Interim profit FY07: Cash earnings per share up by 12.4%
Bendigo Bank continues its growth and success, today reporting a 12.4 per cent increase in cash earnings per share, to 39.0 cents, for the six months ended 31 December 2006.
Cash earnings grew from $48.4 million in the corresponding period last financial year to $55.4 million on the back of solid growth, progressive maturity of its expanded branch network and strong margin performance.
Profit after tax and before significant items increased by 15.2 per cent, to $59.9 million.
Directors declared an interim dividend of 24.0 cents per share, fully franked, an increase of two cents on the previous interim dividend.
Managing Director Rob Hunt said the result continued Bendigo’s consistent, reliable earnings growth.
“We are steadily and surely building shareholder returns half-on-half, year-on-year in line with the growth and development of our business,” Mr Hunt said.
“And this trend is set to continue as our newer businesses and branches mature on a rolling basis.”
The non-cash significant item which reduced the reported profit attributable to shareholders to $54.3 million was a $5.6 million charge for an issue of shares under the general staff share scheme.
“Under the new Accounting Standards, staff share issues are now accounted for with an adjustment through the profit and loss account reflecting the ‘fair value of the issue’, yet there is no change to the economic cost of providing shares under our plan which is now more than a decade old,” Mr Hunt said.
“Our staff share scheme provides great staff alignment to shareholder outcomes and provides an excellent, long-term incentive benefit for staff.”
Mr Hunt said Bendigo Bank had consistently pursued a branded retail banking strategy focused on producing sustainable growth in shareholder value.
“That requires us to deliver service and value in line with our brand, and to ensure the achievement of a fair balance between the needs of customers, communities and shareholders.
“And I think that by and large we are getting this right. The growth in our business and in customer numbers, and the diversity of revenue being produced, is clearly generating value for our shareholders.
Mr Hunt said Bendigo’s prospects remained good “in a banking market that is not getting any easier”.
“Demand for our brand remains strong and we are writing healthy business volumes at profitable prices. This is reflected in a strong margin performance, with a 13 basis point increase during the December half.”
Mr Hunt said Bendigo continued to invest in solutions to “some significant issues” facing customers and communities.
“Just today we are launching our new Generation Green™ program that begins to focus on and address environmental degradation and greenhouse gas emissions at a customer and community level.
“Why do we do these things when it is easier not to? Because we are in a position to lead change – as we proved with Community Bank® – and because we are confident our customers will reward us for improving the long-term prospects for themselves and their communities.”
The result in brief
- Cash earnings $55.4 million (31 Dec. 2005 $48.4 million), a 14.5% increase.
- Profit after tax before significant items $59.9 million ($52.0 million), up 15.2%.
- Cash earnings per share 39.0 cents (34.7 cents), up by 12.4%.
- Significant item for the period - $5.6 million expense for staff share issue.
- Profit after tax $54.3 million ($53.3 million), an increase of 1.9%.
- Return on equity, cash basis 14.8% (14.1%).
- Interim dividend 24.0 cents per share (22.0 cents) fully franked.
- Loans under management $14.7 billion ($13.4 billion), a 10% increase.
- Retail funds under management $15.2 billion ($13.9 billion), an increase of 8.9%.
- Interest margin 2.92% compared with 2.79% at 30 June 2006.
- Credit quality – gross impaired loans to total assets 0.08% (0.07%).
- Cost to income ratio 66.5% (67.9%).