2000/2001 profit announcement
Bendigo Bank today announced a 2000/2001 operating profit after tax of $33.3 million.
Chairman Richard Guy said this represented a 56 per cent increase on last year. Due to factors which included the receipt of just nine months profit contribution by First Australian Building Society to offset the capital issued to its former shareholders as part of last October's merger, growth in earnings per share was 14.7 per cent.
"This represents a solid progression in our long-term strategy to leverage our position as a regional and community bank," Mr Guy said.
He said that in recent years Bendigo had managed consistently strong growth while at the same time establishing the footings required to expand its business beyond its traditional boundaries.
"Today, we are accessible to more Australians, thanks to our growing branch and Community Bank network, our electronic banking capabilities and our joint venture activities such as Elders Rural Bank and Tasmanian Banking Services.
"Much of the structural change within the Bank has also been achieved. We have fully integrated our commercial banking arm Cassa Commerciale into the retail bank, centralised the Group's treasury operations, completed rollout of our branch delivery and loan application processing system, and on 31 August will complete the integration of First Australian customers into the Bank.
"We are therefore well-equipped to handle the rapid growth in customer numbers and new business we are experiencing both in the Bank and in our joint venture and alliance activities.
"During the current calendar year we have consistently attracted between 10,000 and 15,000 new customers per month and we expect this growth to continue for some time yet.
"Retail deposit and lending volumes continue to grow strongly and we anticipate a continuation of the profit progression we have seen in recent years."
Mr Guy said directors had declared a final dividend of 14.5 cents per share (payable on 31 October and fully franked at 30 per cent), an increase of 1.0 cent on last year's final dividend. Dividends for the financial year totalled 41.0 cents per share (up from 24.0 cents), including the 15 cent special cash dividend paid in February 2001. Excluding the special dividend, the payout ratio was 84 per cent.
Detailing the result, which is subject to audit, managing director Rob Hunt said operating profit before tax was $55 million, a 47 per cent increase on the $37.4 million for 2000.
"Even without the nine-month contribution from First Australian ($6.2 million after-tax), profit growth was still in excess of 20 per cent," Mr Hunt said.
Mr Hunt said total bank lending approvals were $2.49 billion, a 34.5 per cent increase, while total Group deposits grew by 41.7 per cent to $6.2 billion.
He said the lending environment had "not been easy" given uncertainty with the introduction of the new tax system but the Bank had continued to experience record demand. "Looking ahead, we have invested in upskilling our lending capacity in Queensland and while that is a highly competitive market, we anticipate good growth there."
Mr Hunt said that while interest margins had come under pressure due to the rapid reduction in official rates early this year, "in the final analysis our margin reduced by just eight basis points and has recovered well".
"Retail deposit growth was extremely strong and comprised 88.4 per cent of total deposits. This deposit franchise is one of Bendigo's greatest strengths and provides us with an enviable funding base to support future growth and margins."
Mr Hunt said the Bank continued to build its non-interest income and during the current financial year would roll out a new wealth creation business strategy to bring its currently disparate funds management and advice businesses under the one umbrella.
"We will bring these together to create a 'one stop' wealth creation/wealth management structure to enhance the ability of our customers to plan and manage their retirement and estate planning. Our aim is to substantially grow our off-balance sheet funds, facilitate the accumulation of customer wealth and in the process deliver a fee-based income stream not susceptible to the fluctuations of interest margins."
Mr Hunt said the Company remained conscious that its performance ratios required further improvement, with First Australian integration costs pushing the cost-to-income ratio back above 70 per cent (72.8) - "which we anticipated would be a short-term consequence of that investment" - and return on equity at 9.4 per cent.
"Having positioned and equipped the Company to grow, we are very focused on delivering shareholder value by improving those measures through growing income streams, controlling costs and managing our capital base."
Mr Hunt said the Bank had repurchased two million shares in its on-market buyback, while total off-balance sheet securitisation programs undertaken to date amount to $851 million. "Securitisation programs remain an integral part of the Bank's capital management and funding strategies."
"This year we had some interruptions to our performance progression, including the decisions to prudently provision against a court ruling made against us ($3.5 million after tax) and also provisioning several commercial loans in recognition of where we are in the economic cycle.
"Income growth, though, is strong, with fee and margin income both growing by 37 per cent last year, and we anticipate increasing contributions from all divisions of our business plus our alliance activities Elders Rural Bank, Tasmanian Banking Services and Bendigo Investment Services.
"The Company is well placed to deliver earnings improvements."