Bendigo & Adelaide Bank (BDJ) Q4 2026 Earnings Report

The call balanced clear operational progress—modest earnings growth, margin and deposit-mix improvements, strong digital (Up) momentum, completed core consolidation and material strategic partnerships—against significant risk and cost headwinds: AML/CTF and non-financial risk remediation (with a $70m rectification provision and further AML investment planned), regulatory provisions that reduced CET1, elevated one‑off FY'27 notables ($100m–$123m pretax) that will dilute ROE, and expected margin/funding pressures and higher credit costs. Management is prioritizing risk uplift and productivity to protect sustainable growth, but near-term profitability and capital will be affected by remediation and integration costs.

Guidance highlights: for FY27 management expects business‑as‑usual (BAU) operating expenses to grow 4–5% (pre‑notables, excluding RACQ) — roughly 5–6% including RACQ’s $8–9m run‑rate — while total one‑off notables are guided at $100–123m pretax (partnership implementation $56–66m, RACQ migration $28–34m, staff‑equity methodology $16–23m), implying overall cost growth of roughly 9–11% on FY26; total investment spend is guided at $230–240m inclusive of notables (≈$120m expensed, ≈$60m capitalised, $50–60m of notables) with expensed investment pre‑notables expected flat YoY at ~$120m. If the RACQ transaction completes in Q2 FY27 it should add NII of $33–37m, incremental OpEx $8–9m, a 31bp CET1 impact and a 23–27bp ROE uplift (RACQ scale ≈$2.6bn loans / $2.3bn deposits); the Financial Crime uplift is budgeted $70–90m (with $8m spent in FY26) and a $70m initial non‑financial risk rectification provision was taken in FY26. Medium‑term BAU cost ambition remains no higher than inflation through the cycle (inflation assumed in the mid‑4% range), partnership benefits of $65–75m are expected to be realised in FY28, and management reiterates its 2030 ROE target of >10% (ROE >8% in FY26, ROTE >10%, H2 ROTE ~10.5%).