2003/2004 interim profit announcement
Bendigo Bank today announced a 2003/04 interim operating profit after income tax of $34.6 million, a 36 per cent increase on the corresponding period for the previous year.
Chairman Richard Guy said key performance ratios had also shown solid improvement. Earnings per share grew by 6.5 cents, or 32 per cent, to 26.8 cents, while return on equity increased to 11.9 per cent.
Directors declared an interim dividend of 17.0 cents per share, fully franked at 30 per cent, an increase of 3.5 cents on the previous interim dividend. The payout ratio was 62 per cent. The dividend is payable on 31 March on shares registered by 17 March.
“This is an excellent result in line with the growth and expansion of our business,” Mr Guy said.
“It reaffirms a strong and consistent upward trend in the company's profitability and performance. The interim after-tax profit we announce today is triple that of just four years ago.
“Each reporting period since then has seen a substantial improvement in profitability. This illustrates that we are beginning to reap the rewards for a decade of a consistent strategy and commitment to build new collaborative commerce structures and progressively expand our distribution capacity.
“These investments are focused on improving outcomes for our customers, on broadening the number of communities we service, and on enhancing our capacity to help improve the prospects of many communities across the nation.
“That approach is now paying dividends for all stakeholders. Our communities are gaining renewed confidence and self-belief, they are rewarding our commitment to them by bringing their business to us, and the resulting strong growth in customer and business numbers is creating improved outcomes for Bendigo Bank shareholders.
“We see clear opportunities ahead to continue this progress so long as we maintain our focus. The new branches and businesses – including our joint ventures and alliances – we have established in recent years are maturing and increasing their contribution to the Group's performance, and the demand for the Bendigo style of banking remains strong across Australia.
“We will continue to make the investments needed to expand our distribution network and product capacity and we expect this will continue to fuel our growth and progress into the future.”
Detailing the result, Group Managing Director Rob Hunt said retail deposits and lending were significant contributors to growth, both recording solid increases over the same period last year.
“We are yet to see any concrete evidence of a slowdown in our lending growth, and although we anticipate there will be some contraction in the housing market during 2004 we foresee a solid second half performance.
“We have placed the Bendigo brand on 140 new branches in the past three years and they are making an ever stronger contribution to lending growth as they mature. Also, we are less dependent on straight-out home loans, with
37 per cent of our loan balances now drawn for other purposes – mainly small business.”
Lending quality remained excellent, with net impaired assets halving to $2.8 million, just 0.03 per cent of gross loan balances. The expense for bad and doubtful debts reduced by almost $1 million, to $6.4 million. “We have no immediate concerns about a deterioration in this position and we continue to build our general provision in line with the bank's growth,” Mr Hunt said.
Total Group deposits increased by $1 billion, or 12 per cent, during the half, to $9.3 billion. Mr Hunt said retail funding continued to be a strong attribute of Bendigo, with retail deposits increasing by $774 million, or 10 per cent, to $8.4 billion. This comprised 90.7 per cent of total Group deposits.
Mr Hunt said that while the bank continued to invest in expansion, products and new businesses, it was growing income at a significantly faster rate than expenses. “Ours is an income generation strategy and we are growing income rapidly. I am confident we are on track to reach our target of a 65 per cent cost-to-income ratio by the 30 June 2005 balance date.”
Looking ahead, Mr Hunt said the bank was in a strong position.
“As well as our core banking business, we are beginning to see good volumes and margin from our funds management and advice businesses, which we built from within. We are also pleased with the performance of our joint venture bank, Elders Rural Bank, which continues to improve its contribution.
“Our balance sheet is extremely strong and puts us in a sound position to capitalise on growth opportunities that might come our way.
“The many major investments we have made in recent years have already been expensed, which means we can continue to invest in positioning Bendigo as the partner of choice for communities which are looking for a banking provider which can offer much, much more than simply product or banking access.
“We continue to build a raft of interlocking solutions in finance, capital management, telecommunications, energy and e-commerce which we believe can provide our communities with competitive advantages in the new economy.
“As we do, the underlying performance prospects of the bank itself continue to improve markedly. At this point we are on track to achieve our aim of a 25 per cent increase in our full-year profit for 2003/04.”
Highlights (July-Dec. 2003 compared with July-Dec. 2002)
Operating profit after income tax was $34.6 million, up 36% from $25.4 million
Earnings per share 26.8 cents, compared with 20.3 cents (32% increase)
Total bank lending approvals were $3.1 billion, a 43% increase
Gross loan balances grew by $803 million during the half, with a further $270 million in loans sold to off-balance sheet structures ($535 million for the full year)
Total Group deposits grew by 12% during the half, to $9.3 billion, with retail deposits representing 90.7% of total deposits
Group managed assets total $12.9 billion, an 8 per cent increase for the half
Total risk-weighted capital adequacy ratio at 31 December 2003 was 10.26%
Shareholder equity increased by 10% to $608 million
Interim dividend is 17.0 cents per share, fully franked at 30 per cent (up by 26% from 13.5 cents interim 2003)
Net impaired assets declined by 52% to $2.8 million during the half, representing 0.03% of gross loans (December 2002 = 0.08%, June 2003 = 0.08%) General provisions were increased by $4.5 million and now total $48.3 million, or 0.79% of risk-weighted assets