The bank has taken a grim outlook on the COVID-19 crisis and has provisioned for downside economic scenarios.
Bendigo and Adelaide Bank has provisioned $143.8 million for potential impacts from COVID-19, assuming a significant change to the base case economic outlook – including higher unemployment and a reduction in residential and commercial property prices – as well as a shifting in the weightings of scenarios used to calculate provisions towards downside economic scenarios.
“The bank has not assumed a sharp recovery in the adapted economic outlook, but rather a slower recovery with probabilities biased to the downside,” Bendigo said in a statement.
While substantially smaller than the multibillion-dollar provisions of its big four counterparts, the provision is still an increase of $127.7 million from previous provisions. Bendigo’s portfolio of deferred loans includes 16,267 consumer loans (mortgages and personal loans) worth $4.6 billion and 4,144 commercial loans worth $1.7 billion.
“We are very well placed, driven by our longstanding and prudent risk appetite settings, increased credit provisioning and a strong balance sheet and capital base, above APRA’s unquestionably strong benchmark target for standardised banks, and further bolstered by our recent capital raise,” said managing director Marnie Baker.
“COVID-19 has demonstrated the flexibility of our organisation to adapt at scale in how we do business in line with our vision to be Australia’s bank of choice.”
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