THE Bendigo and Adelaide Bank this week announced an after-tax statutory profit of $203.2 million for the first half of this financial year, but the company’s share price has been savaged in the aftermath.

Shares in Australia’s fifth largest bank have fallen more than 10 per cent since Monday’s announcement, trading at $9.96 late yesterday, down $1.20 or 10.7 per cent on Friday’s closing price of $11.16 a share.

Underlying cash earnings for the six months to December 31 were $219.8M, flat on the prior half, and the bank announced a fully franked interim dividend of 35 cents per share, in line with the prior period.

Managing director Marnie Baker said the results demonstrate strong customer loyalty and increasing customer growth, despite a challenging operating and external environment, as the bank executes its vision of being Australia’s bank of choice. 

“Independent recognition as one of Australia’s most trusted brands, continued market-leading customer satisfaction rankings and award-winning products and services, coupled with a clear, purpose-driven culture, proven business model, innovative mindset and technology investments have driven today’s solid result,” Ms Baker said. 

“While our strategy to reduce complexity, invest in capability and tell our story has delivered solid results and strong growth in customer numbers, the lack of fair competition in Australian banking continues to inhibit true customer choice.”

She said the Bendigo’s market-leading funding position continues, providing flexibility to fund asset growth and manage margin.

“The solid performance of our business, particularly in a subdued banking sector facing ongoing disruption and regulatory changes, is further highlighted by continued increase of funding sourced from retail customers (82.4 per cent in 1H19).”

Ms Baker said the organisation’s organic capital growth reflects solid profitability, a stable balance sheet and an ongoing movement to lower risk exposures.

“The bank is in an excellent position to meet APRA’s unquestionably strong capital benchmarks.

“We continue to work towards advanced accreditation. 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.”

While Bendigo continues to operate in a highly competitive market, it does so in an uneven playing field, but Ms Baker remains confident that further growth opportunities will be achieved.

She said the bank was continuing to work towards delivering on its own plans for the future, but external factors, such as the royal commission final report, were having an impact.

“We continue to implement our strategy to control our destiny and realise our vision, but the external environment still inhibits customer choice.

“Whilst the Royal Commission final report makes strong industry-wide recommendations to improve customer outcomes, little goes to the issues of competition and a level playing field, something many inquiries cite as being essential to better customer outcomes, and a point we’ve made for years.”

She said a less competitive environment means poorer customer outcomes.

“Despite an uneven playing field in a subdued, challenging, Royal Commission environment, our business continues to perform. We are tracking to system, managing our costs, our balance sheet is solid and our investment in technology that Australian customers’ desire is driving strong customer growth.”