The Motley Fool

Here’s what shareholders need to know about Bendigo and Adelaide Bank Ltd today

What: Australia’s fifth-largest bank, Bendigo and Adelaide Bank Ltd (ASX: BEN) has today reported its half yearly results. Here are some of the highlights:

  • Underlying cash profits increased by 10.9% to $217.9 million on the prior corresponding period (pcp)
  • Underlying earnings per share were up 3.4% to 48.1 cents per share (cps) on the pcp

The board has declared a 33 cps fully franked dividend which is up 2 cps on the pcp

So what: The interim results shows that Bendigo and Adelaide Bank was able to maintain its net interest margin and strengthen its balance sheet including a boost in Common Equity Tier 1 capital from 7.9% to 8.1%. It also reduced loan impairments from $336.5 million to $257.4 million and grow its position in agri-business banking thanks to the group’s acquisition of Rural Finance and growth of Rural Bank.

Despite the solid numbers, the results haven’t impressed investors with the share price sinking around 4% by early afternoon in an otherwise flat day of trading on the  S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

The negative reaction to today’s results does need to be considered in the context of the mid-term outperformance of the bank’s share price which has rallied around 18% over the past year, thereby significantly outperforming the 10% return from the index.

Now what: With many investors owning bank stocks for their juicy fully franked dividend yields, Bendigo and Adelaide’s dividend is obviously a key factor. According to data provided by Morningstar a final dividend of 34.6cps is forecast; assuming this forecast is accurate it implies an investor buying shares in Bendigo and Adelaide Bank today is set to receive a yield of 4.9%.

This yield is a little lower than the forecast rate currently attainable from other bank stocks such as National Australia Bank Ltd. (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ), which suggests investors would be hoping for a faster rate of capital appreciation to compensate.

These 3 stocks could be the next big movers in 2020

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 6/8/2020

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned.


Related Articles...