The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is moving higher this morning after the bank reported a 31% increase in its first-half profit.
Bendigo Bank share price rises on profit jump
The Bendigo Bank share price is up 2.48% to $9.49 as the market digests the update.
Key financial results from the half ending December 31 include:
- Total income of $965.1 million, up 8.5%
- Statutory net profit of $321.3 million, up 31.7%
- Fully franked dividend of 26.5 cents per share
Bendigo Bank maintained its market-leading net promoter score of 29, more than 30 points above the banking average.
Subsequently, customers increased 3.4% and residential lending recorded above system growth for the sixth consecutive half.
“Our customer base is growing because customers are attracted to our products, service levels and our purpose of feeding into the prosperity of our customers and communities, not off it.”
Further growth was limited by a 14 basis point fall in the net interest margin (NIM) to 2.09%.
The decline has stemmed from intense competition, customers locking in fixed home loans and holding extra liquid assets on hand.
Big four banks Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB) also cited similar pressures in their results.
Positively, the bank anticipates the NIM to improve over 2022 and 2023 with rate increases on the horizon.
Earnings receive a bump for credit unwinding
Notwithstanding the revenue growth, the 31.7% bump in profit was largely a result reversal of credit provision.
In the prior half, it expensed a $19.5 million credit impairment, which was reversed in the latest half.
What’s next for the Bendigo Bank share price?
The Bendigo bank share price will benefit from its technology investment going forward.
The company has reduced its processing time to 14 days. Meanwhile, 66% of customers now bank online and 10% of home loans are automatically decided.
This should aid the business in reducing costs and boosting profit over the medium term.
Bendigo Bank also completed the acquisition of Ferocia, which owns neobank Up.
The business will partner with fintech Tic:Toc to offer digital mortgages to a younger demographic of customers.
Management cited further margin compression and lower other income as headwinds to the Bendigo Bank share price in the second half.
“This strong result would not be possible without our strategy and our focus on execution. We are committed to removing complexity, keeping cost growth low and, above all, remaining a customer centric organisation.”
