The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price has been travelling higher since late July. It appears investors are buying the company's shares ahead of its FY21 results.
During Friday's market close, the regional bank's shares finished up 1.41% to $11.16. This means that its shares are now 60% higher since this time last year.
Below, we take a look at the performance of the Bendigo and Adelaide Bank share price last earnings season.
What happened in the first half of FY21?
In mid-February 2021, Bendigo and Adelaide Bank delivered its half-year results to the ASX, reporting growth across key metrics.
Here's a quick summary of the highlights mentioned in the H1 FY21 release:
- Total income improved by 3.3% to $849 million over the prior corresponding period.
- Cash earnings lifted 1.9% over H1 FY20 to $219.7 million, driven by an increase in lending portfolios and hedging revenue.
- Interim fully-franked dividend of 28 cents per share including 4.5 cents of a deferred FY20 dividend.
As a whole, investors were pleased with the performance, pushing up Bendigo and Adelaide Bank shares from $9.75 on 15 February to $11.68 in the days following.
However, the Bendigo and Adelaide Bank share price rise was short-lived, plummeting to as low as $9.62 on 1 March. This represents a decline of about 18% in the space of 2 weeks.
What should investors look out for this earnings season?
With Bendigo and Adelaide Bank due to report its full-year results on Monday, investors may be wondering what to expect.
According to Goldman Sachs, its team of analysts are forecasting a strong result for the FY21 second half.
Total income is estimated to stand at approximately $853 million, which is a tad ahead of H1 FY21's $849 million.
Cash earnings are projected to come in at $461 million for the full year ($261 H2 FY21). This represents a 52.7% increase over the prior corresponding period.
However, the market will likely be focused on commentary around the impacts of current COVID-19 lockdowns.
The regional bank revealed it had a net release of $19.4 million in collective provisions earlier in the month. The extra funds came from rising GDP, lower unemployment and higher residential properties. Although, it's a question of if and when the company will release the provisions once Australia comes out of lockdown.
FY21 credit expenses are anticipated to be at around $18 million. Prior to the provision release, it was $37.4 million. This compared to $40.8 million in FY20 before pandemic related impacts.
While Bendigo and Adelaide Bank's mortgage portfolio remains robust, increased competition is expected to slightly weigh down its performance. The "major banks have all reinvigorated mortgage growth via improved turnaround times", the report said.
In addition, costs are assumed to have lifted on an average of 3.4% per annum since FY15. In comparison, its peers are at around 0.7%. Nonetheless, FY21 costs are predicted to be broadly flat or marginally down against FY20.
Bendigo and Adelaide Bank is estimated to pay a fully franked final dividend of 26 cents per share.
About the Bendigo and Adelaide Bank share price
In 2021, the Bendigo and Adelaide Bank price has gained close to 20%, reaching pre-pandemic levels. If the company's share price can surge above the $13 mark, it will be sitting at an all-time high.
Bendigo and Adelaide Bank commands a market capitalisation of around $6.1 billion, making it the 90th largest company on the ASX.
