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Tuesday 06 May 2014 by FIIG Research Legacy

Bendigo Bank full research report May 2014 - retail

Executive Summary

Bendigo and Adelaide Bank Limited (Bendigo Bank) is a regional bank that specialises in retail banking with a focus on rural communities. It also owns Rural Bank and Delphi Bank and operates the margin lending business, Leveraged Equities
At the time of writing, Bendigo Bank had offered to purchase the Rural Finance Corporation from the Victorian Government, which would increase its rural loan portfolio by approximately 50% and total assets by around 2.8%. This is subject to APRA approval but is expected to be received and the transaction completed in July 2014
Bendigo Bank offers a range of banking and wealth management services across all states and territories in Australia, with a particularly strong retail deposit franchise and community focus. Its largest operations are in Victoria and South Australia
Bendigo Bank reported a solid net profit after tax of $180.7m in 1H14, a decrease of 4.7% compared to $189.4m the prior corresponding period. However, underlying cash earnings were $185.9m, an increase of 9.5% on the prior corresponding period.
Bendigo Bank’s capital position has improved with recent Tier 1, Tier 2 subordinated debt and equity raisings. The Tier 1 capital ratio was 9.24% as at 31 December 2013 and total capital ratio was a solid 10.72%. Following the $300m subordinated bond raising in January 2014, the total capital ratio was an impressive 11.68% on a pro-forma basis
Bendigo has a sound credit profile with strong earnings growth, low levels of bad debt and a high proportion of deposit funding. The bank is actively looking to increase its regulatory capital which will further solidify its financial position

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