Lower returns expected, but no rise in bad debts for Bendigo
(31 October 2012 – Australia) Despite a challenging environment, Bendigo and Adelaide Bank chief executive Mike Hirst told shareholders there were no signs of a rise in bad debts for the regional lender.
At the bank’s annual general meeting, Hirst said banks would struggle to grow revenue as long as consumer and business sentiment remained weak.
New regulatory requirements for banks to hold more capital are also making it challenging for the sector to increase profits.
'These imposts, combined with the lower level of absolute interest rates, will ensure lower returns from banks than those experienced in the years prior to the global financial crisis,' Hirst told shareholders in Adelaide.
Bendigo's cash profit for the 2011/12 financial year of A$323 million was down 3.9 percent on the previous year, reflecting the impact of weak demand for loans.
After the meeting, Hirst told AAP so far Bendigo had no sign of a rise in bad debts.
'I think as interest rates are coming down that will ensure that doesn't become entrenched.
'But conditions are challenging for everybody.'
Employment would be the main factor for bad debts, he said.
'Sure, we've seen some different things pop up from time to time in areas that are predominantly challenged by the strong Australia dollar, but compared to the rest of the world, things are pretty good in that area.'
The unemployment rate rose to 5.4 percent in September, from 5.1 percent in August, but 14,500 jobs were added to the economy in September.
Hirst said Bendigo was focused on achieving long-term growth through the current economic turmoil, primarily by strengthening its relationship with its customers.
'Long-term research on companies shows that the best performed firms are those that invest, innovate and grow through periods of difficulty - and that is what we plan to do,' he said.
New regulatory requirements for banks to hold more capital are also making it challenging for the sector to increase profits.
'These imposts, combined with the lower level of absolute interest rates, will ensure lower returns from banks than those experienced in the years prior to the global financial crisis,' Hirst told shareholders in Adelaide.
Bendigo's cash profit for the 2011/12 financial year of A$323 million was down 3.9 percent on the previous year, reflecting the impact of weak demand for loans.
After the meeting, Hirst told AAP so far Bendigo had no sign of a rise in bad debts.
'I think as interest rates are coming down that will ensure that doesn't become entrenched.
'But conditions are challenging for everybody.'
Employment would be the main factor for bad debts, he said.
'Sure, we've seen some different things pop up from time to time in areas that are predominantly challenged by the strong Australia dollar, but compared to the rest of the world, things are pretty good in that area.'
The unemployment rate rose to 5.4 percent in September, from 5.1 percent in August, but 14,500 jobs were added to the economy in September.
Hirst said Bendigo was focused on achieving long-term growth through the current economic turmoil, primarily by strengthening its relationship with its customers.
'Long-term research on companies shows that the best performed firms are those that invest, innovate and grow through periods of difficulty - and that is what we plan to do,' he said.
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