Bendigo and Adelaide Bank’s managing director says the group’s balance sheet is “very strong” and it is well-placed to compete “vigorously” for customers.
In a statement to shareholders, Mike Hirst revealed that the regional bank posted a $208.7 million profit after tax for the six months to 31 December 2015, with $223.7 million worth of cash earnings – a 2.7 per cent increase on the prior corresponding period.
Mr Hirst said that while Bendigo and Adelaide Bank’s net interest margin contracted slightly on the prior half-year by 1 basis point to 2.16 per cent, the repricing of the mortgage market “to more realistic levels” has seen its margin improve in the latter part of the calendar year.
Furthermore, Mr Hirst said the low interest rate environment continued to impact the bank’s growth as many customers chose to reduce debt.
“About 43 per cent of our customers are ahead in their loan repayments, while mortgage offset accounts grew by 12 per cent over the period,” he said.
“All of this means that our bank is in a very strong position from a balance sheet perspective and particularly well-placed to compete vigorously for customers in the future.
“With our Basel III Common Equity Tier 1 ratio increasing 7 basis points to 8.24 per cent and total capital increasing 9 basis points to 12.66 per cent, we have ample capital to grow our business.”
Mr Hirst said funding is a particular strength for Bendigo and Adelaide Bank, with approximately 81 per cent of its funding provided through deposits.
“As the wholesale markets move through a period of volatility and higher prices, our funding profile provides some insulation from those issues,” he said.
“We have continued to build and position a strong and valued brand, and our steadfast approach to disciplined margin management and balance sheet growth means our bank is well-placed for sustainable growth.”