Bendigo and Adelaide Bank beat expectations with first-half profit

Bendigo and Adelaide - First half after tax cash profit of AUD 223.7m ($160m), up 2.7%, beating expectations. The bank's Managing Director, Mike Hurst said that "repricing of the mortgage market to more realistic levels has seen margin improve in the latter part of the half". 

Bendigo and Adelaide Bank chief Mike Hirst has blamed the "irrational" competition in the mortgage market before the banks raised rates in November for a 9 per cent fall in its interest income in the first half of 2016.

But the bank still beat analysts' expectations, with after-tax cash profit up 2.7 per cent to $223.7 million. And Mr Hirst said the bank's profitability should be bolstered by the 0.12 per cent rise in its interest rates, which is only just kicking in and billions of dollars in capital it should be able to release in coming years due to better risk systems.

Bendigo and Adelaide Bank's cash profit edged 0.4 per cent higher on a year ago.

Total interest income fell more than 9.3 per cent to $1.37 billion and statutory profit in the six months ended December 31 fell 8.2 per cent to $208.7 million. But total net income was up slightly to $783.5 million because of a rise in non-interest income to $196.5 million.

"The net interest margin only fell 1 basis point [0.01 per cent] [to 2.16 per cent] and exit margins [in December] are actually higher," he told Fairfax Media. "We think there was some irrational pricing before the higher interest rates and the impact that has on the P&L is obvious to see.