Bendigo Builds On Success While Other Banks Claw Back Their Losses

The Age

Wednesday February 20, 2008

Vanessa Burrow

WHILE financial stocks are being kicked worldwide, Victoria's Bendigo Bank proved that, in some cases at least, banks can still manage to please investors.

The bank reported earlier this week, and added a few cents immediately after announcing net profit had risen 34% to $72.8 million in the six months to December 31.

But yesterday, in a less pessimistic environment, it added a further 48?, or 4.3%, to $11.54. Austock analyst John Buonaccorsi continued to rate Bendigo Bank a "strong buy", despite lowering his 12-month price target to $16 a share, from $17.

Deutsche Bank analyst Andrew Hill and colleagues noted the report contained "no nasty surprises" and placed a hold rating on the stock with a 12-month target price of $12.

However, they noted the weaker market conditions had affected the outlook for margin lending balance growth. Bendigo Bank's margin lending balances fell $400 million in recent months, a number that represented about 8% of the existing balance, and about 1% of the total lending book.

However, the banks as a whole retraced some of their steps yesterday, with Commonwealth Bank gaining $1.27 to $45.27 and National Australia Bank up 95? to $30.46. Westpac also gained 65? to $23.15 but ANZ added only 14? to $22.60.

Bell Financial announced it had agreed to acquire Tricom Group, providing a "capital infusion" while taking full control of the broker. Shares, which have been sparsely traded since the company's float late last year, rose 15?, or 9.7%, to $1.70.

But the big movers were Boom Logistics, which floated 23?, or 29.9% higher, to $1, while Perilya performed similarly, gaining 34?, or 23.5%, to $1.79.

Substantial gains were also notched by BHP Billiton and Rio Tinto. BHP rose 74? to $39.70 and Rio was up $2.50 to $136.50.

In contrast, Mount Gibson Iron fell 28?, or 8.7%, to $2.94.

Foster's Group lost 9? to $5.77 after announcing profit growth had slowed to 6% in the six months to December 31.

And building contractor Thomas & Coffey remained at $1 a share, despite announcing a 43.9% increase in first-half profit. Profit after tax rose to $3.1 million at the micro-capitalisation company, with market value of $79.3 million.

In currency markets, the Australian dollar rose to a high of US92.08? as the Reserve Bank sent out even more signals that it intends to raise interest rates. The Aussie dollar was last night buying up to Y99.20, 62.6 Euro cents and 47.17 British pence.

In Australia to promote the Walter Scott Global Equity Fund, which is marketed by Macquarie Adviser Services, investment manager Roy Leckie said "traditional" methods of investing were coming back into fashion because of volatility in the market. The fund has $1 billion under management, and uses a "buy and hold" investment approach, with an average portfolio turnover of about 15% to 25% per year.

"We are not optimistic about global equity returns at the market level, we are very optimistic about the companies that we are invested in," Mr Leckie said. "And we think this is a great opportunity, in a tougher macro and stock market environment . . . for us to deliver the returns that we've been targeting."

Macquarie's Peter Shepherd said the fund had proven popular among investors.

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