Bendigo & Adelaide Bank (BEN) - Right price

Bendigo & Adelaide Bank Limited provides banking and other financial services to retail customers and small to medium sized businesses in Australia.

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We raised our recommendation on the stock from Lighten to Hold on valuation grounds, following a big drop in the share price when it reported its first-half FY25 results. A weak first-half FY25 earnings reflected a higher operational and funding costs as the bank struggled to deal with a much-stronger than expected boost to lending volumes from its new lending platform.

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Steps have been taken to ameliorate those problems, however, with more rational pricing on home loans, and on the deposits to fund them, supporting the bank’s net interest margin (NIM) and lifting returns, while additional staff have been deployed to deal with the high volumes.

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