BENDIGO, Australia, August 24, 2026, 11:12 AEST — Bendigo Bank saw 9% of its cash earnings directed to addressing risk issues, even as the bank reported a return to profitability.
- Bendigo Bank reported a 3.0% increase in cash earnings to A$530.2 million for FY26.
- An after-tax risk provision of A$49 million accounted for 9.2% of cash earnings.
- The annual dividend of 63 cents suggests a 6.0% yield based on Friday’s closing price of A$10.49.
Bendigo and Adelaide Bank Limited ASX:BEN posted a return to statutory profit and increased its underlying earnings, while a new risk-control expense accounted for nearly one eleventh of cash earnings. Shares were indicated up 1.2% at 10:22 AEST on Monday following the results.
The regional bank posted cash earnings of A$530.2 million, a rise of 3.0%. Statutory net profit reached A$375.1 million, recovering from a A$97.1 million loss linked to goodwill impairment in the previous year. The board maintained the full-year dividend at 63 cents.
The underlying operating figure was firmer than the reported profit indicates. Total income climbed by 5.1%, with operating results up 6.7%. Second-half cash earnings advanced 6.8% as net interest margin, the gap between lending income and funding cost, hit 1.98%.
| FY26 scorecard | FY26 | Comparison |
|---|---|---|
| Total income | A$2,045.9m | up 5.1% from previous year |
| Operating performance | A$786.3m | rising 6.7% year-over-year |
| Cash earnings | A$530.2m | up 3.0% year-on-year |
| Statutory profit | A$375.1m | reversed from A$97.1m loss |
| Net interest margin | 1.95% | increased by 7 basis points |
The shift in funding played a significant role. Lower-cost deposits increased by 6.8%, making up 54.8% of customer deposits compared to 52.5% previously. CEO Richard Fennell said earnings were supported by “the continued growth in lower cost deposits driving higher margin.” Full-year statement
Lending activity gained strength towards the end of the year. Overall loan volumes increased by 3.5% in the second half. Residential loans resumed growth, and business plus agribusiness balances advanced 8.8% over the year.
| Balance sheet | June 2026 | FY change | Second-half change |
|---|---|---|---|
| Total lending | A$87.14bn | up 1.5% | up 3.5% |
| Residential lending | A$66.35bn | down 0.4% | up 1.9% |
| Customer deposits | A$74.13bn | up 2.2% | up 1.1% |
| Business and agribusiness loans | — | rose 8.8% | — |
The key question for investors is if stronger margins can offset remediation costs. Bendigo recorded an after-tax charge of A$49 million for its risk program. When compared to cash earnings of A$530.2 million, this equates to 9.2%. After-tax regulatory and legal expenses totaled A$58.8 million, representing 11.1%.
The Australian Prudential Regulation Authority set licence conditions following the identification of “longstanding and pervasive” deficiencies. A A$50 million operational-risk capital add-on will stay in place until the bank shows ongoing progress. APRA also noted the bank continues to be financially sound. APRA
| Risk and resilience | Measure | Investor reading |
|---|---|---|
| Risk rectification provision | A$49.0m after tax | 9.2% of FY26 cash earnings |
| Risk and legal matters | A$58.8m after tax | 11.1% of FY26 cash earnings |
| CET1 capital ratio | 11.34% | Decreased 3 bps in H2 |
| Liquidity coverage ratio | 140.2% | Rose 4.9 percentage points |
| APRA capital add-on | A$50m | Still applies while remediation ongoing |
The resulting trade-off offers limited scope for valuation gains. According to a poll of thirteen analysts by S&P Global, the consensus rating on the stock is Hold, with an average price target of A$10.63. This represents a 1.3% premium to Friday’s closing price of A$10.49. The range of targets among analysts remains broad.
| Analyst recommendations | Rating | Target | Date |
|---|---|---|---|
| Consensus, 13 analysts | Hold | A$10.63 average | August 2026 |
| Goldman Sachs | Buy | A$11.32 | August 1 |
| JPMorgan | Hold | A$10.50 | August 19 |
| Citi | Sell | A$10.00 | July 13 |
| Morgan Stanley | Sell | A$9.80 | June 4 |
The dividend delivers the strongest backing. The stable annual payout of 63 cents results in a yield of roughly 6.0% based on Friday’s closing price, excluding the benefit of Australian franking credits. However, the consensus analyst target implies only a little over 1% potential gain in share price.
Digital channels are beginning to reach greater scale. Up closed the year holding A$2.6 billion in loans, marking a 56% increase, and A$4.1 billion in deposits, up 45%. Approximately 80% of Bendigo’s home loans are now processed using its new lending platform.
Expenses continue to be a counterbalance. Total costs for the full year climbed 4.2%, even as there was a 2.1% decline in the second half. Bendigo anticipates incurring an additional A$56 million to A$66 million in restructuring costs tied to strategic partnerships in FY27, with expected yearly benefits commencing in FY28.
Risks: An economic slowdown may drive up mortgage arrears and credit costs, coinciding with maximum remediation expenditure. Residential 90-day arrears recently increased by five basis points to 0.87%. Inability to meet APRA requirements would maintain the capital add-on, potentially pushing back the bank’s target of achieving over 10% return on equity by 2030.
The upcoming key milestones include finalising the RACQ Bank book acquisition in the first half of FY27 and confirming ongoing growth in lower-cost deposits. These factors will determine if Monday’s margin gains will endure following the risk overhaul.
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