Bendigo and Adelaide Bank Ltd (ASX: BEN) reported its first-quarter results this week, and it's fair to say they didn't set the world on fire.
The challenger bank reported cash earnings after tax of $120.7 million for the first quarter of its 2026 financial year, down 3.2% on the average quarterly earnings for the first half of 2025.
Residential lending came in at $65.7 billion, a 5.6% contraction over the quarter, while there was better news on the business lending front, with growth of 2.9% to $17.2 billion.
Managing director Richard Fennell was putting a positive spin on the results, as he said in the company's statement to the ASX:
During the quarter we delivered several strategic milestones which will position the bank for sustainable growth in the second half of this financial year and beyond. The Bendigo Lending Platform has been successfully rolled out across the branch network in all states, except for Victoria and Tasmania which will be rolled out in November.
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Unimpressive, analysts say
The analysts at Macquarie have run the ruler over the Bendigo results, and they're not overly impressed, saying the trading update was "weak" and costs were also materially higher. They said the results missed consensus expectations by 8%.
They went on to say:
This was underpinned by worse expense trends. Management called out seasonality and some impacts from remediation, but we note that business as usual expenses were still meaningfully worse than the prior year.
They noted that revenue showed solid growth of 4% quarter on quarter, with better margins and non-interest income, "but these trends were insufficient to offset poor expense performance''.
The worse-than-expected expense trends highlight the need for improved productivity at Bendigo, which is likely to be a key feature of the upcoming investor day.
Macquarie lowered its earnings per share expectations for Bendigo by about 1% for the next three financial years, "as we incorporate higher expenses, partially offset by the removal of a rate cut supporting revenues, and lower impairments in the near term''.
The Macquarie team also lowered their price target on Bendigo shares by 25 cents to $10.50, compared with the current share price of $11.36, indicating the shares have further to fall, even after a sharp sell-off following the release of the quarterly results.
Macquarie has an underperform rating on the shares.
Bendigo and Adelaide Bank was valued at $6.61 billion at the close of trade on Wednesday.
