“There is considerable scope for government to supplement the recommendations with pro-competition initiatives,” Ms Baker said. “A less competitive environment means poorer customer outcomes.”
Bendigo Bank sailed through the Hayne royal commission when compared with its bigger bank rivals, however questions were raised about practices at fully-owned subsiduary Rural Bank where the actions of the bank and its employees led to hardship for some customers.
The bank said it would continue to focus on attracting a younger demographic. It noted it had been a beneficiary of negative sentiment toward the banks in the aftermath of the royal commission stating that customer numbers were up 18 per cent in December compared with the same time the previous year.
Bendigo Bank announced a cash profit of $219.8 million, which was 2.4 per cent lower than the previous corresponding half of $225.3 million but flat on the previous half.
Among the factors weighing on the result were subdued growth, higher funding costs, employment and one-off regulatory costs related to the Hayne royal commission.
The bank announced a fully-franked, first-half dividend of 35c a share payable March 29, the dividend is in line with the previous half. The bank also reported a 15 basis point rise in its Common Equity Tier 1 ratio (CET1) to 8.76 per cent, saying the bank was on track to meet APRA’s unquestionably strong benchmark.
Bendigo Bank managing director Marnie Baker said the bank was making progress on its quest for advanced bank accreditation.
“In my view the uneven playing field is part of the reason we have seen some of this behaviour exposed by the royal commission” Ms Baker said on an investor call on Monday morning.
“During the half, we received accreditation for interest rate risk in the banking book and we continue to make progress on credit risk accreditation. We anticipate greater clarity once APRA’s credit risk capital prudential standards changes are released in 2019.”
Retail deposits rose 3. per cent or $1.7 billion to $52.3 billion from $50.6 billion in the previous half while total loans fell 1 per cent or $0.6 billion to $61.2 billion from $61.8 billion.
Housing loan growth was below system at 2.7 per cent compared with system growth of 3.3 per cent. Operating expenses rose 4.2 per cent to $464.2 million from $445.5 million on the prior corresponding period reflecting higher staff costs and one off regulatory costs.
Net interest margin (NIM) at the bank which measures the bank’s funding costs versus the rate at lends at contracted by more than expected at the bank falling 3 basis points at the bank to 1.95 per cent compared with 1.98 per cent at the prior corresponding period.