Bendigo Bank has taken a leap of faith on Australia’s economic recovery from the pandemic.
The post The Bendigo Bank (ASX:BEN) share price is gaining. Here’s why appeared first on The Motley Fool Australia. –
Bendigo Bank stated its profits for the 6 months ended 30 June 2021 will include a net release of its collective provision.
Right now, the Bendigo Bank share price is trading at $10.51, 0.57% higher than yesterday’s close.
Let’s take a look at the latest news from Bendigo Bank.
Bendigo Bank releases provisions
The Bendigo Bank share price is gaining following news of an additional $19.4 million worth of half-year profits – sort of. The extra funds will come from its collective provisioning.
The bank also revealed its credit expenses for the 2021 financial year are $18 million. Prior to the release of the collective provision, they were $37.4 million.
For comparison, the bank’s credit expenses for the 2020 financial year were $40.9 million before it recognised the impacts of COVID-19.
A bank’s collective provisions are funds it keeps aside in case of poorly performing loans. The collective provisions are meant to cover the bank’s losses if unspecified loans turn bad unexpectedly.
Bendigo Bank set aside an extra $127.7 million when COVID-19 began to hit Australia in the pocket in May 2020. The bank also upped its other provisions to put away $148.3 million more in case the economy struggled to bounce back.
According to Bendigo Bank, the release of some of its collective provisions “reflects the improved economic outlook for the Australian economy”.
The bank said improved GDP, lower unemployment, and higher housing prices have partially offset the risks associated with Australia’s current lockdowns.
Finally, the next news that could impact the Bendigo Bank share price is only a matter of weeks away.
Bendigo Bank will release its full-year results for the 2021 financial year on 16 August.
Commentary from management
Bendigo and Adelaide Bank managing director Marnie Baker commented on today’s news, saying:
We remain fully committed to supporting our customers and their communities through this unique time in history… Our business continues to be well placed even with the unpredictable nature of this pandemic, through a proven strategy, purpose and values, alongside appropriate risk management, and a strong balance sheet and capital base which are all key to our long-term success and sustainability.
Bendigo Bank share price snapshot
The Bendigo Bank share price has been performing well lately.
It has gained around 11% since the start of 2021. It is also 58% higher than it was this time last year.
The bank has a market capitalisation of around $5.7 billion, with approximately 546 million shares outstanding.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.