ASX 200 bank stock smashing the benchmark on Friday as a key metric strengthens

Investors are sending the ASX 200 bank stock surging on Friday. But why?

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Shares in S&P/ASX 200 Index (ASX: XJO) bank stock Bendigo and Adelaide Bank Ltd (ASX: BEN) are leaping higher today.

Bendigo Bank shares closed yesterday trading for $9.92. In morning trade on Friday, shares are swapping hands for $10.38 apiece, up 4.6%.

For some context, the ASX 200 is down 0.2% at this same time.

Here's why Bendigo Bank stock is smashing the benchmark today.

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Image source: Getty Images

ASX 200 bank stock lifts off on increased margins

The Bendigo Bank share price is soaring after the company released a trading update for the 10 months through 30 April.

The ASX 200 bank stock reported unaudited cash earnings of roughly $464 million for the 10 months. That's down 2.3% on the prior corresponding period.

Likely spurring investor interest, the bank's net interest margin (NIM) – which measures the difference between its lending rates and borrowing rates – increased since it reported its half year results.

NIM post revenue share arrangements came in at 1.87%, up from 1.83% reported in 1H FY 2024. The bank added that its April exit NIM was higher than the year to date average.

Also likely spurring investor interest is the low credit expense levels Bendigo Bank reported across all of its portfolios.

What did management say?

Commenting on the 10-month results sending the ASX 200 stock surging today, CEO Marnie Baker said:

At our half year results in February we reiterated our commitment to managing the business for long term value. We have continued our focus on disciplined growth and prudent management of our costs.

The margin considerations we outlined in February have helped support a year-to-date margin of 1.87% post revenue share. We look forward to showcasing our growth engines at our Investor Day on 23 May 2024.

How has the ASX 200 bank stock been tracking?

With this morning's intraday gains factored in, the Bendigo Bank share price is up an impressive 21% since this time last year. Most of those gains have been delivered over the past six months.

Atop the strong share price gains, the ASX 200 bank stock also pays some juicy dividends.

Over the past year, Bendigo Bank paid a final dividend of 32 cents per share on 29 September and an interim dividend of 30 cents per share on 26 March. At the current share price that equates to a fully franked trailing yield of 6.0%.

And if we add those dividends back into the share price, the accumulated value of the ASX 200 bank stock is up more than 28% in 12 months.

Motley Fool contributor Bernd Struben 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. 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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