Bendigo and Adelaide Bank douses talk of merger with Bank of Queensland
Richard Gluyas From: The Australian August 08, 2011 12:58PM
BENDIGO and Adelaide Bank has doused speculation surrounding a merger with Bank of Queensland, saying consolidation at the "lower end" of the sector was more likely than a deal involving regional banks in Queensland.
Announcing a 41 per cent increase in net profit to $342.1 million today, chief executive Mike Hurst said Queensland was a tough market with two regional banks (Suncorp and BoQ) ?of good size?.
?I think there will be consolidation in the industry, but I think it will be at the lower end rather than the regional banking end,? Mr Hirst said.
?If there are opportunities to participate, we?d welcome that.?
The Bendigo chief said the 2011 result had been achieved in a challenging market, but the bank had enjoyed ?extremely strong? deposit inflows and lending demand from its customers.
More than 90 per cent of the bank?s on-balance sheet funding came from retail deposits, and lending growth comfortably exceeded average growth in the banking system.
?Today?s result shows that support is being returned to the bank, and augurs well for our earnings outlook and availability of funding in a market that we expect to remain volatile,? Mr Hirst said.
Total lending growth for the year was 8 per cent, ahead of system growth of 5 per cent, with deposits expanding by 12 per cent compared to 9 per cent for the banking system.
Bendigo?s net interest margin expanded from 2.12 per cent to 2.17 per cent, and while the bank expected funding conditions to remain tight, it expressed confidence in its ability to raise and retain deposits through its various networks. About three-quarters of Bendigo?s funding comes from retail deposits, rising to 91 per cent for on-balance sheet funding.
On credit quality, Bendigo said 90-day arrears in residential mortgages were steady over the period, sitting at 1.18 per cent of the portfolio at June 30.
This was below the July 2009 arrears rate, despite seven increases in the cash rate since then.
Both credit card and personal loan arrears fell.
Bendigo said volatile markets had resulted in about 1000 ?successfully completed? margins over the last few days.
The margin lending book had an average loan-to-valuation ratio of about 45 per cent.
Mr Hirst said he didn?t expect any job cuts before the end of the year, even though Bendigo wanted to further cut its cost-to-income ratio from 57.4 per cent to its long-term target of 55 per cent.
Shares in Bendigo put on 0.37 per cent today, adding 3 cents to $8.10 as the benchmark index was down 1.4 per cent.
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