Australia’s fifth-largest retail bank announced its interim results for the half-year ending 31 December 2019 this morning, showing profits of $145.8 million during the period.

The company said the 28.2 per cent reduction in profit from the corresponding period the previous financial year was affected by a pre-tax impairment of $87.1 million and faster amortisation, of $19 million.

But total lending reached $62.9 billion for the first half – up 2.8 per cent, compared with the final six months of 2018.

Small business lending was a particularly strong performer for the bank, growing by 15.6 per cent during the first half.

Announcing the planned $300 million capital raise this morning, managing director and CEO Marnie Baker said the cut in first-half dividends to 31 cents a share – down from 35 cents – was necessary to maintain the bank’s strategic growth.

“We have made a difficult decision to reduce our first half dividend by 4 cents to 31 cents per share,” she said in a statement to the Australian Stock Exchange.

“We have a history of rewarding shareholders with a high yield and long-term returns.

“We feel this reduction was required given the capital raising to ensure sustainability of the dividend, retain funds for growth and to enable us to continue to deliver our strategy.”

Baker said capital raising would be used to support the bank’s residential mortgage lending growth, to strengthen its balance sheet and to provide an “increased buffer” above Australian Prudential Regulation Authority capital ratio requirements.

She said the company’s interim results vindicated a “multi-year strategy to be Australia’s bank of choice” and that they were “underpinned by our market-leading trust ratings, strong growth, above system lending, margin management, asset quality and growth in new and existing markets”.

“Earnings for the half were impacted by ongoing technology investment, regulatory and compliance costs and staff investment to support mortgage growth.

“Despite this, we delivered total income of $814.7 million, up 1.4 per cent on the prior corresponding period, in a challenging environment comprised of low rates, increasing regulatory pressure, low consumer and business confidence and growing competition.”

Baker said the bank had also enjoyed strong customer growth over the period, “with the total number of customers choosing our Bank increasing 4.9 per cent in the half”.

“This sustained growth set a record of more than 1.8 million customers.

“Our net promoter score is 27.2 higher than the average of the major banks.”

Bendigo and Adelaide Bank also reduced its bad and doubtful debts by 9 per cent from the corresponding period in 2018, to $23.3 million.

Baker said the company had also made new investments, of $16.9 million, in “systems and process simplification, automation, strengthened digital services and capability, including open banking, and compliance and regulatory initiatives, to drive a consistent and reliable customer experience across all channels and deliver efficiencies as we target a medium-term cost to income ratio towards 50 per cent”.

“As we continue our growth trajectory, we will accelerate the level of investment in technology and digital initiatives to boost scale, further remove complexity and cost from our business and deliver the banking experience of the future,” she added.

“We will continue to take full advantage of the growth opportunities before us.”

Bendigo and Adelaide Bank shares were steady this morning at $10.57.

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