Bendigo and Adelaide Bank reported cash earnings of $112.7 million in the first quarter of FY27, representing an 18.5% increase on the 2H26 quarterly average. The result requires context, however, as the prior quarter included a $70 million provision charge for the bank’s risk rectification plan, which has now been reclassified as a notable item under the bank’s revised financial reporting framework. Stripping out the distortion from that one-off charge, underlying earnings momentum shows modest improvement driven by net interest income growth and cost management, though the statutory profit of $66 million reflects substantial non-cash write-downs in Homesafe properties across Sydney and Melbourne.
Customer deposit growth remains a bright spot, climbing to $74.3 billion and growing at 4.8% on an annualised quarterly basis. The composition shift tells an important story: term deposits surged 13.3% annualised, reflecting higher interest rate environments and customer preference for fixed returns, whilst lower-cost deposits contracted 4.0% annualised and now represent 54.1% of the deposit base. Up’s Grow & Flow product accelerated at 45.3% annualised, validating the bank’s digital offering, but this comes against a backdrop of customers deliberately moving money into higher-yielding term products. The net interest margin compressed 6 basis points to 1.94%, driven partly by this deposit mix shift combined with higher wholesale funding activity undertaken to prefund the RACQ balance sheet acquisition.
Loan growth remains concerning. Total lending balances contracted 3.1% annualised during the quarter, with residential lending falling 0.8% despite improved loan application and discharge momentum. The weakness is more pronounced in agribusiness, which contracted 7.9% annualised due to seasonal outflows, though the bank noted stronger loan applications in that segment. Business lending showed a mixed picture, with growth of 3.4% annualised when excluding portfolio funding, offset by a 12.5% annualised decline after accounting for the exit of a large portfolio funding client. This loan contraction, combined with NIM pressure, suggests headwinds in the core earnings driver for a deposit-funded bank.
Credit expenses of $6.8 million in the quarter reflect growth in business loan provisioning and ongoing cost-of-living pressures affecting customers. The bank flagged that provision coverage remains appropriate, signalling confidence in the underlying quality of the loan book. Operating expenses declined 5.8% on the prior quarter average, though this improvement is partly skewed by the absence of a large risk provision charge seen previously. On a business-as-usual basis, expenses were marginally higher due to annual salary increases and higher average workdays.
Bendigo’s shift to a cash earnings reporting framework for FY27, which treats material non-recurring costs as notable items alongside statutory profit, aligns the bank with peer disclosure practices. The bank appointed Christopher Dean as Chief Customer Officer to drive growth through branch networks, whilst Up released its investment loan product to expand the residential offering to refinancing customers. The bank retained its position as Australia’s Most Trusted Agribusiness Bank for the fourth consecutive year according to Roy Morgan research.
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Investors should watch for whether loan contraction reverses in coming quarters as monetary policy stabilises, and whether NIM stabilises as wholesale funding and deposit mix normalise. The next detailed results are expected on 13 November 2026. This announcement is price sensitive and has been flagged as material by the ASX.
View the full ASX announcement (PDF)
About Bendigo and Adelaide Bank Limited (ASX: BEN)
An Australian financial institution formed by the merger of Bendigo Bank and Adelaide Bank in 2007, headquartered in Bendigo. The bank provides retail banking, business banking, and financial services including personal loans, mortgages, investment products, insurance, and superannuation through more than 400 branches. It serves retail customers and small to medium-sized businesses across Australia.
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