Bendigo and Adelaide Bank in capital raising

Bendigo and Adelaide Bank has reported a 26 per cent profit decline to $173.2 million for the year ended June 30.

The group attributed the profit decline to a slowing economy, the global recession and “an unprecedented drop in official cash rates”, as well as increased funding costs.

The group also announced a $300 million equity raising, with the additional capital being used to strengthen the bank’s capital base and “to take advantage of growth opportunities as markets continue to improve”.

Drilling down on the various segments, the bank said significant opportunities existed in the third party mortgages, wealth management and margin lending businesses.

It said there was a genuine desire to support a fifth funding alternative in the third party mortgages sector, and with improving margins and a reshaped commission structure, the fundamentals of this business were rapidly improving.

It said margin lending offered the bank a low cost, high margin business with excellent credit performance, adding “there is significant capacity for growth as customer appetite for risk and gearing is restored”.

The group’s announcement said “an increased customer risk appetite will also benefit our wealth management business — and with other key industry drivers (compulsory superannuation and an ageing population), the prospects for growth remain sound”.