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Bendigo shares soar as FY profit rises 4pct

Simone Ziaziaris  |  14 Aug 2017Text size  Decrease  Increase  |  

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SYDNEY - [AAP] Bendigo and Adelaide Bank (ASX: BEN) shares have soared after the regional lender said strong second-half margin expansion helped lift full-year cash profit 4.2 per cent to $418.3 million.

Shares in the bank were up almost 7 per cent shortly after midday on Monday after Bendigo said net interest margin for six months to June 30 was 0.08 percentage points higher than in the first half.

Net interest margin--a key metric of a lender's financial health--finished the financial year at a healthy 2.34 per cent, while full-year statutory net profit was up 3.4 per cent to $429.6 million.

The bank benefited from mortgage rate increases designed to shift borrowers from interest-only loans to principle and interest, and to slow the growth of investor lending.

Managing director Mike Hirst said the result was strong despite constraints posed by the Australian Prudential Regulatory Authority's intervention to address risks related to the property market.

"The APRA caps have had an impact, there is no doubt about that," Mr Hirst said.

APRA in March told major lenders to limit growth in higher risk interest-only loans to 30 per cent of new mortgages.

While Bendigo lifted total new loan approvals 17.7 per cent to $20.1 billion, non-residential approvals contracted 4.1 per cent.

Full-year net interest margin--the difference between interest earned on loans and the amount paid to fund them--fell by one basis point to 2.22 per cent.

The lender's shares were 76 cents, or 6.75 per cent, higher at $12.02, at 1226 AEST.

BENDIGO'S FY PROFIT:

* Cash profit up 4.2pct to $418.3m

* Net profit up 3.4pct to $429.6m

* Final dividend unchanged at 34 cents, fully franked

 

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