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Bendigo and Adelaide Bank, supporting customers through COVID-19

Team Veye | 28 Oct 2020 ASX - BEN
Bendigo and Adelaide Bank, supporting customers through COVID-19

Bendigo and Adelaide Bank (ASX: BEN)

Update on 1Q21 trading result and COVID-19 support packages

Bendigo and Adelaide Bank (ASX: BEN) on 27 October 2020 provided an update on its 1Q21 trading result and COVID-19 support packages.

(Graphic Source – Company Reports)

The Bank’s total lending continues to be a strength with year to date growth at 11 percent and residential lending at 16.1 percent, both well above system. Net Interest Margin continues to be well managed, increasing one basis point on 2H20 to 2.30 percent in the first quarter of the financial year 2021.

As at 16 October, 6,797 customer accounts remain on deferral, down 69 per cent from the peak on 31 May and down 63 percent since 31 August. The value of the accounts where repayments have been deferred is ~$2.5bn, down from a peak of $6.9bn which occurred in June.

  • Residential and consumer support packages total 4,408 accounts, down 74 per cent since the peak in May.
  • Commercial support packages total 2,389 accounts, down 49 per cent since the peak in July.

Customers transitioning away from deferral arrangements will continue to occur through the remainder of October and November as repayment deferral periods expire.

In line with its purpose and customer commitment, Bendigo and Adelaide Bank supported customers and the over 25,000 personal and commercial accounts they have with it since March, to help them manage through the pandemic. It’s rewarding to see that this personalised support had enabled more than two-thirds of these customers to get back on their feet. The Bank is further encouraged by the Victorian Premier’s announcement to reopen Melbourne’s retail and hospitality industries from the next day.

(Chart source: TradingView)

The bank is also committed to ensuring tailored arrangements were agreed with those customers still on repayment deferral arrangements prior to their deferral period ending, and that measures were in place to allow for a smooth transition and fair outcomes were achieved for customers and shareholders. (Data Source – Company Reports)

 

Veye’s Take

In line with its strategy, Bendigo and Adelaide Bank is focused on driving sustainable growth through active cost management, and it continued to target income growth to exceed cost growth this financial year. The bank is adequately provisioned to manage through the pandemic. Significantly, the number and balances of COVID-19 support packages have significantly reduced, including in Victoria, as the Bank continued to work individually with customers on repayment deferral arrangements. The stock had been trying to recover but not yet fully successful. It has strong support near $6.2 area from where short term bounces are possible. The real strength in the share price can come only above $10.30. Veye maintains a "Hold" on “Bendigo and Adelaide Bank” at the current price of $6.82

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