Key Highlights

• Bendigo and Adelaide Bank reported cash Earnings of $530.2 million for the year to 30 June 2026, up 3.0 per cent, with second-half cash earnings 6.8 per cent higher than the first half.

• Statutory net profit after tax was $375.1 million.

• In FY26, lower-cost deposits rose 6.8 per cent and made up 54.8 per cent of customer deposits, compared with 52.5 per cent a year earlier.

• Customer deposits grew 2.2 per cent over the year to about $74.1 billion,.

How is Bendigo and Adelaide Bank (ASX:BEN) balancing a return to earnings growth with a regulator-driven repair of its risk framework? In short, the regional lender is improving its funding mix and margins while committing to a multi-year programme to fix non-financial risk controls, a task that carries real cost and some regulatory constraints.

The central development: growth alongside remediation

Bendigo and Adelaide Bank reported cash earnings of $530.2 million for the year to 30 June 2026, up 3.0 per cent, with second-half cash earnings 6.8 per cent higher than the first half. Statutory net profit after tax was $375.1 million.

Two stories are running in parallel: the commercial engine is gathering pace, while the bank has acknowledged that its non-financial risk capabilities need substantial improvement.

What the bank does and how it earns

Bendigo and Adelaide Bank is a mid-sized Australian bank serving retail, Business and agribusiness customers. It operates through its own branded network, community-linked branches, Mortgage channels and the digital bank Up. Most Revenue is net interest income, the difference between what it earns on loans and pays on funding.

Funding quality is therefore central. In FY26, lower-cost deposits rose 6.8 per cent and made up 54.8 per cent of customer deposits, compared with 52.5 per cent a year earlier. Customer deposits grew 2.2 per cent over the year to about $74.1 billion,.

Results in detail

Net interest Margin for the second half was 1.98 per cent, up 6 basis points on the first half, with management crediting funding management.

Total lending rose 1.5 per cent over the year and 3.5 per cent over the second half. Business lending grew 12.5 per cent for the year, while residential lending was slightly lower, partly because the bank exited a legacy mortgage partner channel. Digital residential channels grew 13.0 per cent. Up's lending rose 56.3 per cent to $2.6 billion and its deposits rose 44.8 per cent to $4.1 billion.

Operating expenses rose 4.2 per cent for the year, driven by software amortisation, technology and Investment in risk and digital capability, but fell 2.1 per cent in the second half. Credit expenses were modest at $13.3 million, and impaired assets fell 11.1 per cent to $115.1 million. Residential arrears of 90 days or more edged up 5 basis points to 0.87 per cent, while business arrears fell 54 basis points to 1.32 per cent. The Common Equity Tier 1 ratio was 11.34 per cent in the preliminary release. The final Dividend was 33 cents per share, fully franked.

The regulatory backdrop

The risk work is the most important qualifier on the result. The Australian Prudential Regulation Authority (APRA) reviewed the bank's non-financial risk management and imposed licence conditions. A Capital charge of $50 million has applied since 1 January 2026. The bank has committed to a rectification plan expected to need an initial provision of $70 million, and the programme will run over several years.

A Financial Crime Transformation Program on anti-money laundering began in December 2025. The FY26 statutory result absorbed $49.0 million after tax for the rectification plan and $9.8 million for legal penalties.

For investors, the uncertainty lies in the duration and final cost of this work and in whether further regulatory measures follow.

Latest trading update

On 19 October 2026 the bank released an unaudited first-quarter FY27 update for the quarter ended 30 September 2026. Cash earnings were $112.7 million, up 18.5 per cent on the second-half FY26 quarterly average, and statutory profit was $66.0 million. Net interest margin was 1.94 per cent, down 6 basis points on the fourth quarter, which Mr Fennell attributed mostly to temporarily higher liquid assets.

Customer deposits were $74.3 billion, up 4.8 per cent annualised, but lending balances fell 3.1 per cent annualised. Operating expenses were down 5.8 per cent, largely because notable items were lower. From FY27 the bank is also changing its reporting to present cash results including notable items, which it says aligns it with peers and improves transparency. FY26 proforma tables were restated, so comparisons need care.

Sector conditions and competitive position

Bendigo competes with the major banks on scale and pricing, and with regional banks and digital lenders on service. It lacks the funding cost and technology scale of larger rivals.

Management expects more modest economic growth this financial year, citing inflation, weaker consumer sentiment, three Reserve Bank of Australia rate rises, softer property prices and geopolitical risks. Its medium-term target is a Return on Equity above 10 per cent by 2030.

Strategy and upcoming developments

Several items could shape the next phase. The Acquisition of the RACQ Bank Loan and deposit book, adding about 90,000 customers, is on track for completion in the first half of FY27. A productivity programme incurred $29 million of restructuring costs in FY26, with a further $56 million to $66 million expected in FY27 and run-rate benefits of $65 million to $75 million targeted from FY28. These are management targets, not guarantees.

Additional disclosure is due on 13 November 2026, when the bank will publish further credit tables and Basel disclosures.

Risks and what to watch

Key risks include the cost and pace of the risk remediation, possible further regulatory action, margin pressure from competition and funding costs, and slower housing and business conditions. Falling lending balances in the latest quarter suggest growth is not yet assured, and the RACQ integration adds execution risk.

Points to monitor include the progress of the rectification plan, the trajectory of lower-cost deposits, margin trends once Liquidity normalises, and whether lending momentum returns.