BENDIGO Bank, which is merging with Adelaide Bank, has reported a 34.1 per cent lift in first half earnings and reaffirmed its outlook for this financial year. Net profit for the six months ended December 31 was $72.8 million, up from $54.3 million the prior corresponding period.
The bank's cash earnings rose 27.6 per cent to $70.7 million.
Bendigo Bank managing director Rob Hunt said the results reflected solid growth at profitable prices despite current volatile conditions in financial markets.
He said the bank had experienced an increase in its cost of funds, particularly for wholesale funds, in the half year.
This had been offset by the re-pricing of some assets, such the residential home loan portfolio and margin lending books.
"While this cost of funding has increased, it has served to illustrate the strength and deposit-generating ability of our retail branch network," Mr Hunt said.
"Notwithstanding this, we have a disciplined strategy of only writing business that remains profitable and secure in the current funding environment."
The bank's net interest margin (NIM) fell moderately over the first half.
"Pro-forma results prepared on the basis that the two banks had merged for the entire reporting period indicate a 0.12 per cent fall in NIM for the six-months," it said.
"Ongoing management of NIM will continue to benefit from our commitment to writing and maintaining profitable business," Mr Hunt added.
Mr Hunt said the outlook for the merged bank was sound.
"As our retail bank continues to expand and mature, and as partnering with our communities, business partners and customers continues to produce tangible benefits, we will continue to produce sustainable and consistent results," Mr Hunt said.
"The merger, and the way in which the two banks have already been able to work together, augurs for the continued success of this business."
Bendigo Bank reaffirmed its full year target for cash earnings per share (EPS) growth of 12 per cent.
In the first half, cash EPS grew by 10.3 per cent to 43 cents.
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