Bendigo Bank H1 2024: Deposits Rise, Earnings Up – Financial Results
- Bendigo Bank reported a 2.8% sequential increase in cash earnings after tax to $256.4 million for the half year ended December 31, 2024, alongside a four-basis-point rise in...
- Customer deposits across the business increased by 1.1% sequentially, reaching $73.7 billion.
- The bank is currently integrating customer accounts from Adelaide Bank, a process expected to bolster its customer base.
Bendigo Bank reported a 2.8% sequential increase in cash earnings after tax to $256.4 million for the half year ended , alongside a four-basis-point rise in net interest margins to 1.92%. The results, announced , reflect progress in the bank’s strategic shift towards deposit-led loan growth, according to bank executives.
Customer deposits across the business increased by 1.1% sequentially, reaching $73.7 billion. However, total funding experienced a 1.6% decrease, settling at $93.6 billion. This dynamic suggests a strategic focus on attracting and retaining deposits as a core component of funding, even as overall funding levels fluctuate.
The bank is currently integrating customer accounts from Adelaide Bank, a process expected to bolster its customer base. Simultaneously, the onboarding of RACQ Bank’s loan and deposit book is anticipated to further expand its customer reach and, crucially, support growth in residential lending, particularly within Queensland. This expansion strategy signals a deliberate effort to increase market share and diversify lending portfolios.
“This result reflects good progress on our strategy over the half, with our deposit-led approach to drive sustainable loan growth gaining momentum and improving our earnings,” said Fennell, highlighting the effectiveness of the bank’s current strategy.
The reported figures come after Bendigo and Adelaide Bank Limited (ASX:BEN) reported a statutory net profit after tax of $545.0 million for the full year 2024, a 9.7% increase. However, cash earnings for the full year were $562.0 million, representing a 2.6% decrease compared to the previous year. The contrasting performance between statutory net profit and cash earnings underscores the impact of non-cash items and accounting adjustments on overall profitability.
The bank’s focus on deposit growth is particularly noteworthy in the current economic climate. Banks across the region have been navigating a complex landscape of rising interest rates and fluctuating deposit levels. A strong deposit base provides a stable and cost-effective funding source, allowing banks to manage net interest margins and support lending activities without relying heavily on more expensive wholesale funding markets.
The integration of Adelaide Bank and RACQ Bank’s portfolios represents a significant undertaking for Bendigo Bank. Successfully integrating these businesses will be critical to realizing the anticipated benefits of increased scale, expanded geographic reach, and diversified product offerings. The RACQ Bank acquisition, in particular, is expected to provide a strong foothold in the Queensland market, a region with significant growth potential.
The 1.92% net interest margin, while a modest increase of four basis points, is a key indicator of the bank’s profitability. Net interest margin represents the difference between the interest income generated from loans and the interest expense paid on deposits and other funding sources. Maintaining a healthy net interest margin is crucial for banks to generate sustainable profits.
The bank’s performance in the latter half of 2024 and the beginning of 2025 suggests a strategic recalibration towards a more sustainable growth model. By prioritizing deposit growth and strategically expanding its lending portfolio through acquisitions, Bendigo Bank appears to be positioning itself for long-term success in a competitive banking environment. The coming quarters will be crucial in determining whether these strategies translate into continued earnings growth and increased shareholder value.
Investors will be closely watching how Bendigo Bank manages the integration of the acquired portfolios and navigates the broader economic challenges, including potential fluctuations in interest rates and housing market conditions. The bank’s ability to maintain its deposit-led growth strategy and effectively manage its net interest margin will be key determinants of its future performance.