Bendigo and Adelaide Bank (BEN) released its Pillar 3 Disclosure for 1Q13 showing continued improvements in credit quality during the quarter with a large fall in impaired assets and stable 90+ day arrears. The bank also posted a solid increase in capital.
Gross impaired assets fell by 12% (or $43m) during 1Q13 and now equates to 1.80% of non-housing loans, compared to 2.08% in 4Q12. This was primarily due to the reduction in non-housing impaired assets.
The 90+ day arrears balance fell marginally by 1% due to improvements in housing.
The Basel II Core Tier 1 ratio increased by 50bps to 7.9% during 1Q13. This was mainly due to the sale of the IOOF stake and B-tranche securitisation notes as previously announced during FY12 results. Underlying organic capital generation was about 5bps.
Small acquisition of Southern Finance likely to be first of many
BEN also announced it has signed a non-binding heads of agreement to acquire certain assets of Southern Finance, a debenture company based in Victoria. With returns in BEN’s base banking business relatively poor and improvement in these returns largely out of the company’s control, the bank may seek other small similar acquisitions particularly when they bring funding benefits.