Bendigo and Adelaide Bank (ASX:BEN) shares fell more than 4% to $12.18 after the regional lender’s first-quarter update underwhelmed the market.
For the three months to September 30 (1Q26), the bank reported unaudited cash earnings of $120.7 million, down 3.2% on the 2H25 quarterly average, and statutory NPAT of $110.0 million. Revenue lines improved—net interest income rose 3.4% on the prior half’s quarterly average as the net interest margin edged up to 1.91% (up 3 bps versus 4Q25), aided by a better deposit mix, term-deposit repricing and a more favourable asset mix. O
ther income increased 6.8% on higher card transaction volumes and seasonal Community Bank franchise fees. Management noted the exit margin was slightly below the quarter’s average.
Costs drag
Costs, however, were the drag. Operating expenses climbed 7.6% on seasonal factors and several one-offs—or 3.0% after adjusting for these items. The lift reflected higher staff costs (including more working days, leave balance movements and redundancies) and an unplanned $3.7 million remediation provision.
Credit expenses were a modest $0.3 million net release, helped by a collective provision reduction in Agribusiness, partly offset by higher specific provisions in Consumer and Business.
Funding and liquidity remained solid
Lower-cost deposits grew at a 3.4% annualised pace and now represent 53.0% of customer deposits, while term deposits eased to 34.7%. The customer-deposit funding ratio stood at 77%, the average LCR at 136.5%, and the spot NSFR at 117.7%. The CET1 ratio was 10.93%, down 7 bps on the prior quarter. On the asset side, residential loan balances contracted at a 5.6% annualised rate as the bank took a cautious stance amid competitive pressures in third-party channels.
Management said the balance sheet is positioned for a return to growth in the second half. Strategic execution continued, with the Bendigo Lending Platform rolled out across branches nationwide except Victoria and Tasmania (scheduled for November), and a refreshed in-app onboarding experience going live at the end of October, enabling onboarding of new customers within minutes.