Bendigo Bank Reports 1.75% RWA Increase and Stable CET1 Ratio

Capital Buffers Hold Steady Despite Growing Risk-Weighted Assets

Bendigo and Adelaide Bank (ASX:BEN) nudged its Common Equity Tier 1 (CET1) ratio up by a single basis point to 11.38% in the March 2026 quarter, reflecting a mix of earnings, capital movements, and risk-weighted asset (RWA) growth. The bank’s CET1 capital rose by $82.5 million to $4.49 billion, supported by $125 million in net profit, partially offset by a $170 million interim dividend payout. Notably, the dividend reinvestment plan (DRP) contributed $119 million of fresh equity, underwritten to 70% participation, cushioning capital depletion from dividend payments. This subtle capital dance kept the CET1 buffer above regulatory minimums, with 6.88% available after meeting capital requirements.

The CET1 ratio’s modest improvement contrasts with a 1.75% increase in total RWAs to $39.43 billion, driven by a $476 million expansion in residential and commercial property lending portfolios. This loan book growth was partly offset by $405 million in RWA relief from data and logic enhancements, reflecting the bank’s ongoing efforts to refine risk models. However, the biggest single impact on RWAs was a $625 million operational risk capital overlay mandated by APRA from 1 January 2026, a regulatory response to the bank’s previous compliance issues, including a $50 million capital hit related to AML/CTF breaches documented late last year. This overlay alone added roughly 1.6 percentage points to the CET1 ratio’s denominator, constraining capital ratios despite earnings gains.

Liquidity Metrics Show Mixed Signals Amid Funding Shifts

Liquidity coverage improved slightly, with the Liquidity Coverage Ratio (LCR) rising to 135.7%, indicating the bank’s liquid assets comfortably exceed net cash outflows by an average $3.3 billion over 30 days. This uptick was largely due to a $528 million reduction in net cash outflows, driven by lower wholesale funding and non-operational deposits, even as high-quality liquid assets (HQLA) declined by $684 million. The bank’s stable funding position, however, showed some strain as the Net Stable Funding Ratio (NSFR) slipped to 117.6%, down from 119.1% in December 2025, reflecting increased required stable funding linked to loan book growth. Retail and small business deposits remain the backbone of funding, comprising 77% of available stable funding, underscoring the bank’s reliance on core customer deposits amid wholesale funding fluctuations.

Regulatory Compliance and Capital Strategy Under the Microscope

The disclosures adhere to APRA’s updated Prudential Standard APS 330, aligning Bendigo Bank with international Basel Committee standards for transparency. The bank’s Chief Financial Officer and Chief Risk Officer have attested to the accuracy and reliability of the data, which includes detailed breakdowns of credit risk, operational risk, and market risk RWAs. Credit risk remains the dominant component at $35.13 billion, with operational risk now elevated due to the APRA overlay. This regulatory development follows the bank’s recent commitments to strengthen its risk management frameworks, as highlighted in previous filings addressing AML/CTF compliance and capital adequacy challenges.

These capital and liquidity metrics come on the back of Bendigo Bank’s recent operational improvements, including partnerships aimed at driving efficiency and earnings growth, as noted in its April 2026 announcements. The interplay between evolving regulatory capital requirements and the bank’s growth ambitions will remain a key area for investors to watch, particularly as the bank balances dividend payments with capital retention strategies in a competitive lending environment.