Bendigo Bank share price slumps 5% following FY22 results

How did Bendigo Bank perform in FY22?

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Key points

  • The Bendigo Bank share price is down 5.01% to $10.24 today following the company's release of its FY22 results 
  • The regional bank reported a 0.4% increase in total income but slumped 6.9% on the bottom line 
  • The board declared a fully franked final dividend of 26.5 cents per share 

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is in reverse on Monday morning.

This follows the release of the company's full year results for the 2022 financial year.

At the time of writing, the regional bank's shares are down 5.01% to $10.24.

Bendigo Bank share price sinks amid a 'challenging and competitive environment'

  • Total income up 0.4% to $1,709.9 million
  • Statutory net profit after tax down 6.9% to $488.1 million
  • Cash earnings after tax up 9.4% to $500.4 million
  • Fully franked final dividend per share of 26.5 cents
  • CET1 ratio up 11 basis points to 9.68%

What happened in FY2022?

For the 12 months ended 30 June, Bendigo Bank reported a 9.4% increase in cash earnings after tax to $500.4 million. This was underpinned by disciplined cost management and lower loan provisions.

The net interest margin (NIM) declined 11 basis points in the previous half to 1.69% reflecting the historically low interest rate environment. Variable and fixed residential loan competitive pressure led to a decline of around 15 basis points over the first half.

In addition, the company's Common Equity Tier 1 (CET1) ratio – a key measure of financial strength – rose again, up 11 basis points to 9.68%. This is above Australian Prudential Regulation Authority's (APRA) benchmark target for standardised banks. Bendigo Bank stated that its strong capital position reflects a well-managed balance sheet and strong risk management.

The robust performance allowed the Bendigo Bank board to declare a fully franked final dividend of 26.5 cents per share. This takes the full year dividend to 53 cents apiece, up 6% from the 50 cents in the prior corresponding period.

Management commentary

Bendigo Bank's CEO and managing director, Marnie Baker touched on the company's performance in FY2022. She said:

These results show we have delivered what we promised in a challenging and competitive environment. Bendigo and Adelaide Bank has delivered continued growth in loans, deposits and customer numbers. We have reduced costs and improved our cost to income ratio while maintaining a strong balance sheet and preserving our credit quality.

We have achieved a fourth consecutive half of positive jaws and our transformation agenda is on track. Our performance for FY22 is evidence that our strategy is working. The Bank is proud of the progress it has made and the discipline we have shown however we know we have more to do.

What's the outlook for FY2023?

No guidance has been given for FY2023. However, Baker spoke about focusing on the company's overall returns. She concluded:

What we hoped was going to be a relatively smooth economic landing coming out of COVID has got a little bumpy, as we face into growing inflationary pressures, a tight jobs market, rising wages and general global uncertainty.

Cash rate increases from the Reserve Bank are beginning to have an impact on property values in some markets and we can expect credit growth to moderate and competition to remain intense.

Taking inflationary headwinds into account, our aim is to keep costs broadly flat. Our investment spend will remain at current levels through to FY24 before declining and impairment expenses should return to historical averages over the medium term.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo and Adelaide Bank Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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