The regional lender’s net interest margin – the profit the bank makes on loans – contracted by one basis point to 2.16 per cent over the six months to December 31.
“This last half saw extreme price competition for mortgages, with several competitors seeking to increase their balance sheet exposure to Australian home loans and some irrational pricing in the lead up to changes in regulation,” managing director Mike Hirst said in a statement on Monday.
“However, repricing of the mortgage market to more realistic levels has seen margin improve in the latter part of the half.”
Hirst said more customers also took advantage of low rates to overpay their home loans, reducing interest payments to the bank.
About 43 per cent of Bendigo’s customers are ahead in their loan repayments, while mortgage offset accounts increased by 12 per cent over the period.
About 81 per cent of the bank’s funding is now provided by retail customers.
“All of this means that the bank is in a very strong position from a balance sheet perspective and particularly well placed to compete vigorously for customers in the future,” Hirst said.
Net profit dipped 8.2 per cent to $208.7 million but the bank raised its interim dividend one cent to 34 cents per share, fully franked.
BENDIGO’S FIRST HALF RESULTS
* Cash earnings up 2.7pct to $223.7mn
* Net profit down 8.2pct to $208.7mn
* Interim dividend up one cent to 34 cents, fully franked
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