Bendigo Bank welcomes credit upgrade
Bendigo Bank managing director Rob Hunt today welcomed an upgrade in the Bank's credit rating announced overnight by Fitch Ratings.
Fitch upgraded Bendigo's long-term rating to BBB+ from BBB.
The Bank's short-term rating was reaffirmed at F2.
“We are pleased that Fitch has acknowledged the strength of the strategy we have consistently applied for a number of years now,” Mr Hunt said.
“The upgrading acknowledges that our focus on helping our customers and communities achieve success has provided a solid foundation on which to build sustainable value for our shareholders.
“Bendigo has taken on many partners in collaborative commerce ventures ranging from Community Banks through to joint ventures and we could not achieve success without their commitment, too.
“We remain focused on this strategy and on continuing the progression we are making in building a unique banking model.
“The demand for the Bendigo style of banking is as strong as ever and we continue to make investments in broadening our distribution network to provide more communities with access to our growing suite of financial products and community enhancement initiatives.”
Mr Hunt will announce Bendigo Bank's interim profit result on Monday 16 February.
Note: Bendigo Bank is rated BBB/A2 by Standard & Poor's.
The Fitch statement
LONDON, February 02 (Fitch) – Fitch Ratings, the international ratings agency, has upgraded Bendigo Bank Limited's (“Bendigo”) Long-term rating to ‘BB+' from ‘BBB'. The upgrade reflects a number of positive developments, which have enhanced the bank's creditworthiness. Bendigo's other ratings have been affirmed at Short-term ‘F2', Individual B/C' and support ‘4'. The outlook is Stable.
Bendigo's strong commitment to relationship banking provides it with a solid platform for growth. Since 1998, its assets and equity have more than doubled in size, and at the same time the bank has attained greater geographic diversity, thereby reducing its reliance on its home state of Victoria. Fitch notes that this growth has been achieved without compromising the bank's prudent risk management standards. In fact, risk management systems have steadily improved over the past five years, as reflected in Bendigo's low level of impaired assets – as at 30 June 2003, gross impaired assets amounted to a more 0.22% of gross loans.
Financial performance has been solid, with Bendigo steadily improving its return on equity (ROE) towards an internal target of around 15% (FY03: 11.3%). The bank has capitalised on Australia's robust household sector, which has helped boost levels of residential mortgage lending over the past three years; Fitch note that around 60% of Bendigo's loans are residential mortgages. Nonetheless, should housing prices eventually be adversely affected by a continued easing in demand for housing, Bendigo is unlikely to face material financial or credit issues.
Bendigo maintains satisfactory capital rations, with its Fy03 Tier 1 ration of 8.1% being in line with the bank's internal target for a minimum Tier 1 ratio of 8.0%; there is no hybrid component to the bank's Tier 1 capital.
Contact: John Miles, Andrew Smith; Brisbane, Tel: +617 322 8600