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Highlights

  • Q3 FY25 cash earnings fell 7.8% to $122.2 million, driven by a 13.6% drop in other income.

  • Statutory NPAT rose 1.3% to $109.8 million, with net interest margin remaining steady.

  • Residential mortgage growth slowed and Homesafe completions declined during the quarter.

Regional lender Bendigo and Adelaide Bank (ASX:BEN) has reported a decline in third-quarter cash earnings for FY25, reflecting weaker non-interest income and a slowdown in residential mortgage growth. The bank posted unaudited cash earnings of $122.2 million for the quarter, representing a 7.8% decrease from its average quarterly earnings during the first half of the financial year.

The decline was primarily attributed to a fall in "other income," which totalled $59.5 million—13.6% below the first-half quarterly average. This category includes fees, commissions, foreign exchange gains, and realised income from the bank’s Homesafe equity release product. Lower Homesafe completions and reduced account-keeping fees were cited as the key contributors to the drop.

Despite the decline in cash earnings, unaudited statutory net profit after tax (NPAT) rose 1.3% to $109.8 million when compared with the average of the prior two quarters. The bank's net interest margin (NIM) remained flat relative to the second quarter. According to Bendigo, margin pressures were balanced by the repricing of lending products, which helped offset the effect of a lower cash rate environment.

On the expense side, the bank maintained discipline, reporting total operating costs of $295.6 million—1.2% below the first-half quarterly average. The reduction was attributed to lower business-as-usual expenses, particularly reduced staffing costs, which partly offset slightly higher investment spending.

Bendigo Bank noted that residential mortgage growth softened in the final month of the quarter, bringing the annualised growth rate to 9.4%. Meanwhile, deposit growth remained steady, buoyed by rising savings balances despite a decline in transaction accounts. Business lending also grew, supported by strategic portfolio funding initiatives.

The third quarter also marked a key milestone in Bendigo’s long-running transformation program. The bank completed the migration of its Rural Bank system and officially retired the Rural Bank brand. As part of its broader simplification strategy, Bendigo is reducing its core banking systems from eight to two, aiming to streamline operations and cut long-term technology costs.

“Our strategic focus on simplifying the business and enhancing operational efficiency is beginning to yield results,” the bank stated. “While earnings were impacted by short-term headwinds, our underlying momentum in lending, deposits, and technology transformation remains strong.”