Bendigo shows regional battle
(12 August 2009 – Australia) The latest full financial year result for Bendigo and Adelaide Bank has shown the tough battle that regional banks are in to grow and be profitable in the current environment.
The bank announced a 57.7 percent drop in full year profit to A$83.8 million, with the first half of 2009 contributing just A$33.2 million to the total.
In contrast, the first six months of 2008 contributed A$115.2 million out of the total A198.3 million. Since then, profit has fallen in the last two half years.
The bank put the profit fall down to a slowing economy and global recession, an unprecedented drop in official cash rates and increased funding costs.
However, the results also show that significant items played a large part in the profit fall. Before significant items, profit fell by a smaller 25.8 percent compared with the previous financial year.
While revenue rose for the bank, operating expenses rose by an even greater amount, up nearly 20 percent.
Write-downs over the past year included a $550 million dollar exposure to investors in collapsed agricultural company Great Southern, which has thus far generated $20 million in loan loss provisions.
While the gross impaired loans to total assets ratio has jumped from 0.09 percent in 2008 to 0.49 percent, the bank said that the result is still lower than some of its bigger rivals.
In a positive sign for funding for the regional bank, all important retail deposits increased by a significant 20.8 percent over the year, to now total A$28.5 billion. In the same period, loans under management fell five percent to A$40.8 billion, reducing the bank’s reliance on other sources of funding.
In contrast, the first six months of 2008 contributed A$115.2 million out of the total A198.3 million. Since then, profit has fallen in the last two half years.
The bank put the profit fall down to a slowing economy and global recession, an unprecedented drop in official cash rates and increased funding costs.
However, the results also show that significant items played a large part in the profit fall. Before significant items, profit fell by a smaller 25.8 percent compared with the previous financial year.
While revenue rose for the bank, operating expenses rose by an even greater amount, up nearly 20 percent.
Write-downs over the past year included a $550 million dollar exposure to investors in collapsed agricultural company Great Southern, which has thus far generated $20 million in loan loss provisions.
While the gross impaired loans to total assets ratio has jumped from 0.09 percent in 2008 to 0.49 percent, the bank said that the result is still lower than some of its bigger rivals.
In a positive sign for funding for the regional bank, all important retail deposits increased by a significant 20.8 percent over the year, to now total A$28.5 billion. In the same period, loans under management fell five percent to A$40.8 billion, reducing the bank’s reliance on other sources of funding.
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