On February 17, Bendigo and Adelaide Bank's shares plummeted by 19%, marking their worst performance ever. This steep decline was triggered by the bank's underwhelming first-half profit results that fell short of analysts' projections, mainly due to pressure on its margins.
The stock hit its lowest point since May 30 but managed a slight recovery to finish 15.3% lower, positioning it as the top loser on the ASX200 index that day.
Bendigo's cash net profit of A$265.2 million in the first half represented a 10% decrease from the previous six months and missed analysts' A$278.4 million estimate, as reported by Visible Alpha.
CEO Richard Fennel acknowledged the challenges faced by the bank, noting, "Income was impacted by margin pressures, driven by higher funding costs to support accelerated lending growth."
The bank's net interest margin decreased by 6 basis points to 1.88%, falling below market expectations, according to Citigroup analysts. This was attributed to a shift towards higher-cost deposits, reflecting increased offset account balances and customer preference for longer-term deposits.
With Australia's interest rates remaining at 13-year highs, customers are reluctant to take loans, opting instead for high-yielding accounts. Consequently, banks are compelled to offer competitive rates, leading to increased costs.
Despite the financial setbacks, Bendigo's customer base grew by 5% to over 2.7 million, with its digital lending platform Up, known for offering competitive loan rates, experiencing a 13.2% surge in customers to over one million.
Commenting on the results, UBS stated, "In our view, this result reads fairly poor, with a lot of work to do and delivery needed to meet expectations on full-year numbers." ($1 = 1.5723 Australian dollars)