The margin lending portfolio that Bendigo and Adelaide Bank’s (Bendigo) Leveraged Equities unit acquired from Macquarie Group has fallen by about $200 million, Bendigo retail bank chief executive Mike Hirst said.
“That margin lending book has fallen about $200 million since we purchased it,” Hirst said yesterday.
“However that … level of margin lending is really in direct correlation with what the market’s done and there was a significant fall in the market in March as you know and it has just fallen in line with market.
“The number of customers is still the same so we’re still very comfortable with that position.”
In January, Leveraged Equities agreed to acquire the $1.5 billion loan portfolio for a premium of $52 million from Macquarie Group.
Bendigo yesterday revised its guidance for the financial year ended 30 June 2009.
The regional lender now expects to earn between $205 and $218 million or 70 and 75 cents a share, the bank said in a March quarter trading update.
That is 15 per cent below market expectations, according to Morningstar analysts.
Three key things have impacted Bendigo since the group announced its half-year results, Hirst said.
“The first is a change in the amount of margin lending that we expected to write between December and July and the fall in margin lending volumes results in about a 2.5 cent decrease to EPS [earnings per share],” he said.
“The second thing is around liquidity, where we expected to have run that down in the first quarter. It is still is sitting around the 14 per cent level, so that has impacted upon the forecast that we had.
“The third is around the funding cost. There was a $14 million double count of revenue in December that we unearthed last week and that has obviously had an impact of about 3.5 cents.”
