The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price has jumped 6% in response to the bank’s FY26 third quarter update.
Bendigo Bank is one of the largest non-major banks in Australia with more than 2.4 million customers.
Bendigo Bank’s FY26 third-quarter update
The bank announced its initiatives for the second phase of the productivity program. It wants to evolve its operating model to be simple and more efficient.
Following the Google partnership announced in November, it has entered into two strategic partnerships with leading providers of technology services and business operations.
First, an agreement is a seven-year technology service partnership with Infosys, which will significantly improve its IT service delivery capability and provide access to “enhanced capabilities, software engineering and AI talent to deliver greater capacity to innovate”.
Second, there’s a six-year business partnership with Genpact which will “bring deep expertise in process optimisation and delivery to drive greater productivity and support stronger risk management across the bank.”
Bendigo Bank said that by focusing on its core strengths, including customer connection and its strong deposit franchise, the ASX bank share will be “better positioned to respond to changing market dynamics and drive sustainable growth”.
This is expected to lead to “workforce changes, impacting people in our technology and business operations teams”. Employees will be consulted on roles and team structures.
These changes will help the bank hit its guidance of ‘business as usual’ expenses to be no higher than inflation through the cycle.
The annual run rate expense should benefit by approximately $65 million to $75 million, which will be realised by FY28. Upfront transition costs will be impacted by between $85 million to $95 million, the majority of which will be incurred in FY27.
Trading update
The bank revealed how it performed in the three months to 31 March 2026.
Compared to the third quarter of FY25, net interest income grew 4.1% year on year to $433.2 million, operating profit before credit charges grew by 10.9% to $199.8 million and cash earnings after tax jumped 12.8% to $137.9 million.
Bendigo Bank’s statutory net profit after tax declined by 0.4% year on year to $109.4 million.
Within those numbers the net interest margin (NIM) – how much profit the bank makes on its lending – rise 6 basis points (0.06%) to 1.98% compared to the second quarter of FY26. This occurred following deposit pricing and mix, as well as two RBA rate rises.
Lending growth continued to improve, with quarter on quarter growth of 5.6% (annualised). Residential lending growth was 4.2% (annualised) and business and agribusiness lending growth was 12.7% (annualised).
Operating expenses were 4.1% lower largely because of reduced staff costs. Credit expenses came to $2.1 million as it monitors geopolitical developments and potential impacts on credit risk.
Final thoughts on the Bendigo Bank share price
The bank is doing what it thinks it needs to do to grow earnings and ensure good performance in the long-term. However, job cuts are a painful thing for staff.
Aside from that, its lending earnings are looking positive. How long will it be able to keep up this growth? Time will tell.
It’s not one of the ASX dividend shares I’d choose to buy today, but I’d be happy as a shareholder.
