Bank Predicts 12% Profit Increase

Sydney Morning Herald

Wednesday January 30, 2008

Danny John

THE newly expanded Bendigo Bank yesterday sought to dispel growing investor uncertainty about a fall-off in corporate profits by indicating it was on target to meet a predicted 12 per cent increase in earnings for the current financial year.

Fresh from its $4 billion merger with the fellow regional institution Adelaide Bank, Bendigo's senior directors told shareholders the group was weathering the financial storm that had engulfed stockmarkets.

Speaking at a meeting called to approve a change in the joint company's name to Bendigo and Adelaide Bank, the chairman, Robert Johanson, said that while the backdrop to the deal had changed significantly since it was first agreed last September, the benefits of bringing the two banks together still added up.

"These are turbulent times in the market," Mr Johanson admitted, as Bendigo became the first of the leading banks during the latest turmoil to confirm forecasts that double-digit earnings growth was still possible in the run-up to the banking industry's next profit reporting season.

Bendigo's managing director, Rob Hunt, who is overseeing the integration of the two banks' different businesses, was upbeat about the expanded group's prospects and indicated that he still saw some opportunities to grow despite the "testing times".

Sticking to its 12 per cent growth target should see the combined Bendigo and Adelaide operations turn in full-year cash earnings to the end of June of just under $250 million - up from $223 million if the two had been working together 12 months ago.

Bendigo will be among a crop of banks releasing their first half results from the middle of next month. Of equal importance to investors will be any sign of a fall-off in the amount of money being lent to the business sector and home-owners.

The huge increase in profits witnessed over the past five years had been expected to slow this year even before the uncertainties caused by the latest stockmarket slump.

But the more immediate concern among Bendigo's shareholders has been the fall in its share price, with yesterday's news not enough to prevent a further drop of 37c to $12.85.