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Commenting on the regional bank’s half-year financial results yesterday, Bendigo and Adelaide Bank managing director Mike Hirst made a point of highlighting the competitiveness in the home loan market.
“This last half saw extreme price competition for mortgages, with several competitors seeking to increase their balance sheet exposure to Australian home loans and some irrational pricing in the lead-up to changes in regulation,” Mr Hirst said.
“Of course, those changes were deemed necessary by the Financial System Inquiry to begin levelling the playing field for all banks,” he added.
Bendigo and Adelaide Bank announced an after-tax statutory profit of $208.7 million for the six months ending 31 December 2015.
Underlying cash earnings were $223.7 million, a 2.7 percent increase on the December 2014 half-year result.
In the three months to December 2015, the bank saw 6.6 per cent growth in home lending through its retail channel, 4.1 per cent growth through third party and a 5.7 per cent fall in mortgages distributed through mortgage managers.
Mr Hirst said the results reflected the bank’s disciplined management approach through the half.
"Net interest margin contracted slightly on the prior half year by 1 basis point to 2.16 per cent; however, repricing of the mortgage market to more realistic levels has seen margin improve in the latter part of the half,” he said.
“The low interest rate environment also impacted growth as many customers chose to reduce debt. About 43 per cent of the bank’s customers are ahead in their loan repayments, while mortgage offset accounts grew by 12 per cent over the period.”
The regional bank is in a “very strong position” from a balance sheet perspective, Mr Hirst noted, 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 percent and total capital increasing 9 basis points to 12.66 percent, we have ample capital to grow our business,” he said.
“Funding is a particular strength, with about 81 per cent of funding now provided by retail customers. As the wholesale markets move through a period of volatility and higher prices, our funding profile provides some insulation from those issues.”
[Related: Bendigo calls out capital funding risk]