Bendigo and Adelaide Bank Delivers Steady Start to FY26 with Margin Growth and Digital Progress

About Bendigo and Adelaide Bank Ltd

Founded in 1858 and headquartered in Bendigo, Victoria, Bendigo and Adelaide Bank is one of Australia’s largest regionally-based banks, serving 2.4 million customers through its Bendigo Bank, Adelaide Bank, Rural Bank, and Community Bank brands. Known for its customer-owned partnership model and focus on regional communities, the bank has evolved into a diversified retail and business bank with total assets exceeding $100 billion.

The 1Q26 update marks the first report under newly appointed Managing Director and CEO Richard Fennell, who described the quarter as “solid but transitional,” emphasising strategic execution and digital modernisation as key priorities.

Financial Performance

The Group reported unaudited cash earnings of $120.7 million and statutory net profit after tax of $110 million for the quarter ended 30 September 2025. Total income rose 3.8 per cent to $505.8 million, supported by improved net interest income and higher transaction volumes in cards and merchant services.

Net interest income increased 3.4 per cent to $436.2 million, driven by a 3 basis-point lift in NIM to 1.91 per cent. The bank benefited from favourable deposit mix shifts as customers moved funds from term deposits to lower-cost savings and transaction accounts. Term deposits fell to 34.7 per cent of customer deposits, while low-cost deposits increased to 53 per cent, helping offset the impact of a lower cash-rate environment.

Other income rose 6.8 per cent to $69.6 million, supported by higher card transaction activity and seasonal Community Bank franchise fee payments. Operating expenses grew 7.6 per cent to $328.8 million due to seasonal costs, increased workdays, and a $3.7 million remediation provision. Excluding one-offs, expenses rose a modest 3 per cent, in line with the bank’s cost-discipline targets.

Credit quality remained strong with a net credit reversal of $0.3 million, reflecting a collective provision release in the Agribusiness portfolio, partly offset by higher specific provisions in Consumer and Business segments. Non-performing loans remained low at 1.2 per cent of total exposures.

Balance Sheet and Capital Position

Bendigo Bank’s balance sheet remains resilient with a CET1 capital ratio of 10.93 per cent, down 7 basis points from the prior quarter but comfortably above regulatory requirements. The Liquidity Coverage Ratio stood at 136.5 per cent and the Net Stable Funding Ratio at 117.7 per cent, indicating ample funding headroom. The customer-deposit funding ratio of 77 per cent demonstrates continued reliance on a sticky retail deposit base rather than wholesale markets.

Residential loan balances contracted 5.6 per cent annualised as the bank adopted a disciplined stance on pricing and risk in third-party mortgage channels. Management expects housing lending volumes to stabilise in 2H26 as the new Bendigo Lending Platform is rolled out across the branch network to enhance approval speed and borrower experience.

Agribusiness and Commercial lending remained steady, supported by ongoing regional infrastructure investment and favourable commodity pricing. Deposits grew 3.4 per cent annualised, underpinned by customer migration to savings products and solid Community Bank franchise flows.

Strategic Execution and Digital Transformation

During the quarter, Bendigo Bank achieved key milestones in its multi-year transformation agenda focused on simplifying operations and enhancing customer experience. The Bendigo Lending Platform, a modernised cloud-based system for loan origination and servicing, was successfully implemented across all states except Victoria and Tasmania (which will follow in November). Early feedback from staff and customers has been positive, with processing times reduced and improved transparency through digital workflow tracking.

The bank also launched a refreshed in-app onboarding process in late October, allowing new customers to open accounts in minutes. Initial reviews highlight its ease of use and enhanced security features. These initiatives are core to Bendigo’s goal of building a modern, scalable digital bank that preserves the community ethos of its franchise model.

Community Banking and Sustainability

Bendigo’s unique Community Bank model continues to deliver shared value, with local franchisees reinvesting a portion of profits back into their communities. Since inception in 1998, the program has returned over $320 million to local projects and initiatives across Australia. In 1Q26, Community Bank income benefited from seasonal fee accruals and higher transaction activity.

The bank also advanced its ESG and climate-finance agenda, expanding renewable energy lending and releasing its latest Sustainability Report highlighting progress towards net-zero emissions by 2050. A dedicated Climate and Community Finance team was established to support regional projects in sustainable agriculture and energy efficiency.

Outlook

Management expects earnings momentum to strengthen in the second half of FY26 as margin benefits from deposit repricing and digital efficiencies take effect. While competition in home lending remains intense, Bendigo’s focus on profitable growth and relationship banking should help preserve returns.

The bank remains cautiously optimistic about the macroeconomic environment. Slowing inflation and the Reserve Bank’s recent rate cut to 3.6 per cent are expected to support borrower affordability and credit demand into calendar 2026. Management also highlighted the bank’s strong capital buffers and funding base as key advantages in navigating a competitive sector undergoing digital disruption.

Conclusion

Bendigo and Adelaide Bank delivered a measured but resilient start to FY26, demonstrating stable profitability despite cost pressures and mortgage competition. Its focus on margin management, digital execution, and community-driven banking continues to differentiate it from larger peers. With a strong capital position, growing deposit base, and ongoing platform modernisation, the bank is well placed to re-accelerate lending and deliver sustainable shareholder value through FY26 and beyond.