Bendigo Bank Clarifies Earnings Variance, Calms Market Concerns
Bendigo and Adelaide Bank clarifies a modest 5.8% variance in half-year cash earnings against market forecasts, confirming no material surprise and compliance with ASX disclosure rules.
- 5.8% difference between actual H1FY25 cash earnings and market consensus
- No earnings guidance published prior to results
- Cash earnings favored over statutory NPAT by analysts and management
- Bank confirms continuous monitoring of analyst forecasts and market expectations
- No material effect on share price attributed to earnings variance per bank's assessment
Context of the ASX Inquiry
Following the release of its half-year results for the period ending 31 December 2024, Bendigo and Adelaide Bank Limited (BEN) received an ASX Aware letter querying whether its earnings figures materially diverged from market expectations. This inquiry was prompted by a notable share price decline from $13.42 to a low of $10.87 immediately after the results announcement on 17 February 2025.
Earnings Performance and Market Expectations
Bendigo Bank responded by emphasizing that it had not issued any prior earnings guidance, leaving market expectations to be shaped primarily by sell-side analyst forecasts. BEN identified cash earnings, referred to as 'Cash Earnings after tax', as the key metric for evaluating its performance, rather than statutory net profit after tax (NPAT), which is less relevant to market participants.
BEN’s analysis showed a 5.8% variance between its actual cash earnings for H1FY25 and the consensus estimate derived from nine sell-side analyst forecasts. This consensus was calculated as a simple average without adjustments, amounting to $282 million for the half-year period. The bank also noted a minimal 1.1% difference compared to the prior corresponding period, underscoring earnings stability.
Materiality and Disclosure Considerations
Importantly, BEN’s board and executive leadership continuously monitored earnings expectations and concluded that the 5.8% variance did not exceed thresholds that would trigger mandatory disclosure under ASX Listing Rule 3.1. The ASX’s own guidance suggests a 15% variance as a benchmark for material surprises, well above the difference observed here.
Consequently, BEN confirmed it had no obligation to announce any variance prior to the results release and affirmed full compliance with continuous disclosure obligations. The bank also clarified that no prior announcements were made because the variance was not deemed material.
Market Reaction and Additional Factors
Despite BEN’s assessment, the market reacted negatively to the results announcement. The bank’s post-release engagement with investors and analysts revealed that concerns centered on margin performance relative to the previous half-year and the rate of cost growth, both disclosed in detail in the results presentation. These operational factors may have weighed more heavily on sentiment than the earnings variance itself.
Looking Ahead
Bendigo Bank remains confident in its full-year cash earnings outlook and continues to monitor analyst forecasts closely. The bank’s transparent communication and adherence to ASX rules provide a foundation for investor trust, even as market volatility underscores the challenges of interpreting earnings results amid broader operational concerns.
Bottom Line?
Bendigo Bank’s measured response underscores the fine line between earnings variance and market perception in a sensitive sector.
Questions in the middle?
- Will BEN’s margin and cost growth concerns persist into FY25 and impact future earnings?
- How will analysts adjust their forecasts in light of BEN’s detailed disclosures and market reaction?
- Could further operational updates trigger renewed market volatility despite stable earnings?
