Bendigo and Adelaide Bank Ltd (ASX: BEN) has released its FY21 first quarter update. Are Bendigo Bank shares worth buying?
FY21 first quarter update
Bendigo Bank is holding its AGM today. It said that its total lending continues to strong with year to date growth of 11% and residential lending growth at 16.1%. The net interest margin (NIM) is being “well managed” – it increased by one basis point (0.01%), compared to the second half of FY20, to 2.30%.
As at 16 October 2020, 6,797 customers accounts (including 4,408 residential and consumer accounts) remained on deferral. This is a 69% reduction from the peak on 31 May and down 63% since 31 August 2020. The value of these loans, where repayments has been deferred, is around $2.5 billion, down from $6.9 billion in June 2020.
However, despite the positive update, management think the outlook remains uncertain and the bank is going to maintain its approach to credit provisioning adopted for COVID-19.
Bendigo Bank Managing Director Marnie Baker said: “We are focused on driving sustainable growth through active cost management, and we continue to target income growth to exceed cost growth this financial year. Our sights are family fixed on achieving outcomes for all stakeholders and we are adequately provisioned to manage through the pandemic.
“Pleasingly, the number and balances of COVID-19 support packages have significantly reduced, including in Victoria, as the bank continues to work individually with customers on repayment deferral arrangements.”
Is Bendigo bank a bargain buy?
The Bendigo Bank share price is still down by 38% from before COVID-19 hit Australia’s share market.
But the re-opening of Melbourne should help things considering it’s a large market for the regional bank.
I’m impressed by Bendigo’s ability to increase its NIM despite the difficult conditions and low interest rates.
If I had to buy one of the domestic banks then Bendigo Bank would be up there, along with Commonwealth Bank of Australia (ASX: CBA). But if I had to buy one bank it’d be Macquarie Group Ltd (ASX: MQG) for the global earnings. However, there are several other ASX dividend shares I’d invest in first like Washington H. Soul Pattison and Co. Ltd
(ASX: SOL) which I covered here.
