Interim Review 2021

Message from the Managing Director

We are well progressed with our strategy to grow and transform to be Australia’s bank of choice. This strategy - supported by our purpose to feed into prosperity, not off it - and our strong financial position, saw us further grow customer numbers and market share in both lending and deposits, while simultaneously reducing costs and simplifying our business.

Cash earnings were up 1.9 percent on the prior corresponding period, with statutory net profit up 67.3 percent to $243.9 million. Total income was $849.0 million, up 3.3 percent, as we continued to deliver well above system lending growth, maintained our leading trust ratings, and further strengthened our balance sheet.

Pleasingly, in line with previous halves, the number of customers choosing to bank with us climbed again, increasing 4.3 percent to 1.96 million from 30 June. At the same time, we continued to deliver on our commitment to provide a positive customer experience as demonstrated through a net promoter score of 29, which remains much higher than the industry and the average of the major banks.

In line with our strategy to reduce complexity, invest in capability and tell our story, we grew in all our key priority markets, which combined with effective cost management, resulted in positive cash earnings across all divisions. Our actions to remove costs has also simplified our business for our customers, partners, shareholders and our people.

Our growth momentum was reflected through very strong customer deposit growth. Our deep connection with our customers and their communities, resulted in a significant $5 billion increase in customer deposits since June 2020. Additionally, total lending increased by 9.2 percent over the half against 0.1 system growth to $68.3 billion, with residential lending growing 14 percent or 3.6 times system. This was further strengthened by a 26.3 percent increase in applications on the prior half.

We also continued to support customers through COVID-19, while playing a critical role in providing credit to support the economy. The number of customers on COVID-19 repayment deferral arrangements significantly reduced from their peak in May 2020, including in Victoria, and our strong capital position ensures we are well positioned to continue to manage through the pandemic.

Our results demonstrate the strength of our strategy, business model and ability of our people who moved quickly and acted with care to support our customers and their communities. I would like to thank my team for their hard work in supporting our customers.

Following a strong performance and whilst balancing our commitment to support our shareholders during the ongoing market and economic uncertainty, the Board was pleased to announce an interim fully franked dividend of 23.5c per share as well as the full year 2020 final fully franked dividend of 4.5c per share. This follows the Board considering it prudent to defer its decision on the final full year dividend last year, given the challenging and uncertain environment at the time. We also announced a fully underwritten Dividend Reinvestment Plan with a 1.5 percent discount.

The dividend decision supports our strong capital position, our business outlook - including expectations of continued above system lending growth - and APRA’s recent industry guidance on capital management. I would like to extend my personal thanks to each and every shareholder for your enduring support as we continue to closely monitor and actively respond to the ongoing uncertain economic environment.

Pleasingly the depth of the economic contraction has not been as severe as initially expected. With business confidence and consumer sentiment up, an ongoing low-rate environment, a growing housing market, an improving jobs market, continued growth in regional Australia, and our customers showing remarkable resilience and adaptability, the current outlook is encouraging. However, we remain mindful of both the local and global impacts of the pandemic, international trade sentiment, decisions on government support measures and the ongoing reality of natural disasters and climate change.

We continue to target above system residential lending and further growth in the small business and agribusiness sectors, whilst reducing our cost base, and maintaining a strong and resilient balance sheet.

Our investment in new capabilities, partnerships, technology and skills, when combined with our deeply human-approach, high trust and positive net promoter scores, will allow us to become even more innovative and agile in responding to our customers’ ever-changing needs, and further grow market share.

Our advantage lies in the strength of our purpose, values, strategy, and customer commitment - which remains central to who we are - as we continue our journey to be Australia’s bank of choice.

Marnie Baker

MANAGING DIRECTOR

Repositioning for future growth

In the first half of FY21, we continued the modernisation and optimisation of the Bank’s physical distribution network with the opening of new community-focused experience stores in Coffs Harbour in July 2020, and in Bendigo in November 2020. We complemented this by growing our Mobile Relationship Manager (MRM) team by 16 percent to better support customers seeking a more convenient, in person banking experience. In total for the half, our MRMs wrote more than $1 billion in residential loans, a 61 percent increase on the prior corresponding period.

Our Consumer Products team also made huge progress in their product simplification plans in July with the launch of the new Bendigo Complete Home Loan - complete with optional 100 percent offset on all fixed and variable products - which provides exceptional value, simplicity and flexibility for customers.

Our transformation work will continue in line with our strategy to drive sustainable growth, manage costs and deliver a seamless multichannel experience for our customers.