Bendigo & Adelaide Slashes Profit Forecast

Submitted by Jim Thesiger on 5 August, 2009 - 06:37

A downgrading of cash profit forecast was reported by Bendigo and Adelaide Bank (BEN) for the annual result of Monday following an increased provision for problem loans. Bendigo has blamed particular provisions for four problem commercial loans, which is worth $21.5 million, and also $20.2 million for loans related to the collapsed Great Southern Group, for the devaluation. However, the general provision was pushed up by the Bank based on the forecast of further economic downfall for the present half. The Bendigo and Adelaide Bank shares have suffered the impact in the stock exchange due to the recent profit downgrading. The bank’s shares closed down more than 2 percent or 22 cents down at $8.35 against a rising all ordinaries index.

It is to be mentioned that Overall provisions rose to $198.1 million from $157 million at December 31. Bendigo bank revised annual cash income of between 70-75c a share to 63c a share. Mike Hirst, the managing director of Bendigo and Adelaide Bank managing director mentioned that the exposure to Great Southern Group's collapse, which is currently worth $556 million across 8200 individual borrowers, was less than 1.5 percent of the bank's asset base. He also added that underlying strength of the borrowers indicates that the bank doesn’t have a considerable credit issue.
Great Southern was at 2.7 percent, up from 1.1 percent of the value of its loans a year ago.

According to the Bendigo bank authority, the recent development represents about eight cents per share, with forecast cash earning per share for the 2009 full year now approximately 63 cents. Housing loan portfolio of the bank had improved due to the present low interest rate environment. In addition to a domestic taskforce and corporate advisors who are helping the bank to deal with the ongoing crisis, a new executive is expected to start on Monday to report to the managing director of Bendigo regarding the Great Southern loan portfolio of the bank.