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Lending growth brightens Bendigo result

COVID-related provisions have triggered a 27 per cent slide in the non-major bank’s earnings, offset by strong credit-driven income growth.

Bendigo and Adelaide Bank has released its full-year results for the 2020 financial year (FY20), posting cash earnings after tax of $301.7 million, down 27.4 percent on the previous corresponding period.

The result was underpinned by a collective provision overlay of $127.7 million in anticipation of a deterioration in credit quality off the back of the COVID-19 crisis.

The result was also impacted by a spike in operating expenses, particularly software impairment charges of $121.9 million.

However, this was offset by an increase in operating income ($1.6 billion), primarily off the back of its lending performance over FY20.

Bendigo’s total lending portfolio grew 5.1 percent on the prior corresponding period to $65.3 billion, spurred by a $3.8-billion increase in its residential lending portfolio, from $39.6 billion to $43.4 billion.

Bendigo’s above-system residential lending growth was driven by a $3.1-billion increase in third-party banking portfolio to $19.9 billion, while its retail banking book increased by approximately $700 million to $23.5 billion.

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Portfolio breakdown

As at 30 June 2020, owner-occupied home loans made up approximately 64 per cent of Bendigo’s mortgage portfolio, up from 63 per cent at the close of the 2019 calendar year.

The share of home loans backed by lender’s mortgage insurance also decreased, down from 20 per cent to 19 per cent.

A greater proportion of home loans are secured with fixed-rate terms, up from 23 per cent to 26 per cent.

Over 90-day arrears have remained stable, representing 0.4 per cent of Bendigo’s residential lending portfolio.

Approximately 9 per cent of mortgage-holders are receiving COVID assistance, representing $4.1 billion.


Reflecting on the overall result, Marnie Baker, Bendigo’s managing director and CEO, acknowledged challenges in the operating environment.

“In a challenging year for Australia and the world, our priority has been to support those impacted by COVID-19, bushfires, floods and prolonged drought through a range of tailored measures in line with our longstanding purpose to feed into prosperity, not off it,” she said.

Ms Baker added that she expects market conditions to “remain challenging”, given continued uncertainty over the duration of the pandemic.

But the CEO stressed that the bank would continue to advance its transformation strategy and explore investment opportunities.

“We continue to focus on maintaining a strong and resilient balance sheet supported by our growth and clear transformation strategy,” she added.

“We’re observing how COVID-19 is changing the world and considering how we can use this to shape the future of work and continuously improve as leaders in customer experience.

“We will make lasting changes into the future, to continue to feed into customer and community prosperity. This will see us increase productivity by taking out costs and investing in new capabilities, particularly in customer experience and digitisation.”

Ms Baker added: “These changes will impact our operations and improve how we engage customers. Regardless of any change, our purpose, values, strategy and customer commitment will remain at the centre of every decision.”

[Related: Less than 1 in 5 NAB borrowers ditches deferrals]

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