Bendigo Bank Posts $549M in Non-Cash Charges, Keeps Dividends Safe
Bendigo and Adelaide Bank reveals a substantial $539.5 million goodwill impairment and $9 million restructuring costs for FY25, while reassuring investors that cash earnings and capital remain intact.
- Goodwill impairment of $539.5 million after tax
- Restructuring costs of $9 million after tax linked to productivity program
- No impact on FY25 cash earnings
- CET1 capital ratio and dividend capacity unaffected
- Closure of ten corporate branches and over 100 job impacts
Significant Non-Cash Charges Mark FY25
Bendigo and Adelaide Bank Limited (ASX, BEN) has disclosed two notable non-cash items that will weigh on its statutory profit for the second half of 2025. The largest of these is a $539.5 million after-tax goodwill impairment charge, primarily driven by an increased discount rate amid heightened global economic uncertainty. This adjustment reflects the bank’s cautious stance on the value of its Consumer Cash Generating Unit (CGU) goodwill.
Alongside this, the bank has recorded $9 million after-tax in restructuring costs related to the initial phase of a broad productivity program. This phase has already seen the closure of ten corporate branches and impacted over 100 roles across various business functions.
Balancing Prudence with Stability
Importantly, Bendigo Bank has emphasised that these charges are non-cash and will not affect its FY25 cash earnings. The bank’s Common Equity Tier 1 (CET1) capital ratio remains stable, and there is no anticipated impact on its ability to pay dividends. This distinction is crucial for investors focused on the bank’s underlying operational health and capital strength.
The goodwill impairment follows the annual review process mandated by accounting standards, which requires testing for indicators of impairment. The increase in the discount rate used for this test signals the bank’s recognition of a more uncertain global economic environment, which could influence future earnings potential.
Restructuring Reflects Strategic Shift
The restructuring costs stem from a productivity initiative aimed at streamlining operations and improving efficiency. The closure of branches and reduction in workforce underline a strategic pivot towards a leaner cost base, likely in response to evolving customer behaviors and competitive pressures in the banking sector.
While these moves are expected to generate long-term benefits, the immediate financial impact is being recognised now, adding a layer of complexity to the bank’s FY25 results.
Looking Ahead
Investors will be watching closely for the full FY25 results release to understand the broader financial implications and to gauge management’s outlook amid ongoing global uncertainties. The bank’s ability to maintain capital strength and dividend payments despite these charges will be a key focus.
Bottom Line?
Bendigo Bank’s hefty goodwill write-down and restructuring costs set the stage for a cautious but resilient FY25 finish.
Questions in the middle?
- How will the increased discount rate affect future goodwill assessments?
- What further phases of the productivity program are planned beyond the initial restructuring?
- Could these non-cash charges signal deeper challenges in the Consumer CGU’s profitability?
