Full Year 2026 Bendigo & Adelaide Bank Ltd Earnings Call

August 24, 2026

Speaker #1: Morning, everyone. Thanks for joining us for Bendigo Bank's 2026 full-year results briefing. Let me begin today by acknowledging the traditional owners of the lands on which we meet today, the Gadigal people of the Eora Nation, and I pay my respects to their elders, past, present, and emerging.

[Company Representative] (Bendigo Bank): Good morning, everyone. Thanks for joining us for Bendigo Bank's 2026 full year results briefing. Let me begin today by acknowledging the traditional owners of the lands in which we meet today, the Gadigal people of the Eora Nation, and I pay my respects to their elders past, present and emerging. I also extend my respects to the Aboriginal and Torres Strait Islander people who are present on the call today. Following our recent results announcement on 18 August, we have slightly adjusted our approach to the result presentation today. Richard will start with a high-level overview of the key performance highlights. He will run through the strategic deliverables and an update on the AML/CTF program. Andrew will then step through the audited financial performance and provide an overview of our credit position within the current macro environment. We will then move on to Q&A.

Speaker #1: I also extend my respects to the Aboriginal and Torres Strait Islander people who are present on the call today. Following our recent results announcement on the 18th of August, we have a slightly adjusted our approach to the result presentation today.

Speaker #1: Richard will start with a high-level overview of the key performance highlights, he'll run through the strategic deliverables, and an update on the AML/CTF program.

Speaker #1: Andrew will step through the audited financial performance, and provide an overview of our credit position within the current macro environment. We'll then move on to Q&A.

Speaker #1: I'll now hand over to Richard.

[Company Representative] (Bendigo Bank): I will now hand over to Richard.

Speaker #2: Thanks, Sam. And good morning, everyone, and thanks for taking the time to join us today. We recognize our market release on the 18th of August provided a number of updates, including unordered statutory profit and financial metrics.

Richard Fennell: Thanks, Sam, and good morning, everyone, and thanks for taking the time to join us today. We recognize our market release on 18 August provided a number of updates, including unaudited statutory profit and financial metrics. Today I would like to provide some more detail in relation to our strategic progress and risk programs. Our full year result demonstrates our ongoing disciplined approach to driving targeted business growth and delivery against our strategic agenda. Cash earnings have again improved this half, benefiting from continued growth in lower cost deposits, supporting margin expansion. Our H2 expenses were down, reflecting the benefits from phase 1 of our productivity program and fewer days in the H2. We have regained lending momentum following a return to growth in our residential lending book in H2.

Speaker #2: So today I'd like to provide some more detail in relation to our strategic progress and risk programs. Our full-year result demonstrates our ongoing disciplined approach to driving targeted business growth and delivery against our strategic agenda.

Speaker #2: Cash earnings have again improved this half, benefiting from continued growth in lower-cost deposits, supporting margin expansion. Our second half expenses were down, reflecting the benefits from Phase 1 of our productivity program, and fewer days in the second half.

Speaker #2: We have regained lending momentum, following a return to growth in our residential lending book in half two. Our key differentiators including our quality products and a Bendigo brand net promoter score that is 21 points above the industry average continues to attract customers.

Richard Fennell: Our key differentiators, including our quality products and the Bendigo brand net promoter score that is 21 points above the industry average, continues to attract customers. We are on track to exceed 3 million customers, with Up's customer numbers growing 11.5% over the year. Up's profitability continued to improve into the H2, with deposit balances growing 45% over the year to more than AUD 4 billion, while momentum in Up Home loans continues with growth of 56% over the year, now reaching AUD 2.6 billion just over three years since launch. Our acquisition of RACQ Bank's loan and deposit book is progressing at pace, with a significant amount of pre-migration work completed. As outlined on 18 August, the uplift of our risk capabilities is our number 1 priority. I will provide more detail on this later in the presentation.

Speaker #2: We're on track to exceed 3 million customers, with UPS customer numbers growing 11.5% over the year. UPS profitability continued to improve into the second half, with deposit balances growing 45% over the year to more than $4 billion.

Speaker #2: While momentum in UPS home loans continues, with growth of 56% over the year, now reaching $2.6 billion just over 3 years since launch. Our acquisition of RACQ Bank's loan and deposit book is progressing at pace, with a significant amount of pre-migration work completed.

Speaker #2: And as outlined on the 18th, the uplift of our risk capabilities is our number one priority. I'll provide more detail on this later in the presentation.

Speaker #2: I want to share some more detail with you now in relation to the financial performance for the 2026 financial year. Cash earnings for the year of $530 million were 3% higher than the prior year, driven by income growth of 5.1% while expense growth was 4.2%.

Richard Fennell: I want to share some more detail with you now in relation to financial performance for the 2026 financial year. Cash earnings for the year of AUD 530 million were 3% higher than the prior year, driven by income growth of 5.1%, while expense growth was 4.2%. Income growth benefited from a 7 basis point increase in net interest margin, higher fee revenue, and Homesafe realized income. The improvement in margin over the year was largely driven by our continued focus on delivering a more favorable mix of lower cost deposits and a measured approach to term deposit pricing. Operating expenses for the year increased by 4.2%, reflecting the expected increases in software amortization and technology costs, and the ongoing investment in risk and digital capabilities. Our focus on productivity and cost management helped to offset a proportion of these costs.

Speaker #2: Income growth benefited from a 7 basis point increase in net interest margin, higher fee revenue, and HomeSafe realized income. The improvement in margin over the year was largely driven by our continued focus on delivering a more favorable mix of lower-cost deposits and a measured approach to term deposit pricing.

Speaker #2: Operating expenses for the year increased by 4.2%, reflecting the expected increases in software amortization and technology costs. And the ongoing investment in risk and digital capabilities.

Speaker #2: Our focus on productivity and cost management helped to offset a proportion of these costs. And second half 2.1%, benefiting from a lower average FTE number and as a result of our productivity programs, and lower remediation expenses and fewer workdays.

Richard Fennell: Second half costs were down 2.1%, benefiting from a lower average FTE number, and as a result of our productivity programs and lower remediation expenses and fewer workdays. Credit costs increased for the full year, reflecting our cautious outlook from the updated macroeconomic forecast. That said, the overall credit portfolio remains resilient, and we are focused on helping customers that face difficult choices due to cost of living and other pressures. Pleasingly, our ROE is now back above 8% and our return on tangible equity is above 10%, with H2 ROTE near 10.5%. Our three areas of focus that will support our 2030 ROE target are all progressing well. Our efforts in these areas will be further enabled by our risk uplift programs, which will strengthen our risk management frameworks and systems to support sustainable growth. Let me step you through the progress we've made this half.

Speaker #2: Credit costs increased for the full year, reflecting our cautious outlook from the updated macroeconomic forecast. That said, the overall credit portfolio remains resilient, and we are focused on helping customers that face difficult choices due to cost of living and other pressures.

Speaker #2: Pleasingly, our ROE is now back above 8%, and our return on tangible equity is above 10%, with half two ROTE near 10.5%. Our three areas of focus that will support our 2030 ROE target are all progressing well.

Speaker #2: Our efforts in these areas will be further enabled by our risk uplift programs which will strengthen our risk management frameworks and systems to support sustainable growth.

Speaker #2: Let me step you through the progress we've made this half. Our deposit-first approach to managing our balance sheet has been supported by digital deposit sales growth of 34% over the year, following the introduction of new digital onboarding capability in the Bendigo app, along with continued growth in our UP customer base.

Richard Fennell: Our deposit first approach to managing our balance sheet has been supported by digital deposit sales growth of 34% over the year, following the introduction of new digital onboarding capability in the Bendigo Bank app, along with continued growth in our Up customer base. The enhanced functionality in the Bendigo Bank app has materially improved the experience for new to bank and existing customers. EasySaver deposits continue to grow, up 10.7% over the year. The introduction of Grow and Flow to upsiders has helped grow Up's deposit balances by 45% over the year to reach AUD 4.1 billion. Leveraging what we've learned, we will improve the functionality and experience for business and agri customers over the next 18 months, with a sequence of improvements and uplift in the digital capability for B&A.

Speaker #2: The enhanced functionality in the Bendigo app has materially improved the experience for new to bank and existing customers. Easy saver deposits continue to grow.

Speaker #2: Up 10.7% over the year. And the introduction of Grow and Flow to Upsiders has helped grow UPS deposit balances by 45% over the year, to reach 4.1 billion.

Speaker #2: Leveraging what we've learned, we will improve the functionality and experience for business and agri customers over the next 18 months, with a sequence of improvements and uplift in the digital capability for B&A.

Speaker #2: This functionality we're building will make it easier for our customers to join the bank and further support growth in lower-cost deposits. Turning to productivity.

Richard Fennell: This functionality we're building will make it easier for our customers to join the bank and further support growth in lower cost deposits. Turning to productivity, our FTE numbers have reduced by 3.4% over the year, driven by the first phase of our productivity program. In April, at the quarterly trading update, we announced two significant strategic partnerships as part of the second phase of this program. In July this year, we commenced a 7-year technology service partnership with Mphasis, which will significantly improve IT service delivery and provide access to enhanced capabilities, software engineering, and AI talent to deliver innovation capacity. We've also established our 6-year business operations partnership with Genpact, which will bring deep expertise in process optimization and delivery to drive greater productivity and support stronger process disciplines across the bank. Sustainable growth.

Speaker #2: Our FTE numbers have reduced by 3.4% over the year, driven by the first phase of our productivity program. In April, at the quarterly trading update, we announced two significant strategic partnerships as part of the second phase of this program.

Speaker #2: And in July this year, we commenced a 7-year technology service partnership with Infosys, which will significantly improve IT service delivery and provide access to enhanced capabilities software engineering and AI talent to deliver innovation capacity.

Speaker #2: We've also established our 6-year business operations partnership with Genpact, which will bring deep expertise in process optimization, and delivery, to drive greater productivity and support stronger process disciplines across the bank.

Speaker #2: Growth. We've seen some positive impact from recent targeted pricing through Ben Express and our Qantas partnership to support digital channel growth momentum, in residential lending, which was up 1.9% in the second half.

Richard Fennell: We've seen some positive impact from recent targeted pricing through BEN Express and our Qantas partnership to support digital channel growth momentum in residential lending, which was up 1.9% in H2. The Bendigo Lending Platform now accounts for 80% of home loan flow for the Bendigo brand, reducing time to decision for our customers and improving our productivity. The momentum behind Up Home continues, up 56% to AUD 2.6 billion, and coming soon to upsiders in this half, the Up Home investment loan. We've been clear about our objectives for Business and Agribusiness to be at growth by FY26 and above system in FY27. We achieved our growth targets this year with agribusiness lending up 3.8% and business lending, excluding portfolio funding, up 8%. Since Adam Rowse has joined the bank in 2022, we've selectively grown our agribusiness book by more than 15%.

Speaker #2: The Bendigo lending platform now accounts for 80% of home loan flow for the Bendigo brand, reducing time to decision for our customers and improving our productivity.

Speaker #2: The momentum behind UP Home continues, up 56% to 2.6 billion, and coming soon to Upsiders in this half, the UP Home investment loan. We've been clear about our objectives for business and agribusiness, to be at growth by FY26 and above system in FY27.

Speaker #2: We achieved our growth targets this year with agribusiness lending up 3.8% and business lending excluding portfolio funding up 8%. Since Adam Rouse has joined the bank in 2022, we've selectively grown our agribusiness book by more than 15%.

Speaker #2: And in business, we continue to build in business direct and the commercial broker channel. In FY27, we'll be launching a new equipment finance platform to support both our agri and SME customers.

Richard Fennell: In business, we continue to build in business direct and the commercial broker channel. In FY27, we'll be launching a new equipment finance platform to support both our agri and SME customers. I want to share how the two programs of work depicted here will serve as the foundation to strengthen our risk management frameworks and systems to support sustainable growth as we deliver on our 2030 strategy. In December 2025, the Financial Crime Transformation Program commenced with a focus on enhancing our enterprise-wide AML/CTF risk management. This program will deliver a material uplift in our ability to detect, deter, and disrupt financial crime, and we continue to add capacity and capability to our financial crime operations team to support this work. We expect to invest AUD 70 to AUD 90 million, of which AUD 8 million was spent in FY26. These expenses will be contained within our existing investment slate.

Speaker #2: I want to share how the two programs have worked depicted here will serve as the foundation to strengthen our risk management frameworks and systems to support sustainable growth as we deliver on our 2030 strategy.

Speaker #2: In December 2025, the financial crime transformation program commenced, with a focus on enhancing our enterprise-wide AML CTF risk management. This program will deliver a material uplift in our ability to detect, deter, and disrupt financial crime, and we continue to add capacity and capability to our financial crime operations team to support this work.

Speaker #2: We expect to invest $70 to $90 million of which $8 million was spent in FY26. These expenses will be contained within our existing investment slate.

Speaker #2: Last week, we announced a rectification plan to address deficiencies in our management of non-financial risk. This multi-year program of work is expected to require an initial estimated provision of $70 million which has been included in the 2026 financial year results.

Richard Fennell: Last week, we announced a rectification plan to address deficiencies in our management of non-financial risk. This multi-year program of work is expected to require an initial estimated provision of AUD 70 million, which has been included in the 2026 financial year results. The plan will drive a fundamental shift in our risk maturity. Our approach to embed non-financial risk management into all aspects of the organization will ensure we can continue delivering for our shareholders, our customers, our people, and our communities. This is the number 1 priority for the board and executive team and will be led by me. Andrew will run through the costs and associated treatment of these expenses in more detail shortly. Now for some more detail on our financial crime transformation program. We launched this program to significantly strengthen our controls against financial crime and enhance our AML/CTF framework.

Speaker #2: The plan will drive a fundamental shift in our risk maturity. Our approach to embed non-financial risk management into all aspects of the organization will ensure we can continue delivering for our shareholders our customers our people and our communities.

Speaker #2: This is the number one priority for the board and executive team, and will be led by me. Andrew will run through the costs and associated treatment of these expenses in more detail shortly.

Speaker #2: Now for some more detail on our financial crime transformation program. We launched this program to significantly strengthen our controls against financial crime and enhance our AML CTF framework.

Speaker #2: Since the announcement late last calendar year, we've acted with pace and purpose. We appointed a new AML CTF chief compliance officer in January, bringing in significant experience to drive this change.

Richard Fennell: Since the announcement late last calendar year, we've acted with pace and purpose. We appointed a new AML/CTF Chief Compliance Officer in January, bringing in significant experience to drive this change. This program is well established across 5 dedicated work streams, and we're already seeing tangible results. We've upgraded our monitoring systems, improved controls, and are, excuse me, and are leveraging our new partnership with Genpact to draw on their global expertise and capacity. Looking ahead, our focus remains on building a best-in-class financial crime function to help protect our customers and the broader community. Finally, I'd like to recap our progress on the first year of our 2030 strategy and the strategic deliverables we've achieved. We first spoke to the market about our new strategy this time last year, outlining the 5 strategic pillars and our 3 enablers that will help deliver on building scale through innovation.

Speaker #2: This program is well established across five dedicated workstreams and we're already seeing tangible results. We've upgraded our monitoring systems improved controls and are excuse me and are leveraging our new partnership with Genpact to draw on their global expertise and capacity.

Speaker #2: Looking ahead, our focus remains on building a best-in-class financial crime function to help protect our customers and the broader community. And finally, I'd like to recap our progress on the first year of our 2030 strategy and the strategic deliverables we've achieved.

Speaker #2: We first spoke to the market about our new strategy this time last year, outlining the five strategic pillars and our three enablers that will help deliver on building scale through innovation.

Speaker #2: We recognize as a bank with two to three percent market share innovation partnerships and capability will create the opportunities we need to grow efficiently.

Richard Fennell: We recognize as a bank with 2% to 3% market share, innovation, partnerships, and capability will create the opportunities we need to grow efficiently. The FY26 results demonstrate our progress on the 2030 strategy, with the streamlining of our approach to both lending and deposits. The Bendigo Lending Platform is now being utilized by all of our retail branches, in addition to our broker network. Approximately half of our new-to-bank customers are being onboarded digitally via the Bendigo Bank app. The migration of our Adelaide Bank customers to Bendigo Bank in December 2025 marked the completion of our multi-year core banking consolidation project. This key strategic program has delivered a simpler and more efficient bank and created a platform for sustainable growth. Over the year, we have delivered several initiatives that will pave the way for the next phase of growth, including our partnership with Google.

Speaker #2: The FY26 results demonstrate our progress on the 2030 strategy, with the streamlining of our approach to both lending and deposits. The Bendigo lending platform is now being utilized by all of our retail branches in addition to our broker network, and approximately half of our new-to-bank customers are being onboarded digitally via the Bendigo Bank app.

Speaker #2: The migration of our Adelaide Bank customers to Bendigo Bank in December 2025 marked the completion of our multi-year core banking consolidation project. This key strategic program has delivered a simpler and more efficient bank and created a platform for sustainable growth.

Speaker #2: Over the year, we've delivered several initiatives that will pave the way for the next phase of growth. Including our partnership with Google we currently have over 5,000 of our staff actively utilizing our Google AI platform, Gemini Enterprise, to support their daily productivity.

Richard Fennell: We currently have over 5,000 of our staff actively utilizing our Google AI platform, Gemini Enterprise, to support their daily productivity. Our partnerships with Mphasis and Genpact will deliver the capabilities we need to maintain and improve our foundational technology, allowing our core technology team to drive improvements in data quality, cybersecurity, and AI. Finally, we have appointed a new Chief Customer Officer for Consumer, Christopher Dean, who assumes the role in September. Christopher brings deep retail banking experience, most recently as Managing Director at HSBC UK, where he managed a network of 300 branches and led digital banking services for 8 million customers. Christopher is well-placed to help us deliver on our 2030 strategy by deepening our customer relationships and improving how we manage risk.

Speaker #2: Our partnerships with Infosys and Genpact will deliver the capabilities we need to maintain and improve our foundational technology allowing our core technology team to drive improvements in data quality, cybersecurity, and AI.

Speaker #2: And finally, we've appointed a new chief customer officer for consumer, Christopher Dean, who assumes the role in September. Christopher brings deep retail banking experience most recently as managing director at HSBC UK, where he managed a network of 300 branches and led digital banking services for 8 million customers.

Speaker #2: Christopher is well placed to help us deliver on our 2030 strategy by deepening our customer relationships and improving how we manage risk. I'd like to thank Adam Rouse for leading both customer divisions over the past six months and helping to bring a consistent disciplined approach to customer experience across both networks.

Richard Fennell: I would like to thank Adam Rowse for leading both customer divisions over the past 6 months and helping to bring a consistent, disciplined approach to customer experience across both networks. I will now hand over to Andrew.

Speaker #2: I will now hand over to Andrew.

Speaker #3: Thanks very much, Richard, and good morning, everyone. First of all, let me confirm that there are no changes from the unaudited numbers which we presented last week to the audited numbers we're presenting today.

Andrew Morgan: Thanks very much, Richard, and good morning, everyone. First of all, let me confirm that there are no changes from the unaudited numbers, which we presented last week, to the audited numbers we are presenting today. Going now into some of the metrics underpinning the H2 result. Total lending grew 3.5%, with strong seasonal growth in agri and business lending and a return to growth in residential lending, which grew around 0.6 times system. We have also seen an improved funding mix, with lower-cost deposits now comprising almost 55% of total deposits. Through careful management of our funding requirements, we have continued to improve net interest margin, printing 1.98% for the half. We have tightened our management of BAU costs in the half, delivering absolute cost reduction compared to the H1. Given the uncertain macro environment, we have increased our collective provision and skewed scenario weights more to the downside.

Speaker #3: Going now into some of the metrics underpinning the second half result. Total ending grew 3.5%. We're strong seasonal growth in agri and business lending, and a return to growth in residential lending, which grew around 0.6 times system.

Speaker #3: We've also seen an improved funding mix, with lower cost deposits now comprising almost 55% of total deposits. Through careful management of our funding requirements, we have continued to improve net interest margin, printing 1.98% for the half.

Speaker #3: And we've tightened our management of business as usual costs in the half, delivering absolute cost reduction, compared to the first half. Given the uncertain macro environment we've increased our collective provision and skewed scenario weights more to the downside.

Speaker #3: Our operating performance was 11.2% higher than the prior half, reflecting a combination of income growth and expense reduction. Cash earnings of 273.8 million dollars was 7.7% higher than the prior half.

Andrew Morgan: Our operating performance was 11.2% higher than the prior H1, reflecting a combination of income growth and expense reduction. Cash earnings of AUD 273.8 million was 7.7% higher than the prior H1. With the improved operating performance, return on equity for the H1 improved to 8.26%. Our balance sheet is in a strong position going into the financial year 2027, reflected in strong capital, funding, and liquidity. Turning now to total income for the H1. Income of AUD 1.04 billion was up 2.6% on the prior H1. Net interest income increased 1.6%, reflecting an improved margin, offset by a small reduction in average interest-earning assets and the impact of three less days. Other income, excluding Homesafe, was up 5%, reflecting improved wealth and cards income. Homesafe income was up 29%, reflecting 40% growth in completed contracts on the prior H1, and a slightly softer average profit per completion.

Speaker #3: With the improved operating performance return on equity for the half improved to 8.26%. Our balance sheet is in a strong position going into the financial year 2027, reflected in strong capital funding and liquidity.

Speaker #3: Turning now to total income for the half. Income of 1.04 billion dollars was up 2.6% on the prior half. Net interest income increased 1.6%, reflecting an improved margin, offset by a small reduction in average interest earning assets and the impact of three less days.

Speaker #3: Other income excluding HomeSafe was up 5%, reflecting improved wealth and cards income. HomeSafe income was up 29%, reflecting 40% growth in completed contracts on the prior half.

Speaker #3: And a slightly softer average profit per completion. In respect of key considerations, there are two. First, we expect the RACQ transaction to complete during second quarter 2027.

Andrew Morgan: In respect of key considerations, there are two. First, we expect the RACQ transaction to complete during Q2 2027. You should expect a resultant uplift in income in year of between AUD 33 to AUD 37 million. That reflects around AUD 2.6 billion of loans and around AUD 2.3 billion of deposits. For this gap-

Speaker #3: So you should expect a resultant uplift in income in year of between 33 to 37 million dollars, and that reflects around 2.6 billion dollars of loans and around 2.3 billion dollars of deposits.

Speaker #3: And for this gap.

Speaker #1: Good morning, everyone. Thanks for joining us for Bendigo Bank's 2026 full year results briefing. Let me begin today by acknowledging the traditional owners of the lands in which we meet today, the Gadigal people of the Eora Nation, and I pay my respects to their elders, past, present, and emerging.

[Company Representative] (Bendigo Bank): Good morning, everyone. Thanks for joining us for Bendigo Bank's 2026 full year results briefing. Let me begin today by acknowledging the traditional owners of the lands in which we meet today, the Gadigal people of the Eora Nation, and I pay my respects to their elders past, present, and emerging. I also extend my respects to the Aboriginal and Torres Strait Islander people who are present on the call today. Following our recent results announcement on 18 August, we have slightly adjusted our approach to the result presentation today. Richard will start with a high-level overview of the key performance highlights. He will run through the strategic deliverables and an update on the AML/CTF program. Andrew will then step through the audited financial performance and provide an overview of our credit position within the current macro environment. We will then move on to Q&A.

Sam Miller: Good morning, everyone. Thanks for joining us for Bendigo Bank's 2026 full year results briefing. Let me begin today by acknowledging the traditional owners of the lands in which we meet today, the Gadigal people of the Eora Nation, and I pay my respects to their elders past, present, and emerging. I also extend my respects to the Aboriginal and Torres Strait Islander people who are present on the call today.

Sam Miller: Following our recent results announcement on 18 August, we have slightly adjusted our approach to the result presentation today. Richard will start with a high-level overview of the key performance highlights. He will run through the strategic deliverables and an update on the AML/CTF program. Andrew will then step through the audited financial performance and provide an overview of our credit position within the current macro environment. We will then move on to Q&A. I will now hand over to Richard.

Speaker #1: Richard will start with a high-level overview of the key performance highlights, he'll run through the strategic deliverables, and an update on the AML CTF program.

Speaker #1: Andrew will then step through the audited financial performance, and provide an overview of our credit position within the current macro environment. We'll then move on to Q&A.

Speaker #1: I'll now hand over to Richard.

[Company Representative] (Bendigo Bank): I will now hand over to Richard.

Richard Fennell: Thanks, Sam, and good morning, everyone, and thanks for taking the time to join us today. We recognize our market release on 18 August provided a number of updates, including unaudited statutory profit and financial metrics. Today I would like to provide some more detail in relation to our strategic progress and risk programs. Our full-year result demonstrates our ongoing disciplined approach to driving targeted business growth and delivery against our strategic agenda. Cash earnings have again improved this half, benefiting from continued growth in lower cost deposits, supporting margin expansion. Our H2 expenses were down, reflecting the benefits from phase 1 of our productivity program and fewer days in H2. We have regained lending momentum following a return to growth in our residential lending book in H2.

Speaker #2: So today, I'd like to provide some more detail in relation to our strategic progress and risk programs. Our full year result demonstrates our ongoing disciplined approach to driving targeted business growth and delivery against our strategic agenda.

Richard Fennell: Our full-year result demonstrates our ongoing disciplined approach to driving targeted business growth and delivery against our strategic agenda. Cash earnings have again improved this half, benefiting from continued growth in lower cost deposits, supporting margin expansion. Our H2 expenses were down, reflecting the benefits from phase 1 of our productivity program and fewer days in H2. We have regained lending momentum following a return to growth in our residential lending book in H2.

Speaker #2: Cash earnings have again improved this half, benefiting from continued growth in lower cost deposits, supporting margin expansion. Our second half expenses were down, reflecting the benefits from phase one of our productivity program and fewer days in the second half.

Speaker #2: We have regained lending momentum following a return to growth in our residential lending book in half two. Our key differentiators including our quality products and a Bendigo brand net promoter score that is 21 points above the industry average continues to attract customers.

Richard Fennell: Our key differentiators, including our quality products and the Bendigo Bank brand net promoter score that is 21 points above the industry average, continues to attract customers. We are on track to exceed 3 million customers, with Up's customer numbers growing 11.5% over the year. Up's profitability continued to improve into H2, with deposit balances growing 45% over the year to more than AUD 4 billion, while momentum in Up Home loans continues, with growth of 56% over the year, now reaching AUD 2.6 billion just over three years since launch. Our acquisition of RACQ Bank's loan and deposit book is progressing at pace, with a significant amount of pre-migration work completed. As outlined on 18 August, the uplift of our risk capabilities is our number one priority. I will provide more detail on this later in the presentation.

Speaker #2: We're on track to exceed 3 million customers, with ups customer numbers growing 11.5% over the year. Ups profitability continue to improve into the second half, with deposit balances growing 45% over the year to more than 4 billion dollars, while momentum in ups home loans continues, with growth of 56% over the year, now reaching 2.6 billion dollars, just over three years since launch.

Speaker #2: Our acquisition of RACQ at pace, with a significant amount of pre-migration work completed. And as outlined on the 18th, the uplift of our risk capabilities is our number one priority.

Richard Fennell: Our acquisition of RACQ Bank's loan and deposit book is progressing at pace, with a significant amount of pre-migration work completed. As outlined on 18 August, the uplift of our risk capabilities is our number one priority. I will provide more detail on this later in the presentation.

Speaker #2: I'll provide more detail on this later in the presentation. I want to share some more detail with you now in relation to the financial performance for the 2026 financial year.

Richard Fennell: I want to share some more detail with you now in relation to financial performance for the 2026 financial year. Cash earnings for the year of AUD 530 million were 3% higher than the prior year, driven by income growth of 5.1%, while expense growth was 4.2%. Income growth benefited from a seven basis point increase in net interest margin, higher fee revenue, and Homesafe realized income. The improvement in margin over the year was largely driven by our continued focus on delivering a more favorable mix of lower cost deposits and a measured approach to term deposit pricing. Operating expenses for the year increased by 4.2%, reflecting the expected increases in software amortization and technology costs, and the ongoing investment in risk and digital capabilities. Our focus on productivity and cost management helped to offset a proportion of these costs.

Speaker #2: Cash earnings for the year of 530 million were 3% higher than the prior year, driven by income growth of 5.1%, while expense growth was 4.2%.

Speaker #2: Income growth benefited from a seven basis point increase in net interest margin, higher fee revenue, and HomeSafe realized income. The improvement in margin over the year was largely driven by our continued focus on delivering a more favorable mix of lower cost deposits, and a measured approach to term deposit pricing.

Richard Fennell: The improvement in margin over the year was largely driven by our continued focus on delivering a more favorable mix of lower cost deposits and a measured approach to term deposit pricing. Operating expenses for the year increased by 4.2%, reflecting the expected increases in software amortization and technology costs, and the ongoing investment in risk and digital capabilities. Our focus on productivity and cost management helped to offset a proportion of these costs.

Speaker #2: Our focus on productivity and cost management helped to offset a proportion of these costs. And second half costs were down 2.1%, better benefiting from a lower average FTE number, and as a result of our productivity programs, and lower remediation expenses and fewer workdays.

Richard Fennell: H2 costs were down 2.1%, benefiting from a lower average FTE number, and as a result of our productivity programs and lower remediation expenses and fewer workdays. Credit costs increased for the full year, reflecting our cautious outlook from the updated macroeconomic forecast. That said, the overall credit portfolio remains resilient, and we are focused on helping customers that face difficult choices due to cost of living and other pressures. Pleasingly, our ROE is now back above 8%, and our return on tangible equity is above 10%, with H2 ROTE near 10.5%. Our three areas of focus that will support our 2030 ROE target are all progressing well. Our efforts in these areas will be further enabled by our risk uplift programs, which will strengthen our risk management frameworks and systems to support sustainable growth. Let me step you through the progress we have made this half.

Richard Fennell: Pleasingly, our ROE is now back above 8%, and our return on tangible equity is above 10%, with H2 ROTE near 10.5%. Our three areas of focus that will support our 2030 ROE target are all progressing well. Our efforts in these areas will be further enabled by our risk uplift programs, which will strengthen our risk management frameworks and systems to support sustainable growth. Let me step you through the progress we have made this half.

Speaker #2: Our efforts in these areas will be further enabled by our risk uplift programs which will strengthen our risk management frameworks and systems to support sustainable growth.

Speaker #2: Let me step you through the progress we've made this half. Our deposit first approach to managing our balance sheet has been supported by digital deposit sales growth of 34% over the year, following the introduction of new digital onboarding capability in the Bendigo app, along with continued growth in our up customer base.

Speaker #2: The enhanced functionality in the Bendigo app has materially improved the experience for new to bank and existing customers. Easy saver deposits continue to grow.

Speaker #2: Up 10.7% over the year. And the introduction of grow and flow to upsiders has helped grow ups deposit balances by 45% over the year, to reach 4.1 billion.

Richard Fennell: The introduction of Grow and Flow to upsiders has helped grow Up's deposit balances by 45% over the year to reach AUD 4.1 billion. Leveraging what we've learned, we will improve the functionality and experience for business and agri customers over the next 18 months, with a sequence of improvements and uplift in the digital capability for B&A.

Speaker #2: These functionality we're building will make it easier for our customers to join the bank and further support growth in lower cost deposits. Turning to productivity.

Richard Fennell: This functionality we're building will make it easier for our customers to join the bank and further support growth in lower cost deposits. Turning to productivity, our FTE numbers have reduced by 3.4% over the year, driven by the first phase of our productivity program. in April, at the quarterly trading update, we announced two significant strategic partnerships as part of the second phase of this program. In July this year, we commenced a seven-year technology service partnership with Mphasis, which will significantly improve IT service delivery and provide access to enhanced capabilities, software engineering, and AI talent to deliver innovation capacity. We've also established our six-year business operations partnership with Genpact, which will bring deep expertise in process optimization and delivery to drive greater productivity and support stronger process disciplines across the bank. Finally, to sustainable growth.

Speaker #2: And in July this year, we commenced a seven-year technology service partnership with Infosys, which will significantly improve IT service delivery and provide access to enhanced capabilities software engineering and AI talent to deliver innovation capacity.

Richard Fennell: In July this year, we commenced a seven-year technology service partnership with Mphasis, which will significantly improve IT service delivery and provide access to enhanced capabilities, software engineering, and AI talent to deliver innovation capacity. We've also established our six-year business operations partnership with Genpact, which will bring deep expertise in process optimization and delivery to drive greater productivity and support stronger process disciplines across the bank. Finally, to sustainable growth.

Speaker #2: We've also established our six-year business operations partnership with Genpact, which will bring deep expertise in process optimization, and delivery, to drive greater productivity and support stronger process disciplines across the bank.

Speaker #2: And finally, to sustainable growth. We've seen some positive impact from recent targeted pricing through Ben Express and our Qantas partnership to support digital channel growth momentum, in residential lending, which was up 1.9% in the second half.

Richard Fennell: We've seen some positive impact from recent targeted pricing through BEN Express and our Qantas partnership to support digital channel growth momentum in residential lending, which was up 1.9% in the H2. The Bendigo Lending Platform now accounts for 80% of home loan flow for the Bendigo Bank brand, reducing time to decision for our customers and improving our productivity. The momentum behind Up Home continues, up 56% to AUD 2.6 billion. Coming soon to upsiders, in this half, the Up Home investment loan. We've been clear about our objectives for business and agribusiness to be at growth by FY26 and above system in FY27. We achieved our growth targets this year with agribusiness lending up 3.8% and business lending, excluding portfolio funding, up 8%. Since Adam Rowse has joined the bank in 2022, we've selectively grown our agribusiness book by more than 15%.

Speaker #2: The Bendigo lending platform now accounts for 80% of home loan flow for the Bendigo brand, reducing time to decision for our customers, and improving our productivity.

Speaker #2: The momentum behind up home continues, up 56% to 2.6 billion, and coming soon to upsiders in this half, the up home investment loan. We've been clear about our objectives for business and agribusiness, to be at growth by FY26 and above system in FY27.

Richard Fennell: Coming soon to upsiders, in this half, the Up Home investment loan. We've been clear about our objectives for business and agribusiness to be at growth by FY26 and above system in FY27. We achieved our growth targets this year with agribusiness lending up 3.8% and business lending, excluding portfolio funding, up 8%. Since Adam Rowse has joined the bank in 2022, we've selectively grown our agribusiness book by more than 15%.

Speaker #2: We achieved our growth targets this year with agribusiness lending up 3.8%, and business lending excluding portfolio funding up 8%. Since Adam Rouse has joined the bank in 2022, we've selectively grown our agribusiness book by more than 15%.

Richard Fennell: In business, we continue to build in business direct and the commercial broker channel. In FY27, we'll be launching a new equipment finance platform to support both our agri and SME customers. I want to share how the two programs of work depicted here will serve as the foundation to strengthen our risk management frameworks and systems to support sustainable growth as we deliver on our 2030 strategy. In December 2025, the financial crime transformation program commenced with a focus on enhancing our enterprise-wide AML/CTF risk management. This program will deliver a material uplift in our ability to detect, deter, and disrupt financial crime, and we continue to add capacity and capability to our financial crime operations team to support this work. We expect to invest AUD 70 to AUD 90 million, of which AUD 8 million was spent in FY26. These expenses will be contained within our existing investment slate.

Richard Fennell: In December 2025, the financial crime transformation program commenced with a focus on enhancing our enterprise-wide AML/CTF risk management. This program will deliver a material uplift in our ability to detect, deter, and disrupt financial crime, and we continue to add capacity and capability to our financial crime operations team to support this work. We expect to invest AUD 70 to AUD 90 million, of which AUD 8 million was spent in FY26. These expenses will be contained within our existing investment slate.

Speaker #2: We expect to invest $70 to $90 million of which $8 million was spent in FY26. These expenses will be contained within our existing investment slate.

Richard Fennell: Our approach to embed non-financial risk management into all aspects of the organization will ensure we can continue delivering for our shareholders, our customers, our people, and our communities. This is the number 1 priority for the board and executive team and will be led by me. Andrew will run through the costs and associated treatment of these expenses in more detail shortly. Now for some more detail on our financial crime transformation program. We launched this program to significantly strengthen our controls against financial crime and enhance our AML/CTF framework.

Richard Fennell: Since the announcement late last calendar year, we have acted with pace and purpose. We appointed a new AML/CTF Chief Compliance Officer in January, bringing in significant experience to drive this change. This program is well-established across 5 dedicated work streams, and we are already seeing tangible results. We have upgraded our monitoring systems, improved controls, and are, excuse me, are leveraging our new partnership with Genpact to draw on their global expertise and capacity. Looking ahead, our focus remains on building a best-in-class financial crime function to help protect our customers and the broader community. Finally, I would like to recap our progress on the first year of our 2030 strategy and the strategic deliverables we have achieved. We first spoke to the market about our new strategy this time last year, outlining the 5 strategic pillars and our 3 enablers that will help deliver on building scale through innovation.

Speaker #2: This program is well established across five dedicated workstreams and we're already seeing tangible results. We've upgraded our monitoring systems, improved controls, and are leveraging our new partnership with Genpact to draw on their global expertise and capacity.

Speaker #2: Looking ahead, our focus remains on building a best-in-class financial crime function to help protect our customers and the broader community. And finally, progress on the first year of our 2030 strategy, and the strategic deliverables we've achieved.

Richard Fennell: Looking ahead, our focus remains on building a best-in-class financial crime function to help protect our customers and the broader community. Finally, I would like to recap our progress on the first year of our 2030 strategy and the strategic deliverables we have achieved. We first spoke to the market about our new strategy this time last year, outlining the 5 strategic pillars and our 3 enablers that will help deliver on building scale through innovation.

Speaker #2: We recognize as a bank with two to three percent market share, innovation, partnerships, and capability will create the opportunities we need to grow efficiently.

Richard Fennell: We recognize as a bank with 2% to 3% market share, innovation, partnerships, and capability will create the opportunities we need to grow efficiently. The FY26 results demonstrate our progress on the 2030 strategy with the streamlining of our approach to both lending and deposits. The Bendigo Lending Platform is now being utilized by all of our retail branches, in addition to our broker network. Approximately half of our new-to-bank customers are being onboarded digitally via the Bendigo Bank app. The migration of our Adelaide Bank customers to Bendigo Bank in December 2025 marked the completion of our multi-year core banking consolidation project. This key strategic program has delivered a simpler and more efficient bank and created a platform for sustainable growth. Over the year, we have delivered several initiatives that will pave the way for the next phase of growth, including our partnership with Google.

Richard Fennell: Approximately half of our new-to-bank customers are being onboarded digitally via the Bendigo Bank app. The migration of our Adelaide Bank customers to Bendigo Bank in December 2025 marked the completion of our multi-year core banking consolidation project. This key strategic program has delivered a simpler and more efficient bank and created a platform for sustainable growth. Over the year, we have delivered several initiatives that will pave the way for the next phase of growth, including our partnership with Google.

Speaker #2: Over the year, we've delivered several initiatives that will pave the way for the next phase of growth. Including our partnership with Google, we currently have over 5,000 of our staff actively utilizing our Google AI platform, Gemini Enterprise, to support their daily productivity.

Speaker #2: Our partnerships with Infosys and Genpact will deliver the capabilities we need to maintain and improve our foundational technology, allowing our core technology team to drive improvements in data quality, cybersecurity, and AI.

Richard Fennell: Finally, we have appointed a new Chief Customer Officer for Consumer, Christopher Dean, who assumes the role in September. Christopher brings deep retail banking experience, most recently as Managing Director at HSBC UK, where he managed a network of 300 branches and led digital banking services for 8 million customers. Christopher is well-placed to help us deliver on our 2030 strategy by deepening our customer relationships and improving how we manage risk.

Speaker #2: Christopher is well placed to help us deliver on our 2030 strategy by deepening our customer relationships and improving how we manage risk. I'd like to thank Adam Rouse for leading both customer divisions over the past six months, and helping to bring a consistent disciplined approach to customer experience across both networks.

Richard Fennell: I'd like to thank Adam Rowse for leading both customer divisions over the past 6 months and helping to bring a consistent, disciplined approach to customer experience across both networks. I will now hand over to Andrew.

Speaker #2: I will now hand over to Andrew.

Speaker #3: Thanks very much, Richard, and good morning, everyone. First of all, let me confirm that there are no changes from the unordered numbers which we presented last week to the ordered numbers we're presenting today.

Andrew Morgan: Thanks very much, Richard, and good morning, everyone. First of all, let me confirm that there are no changes from the unaudited numbers, which we presented last week, to the audited numbers we are presenting today. Going now into some of the metrics underpinning the H2 result, total lending grew 3.5% with strong seasonal growth in agri and business lending and a return to growth in residential lending, which grew around 0.6 times system. We have also seen an improved funding mix, with lower cost deposits now comprising almost 55% of total deposits. Through careful management of our funding requirements, we have continued to improve net interest margin, printing 1.98% for the half. And we have tightened our management of BAU costs in the half, delivering absolute cost reduction compared to the H1. Given the uncertain macro environment, we have increased our collective provision and skewed scenario weights more to the downside.

Speaker #3: Going now into some of the metrics underpinning the second half result. Total lending grew 3.5%, with strong seasonal growth in agri and business lending, and a return to growth in residential lending, which grew around 0.6 times system.

Andrew Morgan: We have also seen an improved funding mix, with lower cost deposits now comprising almost 55% of total deposits. Through careful management of our funding requirements, we have continued to improve net interest margin, printing 1.98% for the half. And we have tightened our management of BAU costs in the half, delivering absolute cost reduction compared to the H1. Given the uncertain macro environment, we have increased our collective provision and skewed scenario weights more to the downside.

Speaker #3: And we've tightened our management of business as usual costs in the half, delivering absolute cost reduction, compared to the first half. Given the uncertain macro environment with increased our collective provision and skewed scenario weights more to the downside.

Andrew Morgan: Our operating performance was 11.2% higher than the prior half, reflecting a combination of income growth and expense reduction. Cash earnings of AUD 273.8 million was 7.7% higher than the prior half. With the improved operating performance, return on equity for the half improved to 8.26%. Our balance sheet is in a strong position going into the financial year 2027, reflected in strong capital funding and liquidity. Turning now to total income for the half, income of AUD 1.04 billion was up 2.6% on the prior half. Net interest income increased 1.6%, reflecting an improved margin, offset by a small reduction in average interest-earning assets and the impact of 3 less days. Other income, excluding Homesafe, was up 5%, reflecting improved wealth and cards income. Homesafe income was up 29%, reflecting 40% growth in completed contracts on the prior half, and a slightly softer average profit per completion.

Speaker #3: Turning now to total income for the half. Income of 1.04 billion dollars was up 2.6% on the prior half, net interest income increased 1.6%, reflecting an improved margin, offset by a small reduction in average interest earning assets, and the impact of three less days.

Andrew Morgan: Turning now to total income for the half, income of AUD 1.04 billion was up 2.6% on the prior half. Net interest income increased 1.6%, reflecting an improved margin, offset by a small reduction in average interest-earning assets and the impact of 3 less days. Other income, excluding Homesafe, was up 5%, reflecting improved wealth and cards income. Homesafe income was up 29%, reflecting 40% growth in completed contracts on the prior half, and a slightly softer average profit per completion.

Speaker #3: Other income excluding HomeSafe was up 5%, reflecting improved wealth and cards income. HomeSafe income was up 29%, reflecting 40% growth in completed contracts on the prior half, and a slightly softer average profit per completion.

Speaker #3: In respect of key considerations, there are two. First, we expect the RACQ transaction to complete during second quarter 2027, so you should expect a resultant uplift in income in year of between 33 to 37 million dollars, and that reflects around 2.6 billion dollars of loans and around 2.3 billion dollars of deposits, and for this gap an LCR requirements to be funded most likely with wholesale funding.

Andrew Morgan: In respect of key considerations, there are 2. First, we expect the RACQ transaction to complete during Q2 2027. So you should expect a resultant uplift in income in-year of between AUD 33 to AUD 37 million, and that reflects around AUD 2.6 billion of loans and around AUD 2.3 billion of deposits. And for these gap and LCR requirements to be funded, most likely with wholesale funding. Second, as previously flagged, income from the Homesafe portfolio will reduce over time, subject to the rate and profit on contract completions. This half saw the number of open contracts reduced by around 4%, which is a slightly faster rate than the last 2 halves. Whilst the average life of contracts completed through the half was around 10 years. Turning now to net interest margin, compared to the prior half, our NIM was up 6 basis points to 1.98%.

Speaker #3: Second, as previously flagged, income from the HomeSafe portfolio will reduce over time, subject to the rate and profit on contract completions. This half saw the number of open contracts reduced by around 4%, which is a slightly faster rate than the last two halves.

Andrew Morgan: Second, as previously flagged, income from the Homesafe portfolio will reduce over time, subject to the rate and profit on contract completions. This half saw the number of open contracts reduced by around 4%, which is a slightly faster rate than the last 2 halves. Whilst the average life of contracts completed through the half was around 10 years. Turning now to net interest margin, compared to the prior half, our NIM was up 6 basis points to 1.98%.

Speaker #3: Whilst the average life of contracts completed through the half was around 10 years. Turning now to net interest margin. Compared to the prior half, our NIM was up six basis points to 1.98%.

Speaker #3: Asset pricing negatively impacted four basis points, which was due to a combination of front book pricing pressure in residential lending and ongoing retention pricing pressure in business and agri.

Andrew Morgan: Asset pricing negatively impacted 4 basis points, which was due to a combination of front book pricing pressure in residential lending and ongoing retention pricing pressure in business and agri. Deposit and funding pricing improved 6 basis points, mostly reflecting the benefit of term deposit repricing. Mix provided a 4 basis points benefit, reflecting a combination of improved funding mix and improved asset mix. Income from our replicating portfolios was up 3 basis points as expected, and revenue share negatively impacted 3 basis points. Our Q4 average NIM was 200 basis points. On key considerations for H1 2027, we definitely see headwinds and a couple of tailwinds. On headwinds, there are two. We see competitive pressure on both sides of the balance sheet, and funding costs will also be a headwind, noting that we put some wholesale funding into the balance sheet in Q4.

Speaker #3: Deposit and funding pricing improved six basis points, mostly reflecting the benefit of term deposit repricing. Mixed provided a four basis points benefit, reflecting a combination of improved funding mix and improved asset mix.

Speaker #3: Income from our replicating portfolios was up three basis points as expected, and revenue share negatively impacted three basis points. Our fourth quarter average NIM was 200 basis points.

Speaker #3: On key considerations for one half 27, we definitely see headwinds and a couple of tailwinds. On headwinds, there are two. We see competitive pressure on both sides of the balance sheet, and funding costs will also be a headwind, noting that we put some wholesale funding into the balance sheet in the fourth quarter.

Andrew Morgan: Our Q4 average NIM was 200 basis points. On key considerations for H1 2027, we definitely see headwinds and a couple of tailwinds. On headwinds, there are two. We see competitive pressure on both sides of the balance sheet, and funding costs will also be a headwind, noting that we put some wholesale funding into the balance sheet in Q4.

Speaker #3: We also lifted term deposit pricing through the fourth quarter. On tailwinds, we think there is possibly one more cash rate rise, likely late in the first half, and higher swap rates should see replicating portfolio contribution continue positively, given the current delta between replacement yields and expiring trackers.

Andrew Morgan: We also lifted term deposit pricing through Q4. On tailwinds, we think there is possibly one more cash rate rise, likely late in H1, and higher swap rates should see replicating portfolio contribution continue positively given the current delta between replacement yields and expiring trackers. Turning now to residential lending. Settlement volumes in aggregate were up 31% on the prior half, with strong growth recorded in third party and digital channels. Discharges improved following a spike in H1, which was mostly due to the closing down of one of our partner channels. We continue to prioritize the deployment of capital into channels where both the economics are compelling and growth opportunities exist, being self-serve digital mortgages and our proprietary branch network.

Speaker #3: Turning now to residential lending. Settlement volumes in aggregate were up 31% on the prior half, with strong growth in recorded in third party and digital channels.

Andrew Morgan: Settlement volumes in aggregate were up 31% on the prior half, with strong growth recorded in third party and digital channels. Discharges improved following a spike in H1, which was mostly due to the closing down of one of our partner channels. We continue to prioritize the deployment of capital into channels where both the economics are compelling and growth opportunities exist, being self-serve digital mortgages and our proprietary branch network.

Speaker #3: Discharges improved following a spike in the first half, which was mostly due to the closing down of one of our partner channels. We continue to prioritize the deployment of capital into channels where both the economics are compelling and growth opportunities exists, being self-served digital mortgages and our proprietary branch network.

Speaker #3: This half around 35% of new settlements came through our physical network, whilst just under half came through broker intermediated channels, and 15% through direct digital channels including up.

Andrew Morgan: This half, around 35% of new settlements came through our physical network, whilst just under half came through broker-intermediated channels, and 15% through direct digital channels, including Up. The positive trends in our mortgage book continue. First, around 40% of new loans are below 60% LVR, and almost 90% of new loans are below 80% LVR. Second, the average credit risk weight on new mortgages has continued to improve. Momentum in the book has slowed following the federal budget. We expect system credit growth for residential lending to ease to around 3% to 4%. At the same time, we see a lot of opportunity to continue to grow through our digital and our physical networks. Importantly, discharges also slowed progressively over H2.

Speaker #3: The positive trends in our mortgage book continue. First around 40% of new loans are below 60% LVR, and almost 90% of new loans are below 80% LVR.

Speaker #3: And second, the average credit risk weight on new mortgages has continued to improve. Momentum in the book has slowed, following the federal budget. We expect system credit growth for residential lending to ease to around three to four percent.

Andrew Morgan: Second, the average credit risk weight on new mortgages has continued to improve. Momentum in the book has slowed following the federal budget. We expect system credit growth for residential lending to ease to around 3% to 4%. At the same time, we see a lot of opportunity to continue to grow through our digital and our physical networks. Importantly, discharges also slowed progressively over H2.

Speaker #3: At the same time, we see a lot of opportunity to continue to grow through our digital and our physical networks. Importantly, discharges also slowed progressively over the second half.

Speaker #3: So with this momentum in mind, we are targeting growth around system through financial year 27, although this may be influenced by the level of competitive pressure.

Andrew Morgan: With this momentum in mind, we are targeting growth around system through financial year 2027, although this may be influenced by the level of competitive pressure. On deposits, our deposit gathering franchise has strengthened this half. We continue to see good momentum in digital deposits. In our Up business, digital deposits increased 16% over the half, whilst Bendigo digital deposits grew 14% over the same period. Whilst deposit growth over the half looks modest at 1.1%, deposit mix has continued to improve. We continue to see strong growth in EasySaver accounts, which were up 3.4% on the prior half, and overall savings accounts up 4.3%. Following a dip in Q3, transaction account balances had a strong Q4, finishing marginally lower than the prior half. We also saw offset accounts reduce almost 2% over the half.

Speaker #3: On deposits, our deposit gathering franchise has strengthened this half. We continue to see good momentum in digital deposits. In our up business digital deposits increased 16% over the half, whilst Bendigo digital deposits grew 14% over the same period.

Speaker #3: Whilst deposit growth over the half looks modest at 1.1%, deposit mix has continued to improve. We continue to see strong growth in easy saver accounts, which were up 3.4% on the prior half, and overall savings accounts up 4.3%.

Andrew Morgan: Whilst deposit growth over the half looks modest at 1.1%, deposit mix has continued to improve. We continue to see strong growth in EasySaver accounts, which were up 3.4% on the prior half, and overall savings accounts up 4.3%. Following a dip in Q3, transaction account balances had a strong Q4, finishing marginally lower than the prior half. We also saw offset accounts reduce almost 2% over the half.

Speaker #3: Following a dip in third quarter, transaction account balances had a strong fourth quarter, finishing marginally lower than the prior half. We also saw offset accounts reduce almost 2% over the half.

Speaker #3: Whilst term deposit balances were down 0.6% on the prior half, we did receive our pricing in fourth quarter, and recorded 3% growth for the final quarter.

Andrew Morgan: Whilst term deposit balances were down 0.6% on the prior H1, we did reset our pricing in Q4 and recorded 3% growth for the final quarter. The overall picture is that lower cost deposits increased to 54.8% of total deposits, up from 52.5% just 12 months ago. Critically, our household deposit to loan ratio remains strong at 76%, which is 10 percentage points higher than the industry average. Turning now to operating expenses. As previously flagged, H2 costs came in lower than H1, down 2.1%. Business as usual costs, which exclude remediation costs, reduced 1.1% over the half, mostly reflecting our ongoing productivity and cost management program. Spot FTE were 0.7% higher than the prior half, reflecting investment in our risk team as we continue our work on lifting risk maturity across the organization.

Speaker #3: The overall picture is that lower cost deposits increased to 54.8% of total deposits, up from 52.5% just 12 months ago. Critically, our household deposit to loan ratio remains strong, at 76%, which is 10 percentage points higher than the industry average.

Speaker #3: Turning now to operating expenses. As previously flagged, second half costs came in lower than first half, down 2.1%. Business as usual costs, which exclude remediation costs, reduced 1.1% over the half, mostly reflecting our ongoing productivity and cost management program.

Andrew Morgan: As previously flagged, H2 costs came in lower than H1, down 2.1%. Business as usual costs, which exclude remediation costs, reduced 1.1% over the half, mostly reflecting our ongoing productivity and cost management program. Spot FTE were 0.7% higher than the prior half, reflecting investment in our risk team as we continue our work on lifting risk maturity across the organization.

Speaker #3: Spot FTE were 0.7% higher than the prior half, reflecting investment in our risk team as we continue our work on lifting risk maturity across the organization.

Speaker #3: In respect of financial year 27, we expect business as usual cost growth to be between 5 to 6%, including RACQ. This reflects three factors.

Andrew Morgan: In respect of financial year 2027, we expect business as usual cost growth to be between 5% to 6%, including RACQ. This reflects three factors. First, we expect inflationary pressures to persist and inflation to stay around the fours. Second, as we complete the RACQ transaction, we will bring AUD 8 to AUD 9 million of costs into the organization in-year, which is in line with previous guidance. Third, we are making further investment in risk capability as we seek to uplift our maturity. We expect expensed investment spend to be flat year on year. Over the medium term, we reiterate our cost guidance, which is to keep BAU cost, which excludes remediation and investment spend, contained to no higher than inflation through the cycle. Underpinning that, we expect to fully realize the benefit of our strategic partnerships in financial year 2028. Moving to credit quality and credit expenses.

Speaker #3: First, we expect inflationary pressures to persist, and inflation to stay around the fours. Second, as we complete the RACQ transaction, we will bring eight to nine million dollars of costs into the organization in year, which is in line with previous guidance.

Speaker #3: And third, we are making further investment in risk capability as we seek to uplift our maturity. We expect expensed investment spend to be flat year on year.

Andrew Morgan: Third, we are making further investment in risk capability as we seek to uplift our maturity. We expect expensed investment spend to be flat year on year. Over the medium term, we reiterate our cost guidance, which is to keep BAU cost, which excludes remediation and investment spend, contained to no higher than inflation through the cycle. Underpinning that, we expect to fully realize the benefit of our strategic partnerships in financial year 2028. Moving to credit quality and credit expenses.

Speaker #3: And over the medium term, we reiterate our cost guidance, which is to keep BOU cost, which excludes remediation and investment spend, contained to no higher than inflation, through the cycle.

Speaker #3: Underpinning that, we expect a fully realized the benefit of our strategic partnerships in financial year 28. Moving to credit quality and credit expenses. A key credit metrics remain sound, and we continue to carefully watch trends in the industry and within our book.

Andrew Morgan: Our key credit metrics remain sound, and we continue to carefully watch trends in the industry and within our book. Through the half, we booked a charge of AUD 16 million, mostly related to an increase to collective provision, reflecting an expected deterioration in the economic environment. Our coverage of total provisions to credit-risk weighted assets has increased three basis points on the half and two basis points on the prior year. Gross impaired loans have continued to reduce down to now 13 basis points of gross loans. Arrears across the book remain low but are increasing. Ninety-plus days arrears in residential lending have increased in the low single-digit basis points in the last six months to 87 basis points. In agribusiness, arrears have reduced over the half, and the AUD value of arrears has reduced. The technical issue that we had previously disclosed around expired facilities has mostly been resolved.

Speaker #3: Through the half, we booked a charge of 16 million dollars, mostly related to an increase to collective provision, reflecting an expected deterioration in the economic environment.

Speaker #3: Our coverage of total provisions to credit risk weighted assets has increased three basis points on the half, and two basis points on the prior year.

Speaker #3: Gross impaired loans have continued to reduce down to now 13 basis points of gross loans. A reason across the book remain low, but are increasing.

Andrew Morgan: Gross impaired loans have continued to reduce down to now 13 basis points of gross loans. Arrears across the book remain low but are increasing. Ninety-plus days arrears in residential lending have increased in the low single-digit basis points in the last six months to 87 basis points. In agribusiness, arrears have reduced over the half, and the AUD value of arrears has reduced. The technical issue that we had previously disclosed around expired facilities has mostly been resolved.

Speaker #3: 90 plus days of reason residential lending have increased in the low single digit basis points in the last six months to 87 basis points.

Speaker #3: In agribusiness, a reason have reduced over the half, and the dollar value of a reason has reduced. The technical issue that we have previously disclosed around expired facilities has mostly been resolved.

Speaker #3: Business arrears have continued to improve, now at their lowest level in a number of years. Whilst asset quality remains sound, and arrears are at relatively low levels, we do expect bad debts to trend upwards over time.

Andrew Morgan: Business arrears have continued to improve, now at their lowest level in a number of years. Whilst asset quality remains sound and arrears are at relatively low levels, we do expect bad debts to trend upwards over time. This half, we have included further detail on the composition of our business and agribusiness exposures. In our business book, excluding our portfolio funding business, over 99% of customers have loans of less than AUD 10 million, and we have a very small number of large customers. Arrears in the portfolio are modest, and 95% of the book is secured. In agribusiness, the profile is similar. Almost 99% of customers are sub-AUD 10 million, and again, we have very few large customers. Ninety-nine percent of the book is secured. Our funding and liquidity metrics remain strong and well-diversified. Our average liquidity coverage ratio for the Q4 was strong at 140.2%.

Speaker #3: This half, we've included further detail on the composition of our business and agribusiness exposures. In our business book, excluding our portfolio funding business, over 99% of customers have loans of less than 10 million dollars, and we have a very small number of large customers.

Andrew Morgan: In our business book, excluding our portfolio funding business, over 99% of customers have loans of less than AUD 10 million, and we have a very small number of large customers. Arrears in the portfolio are modest, and 95% of the book is secured. In agribusiness, the profile is similar. Almost 99% of customers are sub-AUD 10 million, and again, we have very few large customers. Ninety-nine percent of the book is secured. Our funding and liquidity metrics remain strong and well-diversified. Our average liquidity coverage ratio for the Q4 was strong at 140.2%.

Speaker #3: A reason the portfolio are modest, and 95% of the book is secured. In agribusiness, the profile is similar. Almost 99% of customers are sub 10 million dollars, and again, we have very few large customers.

Speaker #3: 99% of the book is secured. Our funding and liquidity metrics remain strong, and well diversified. Our average liquidity coverage ratio for the fourth quarter was strong at 140.2%.

Speaker #3: The proportion of customer deposits to total funding reduced on the prior half to around 77%, following the raising of around 1.8 billion dollars of wholesale funding to fund around 3 billion dollars of asset growth.

Andrew Morgan: The proportion of customer deposits to total funding reduced on the prior half to around 77%, following the raising of around AUD 1.8 billion of wholesale funding to fund around AUD 3 billion of asset growth. Our coverage of household deposits to loans at 76% is well above the industry average. Our Community Bank partnerships importantly provide us with a net AUD 15 billion of funding, which provides further diversification and a relatively cheaper funding source than wholesale funding. To illustrate my earlier point on funding pressures, you can see that we have a large volume of term funding maturities to manage through financial year 2027. Turning now to capital and dividends. Our CET1 ratio eased 3 basis points to 11.34% over the half, and this reflected a few key drivers.

Speaker #3: Our coverage of household deposits to loans at 76% is well above the industry average. Our community bank partnerships, importantly, provide us with a net 15 billion dollars of funding, which provides further diversification and a relatively cheaper funding source than wholesale funding.

Speaker #3: To illustrate my earlier point on funding pressures, you can see that we have a large volume of term financial year 27. Turning now to capital and dividends.

Andrew Morgan: To illustrate my earlier point on funding pressures, you can see that we have a large volume of term funding maturities to manage through financial year 2027. Turning now to capital and dividends. Our CET1 ratio eased 3 basis points to 11.34% over the half, and this reflected a few key drivers.

Speaker #3: Our CET1 ratio eased three basis points to 11.34% over the half, and this reflected a few key drivers. Earnings were impacted by lower statutory profits, resulting from 59 million dollars of regulatory provisions, which we took up, as disclosed last week, which lowered CET1 by around 15 basis points.

Andrew Morgan: Earnings were impacted by lower statutory profits resulting from AUD 59 million of regulatory provisions, which we took up, as disclosed last week, which lowered CET1 by around 15 basis points. We did benefit through the half from some data and modeling enhancements, which lifted CET1 by 11 basis points. CET1 was also impacted 18 basis points by the APRA capital overlay reflected through a higher operational risk capital charge, which was effective 1 January 2026. Our capital remains well above the board target of above 10%. Directors have determined to pay a final dividend of AUD 0.33 per share, which will be fully franked. This represents a 69% payout ratio for the half, and on a cents per share basis, is flat on the prior comparative period. In summary, we are in a strong capital position going into financial year 2027.

Speaker #3: We did benefit through the half from some data and modeling enhancements, which lifted CET1 by 11 basis points. CET1 was also impacted 18 basis points by the APRA capital overlay, reflected through a higher operational risk capital charge, which was effective 1 January 2026.

Speaker #3: Our capital, remains well above the board target, of above 10%. Directors have determined to pay a final dividend of 33 cents per share, which will be fully franked.

Andrew Morgan: Our capital remains well above the board target of above 10%. Directors have determined to pay a final dividend of AUD 0.33 per share, which will be fully franked. This represents a 69% payout ratio for the half, and on a cents per share basis, is flat on the prior comparative period. In summary, we are in a strong capital position going into financial year 2027.

Speaker #3: This represents a 69% payout ratio for the half, and on a cents per share basis is flat on the prior comparative period. So in summary, we're in a strong capital position, going into financial year 27.

Speaker #3: Last week, we gave you a summary of some notable items into next year, so I wanted to now bring that picture together for you, along with a reminder of the benefits associated with a couple of our strategic programs.

Andrew Morgan: Last week, we gave you a summary of some notable items into next year, so I wanted to now bring that picture together for you, along with a reminder of the benefits associated with a couple of our strategic programs. For financial year 2027, as we disclosed last week, you can expect us to report on three key notable expense items. First is the cost associated with the implementation of our strategic partnerships of AUD 56 to AUD 66 million. This is consistent with the disclosure which we made in early April of total costs of roughly AUD 85 to AUD 95 million. Second is costs related to the migration of RACQ customers onto our core banking platform of AUD 28 to AUD 34 million. This is consistent with the disclosure which we made in early December 2025.

Speaker #3: For financial year 27, as we disclosed last week, you can expect us to report on three key notable expense items. First is the cost associated with the implementation of our strategic partnerships, of 56 to 66 million dollars.

Andrew Morgan: First is the cost associated with the implementation of our strategic partnerships of AUD 56 to AUD 66 million. This is consistent with the disclosure which we made in early April of total costs of roughly AUD 85 to AUD 95 million. Second is costs related to the migration of RACQ customers onto our core banking platform of AUD 28 to AUD 34 million. This is consistent with the disclosure which we made in early December 2025.

Speaker #3: This is consistent with the disclosure, which we made in early April, of total costs of roughly 85 to 95 million. Second is costs related to the migration of RACQ customers onto our core banking platform, of 28 to 34 million dollars.

Speaker #3: This is consistent with the disclosure, which we made in early December 2025. And third is a one-off methodology change to the mechanics of our staff equity scheme, of around 16 to 23 million dollars.

Andrew Morgan: Third is a one-off methodology change to the mechanics of our staff equity scheme of around AUD 16 to AUD 23 million. In aggregate, these costs will total between AUD 100 and AUD 123 million pre-tax. We expect each of these costs to be isolated to financial year 2027. As a result, our costs, including notables, will be elevated, and return on equity, inclusive of notables, will be diluted in financial year 2027. To support our progress towards our return on equity target of above 10%, we are on track to deliver the benefits which we previously guided to on both our strategic partnerships and RACQ, as you can see on the right-hand side of this slide. There is a lot of information which we have just run through. Let me summarize the total impacts across our key line items in financial year 2027. This includes income, expenses, and capital.

Speaker #3: In aggregate, these costs will total between 100 and 123 million dollars pre-tax. We expect each of these costs to be isolated to financial year 27.

Speaker #3: As a result, our costs, including notables, will be elevated and return on equity inclusive of notables will be diluted in financial year 27. To support our progress towards our return on equity target of above 10%, we are on track to deliver the benefits, which we previously guided to, on both our strategic partnerships and RACQ, as you can see on the right-hand side of this slide.

Andrew Morgan: To support our progress towards our return on equity target of above 10%, we are on track to deliver the benefits which we previously guided to on both our strategic partnerships and RACQ, as you can see on the right-hand side of this slide. There is a lot of information which we have just run through. Let me summarize the total impacts across our key line items in financial year 2027. This includes income, expenses, and capital.

Speaker #3: So there's a lot of information which we've just run through. Let me summarize the total impacts across our key line items in financial year 27.

Speaker #3: And this includes income, expenses, and capital. On BAU expenses, we expect to grow between 4 and 5% on financial year 26, excluding RACQ operating expenses.

Andrew Morgan: On BAU expenses, we expect to grow between 4% and 5% on financial year 2026, excluding RACQ operating expenses. We expect investment spend to be in the range of AUD 230 to AUD 240 million, inclusive of notables. We expect AUD 120 million of that to be expensed, around AUD 60 million to be capitalized, and AUD 50 to AUD 60 million of notable items related to our strategic partnerships and RACQ. That means expensed investment spend pre-notables is expected to be flat on financial year 2026. For RACQ specifically, on the basis that we complete the transaction during Q2 2027, we expect the following in-year impacts. First, NII of AUD 33 to AUD 37 million. Second, incremental OpEx of AUD 8 to AUD 9 million. Third, a 31 basis points impact to CET1 upon completion, reflecting the risk-weighted asset carry, and fourth, an uplift to return on equity of 23 to 27 basis points.

Speaker #3: We expect investment spend to be in the range of 230 to 240 million dollars inclusive of notables. We expect 120 million dollars of that to be expensed, around 60 million to be capitalized, and 50 to 60 million dollars of notable items, related to our strategic partnerships, and RACQ.

Speaker #3: So that means expensed investment spend pre-notables is expected to be flat on financial year 26. For RACQ specifically, on the basis that we complete the transaction during second quarter 27, we expect the following in-year impacts.

Andrew Morgan: For RACQ specifically, on the basis that we complete the transaction during Q2 2027, we expect the following in-year impacts. First, NII of AUD 33 to AUD 37 million. Second, incremental OpEx of AUD 8 to AUD 9 million. Third, a 31 basis points impact to CET1 upon completion, reflecting the risk-weighted asset carry, and fourth, an uplift to return on equity of 23 to 27 basis points. I will now hand back to Richard for closing comments.

Speaker #3: First, NII of 33 to 37 million dollars. Second, incremental OPEX of 8 to 9 million dollars. Third, a 31 basis points impact to CET1 upon completion, reflecting the risk-weighted asset carry, and fourth, an uplift to return on equity of 23 to 27 basis points.

Speaker #3: I'll now hand back to Richard for closing comments.

Richard Fennell: I will now hand back to Richard for closing comments. Thanks, Andrew. To recap, our areas of focus for FY27 are clear. Embed our risk programs to drive a fundamental shift in risk maturity, continue to grow our deposit base, migrate the RACQ customers, and leverage our strategic partnerships as we build a better bank. We remain committed to our target of an ROE of 10% by 2030, delivering long-term value for our shareholders, supported by the necessary uplift in our risk capabilities as we build a better bank. Finally, let me take the opportunity to thank our people, partners, and customers for their continued support over what has, at times, been a challenging last 12 months. I will now hand back to Sam to moderate the Q&A.

Speaker #2: Thanks, Andrew. To recap, our areas of focus for FY27 are clear. Embed our risk programs to drive a fundamental shift in risk maturity, continue to grow our deposit base, migrate the RACQ customers, and leverage our strategic partnerships as we build a better bank.

Richard Fennell: Thanks, Andrew. To recap, our areas of focus for FY27 are clear. Embed our risk programs to drive a fundamental shift in risk maturity, continue to grow our deposit base, migrate the RACQ customers, and leverage our strategic partnerships as we build a better bank. We remain committed to our target of an ROE of 10% by 2030, delivering long-term value for our shareholders, supported by the necessary uplift in our risk capabilities as we build a better bank.

Speaker #2: We remain committed to our target of an ROE of 10% by 2030, delivering long-term value for our shareholders, supported by the necessary uplift in our risk capabilities as we build a better bank.

Speaker #2: And finally, let me take the opportunity to thank our people, partners, and customers for their continued support over what has at times been a challenging last 12 months.

Richard Fennell: Finally, let me take the opportunity to thank our people, partners, and customers for their continued support over what has, at times, been a challenging last 12 months. I will now hand back to Sam to moderate the Q&A.

Speaker #2: I'll now hand back to Sam to moderate the Q&A.

Speaker #3: Thanks, Richard.

Speaker #4: Thank you. Thank you. Just a reminder, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.

[Company Representative] (Bendigo Bank): Thanks, Richard.

Sam Miller: Thanks, Richard.

Operator: Thank you. Just a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. I will now hand back to Sam.

Speaker #4: If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask a question.

Speaker #4: I'll now hand back to Sam.

Speaker #3: Thank you. Our first question comes from Annabelle Ross of Barren Jerry.

[Company Representative] (Bendigo Bank): Thank you. Our first question comes from Annabel Ross of Barrenjoey.

Sam Miller: Thank you. Our first question comes from Annabel Ross of Barrenjoey.

Speaker #4: Good morning, and thank you for taking my question. Hopefully you can hear me okay. So I just wanted to go through the operating expenses guidance that you provided.

Annabel Ross: Good morning, and thank you for taking my question. Hopefully you can hear me okay. I just wanted to go through the operating expenses guidance that you provided. In FY26, your operating expenses excluding investment spend landed at AUD 1,142 million, and your guidance for FY27 operating expenses pre-notables and RACQ is to grow between 4% to 5%. If we then add in the RACQ impact, of which you are guiding to approximately AUD 8 million, this implies BAU expenses next year should be around AUD 1.2 billion. Next, adding in the investment spend, expense of AUD 120 million. This means costs ex notables should land at around AUD 1,320 million. If we then add in notables of AUD 100 million to AUD 123 million, this means total expenses should land around AUD 1,420 million to AUD 1,460 million in FY27. Is this the correct way of thinking about it?

Speaker #4: So in FY26, your operating expenses excluding investment spend landed at 1142, and your guidance for FY27 operating expenses pre-notables and RACQ is to grow between 4 to 5%.

Speaker #4: If we then add in the RACQ impact, of which you're guiding to approx 8 million, this implies BAU expenses next year should be around 1.2 billion.

Speaker #4: Next, adding in the investment spend, expensed of 120 million, this means costs ex-notables should land at around 1320. If we then add in notables of 100 to 123 million, this means total expenses should land around 1420 to 1460 in FY27.

Annabel Ross: Next, adding in the investment spend, expense of AUD 120 million. This means costs ex notables should land at around AUD 1,320 million. If we then add in notables of AUD 100 million to AUD 123 million, this means total expenses should land around AUD 1,420 million to AUD 1,460 million in FY27. Is this the correct way of thinking about it? Then just to add to that, in FY28, you talk about the strategic partnerships, which are going to give a 65 to 75 benefit. Is this benefit required to keep the cost growth in 2028 to around inflation, or are you implying costs will fall further by that number? Thank you.

Speaker #4: Is this the correct way of thinking about it? And then just to add to that, in FY28, you talk about the strategic partnerships. What you're going to give a 65 to 75 benefit.

Annabel Ross: Then just to add to that, in FY28, you talk about the strategic partnerships, which are going to give a 65 to 75 benefit. Is this benefit required to keep the cost growth in 2028 to around inflation, or are you implying costs will fall further by that number? Thank you.

Speaker #4: And is this benefit required to keep the cost growth in 28 to around inflation, or are you implying costs will fall further by that number?

Speaker #4: Thank you.

Speaker #3: Annabelle, that was about 87 questions in one. So what we might do is just, Andrew or Richard, if you could just give the top line on that expense guidance.

[Company Representative] (Bendigo Bank): Annabel, that was about 87 questions in one. So what we might do is just, Andrew or Richard, if you could just give the top line on that expense guidance, that would probably helpful.

Sam Miller: Annabel, that was about 87 questions in one. So what we might do is just, Andrew or Richard, if you could just give the top line on that expense guidance, that would probably helpful.

Speaker #3: That would probably helpful.

Speaker #2: Yeah, over to you, Andrew. So Annabelle, just on your second question first, let me cover that off. So what we previously said is that our business as usual cost growth ambition over the medium term is no higher than inflation through the cycle.

Andrew Morgan: Yeah. Over to you, Andrew. Anabel, just on your second question first, let me cover that off. What we've previously said is that our business as usual cost growth ambition over the medium term is no higher than inflation through the cycle. To be clear, the benefit of the partnerships is included in that BAU cost growth of no higher than inflation. The key reason for that is that there is a large part of our cost base, or around 20% of our cost base, which is growing faster than inflation, and that is license, cloud, and amortization costs. What those partnership benefits will do is allow us to meet that BAU cost guidance no higher than inflation. That's the first question to cover off.

Richard Fennell: Yeah. Over to you, Andrew.

Andrew Morgan: Anabel, just on your second question first, let me cover that off. What we've previously said is that our business as usual cost growth ambition over the medium term is no higher than inflation through the cycle. To be clear, the benefit of the partnerships is included in that BAU cost growth of no higher than inflation.

Speaker #2: To be clear, the benefit of the partnerships is included in that BAU cost growth of no higher than inflation. And the key reason for that is that there is a large part of our cost base, or around 20% of our cost base, which is growing faster than inflation.

Andrew Morgan: The key reason for that is that there is a large part of our cost base, or around 20% of our cost base, which is growing faster than inflation, and that is license, cloud, and amortization costs. What those partnership benefits will do is allow us to meet that BAU cost guidance no higher than inflation. That's the first question to cover off.

Speaker #2: And that is licensed cloud and amortization costs. So what those partnership benefits will do is allow us to meet that BAU cost guidance no higher than inflation.

Speaker #2: That's the first question to cover off. Let me step briefly through then the second part of your question, which is how do we bring all these pieces together?

Speaker #2: And there is quite a bit of detail we've given which I'll step through. So you're absolutely right. Our business as usual costs for 26 were 1142.

Andrew Morgan: Let me step briefly through then the second part of your question, which is how do we bring all these pieces together? There is quite a bit of detail we've given, which I'll step through. You're absolutely right. Our business as usual costs for 2026 were AUD 1,142 million. That is absolutely right. We then said add 4% to 5% on top of that, then add the run costs or the operating expenses for RACQ on top of that again. That's AUD 8 million to AUD 9 million. That total cost for BAU is around about 5% to 6%. Then there are a couple of notable OpEx items. These are items that will only occur, we believe, in 2027, and no further than that. There's a proportion of the partnership costs, which we disclosed. That's somewhere between AUD 34 million and AUD 40 million.

Speaker #2: That is absolutely right. We then said add 4 to 5% on top of that, then add the run costs or the operating expenses for RACQ on top of that again.

Andrew Morgan: We then said add 4% to 5% on top of that, then add the run costs or the operating expenses for RACQ on top of that again. That's AUD 8 million to AUD 9 million. That total cost for BAU is around about 5% to 6%. Then there are a couple of notable OpEx items. These are items that will only occur, we believe, in 2027, and no further than that. There's a proportion of the partnership costs, which we disclosed. That's somewhere between AUD 34 million and AUD 40 million.

Speaker #2: So that's 8 to 9 million dollars. So that total cost for BAU is around about 5 to 6%. Then there are a couple of notable OPEX items.

Speaker #2: So these are items that will only occur we believe in 27 and no further than that. So there's a proportion of the partnership costs, which we disclosed, that's somewhere between 34 and 40 million dollars.

Speaker #2: And then there's the incentive scheme adjustment, which is 16 to 23 million dollars. So that implies then that the overall costs are growing somewhere between 9 and 11%.

Andrew Morgan: Then there's the incentive scheme adjustment, which is AUD 16 million to AUD 23 million. That implies then that the overall costs are growing somewhere between 9% and 11%. That's the BAU costs. On investment spend, we've said the expensed investment spend, we expect to be flat year on year, so around about AUD 120 million. Then there's a proportion of that partnership spend which relates to investment spend, that's between AUD 22 million and AUD 26 million. That means that our overall investment spend OpEx is between AUD 142 million and AUD 146 million. Hopefully that's clear in the way that all those parts come together.

Speaker #2: That's the BAU costs. Then on investment spend, we've said the expensed investment spend, we expect to be flat year on year, so around about 120 million dollars.

Speaker #2: Then there's a proportion of that partnership spend, which relates to investment spend, that's between 22 and 26 million dollars. So that means that our overall investment spend OPEX is between 142 and 146 million.

Andrew Morgan: Then there's a proportion of that partnership spend which relates to investment spend, that's between AUD 22 million and AUD 26 million. That means that our overall investment spend OpEx is between AUD 142 million and AUD 146 million. Hopefully that's clear in the way that all those parts come together.

Speaker #2: So hopefully that's together.

Speaker #4: Yes, thank you.

Speaker #3: Our next question is from Kelsey Bentley. Of JPMorgan.

Annabel Ross: Yes. Thank you.

[Company Representative] (Bendigo Bank): Our next question is from Kelsey Bentley of JPMorgan.

Sam Miller: Our next question is from Kelsey Bentley of JPMorgan.

Speaker #4: Hi, thank you, Sam. Richard and Andrew, I just wanted to ask a question on your outlook for mortgage growth. You talked to wanting to grow around.

Kelsey Bentley: Hi. Thank you, Sam. Richard and Andrew, I just wanted to ask a question on your outlook for mortgage growth. You talked to wanting to grow around System, just based on competitive tensions, sort of see how that tracks. How does that sort of feed into the information you give on slide 9, where you talk about the average mortgage NIM for new business, and we can see a pretty steady trend downwards over the last year. How has this sort of fed into your growth in particularly Q4 of FY26, and how you see things trending in FY27? Thanks.

Speaker #4: System just based on competitive tensions sort of see how that tracks. How does that sort of feed into the information you give on slide 9 where you talk about the average mortgage NIM for new business?

Speaker #4: And we can see a pretty steady trend downwards over the last year. How is this sort of fed into your growth in particularly the fourth quarter of FY26 and how you see things trending in FY27?

Speaker #4: Thanks.

Speaker #2: Yeah, it's a really good question, Kelsey. Because I think we're all going to be facing into a pretty dynamic year when it comes to the mortgage industry.

Andrew Morgan: Yeah, it is a really good question, Kelsey, because I think we are all going to be facing a pretty dynamic year when it comes to the mortgage industry, given what has been happening from a government perspective with changes to tax rules, et cetera. From my perspective, I think we are reasonably well positioned to continue to see some growth going forward, particularly through a couple of channels that I would like to highlight. First of those is the digital channel, which consistently has sort of been that 15% to 20% of mortgage settlements for us, and we expect that will continue to see pretty steady growth. With some of the pricing changes we have made recently in a couple of those offerings there, I think that will hold us in good stead.

Richard Fennell: Yeah, it is a really good question, Kelsey, because I think we are all going to be facing a pretty dynamic year when it comes to the mortgage industry, given what has been happening from a government perspective with changes to tax rules, et cetera. From my perspective, I think we are reasonably well positioned to continue to see some growth going forward, particularly through a couple of channels that I would like to highlight.

Speaker #2: Given what has been happening from a government perspective with changes to tax rules, etc., from my perspective, I think we're reasonably well positioned to continue to see some growth going forward, particularly through a couple of channels that I'd like to highlight.

Speaker #2: First of those is the digital channel, which consistently has sort of been that 15 to 20% of mortgage settlements for us. And we expect that will continue to see pretty steady growth.

Richard Fennell: First of those is the digital channel, which consistently has sort of been that 15% to 20% of mortgage settlements for us, and we expect that will continue to see pretty steady growth. With some of the pricing changes we have made recently in a couple of those offerings there, I think that will hold us in good stead.

Speaker #2: And with some of the pricing changes, we've made recently in a couple of those offerings there, I think that will hold us in good stead.

Speaker #2: And the other one is we continue to mature the use of the Bendigo lending platform through our retail channel, where we expect we'll continue to see some growth there.

Andrew Morgan: The other one is we continue to mature the use of the Bendigo Lending Platform through our retail channel, where we expect we will continue to see some growth there. We have seen a reduction in application volume from where they were through most of FY26 by about 15%. That has steadied now, and we are starting to certainly see some, in the last few weeks maybe, a little bit of more resilience coming back to that market. It is going to be dynamic this year, so that is why we are not giving any firm guidance on that. I do not know, Andrew, is there anything you want to add? Yeah, Kelsey, just picking up your comment on slide 9.

Richard Fennell: The other one is we continue to mature the use of the Bendigo Lending Platform through our retail channel, where we expect we will continue to see some growth there. We have seen a reduction in application volume from where they were through most of FY26 by about 15%. That has steadied now, and we are starting to certainly see some, in the last few weeks maybe, a little bit of more resilience coming back to that market. It is going to be dynamic this year, so that is why we are not giving any firm guidance on that. I do not know, Andrew, is there anything you want to add?

Speaker #2: We have seen a reduction in application volume from where they were through most of FY26 by about 15%, but that is steadied now. And we're starting to certainly see some in the last few weeks, maybe a little bit more resilience coming back to that market.

Speaker #2: But it is going to be dynamic this year. So that's why we're not giving any firm guidance on that. I don't know, Andrew, is there anything else you want to add?

Speaker #2: Yeah, Kelsey, just picking up your comment on slide 9. Part of the reason why we saw a dip in that NIM to credit risk weighted assets, that's the chart on the top right-hand side, is we did see an opportunity through the course of the half to write some fixed rate business, and we felt it was important to build some momentum.

Andrew Morgan: Yeah, Kelsey, just picking up your comment on slide 9. Part of the reason why we saw a dip in that NIM to credit-risk-weighted assets, that's the chart on the top right-hand side, is we did see an opportunity through the course of the half to write some fixed rate business, and we felt it was important to build some momentum. It was a little on the thinner side in respect of margin. The returns were still returns we were looking for. So that really is the explanator for that dip.

Andrew Morgan: Part of the reason why we saw a dip in that NIM to credit-risk-weighted assets, that's the chart on the top right-hand side, is we did see an opportunity through the course of the half to write some fixed rate business, and we felt it was important to build some momentum. It was a little on the thinner side in respect of margin. The returns were still returns we were looking for. So that really is the explanator for that dip.

Speaker #2: It was a little on the thinner side in respect of margin. The returns were still returns we were looking for. So that really is the explanator for that dip.

Speaker #3: Thank you both.

Speaker #1: Thanks, Kelsey. Our next question is from Sally Hong from Morgan Stanley.

Kelsey Bentley: Thank you both.

[Company Representative] (Bendigo Bank): Thanks, Kelsey. Our next question is from Sally Hong from Morgan Stanley.

Sam Miller: Thanks, Kelsey. Our next question is from Sally Hong from Morgan Stanley.

Speaker #4: Good morning, team. I have a couple of questions. So firstly, you're targeting business and agribusiness growth at system for next year. What do you think system growth is for FY27?

Sally Hong: Good morning, team. I have a couple of questions. Firstly, you're targeting Business and Agribusiness growth at System for next year. What do you think System growth is for FY27, and can you comment on the Business and Agribusiness competitive landscape?

Speaker #4: And can you comment on the business and agri competitive landscape?

Speaker #2: Yeah, Sally, we're thinking that that's going to be in the order of just above mid-single digits. Again, there's a little bit of wet finger in the air with this stuff, but probably in the order of maybe 6 to 7% growth just based on the resilience we've seen last year and over the last few months.

Andrew Morgan: Yeah. Sally, we are thinking that that is going to be in the order of just above mid-single digits. Again, there is a little bit of wet finger in the air with this stuff, but probably in the order of maybe 6% to 7% growth, just based on the resilience we have seen last year and over the last few months. We actually are pretty comfortable with the offerings that we have got that we can continue to see some solid growth coming through our business there. We clearly have some strength in the agri space. There were some concerns earlier this calendar year on the back of what happened in the Middle East, that this was going to be a really challenging year for farmers around the country with fuel prices and fertilizer prices.

Richard Fennell: Yeah. Sally, we are thinking that that is going to be in the order of just above mid-single digits. Again, there is a little bit of wet finger in the air with this stuff, but probably in the order of maybe 6% to 7% growth, just based on the resilience we have seen last year and over the last few months. We actually are pretty comfortable with the offerings that we have got that we can continue to see some solid growth coming through our business there.

Speaker #2: We actually are pretty comfortable with the offerings that we've got that we can continue to see some solid growth coming through our business there.

Speaker #2: We clearly have some strength in the agri space. There were some concerns earlier this calendar year on the back of what happened in the Middle East.

Richard Fennell: We clearly have some strength in the agri space. There were some concerns earlier this calendar year on the back of what happened in the Middle East, that this was going to be a really challenging year for farmers around the country with fuel prices and fertilizer prices.

Speaker #2: This was going to be a really challenging year. For farmers around the country, with fuel prices and fertilizer prices, but on the back of what has been a pretty good year in many parts of the country, from a climate perspective, it looks like there'll be another probably solid year from a yield perspective.

Andrew Morgan: On the back of what has been a pretty good year in many parts of the country from a climate perspective, it looks like there will be another probably solid year from a yield perspective. As we are looking forward, we think there are a number of areas that we can continue to drive that growth. Sure, things are competitive. There is always competitiveness out there in the market. We are finding plenty of opportunity based on our relationship-based banking to find customers that are interested in joining us.

Richard Fennell: On the back of what has been a pretty good year in many parts of the country from a climate perspective, it looks like there will be another probably solid year from a yield perspective. As we are looking forward, we think there are a number of areas that we can continue to drive that growth. Sure, things are competitive. There is always competitiveness out there in the market. We are finding plenty of opportunity based on our relationship-based banking to find customers that are interested in joining us.

Speaker #2: So as we're looking forward, we think there are a number of areas that we can continue to drive that growth. Sure, things are competitive.

Speaker #2: There's always competitiveness out there in the market. Although we're finding plenty of opportunity based on our relationship-based banking to find customers that are interested in joining us.

Speaker #4: Thanks, Richard. And just a second question on the margin. So the June quarter margin was around 2%. But you're flagging mortgage competition and term deposit repricing as headwinds.

Sally Hong: Thanks, Richard. Just a second question on the margin. The June quarter margin was around 2%. You are flagging mortgage competition and term deposit repricing as headwinds, with some benefit from the replicating buffer to come through. Should we expect the H1 2027 margin to be below this June quarter margin, and can you give us a sense of what those magnitude of those competing impacts would be?

Speaker #4: With some benefit from the replicating buffer to come through. Should we expect the first half, 27 margin, to be below this June quarter margin?

Speaker #4: And can you give us a sense of what those magnitude of those competing impacts would be?

Speaker #2: I do, Andrew. Sally, we don't normally give too much guidance on margin other than talk about the headwinds and the tailwinds. And as we said last week, we think there are definitely headwinds.

Andrew Morgan: Over to you, Andrew. Sally, we do not normally give too much guidance on margin other than talk about the headwinds and the tailwinds. As we said last week, we think there are definitely headwinds. Those headwinds you have just laid out, which are competition, which we are all seeing on a day-to-day basis on both sides of the balance sheet. In respect to funding costs, we can definitely see headwinds there. We have a wholesale funding task ahead of us through the course of 2027. We have put some wholesale funding onto the balance sheet in the Q3, so there are some headwinds there. In addition to that, part of what drove our margin outcome in the half, and to an extent in the final quarter, was our approach in respect of term deposit pricing.

Richard Fennell: Over to you, Andrew.

Andrew Morgan: Sally, we do not normally give too much guidance on margin other than talk about the headwinds and the tailwinds. As we said last week, we think there are definitely headwinds. Those headwinds you have just laid out, which are competition, which we are all seeing on a day-to-day basis on both sides of the balance sheet.

Speaker #2: And those headwinds you've just laid out, which are competition, which we're all seeing on a day-to-day basis on both sides of the balance sheet.

Speaker #2: And then in respect to funding costs, we can definitely see headwinds there. And so we have a wholesale funding task ahead of us through the course of 27.

Andrew Morgan: In respect to funding costs, we can definitely see headwinds there. We have a wholesale funding task ahead of us through the course of 2027. We have put some wholesale funding onto the balance sheet in the Q3, so there are some headwinds there. In addition to that, part of what drove our margin outcome in the half, and to an extent in the final quarter, was our approach in respect of term deposit pricing.

Speaker #2: We've put some wholesale funding onto the balance sheet in the third quarter. So there's some headwinds there. And in addition to that, part of what drove our margin outcome in the half and to an extent in the final quarter was our approach in respect of term deposit pricing.

Speaker #2: And of course, as those term deposits further reprice, when that book turns, there will be a headwind there. On the positive side, on the tailwind side, we can certainly see that in our replicating portfolio, particularly on the deposit side, the gap between front book tractors and back tractors is still quite wide.

Andrew Morgan: As those term deposits further reprice, when that book turns, there will be a headwind there. On the positive side, on the tailwind side, we can certainly see that in our replicating portfolio, particularly on the deposit side, the gap between front book tractors and back tractors is still quite wide. That will give us a benefit, assuming that five-year swap kind of stays about where it is. Then we do think there is still a possibility of a cash rate rise. I think the market this morning is still implying somewhere between 60% and 65% by the time we get to the end of the calendar. As you all know, what we have typically talked about in respect of our leverage to rates is roughly 2 basis points for every 25 in cash rate.

Speaker #2: And so that will give us a benefit, assuming that five-year swap kind of stays about where it is. And then we do think there's still a possibility of a cash rate rise.

Speaker #2: I think the market this morning still implying somewhere between 60 and 65% by the time we get to the end of the calendar and as you all know, what we have typically talked about in respect of our leverage to rates is roughly, roughly two basis points for every 25 in cash rate.

Andrew Morgan: Then we do think there is still a possibility of a cash rate rise. I think the market this morning is still implying somewhere between 60% and 65% by the time we get to the end of the calendar. As you all know, what we have typically talked about in respect of our leverage to rates is roughly 2 basis points for every 25 in cash rate. Can't give you any more specifics than that other than give you all of the various considerations.

Speaker #2: So can't give you any more specifics than that other than give you all of the various considerations.

Speaker #4: Thanks so much, Andrew.

Andrew Morgan: Can't give you any more specifics than that other than give you all of the various considerations.

Speaker #1: Thanks, Sally. Our next question comes from Andrew Lines from Jefferies.

Sally Hong: Thanks so much, Andrew.

Speaker #5: Thanks and good morning. Just a question on investment and the progression out here 2030 targets. Just your investment slate in our carrying a number of items that you describe as notables.

[Company Representative] (Bendigo Bank): Thanks, Sally. Our next question comes from Andrew Lyons from Jefferies.

Sam Miller: Thanks, Sally. Our next question comes from Andrew Lyons from Jefferies.

Andrew Lyons: Thanks and good morning. Just a question on investment and the progression out to your 2030 targets. Just your investment slate, you are now carrying a number of items that you describe as notables, and there is also the AUD 70 to 90 million that will come through over the next 2 years for AML. You obviously speak about your cost growth of sub-inflation, but just thinking about the impact of investment spend on that cost trajectory out to 2030. As some of these notable programs fall away, how should we be thinking about investment spend? Should we see it decline, or will you be basically reinvesting in the broader franchises as those programs come to an end?

Speaker #5: And there's also the 70 to 90 million that'll come through over the next two years. For AML, now you've obviously speak to bear you cost growth of sub-inflation.

Speaker #5: But just thinking about the impact of investment spend on that cost trajectory out to 2030, as some of these sort of programs notable programs fall away, how should we be thinking about investment spend?

Andrew Lyons: You obviously speak about your cost growth of sub-inflation, but just thinking about the impact of investment spend on that cost trajectory out to 2030. As some of these notable programs fall away, how should we be thinking about investment spend? Should we see it decline, or will you be basically reinvesting in the broader franchises as those programs come to an end?

Speaker #5: Should we see it decline or will you be basically reinvesting in the broader franchises as those programs come to an end?

Speaker #2: Yeah, look, it's a really good question, Andrew. It's one we ponder a little ourselves. So I can't give you a definitive answer. It's one of those things that we're going to need to turn our mind to over the next year or so.

Richard Fennell: Yeah, look, it is a really good question, Andrew. It is one we ponder a little ourselves, so I cannot give you a definitive answer. It is one of those things that we are going to need to turn our mind to over the next year or so. As you point out, some of those programs naturally start to wind down. This year, obviously, there is a fair bit of work going into setting up those new partnerships and the RACQ migration that will be finishing up. At the same time, we will be ramping up the work we are doing on the risk front, both the AML/CTF piece, but also the work we are going to need to do in the non-financial risk area. It is really going to be dependent on what is happening in the market and what are the investments we need to make to remain competitive and relevant going forward.

Speaker #2: As you point out, some of those programs naturally start to wind down. This year, obviously, there's a fair bit of work going into setting up those new partnerships.

Speaker #2: And the RACQ migration that'll be finishing up. But at the same time, we'll be ramping up the work we're doing on the risk front, both the AML CTF piece, but also the work where we're going to need to do on the non-financial risk in the non-financial risk area.

Richard Fennell: At the same time, we will be ramping up the work we are doing on the risk front, both the AML/CTF piece, but also the work we are going to need to do in the non-financial risk area. It is really going to be dependent on what is happening in the market and what are the investments we need to make to remain competitive and relevant going forward.

Speaker #2: It is really going to be dependent on what is happening in the market and what is what are the investments we need to make to remain competitive and relevant going forward.

Speaker #2: I'd love us to be able to be in a position where we can see some reduction in that investment spend between now and 2030, but I'm not going to sit here and make that sort of commitment because things are changing so quickly in the technology space in particular that I'm not sure how that's going to play.

Richard Fennell: I would love us to be able to be in a position where we can see some reduction in that investment spend between now and 2030. I am not going to sit here and make that sort of commitment, because things are changing so quickly in the technology space in particular, that I am not sure how that is going to play. The whole AI area is really interesting because you can mount an argument that that is going to drive so much productivity from a development perspective that you should be able to do more for less. At the same time, I am not sure what sort of developments we are going to need to implement within our organization to keep up with the industry and our customers' expectations, importantly.

Speaker #2: The whole AI area is really interesting. Because you can mount an argument that that's going to drive so much productivity from a development perspective that you should be able to do more for less.

Richard Fennell: The whole AI area is really interesting because you can mount an argument that that is going to drive so much productivity from a development perspective that you should be able to do more for less. At the same time, I am not sure what sort of developments we are going to need to implement within our organization to keep up with the industry and our customers' expectations, importantly.

Speaker #2: But at the same time, I'm not sure what sort of developments we're going to need to implement within our organization to keep up with the industry and our customers' expectations, importantly.

Speaker #3: And just want to point, Andrew, sorry, just before you go to your next question, the rectification plan that Richard mentioned, we did provide for in our 26 results.

Andrew Morgan: Just one other point, Andrew, sorry, just before you go to your next question. The rectification plan that Richard mentioned, we did provide for.

Speaker #3: So that's not part of our investment spend. That's already been put on the balance sheet and we will draw that. So I just want to make sure that's clear.

Speaker #5: Yeah, no, that's clear. Thank you. And maybe just thanks for those comments, Richard and Andrew. Just Andrew, one for you. And again, it's similar to the previous question or maybe a bit of an extension.

Richard Fennell: Yeah

Andrew Morgan: in our 2026 results, so that's not part of our investment spend. That's already been put on the balance sheet, and we will draw that. I just want to make sure that's clear.

Andrew Lyons: Yeah. No, that's clear. Thank you. Thanks for those comments, Richard and Andrew. Andrew, one for you. Again, it's similar to the previous question or maybe a bit of an extension, just around the replicating portfolio and assume sort of swap rates remain where they are at the moment, and that's purely an assumption. How long would you estimate, if that was the case, that you'd have an ongoing tailwind from your replicating portfolio, if you were to make that assumption?

Speaker #5: Just around the replicating portfolio and assume sort of swap rates remain where they are at the moment. And that's purely an assumption. But how long would you estimate, if that was the case, that you'd have an ongoing tailwind from your replicating portfolio if you were to make that assumption?

Speaker #5: How many halves?

Speaker #2: So there's a couple of big ifs in that, Andrew. So if swap stayed where it is now, there's probably another I would say 12 to 18 months of benefit ahead of us.

Andrew Morgan: Yep. I think-

Andrew Lyons: How many half?

Andrew Morgan: So there's a couple of big ifs in that, Andrew. So if

Andrew Lyons: Yeah

Andrew Morgan: if swaps stayed where it is now, there's probably another, I would say, 12 to 18 months of benefit ahead of us. And that's really a function of where those back tractors sit right now relative to where we're printing front tractors.

Speaker #2: And that's really a function of where those back tractors sit right now relative to where we're printing front tractors.

Speaker #5: Appreciate it. Thank you.

Speaker #1: Our next question is from Ed Henning at CLSA.

Andrew Lyons: Appreciate it. Thank you.

[Company Representative] (Bendigo Bank): Our next question is from Ed Henning at CLSA.

Sam Miller: Our next question is from Ed Henning at CLSA.

Speaker #5: Thanks for taking my questions. Just a couple of follow-ups. Just firstly on the margin, Andrew, you talked about you've put in some more wholesale funding and there's some more to do.

Ed Henning: Thanks for taking my questions. Just a couple of follow-ups. Firstly, on the margin, Andrew, you talked about you put in some more wholesale funding and there is some more to do, and you increased your TD prices in the Q4 where you had got a benefit through the half. Can you just talk about your margin? Obviously, you printed 2 in the Q4. Is the exit from that down a little bit given TD pricing up, wholesale funding coming through? Then just think about then going forward with the headwinds of competition and that as the first question.

Speaker #5: And you increased your TD prices in the fourth quarter where you've got a benefit through the half. Can you just talk about your margin?

Speaker #5: Obviously, you've printed two in the fourth quarter. Is the exit from that down a little bit given TD pricing up, wholesale funding coming through, and then to think about then going forward with the headwinds of competition?

Speaker #5: And that is the first question.

Speaker #2: So we're not disclosing what the exit NIM actually was. What I can tell you is that the term deposit book doesn't reprice straight away.

Andrew Morgan: Well, Ed, we are not disclosing what the exit NIM actually was. What I can tell you is that the term deposit book does not reprice straight away. So there is new business that comes through, there are rolls. So there is a progressive reprice that will happen in the term deposit book. It then depends on what tenors customers choose. So if we have customers that are on a 12-month rate and they were on that rate nine months ago, then clearly there is going to be an impact as those term deposits roll. Similarly with wholesale, that is a part impact that will have come through in the Q4, and then that more full impact will play out into next year. What I will say, just in the interest of balance, is that we do have a pretty substantial maturity profile into next year, which we are going to be refinancing.

Speaker #2: So there's new business that comes through, there's roles. So there's a progressive reprice that will happen in the term deposit book. It then depends on what tenors customers choose.

Speaker #2: So if we've got customers that are on a 12-month rate and they're on that rate nine months ago, then clearly there's going to be an impact as those term deposits roll.

Speaker #2: Similarly with wholesale, that's a part impact that will have come through in the fourth quarter. And then that more full impact will play out into next year.

Andrew Morgan: Similarly with wholesale, that is a part impact that will have come through in the Q4, and then that more full impact will play out into next year. What I will say, just in the interest of balance, is that we do have a pretty substantial maturity profile into next year, which we are going to be refinancing.

Speaker #2: What I will say, just in the interest of balance, is that we do have a pretty substantial maturity profile into next year, which we're going to be refinancing.

Speaker #2: I would hope that we do better in respect of spread. So where those deals were printing three, four, five years ago, depending on the tenor, our spreads would have been basis points wider than where we've been able to write wholesale business recently.

Andrew Morgan: I would hope that we do better in respective spread. So where those deals were printing three, four, five years ago, depending on the tenor, our spreads would have been basis points wider than where we have been able to write wholesale business recently. So whilst the volume of wholesale funding will certainly increase, I would hope to see some better spread as we print in whichever form of execution we choose.

Speaker #2: So whilst the volume of wholesale funding will certainly increase, I'd hope to see some better spread as we print, in whichever form of execution we choose.

Speaker #5: Yeah, that's helpful. Thank you. And then just a second question, thinking about kind of cost and revenue growth going forward. You're talking about some margin headwinds.

Ed Henning: Yeah, that is helpful. Thank you. Then just a second question, thinking about kind of cost and revenue growth going forward, you are talking about some margin headwinds. You have Homesafe rolling off a little bit, and you have substantial investment going into, through your P&L just on regulatory and compliance. If we do get an environment where the revenue growth starts to fall for the system, how much discretionary spend do you have that you are able to pull back on spending? Or how should we think about that with your obviously, the regulatory spend has got to come through.

Speaker #5: You've got HomeSafe rolling off a little bit. And you've got substantial investment going into through your P&L just on regulatory and compliance. If we do get an environment where the revenue growth starts to fall for the system, how much discretionary spend do you have that you're able to pull back on spending?

Speaker #5: Or how should we think about that with you? Obviously, the regulatory spend that's got to come through.

Speaker #2: Yeah. Thanks, Ed. From my perspective, that's the reason we're doing things like these strategic partnerships to give us more flexibility there. And they are by their nature cost that we can flex depending on the resources we're requiring from those areas.

Richard Fennell: Yeah. Thanks, Ed. From my perspective, that is the reason we are doing things like these strategic partnerships to give us more flexibility there. They are, by their nature, costs that we can flex depending on the resources we are requiring from those areas. If we think about things like operations, if there is less volume going through, we require less support in processing areas and the like. Likewise, with the relationship with Mphasis, we can make some decisions to flex up and down. That is generally, though, around the edges. The reality is there are significant fixed costs in running a bank. We are always conscious of the revenue environment and in how we then look to manage our cost base, to try and make sure that we can continue to generate strong returns and over time, improving returns for our shareholders.

Speaker #2: So if we think about things like operations, if there's less volume going through, we require less support in processing areas. And the like. And likewise, with the relationship with Infosys, we can make some decisions to flex up and down.

Richard Fennell: Likewise, with the relationship with Mphasis, we can make some decisions to flex up and down. That is generally, though, around the edges. The reality is there are significant fixed costs in running a bank. We are always conscious of the revenue environment and in how we then look to manage our cost base, to try and make sure that we can continue to generate strong returns and over time, improving returns for our shareholders.

Speaker #2: Now, that's generally, though, around the edges. The reality is there's significant fixed costs in running a bank. But look, we're always conscious of the revenue environment.

Speaker #2: And in how we then look to manage our cost base, to try and make sure that we can continue to generate strong returns and over time, improving returns for our shareholders.

Speaker #5: Okay. Thank you.

Speaker #1: Thanks, Ed. Our next question is from John's story at UBS.

Ed Henning: Okay. Thank you.

[Company Representative] (Bendigo Bank): Thanks, Ed. Our next question is from John Storey at UBS.

Sam Miller: Thanks, Ed. Our next question is from John Storey at UBS.

Speaker #5: Thanks very much. Morning, team. Hopefully, you can hear me. I just wanted to kind of to Ed's question just around the deposit benefit that you saw, right?

John Storey: Thanks very much. Morning to you. Hopefully you can hear me. I just wanted to Ed's question just around the deposit benefit that you saw, I would be quite interested to just get a high-level understanding of your strategy in terms of how you think about deposit pricing, particularly on your savings product and just the elasticity of your rates, I guess, and how clients potentially could think about potentially moving to other banks relative to your rates, relative to peers, would be helpful.

Speaker #5: So it'd be quite interesting to just get a high-level understanding of your strategy in terms of how you think about deposit pricing, particularly on your savings product, and just the elasticity of your rates, I guess, and how clients potentially could kind of think about potentially moving to other banks.

Speaker #5: Relative to your rates, relative to peers, would be helpful.

Speaker #2: Yeah. Thanks, John. We get this question a lot. And I assume in particular, you're probably talking about the easy saver product which from a savings product perspective, it provides a solid return for customers, but there are higher returns available elsewhere.

Richard Fennell: Yeah. Thanks, John. We get this question a lot, and I assume in particular you are probably talking about the EasySaver product.

John Storey: Yes

Richard Fennell: Which, from a savings product perspective, it provides a solid return for customers, but there are higher returns available elsewhere. We recognize that. It is interesting. We continue to get strong growth in that product over the last 12 months, north of 10%. We think that reflects the more general attraction of our offering to customers. It is not just around the product. It is around having access to over 400 branches if they want to come in and speak to someone face-to-face, which obviously for many of those banks that offer higher rates, that is not possible. It is for customers who actually like what we do in the community, and over AUD 50 million in the last 12 months, going back into community contributions. Often, those contributions are supporting things that are meaningful to those customers around the country in their local communities.

Speaker #2: We recognize that. But it is interesting we continue to get strong growth in that product. Over the last 12 months, north of 10%. We think that reflects the more general attraction of our offering to customers.

Speaker #2: It's not just around the product. It's around having access to over 400 branches. If they want to come in and speak to someone, face to face, which obviously for many of those banks that offer higher rates that's not possible.

Richard Fennell: It is around having access to over 400 branches if they want to come in and speak to someone face-to-face, which obviously for many of those banks that offer higher rates, that is not possible. It is for customers who actually like what we do in the community, and over AUD 50 million in the last 12 months, going back into community contributions. Often, those contributions are supporting things that are meaningful to those customers around the country in their local communities.

Speaker #2: It's for customers who actually like what we do in the community and over 50 million dollars in the last 12 months going back into community contributions, often those contributions are supporting things that are meaningful to those customers around the country and their local communities.

Speaker #2: So and I think the last one I probably point out is the reflection then in our net promoter score. Being more than 20 points above percentage points above the average of the industry isn't by accident.

Richard Fennell: I think the last one I would probably point out is the reflection then in our net promoter score, being more than 20 percentage points above the average of the industry is not by accident. Customers that continue to be attracted to banking with us, they are satisfied with the returns they are getting from the products we are offering on the deposit side. If they are looking for a higher return, there are other options that we offer as well. We do know with the EasySaver product, with the functionality it provides, along with a solid return, it continues to attract people to putting their funds there. Right now with the flows we are getting, we are comfortable with where we have got that positioned.

Speaker #2: So customers that continue to be attracted to banking with us, they're satisfied with the returns they're getting from the products we're offering on the deposit side.

Speaker #2: They don't if they're looking for a higher return, there are other options that we offer as well. But we do know with the easy saver product, with the functionality it provides, along with a solid return, it continues to attract people to putting their funds there.

Richard Fennell: If they are looking for a higher return, there are other options that we offer as well. We do know with the EasySaver product, with the functionality it provides, along with a solid return, it continues to attract people to putting their funds there. Right now with the flows we are getting, we are comfortable with where we have got that positioned.

Speaker #2: So right now, with the flows we're getting, we're comfortable with where we've got that positioned.

Speaker #5: Maybe just quickly, once for Andrew, just on the DOP, obviously, and how you've been using it, I guess, over the last few reporting periods, what percentage of investors actually take up their dividends in scripts?

John Storey: Maybe just quickly one for Andrew. Just on the DRP, obviously, and how you have been using it, I guess, over the last few reporting periods. What percentage of investors actually take up their dividends in scrips?

Speaker #3: Un-discounted, John. It's typically around 12% to 13%.

Speaker #5: Okay. Fantastic. Thank you.

Andrew Morgan: Undiscounted, John, it's typically around 12% to 13%.

Speaker #1: Our next question is from Tom Strong at Citi.

John Storey: Okay. Fantastic. Thank you.

Speaker #5: Oh, good morning. And thanks for taking my questions. Perhaps a question for you, Andrew, to start with, just on the NIM. On the waterfall, you can see six basis points from deposits.

[Company Representative] (Bendigo Bank): Our next question is from Tom Strong at Citi.

Sam Miller: Our next question is from Tom Strong at Citi.

Tom Strong: Good morning, and thanks for taking my questions. Perhaps a question for you, Andrew, to start with just on the NIM. On the waterfall, you can see 6 basis points from deposits, and you've called out term deposits were also 6. You should have got a benefit on the unhedged deposits from the cash rate rises. It would've been about

Speaker #5: And you've called out term deposits were also six. I mean, you should have got a benefit on the unhedged deposits from the cash rate rises.

Speaker #5: It would have been about probably two to three bips from those. Can you just sort of talk to the other things that might have netted off in that deposit tile?

Tom Strong: Probably two to three basis points from those. Can you just talk to the other things that might have netted off in that deposit tile?

Speaker #3: Thanks, Tom, for the question. So the deposit and funding pricing block of six basis points is all term deposits. We capture all the replicating portfolio benefit inside that replicating portfolio.

Andrew Morgan: Thanks, Tom, for the question. The deposit and funding pricing block of six basis points is all term deposits. We capture all the replicating portfolio benefit inside that replicating portfolio column. So that includes both unhedged and hedged deposits. Remember that it is 80% that are hedged and only 20% unhedged. So that is how we pick it up. What I will also point out, again, in the interest of balance, is revenue share, which someone will no doubt ask about. So we will go there now. Of that three basis points impact of revenue share, about two of that three is term deposits. Whilst, as you all know, the revenue share somewhat acts as a limiter when our margin is expanding and vice versa.

Speaker #3: Column. So that includes both unhedged and hedged deposits. And remember that it's 80% that are hedged and only 20% unhedged. So that's how we pick it up.

Speaker #3: What I will also point out, again, in the interest of balance, is revenue share, which someone will no doubt ask about. So we'll go there now.

Speaker #3: So of that three basis points, impact of revenue share, about two of that three is term deposits. And so whilst as you all know, the revenue share somewhat acts as a limiter when our margin is expanding and vice versa.

Andrew Morgan: Of that three basis points impact of revenue share, about two of that three is term deposits. Whilst, as you all know, the revenue share somewhat acts as a limiter when our margin is expanding and vice versa. What we have seen with that pickup of term deposit margins through the course of the H1, about two of the six has played out in revenue share, just to make that clear.

Speaker #3: And so what we've seen with that pickup of term deposit margins through the course of the half, about two of the six has played out in revenue share, just to make that clear.

Andrew Morgan: What we have seen with that pickup of term deposit margins through the course of the H1, about two of the six has played out in revenue share, just to make that clear.

Speaker #5: Right. Thanks for clarifying that. And just a question on the RACQ book. You sort of make reference to the 30 June 2025 numbers, but if we look at the December balances, first today, it looks like the lending and deposit balances are down sort of two to three percent.

Tom Strong: Great. Thanks for clarifying that. Just a question on the RACQ book. You make reference to the 30 June 2025 numbers, but if we look at the December balances versus today, it looks like the lending and deposit balances are down two to three percent. Can you just talk about how that book is performing, and how you can arrest that decline under new ownership?

Speaker #5: Can you just talk about how that book's performing and how you can sort of arrest that decline under new ownership?

Speaker #2: Yeah. Tom, in respect of RACQ, we're not giving an update on their 30 June numbers because they are yet to release those publicly. We looking forward, we're very keen to see if we can continue to grow that book.

Richard Fennell: Yeah. Tom, in respect of RACQ, we are not giving an update on their 30 June numbers because they are yet to release those publicly. Looking forward, we are very keen to see if we can continue to grow that book. We are bringing over nearly about 20 lenders who currently support the lending book with RACQ. Also, those RACQ members will have access to our very large branch network in Queensland. I cannot remember off the top of my head, but I think it is about 90 branches across Queensland, where they can do their banking going forward. We are going to have a referral agreement in place with RACQ going forward. We would hope we can continue to attract more customers from their very large member base in Queensland, going forward.

Speaker #2: We're bringing over nearly about 20 lenders who currently support the lending book, with RACQ. And also, those RACQ members will have access to our very large branch network in Queensland, I can't remember off the top of my head, but I think it's about 90 branches across Queensland.

Richard Fennell: Also, those RACQ members will have access to our very large branch network in Queensland. I cannot remember off the top of my head, but I think it is about 90 branches across Queensland, where they can do their banking going forward. We are going to have a referral agreement in place with RACQ going forward. We would hope we can continue to attract more customers from their very large member base in Queensland, going forward.

Speaker #2: Where they can do their banking going forward. So we are going to have a referral agreement in place with RACQ going forward. So we'd hope we can continue to attract more customers from their very large member base in Queensland going forward.

Speaker #5: Great. Thanks, Richard.

Speaker #1: Our next question comes from Carlos Ketcher. From Macquarie.

Tom Strong: Great. Thanks, Richard.

Speaker #5: Thanks, Sam. I just had a quick first question, just around the partnership work. I know it's still early, but it'd be great to kind of hear how that's progressing, versus your expectations, and if there's any kind of key learnings or insights as you've worked through that work with Infosys and Genpact so

[Company Representative] (Bendigo Bank): Our next question comes from Carlos Cacho from Macquarie.

Sam Miller: Our next question comes from Carlos Cacho from Macquarie.

Carlos Cacho: Thanks, Sam. I just had a quick first question just around the partnership work. I know it is still early, but it would be great to hear how that is progressing, versus your expectations and if there is any key learnings or insights as you have worked through that work with Mphasis and Genpact so far.

Speaker #2: Yeah. Thanks, Carlos. Look, things are very much on track. We're very pleased with the way the partnerships are performing early days. The Infosys work is further progressed and as part of that, we've had a significant number of ex-Bendigo members of our team transfer to Infosys as part of that arrangement.

Richard Fennell: Thanks, Carlos. Things are very much on track. We are very pleased with the way the partnerships are performing early days. The Mphasis work has further progressed. As part of that, we have had a significant number of ex-Bendigo members of our team transfer to Mphasis as part of that arrangement. Things are starting to get better down there, with Mphasis picking up a range of existing services to provide back to the bank on our behalf. Genpact, that work is not as far advanced, but we are certainly in the process of well progressed with the blueprinting of all the processes that are planned to move across to Genpact.

Speaker #2: And things are starting to get better down there with Infosys picking up a range of new sorry, a range of existing services to provide back to the bank on our behalf.

Richard Fennell: Things are starting to get better down there, with Mphasis picking up a range of existing services to provide back to the bank on our behalf. Genpact, that work is not as far advanced, but we are certainly in the process of well progressed with the blueprinting of all the processes that are planned to move across to Genpact.

Speaker #2: Genpact, that work is not as far advanced, but we're certainly in the process of we'll progress with the blueprinting of all the processes that are planned to move across to Genpact.

Speaker #2: And one of the learnings from that, through that process, that has really helped as we've worked with Genpact to map our existing processes and to be able to leverage their experience where they see opportunities from the work they do with other banks around the world to provide support and advice to us on how we may want to look at doing things differently or more efficiently going forward.

Richard Fennell: One of the learnings from that, through that process, has really helped as we have worked with Genpact to map our existing processes and to be able to leverage their experience, where they see opportunities from the work they do with other banks around the world to provide support and advice to us on how we may want to look at doing things differently or more efficiently going forward. From my perspective, it is certainly really quite exciting the way things are progressing, and I will be heading across to visit those operations in October along with a number of others within the organization to see firsthand how things are progressing. As we sit here today, certainly we are really pleased, recognizing it is still early days.

Speaker #2: So from my perspective, it's certainly really quite exciting the way things are progressing and I'll be heading across to visit those operations in October, along with a number of others within the organization to see firsthand how things are progressing.

Richard Fennell: From my perspective, it is certainly really quite exciting the way things are progressing, and I will be heading across to visit those operations in October along with a number of others within the organization to see firsthand how things are progressing. As we sit here today, certainly we are really pleased, recognizing it is still early days.

Speaker #2: So but as we sit here today, certainly we're really pleased recognizing it's still early days.

Speaker #5: Great. And then a second question, maybe for you, Andrew, just around the non-interest income. You called out ex-HomeSafe. That was driven by better wealth management and cards, income.

Carlos Cacho: Great. Then a second question maybe for you, Andrew, just around the non-interest income. You called out ex-Homesafe, that was driven by better wealth management and cards income. How sustainable is that? Should we kind of think of that as the new base going forward, or are there any one-offs that are likely to roll off for FY 2027?

Speaker #5: How sustainable is that? Should we kind of think about it as the new base going forward, or are there any one-offs that are likely to roll off for FY27?

Speaker #3: Yeah. I'll deal with the two thanks, Carlos. I'll deal with the two separately. So the wealth business is absolutely sustainable. And so what we've seen through the course of both the half and the full year is strong growth in funds under management and some improvement in margin as well.

Andrew Morgan: I will deal with the two. Thanks, Carlos. I will deal with the two separately. The wealth business is absolutely sustainable. What we have seen through the course of both the H1 and the full year is strong growth in funds under management and some improvement in margin as well. It is a good set of products. Our customers like them. They are very straightforward products, so our people provide general advice in respect of the sales of those. That is a good business there, and we expect that business to hopefully continue. On cards, there is a little bit of a one-off. We extended our partnership with Mastercard through the course of the year, and so there was a little bit of a one-off benefit, which will mostly recur, but not fully recur in 2027. That is AUD 3, 4 million.

Speaker #3: And so it's a good set of products. Our customers like them. They're very straightforward products. So our people provide general advice in respect of the sales of those.

Andrew Morgan: Our customers like them. They are very straightforward products, so our people provide general advice in respect of the sales of those. That is a good business there, and we expect that business to hopefully continue. On cards, there is a little bit of a one-off. We extended our partnership with Mastercard through the course of the year, and so there was a little bit of a one-off benefit, which will mostly recur, but not fully recur in 2027. That is AUD 3, 4 million. It's not a big number in the scheme of things.

Speaker #3: So that is a good business there, and we expect that business to hopefully continue. On cards, there is a little bit of a one-off.

Speaker #3: So there's a we extended our partnership with MasterCard through the course of the year. And so there was a little bit of a one-off benefit, which will mostly recur, but not fully recur in 27.

Speaker #3: But that's three, four million dollars. It's not a big number in the scheme of things.

Speaker #5: Great. Thank you.

Speaker #1: Thanks, Carlos. Our next question is from Brendan Sprouse from Goldman Sachs.

Andrew Morgan: It's not a big number in the scheme of things.

Carlos Cacho: Great. Thank you.

Speaker #5: Good morning, team. I have a couple of questions. Firstly, just, Andrew, in relation to your comment during the presentation around inflation, you kind of flagged 4%.

[Company Representative] (Bendigo Bank): Thanks, Carlos. Our next question is from Brendan Sproules from Goldman Sachs.

Sam Miller: Thanks, Carlos. Our next question is from Brendan Sproules from Goldman Sachs.

Brendan Sproules: Good morning, team. I have a couple of questions. Firstly, Andrew, in relation to your comment during the presentation around inflation. You kind of flagged 4%. Could you maybe distinguish between, I guess, staff wage inflation versus, say, tech and other cost inflation that you're expecting in 2027?

Speaker #5: Could you maybe distinguish between I guess staff wage inflation versus, say, tech and other cost inflation that you're expecting in 27?

Speaker #2: Yeah. Thanks, Brendan. So just to reiterate the way we've been talking about our cost base, the last few times we've spoken to you. So if you think about it like this, we've got roughly 60% of our costs today that are staff-related costs.

Andrew Morgan: Yeah, thanks, Brendan. So just to reiterate the way we have been talking about our cost base the last few times we have spoken to you. If you think about it like this. We have got roughly 60% of our costs today that are staff-related costs. As you have seen through both our half and our full year results, we have managed that cost base to below inflation. That is largely because of the first wave of productivity work that we have been doing. Clearly, that part of the cost base will be impacted by any wage inflation. At the same time, the strategic partner benefits will come through that line as well. The second group of costs, which is around about 17%, 18% of our cost base, is license, cloud, and amortizations costs. So software licenses, cloud costs, and amortization costs.

Speaker #2: And as you've seen through both our half and our full year results, we have managed that cost base to below inflation. And that's largely because of the first wave of productivity work that we've been doing.

Speaker #2: Clearly, that part of the cost base will be impacted by any wage inflation. At the same time, the strategic partner benefits will come through that line as well.

Andrew Morgan: Clearly, that part of the cost base will be impacted by any wage inflation. At the same time, the strategic partner benefits will come through that line as well. The second group of costs, which is around about 17%, 18% of our cost base, is license, cloud, and amortizations costs. So software licenses, cloud costs, and amortization costs.

Speaker #2: The second group of costs which is around about 17, 18% of our cost base is licensed cloud and amortization costs. So software licenses, cloud costs, and amortization costs.

Speaker #2: This part of our cost base is growing at a multiple of inflation. And it'd be no surprise to you or anyone on this call that we continue to see when we utilize the services of global tech companies that the costs of such services have been increasing in the double digits.

Andrew Morgan: This part of our cost base is growing at a multiple of inflation. It would be no surprise to you or anyone on this call that we continue to see when we utilize the services of global tech companies, that the costs of such services have been increasing in the double digits. The third part of our cost base is then what we would describe as property and external services. Whilst those costs over the course of the year have grown around about inflation, we are actually quite bullish on these going forward because we have continued to do a lot of work in respect of our corporate property footprint. So we think over time, we can grow those costs below inflation. Then the final part of our cost, which is a very small amount, is what we describe as non-lending losses.

Speaker #2: The third part of our cost base is then what we were described as property and external services. And whilst those costs over the course of the year have grown around about inflation, we're actually quite bullish on these going forward because we've continued to do a lot of work in respect of our corporate property footprint.

Andrew Morgan: Whilst those costs over the course of the year have grown around about inflation, we are actually quite bullish on these going forward because we have continued to do a lot of work in respect of our corporate property footprint. So we think over time, we can grow those costs below inflation. Then the final part of our cost, which is a very small amount, is what we describe as non-lending losses.

Speaker #2: So we think over time we can grow those costs below inflation. And then the final part of our costs, which is a very small amount, is what we describe as non-lending losses.

Speaker #2: And so 60% of our costs going back to your point, we expect to see grow below inflation. And that's staff costs. We expect another 20% of our costs, which is property and external services, to be able to grow a little below inflation as well.

Andrew Morgan: 60% of our costs, going back to your point, we expect to see grow below inflation, and that is staff costs. We expect another 20% of our costs, which is property and external services, to be able to grow a little below inflation as well. Where the partnerships are really helping us to stand in front of a cost group that is growing faster than inflation is those license, cloud, and amortization costs. That is why, again, we come back to that overall guidance of our cost base of growing no higher than inflation through the cycle. So I hope that answers the question, Brendan.

Speaker #2: Where the partnerships are really helping us to stand in front of a cost group that is growing faster than inflation is those licensed cloud and amortization costs.

Speaker #2: That's why, again, we come back to that overall guidance of our cost base of growing no higher than inflation through the cycle. So hope that answers the question, Brendan.

Speaker #5: Oh, that's great, Andrew. Really appreciate it. And my second question is just on the performance of the business and agribusiness division on slide 46.

Brendan Sproules: No, that is great, Andrew. Really appreciate it. My second question is just on the performance of the Business and Agribusiness division on slide 46. You have shown lending balances are growing above system 12.6%, also driven by the portfolio funding business, which you show in the slide is a higher NIM to credit risk-weighted assets. When I look into 2027, how do I balance out that with falling customer balances, falling other income, particularly FX, higher expenses, and you have seen quite a fall in profit, I guess, over the year. We expect those similar trends to continue into 2027 outside of lending?

Speaker #5: I mean, you've shown lending balances are growing above system, 12.6%. Also driven by the portfolio funding business, which you've shown in the slide is a higher NIM to credit risk weighted assets.

Speaker #5: But when I look into 27, how do I balance out that with sort of falling customer balances falling other income, particularly FX, higher expenses?

Speaker #5: And you've seen quite a fall in profit, I guess, over the year. Are we expect those similar trends to continue into 27 outside of lending?

Speaker #2: So a couple of things Brendan on that. I'll start and Richard might want to jump in as well. So we remain pretty bullish about business and agri.

Andrew Morgan: So a couple of things, Brendan, on that. I will start, and Richard might want to jump in as well. We remain pretty bullish about Business and Agri. We talked about strong growth in Agri. We recognize that there is seasonal growth that happens typically in the H2 and then runs down in the H1. We have continued to expand our different channel offers through business lending, and you have already rightly pointed that out. One of those is portfolio funding, which is a really good business. It is a business that has been growing, and it offers, depending on the variety, either both NIM and credit risk-weighted asset benefit and/or just credit risk-weighted asset benefit. So we continue to be pretty optimistic there. We have increased our presence in broker markets, not substantially, but nonetheless, that is a benefit there.

Speaker #2: So we talked about strong growth in agri. We recognize that there's seasonal growth that happens typically in the second half and then runs down in the first half.

Speaker #2: We have continued to expand our different channel offers through business lending. And that and you've already rightly pointed that out. One of those is portfolio funding, which is a really good business.

Speaker #2: It's a business that has been growing and it offers depending on the variety either both near man credit risk weighted asset benefit and/or just credit risk weighted asset benefit.

Andrew Morgan: One of those is portfolio funding, which is a really good business. It is a business that has been growing, and it offers, depending on the variety, either both NIM and credit risk-weighted asset benefit and/or just credit risk-weighted asset benefit. So we continue to be pretty optimistic there. We have increased our presence in broker markets, not substantially, but nonetheless, that is a benefit there.

Speaker #2: And so we continue to be pretty optimistic there. We've increased our presence in broker markets, not substantially, but nonetheless, that's a benefit there. Where we've got more work to do, and it's part of our investment slate into next year, is in onboarding.

Speaker #2: And digital onboarding. And so we're very successfully through the consumer bank rolled out digital onboarding this year. And we've seen good signs of success there.

Andrew Morgan: Where we have got more work to do, and it is part of our investments slate into next year, is in onboarding and digital onboarding. So we very successfully, through the Consumer Bank, rolled out digital onboarding this year, and we have seen good signs of success there early on. The next piece of the strategy that we need to tackle is digital deposit gathering for our Business and Agri customers. So that is certainly part of that investment slate we talked about earlier. We know we have got work to do there. So getting that part of our business really humming again will certainly help to underpin, I would hope, better stability and margin. But Richard, you might want to.

Speaker #2: Early on, the next piece of the strategy that we need to tackle is digital deposit gathering. For our business and agri customers. And so that's certainly part of that investment slate we talked about earlier.

Speaker #2: We know we've got work to do there. And so getting that part of our business really humming again will certainly help to underpin I would hope better stability and margin.

Andrew Morgan: So that is certainly part of that investment slate we talked about earlier. We know we have got work to do there. So getting that part of our business really humming again will certainly help to underpin, I would hope, better stability and margin. But Richard, you might want to.

Speaker #2: But Richard, you might want to.

Speaker #3: Yeah. And look, on that slide, John, I think the sorry, Brendan. I think the key point there is if you look at the growth in assets, yep, that's positive.

Richard Fennell: Yeah, and look on that slide, John, I think the, sorry, Brendan. I think the key point there is if you look at the growth in assets, yeah, that is positive and it tends to be every H2 stronger because we get the Agri flows with the seasonal lending there. But the liabilities has been pretty much flat over four halves. That is where we are looking to drive that growth, which will then help the margin. So that is the key for us arresting that decline in margin from a divisional perspective, is starting to get the liability flow growing there. And the reality is, we have fallen behind when it comes to digital capability in the B&A space for deposit gathering. So that is a key focus for our digital team this financial year.

Speaker #3: And it tends to be every second half stronger because we get the agri flows with the seasonal lending there. But the liabilities has been pretty much flat over four hards.

Speaker #3: That's where we're looking to drive that growth, which will then help the margin. And so that's the key for us arresting that decline in margin.

Speaker #3: From a divisional perspective, it's starting to get the liability flow growing there. And the reality is we have fallen behind when it comes to digital capability in the B&A space for deposit gathering.

Richard Fennell: So that is the key for us arresting that decline in margin from a divisional perspective, is starting to get the liability flow growing there. And the reality is, we have fallen behind when it comes to digital capability in the B&A space for deposit gathering. So that is a key focus for our digital team this financial year.

Speaker #3: And so that's a key focus for our digital team this financial year.

Speaker #5: Thank you.

Speaker #1: Thanks, Brendan. Our next question is from Brian Johnson at MST.

Brendan Sproules: Thank you.

Speaker #5: Hi. Two questions, if I may. If we have a look at slide 42, we can see that the average flow of a new home loan being done is about $480,000, which is really low compared to the overall stats.

[Company Representative] (Bendigo Bank): Thanks, Brendan. Our next question is from Brian Johnson at MST.

Sam Miller: Thanks, Brendan. Our next question is from Brian Johnson at MST.

Brian Johnson: Hi. Two questions, if I may. If we have a look at slide 42, we can see that the average flow of a new home loan being done is about AUD 480,000, which is really low compared to the overall stats. We can also see that you seem to be over-indexed towards investment property. When we think about that, it would appear that even the life of the digital home loans would appear to be shorter than through the branch. Can we just get a feeling as to whether those three observations are right and why that may be? So low average home loan drawdown. And another question after this, the shorter life and the over-index towards investment.

Speaker #5: What we can also see is that you seem to be over-indexed towards investment property. Could you and when we think about that, it would appear that even the life of the digital home loans would appear to be shorter than through the branch.

Speaker #5: Can we just get a feeling as to where those three observations are right and why that may be? So low average home loan drawdown and then over question after this, the shorter life and the over-indexed towards investment.

Brian Johnson: Can we just get a feeling as to whether those three observations are right and why that may be? So low average home loan drawdown. And another question after this, the shorter life and the over-index towards investment.

Speaker #3: Yeah. Thanks, Brian. The we historically have had a lower average mortgage value than the market, which also reflects our strength in regional Australia. The reality is if you're buying a property in regional Australia where many of our branches are, the price of those properties and therefore the amount you need to borrow tends to be significantly less than if you're focused more around Sydney and Melbourne.

Richard Fennell: Yeah. Thanks, Brian. We historically have had a lower average mortgage value than the market, which also reflects our strength in regional Australia. The reality is, if you're buying a property in regional Australia, where many of our branches are, the price of those properties, and therefore the amount you need to borrow, tends to be significantly less than if you're focused more around Sydney and Melbourne. So that's historically been a key element of lower average value. As far as the investment flow, yeah, it's been 27% in the most recent H1, but it's not massively different to the portfolio, which has been at 23% to 24% over the last three halves. Yes, we have chosen to be a little bit more competitive from a pricing perspective in investor.

Speaker #3: So that's historically been a key element of lower average value. As far as the investment flow, yeah, it's been 27% in the most recent half.

Richard Fennell: So that's historically been a key element of lower average value. As far as the investment flow, yeah, it's been 27% in the most recent H1, but it's not massively different to the portfolio, which has been at 23% to 24% over the last three halves. Yes, we have chosen to be a little bit more competitive from a pricing perspective in investor.

Speaker #3: And but it's not massively different to the portfolio, which is been at 23, 24% over the last three hards. Yes, we have chosen to be a little bit more competitive from a pricing perspective in investor.

Speaker #3: The reason we've done that is because we're we know that we can generate an appropriate return there because even being slightly sharper on rate there, it's still a rate that's above the owner-occupied rate.

Richard Fennell: The reason we've done that is because we know that we can generate an appropriate return there, because even being slightly sharper on rate there, it's still a rate that's above the owner-occupied rate. So we saw an opportunity there, in the market to position ourselves to take a little bit of market share through that investment space. But certainly at 27% versus a portfolio of 24%, I don't feel like we're skewing the business in any significant way. On the weighted average life, I must admit, I haven't turned my mind to that. The reality is, I suspect one of the drivers of that may be the fact that we shut down one of our third-party channels about 12 months ago, and we've seen increased turnover in that back book there as a lot of those customers through that channel have refinanced elsewhere.

Speaker #3: So we saw an opportunity there in the market to position ourselves to take a little bit of market share through that investment space. But certainly at 27% versus a portfolio at 24%, I don't feel like we've skewed we're skewing the business in any significant way.

Speaker #3: On the weighted average life, I must admit I haven't turned my mind to that. The reality is I think with I suspect one of the drivers of that may be the fact that we shut down one of our third-party channels about 12 months ago.

Richard Fennell: On the weighted average life, I must admit, I haven't turned my mind to that. The reality is, I suspect one of the drivers of that may be the fact that we shut down one of our third-party channels about 12 months ago, and we've seen increased turnover in that back book there as a lot of those customers through that channel have refinanced elsewhere.

Speaker #3: And we've seen increased turnover in that back book there, as a lot of those customers through those that channel have refinanced elsewhere. And so I suspect that will be impacting that weighted average life.

Speaker #3: As that portfolio continues to reduce in absolute size, the amount of attrition there on a month-to-month basis continues to reduce. But it might be one of the unless Andrew, you've turned your mind to what we might have to take that one on notice.

Richard Fennell: I suspect that will be impacting that weighted average life. As that portfolio continues to reduce in absolute size, the amount of attrition there on a month-to-month basis continues to reduce. But it might be one that, unless Andrew, you have turned your mind to it, we might have to take that one on notice.

Speaker #2: On the digital point, Brian, narrowly, it's probably still too early days to really get a census to the average life of a digital loan.

Andrew Morgan: On the digital point, Brian, narrowly, it is probably still too early days to really get a sense as to the average life of a digital loan. We certainly know those numbers for broker-introduced customers and also through our proprietary network. No surprise for a proprietary loan, it is typically around five to six years average life, depending on the number of products the customer takes, and it is typically somewhere between three to four, maybe three to 4.5 for third party. But it is still a little early in our digital through the various channels like Up to get a good sense as to how sticky or otherwise the life of those loans are. But Richard's point on the mortgage partner channels is right.

Speaker #2: We certainly know those numbers for broker introduced customers and also through our proprietary network. And no surprise for a proprietary loan, it's typically around five to six years average life, depending on the number of products the customer takes.

Andrew Morgan: No surprise for a proprietary loan, it is typically around five to six years average life, depending on the number of products the customer takes, and it is typically somewhere between three to four, maybe three to 4.5 for third party. But it is still a little early in our digital through the various channels like Up to get a good sense as to how sticky or otherwise the life of those loans are. But Richard's point on the mortgage partner channels is right.

Speaker #2: And it's typically somewhere between three to four, maybe three to four and a half for third-party. But it's still a little early in our digital through the various channels like up to get a good census to how sticky or otherwise the life of those loans are.

Speaker #2: But Richard's point on the mortgage partner channels is right.

Speaker #5: Okay. Now, the second question, Richard, and I apologize. I'm not sure whether this is a question for you or the chair. Or the head of the risk committee.

Brian Johnson: Okay. The second question, Richard, and I apologize, I am not sure whether this is a question for you or the chair or the head of the risk committee, but it is quite disappointing to actually go through another presentation and still we have not had it clearly enunciated whatever the AUSTRAC problem basically is, whether staff are involved, et cetera. But that said, right now if we have a look at the stock, as far as I can work out, net book value is AUD 11.67, so you are trading below book value. Common sense says issuing shares at a discount to net book value is net book value diluted. When we have a look this time around, you are issuing DRP shares, that is on slide 22. But then when I actually have a look at slide 23, I can see the employee bonus equity plan.

Speaker #5: But it is quite disappointing to actually go through another presentation and still we haven't had a clearly enunciated whatever the AUSTRAC problem basically is.

Speaker #5: Where the staff are involved, etc. But that said, right now, if we have a look at the stock, as far as I can work out, net book value is $11.67.

Brian Johnson: But that said, right now if we have a look at the stock, as far as I can work out, net book value is AUD 11.67, so you are trading below book value. Common sense says issuing shares at a discount to net book value is net book value diluted. When we have a look this time around, you are issuing DRP shares, that is on slide 22. But then when I actually have a look at slide 23, I can see the employee bonus equity plan.

Speaker #5: So you're trading below book value. Common sense says issuing shares at a discount to net book value is net book value diluted. And when we have a look this time around, your issuing DRP shares that's on slide 22.

Speaker #5: But then when I actually have a look at slide 23, I can see the employee bonus equity plan, there's this one-off adjustment where you're moving from 100% shares as I recall to 50% cash.

Brian Johnson: There is this one-off adjustment where you are moving from 100% shares, as I recall, to 50% cash. I would just really like to understand what is the logic when you are trading below book value, asking shareholders, issuing new shares under the DRP, but giving the staff basically 50% of the bonuses through cash in an environment where there has been this recurring governance issue which shareholders are yet to pay for when we find out whatever the AUSTRAC fine is.

Speaker #5: I just really like to understand what is the logic when you're trading below book value asking shareholders issuing new shares under the DRP but giving the staff basically 50% of the bonuses through cash in an environment where there has been this recurring governance issue which shareholders are yet to pay for when we find out whatever the AUSTRAC fine is.

Speaker #3: All right. Yeah. Brian, there's a few elements in there. The first thing I will say is and there was some information in the press over the last week.

Richard Fennell: All right.

Brian Johnson: Can I get some comment, please?

Richard Fennell: Yeah. Brian, there's a few elements in there. The first thing I will say is, and there was some information in the press over the last week, these matters are still being dealt with by law enforcement, and as such, I just can't comment around any details around the specific issues that led to the AML issue coming to light last calendar year. Unfortunately, that's going to remain that way until the police announce any action that they do or don't want to take in relation to that. We're certainly conscious of the fact that we're operating at a discount to net book value. For a number of halves there, we were not adding to our share count and doing that quite deliberately.

Speaker #3: These matters are still being dealt with by law enforcement. And as such, I just can't comment around any details around the specific issues that led to the AML issue coming to light last calendar year.

Speaker #3: Now, unfortunately, that's going to remain that way until the police announce any action that they do or don't want to take in relation to that.

Richard Fennell: Unfortunately, that's going to remain that way until the police announce any action that they do or don't want to take in relation to that. We're certainly conscious of the fact that we're operating at a discount to net book value. For a number of halves there, we were not adding to our share count and doing that quite deliberately.

Speaker #3: In relation we're certainly conscious. The fact that we're operating at a discount to net book value. For a number of halves there, we were not adding to our share count and doing that quite deliberately.

Speaker #3: The reality, as we sit here today, as I think you're aware, we do not know yet what will come of the investigation from AUSTRAC and that may lead to some form of penalty.

Richard Fennell: The reality as we sit here today, as I think you're aware, we do not know yet what will come of the investigation from AUSTRAC, and that may lead to some form of penalty. We just don't know. We continue to collaborate with AUSTRAC through that process, but we don't know when we'll find out and what impact that will be. So during the-

Speaker #3: We just don't know. We continue to collaborate with AUSTRAC through that process. And but we don't know when we'll find out and what impact that will be.

Speaker #3: So during the.

Speaker #5: So sorry, Richard, because I just interrupted there. So the 120 million dollars of DRP underwrite we did last time around, which I think has been more or less linked to the AUSTRAC risk.

Brian Johnson: Sorry, Richard, I just interrupted you there. The AUD 120 million DRP underwrite we did last time around, which I think has been more or less linked to the AUSTRAC risk. What you are saying today is this DRP issuance is the uncertainty around the same issue, which is implying the fine could be greater than that?

Speaker #5: What you're saying today is this DRP issuance is the uncertainty around the same issue, which is implying the fine will be greater than that?

Speaker #3: No. No, you're not doing a great job putting words in my mouth.

Speaker #5: Right.

Richard Fennell: No. You are not doing a great job putting words in my mouth.

Speaker #3: Yeah, I know you are. The reality is in an environment like this, where there is uncertainty going forward, we feel it is an appropriate thing for us to be conservative in relation to our capital position.

Brian Johnson: Right.

Richard Fennell: Yeah, I know you are. The reality is, in an environment like this where there is uncertainty going forward, we feel it is an appropriate thing for us to be conservative in relation to our capital position. We have just set aside about AUD 70 million at the end of 2026 for some further work we need to do on the risk front. That has had an impact on our capital position at 30 June. We are making sure we are conservatively positioned until we have greater certainty around this issue in particular. I certainly do not have any view and will not be making any prediction about any potential penalty if one is applied and to what value that will be. I would not read into the excess capital position we are holding today as any form of indication of what we are expecting on that front.

Speaker #3: We have just set aside some about 70 million dollars at the end of 2026 for some further work we need to do on the risk front.

Speaker #3: And that has had an impact on our capital position at 30 June. We are making sure we are conservatively positioned until we have greater certainty around this issue in particular.

Richard Fennell: We are making sure we are conservatively positioned until we have greater certainty around this issue in particular. I certainly do not have any view and will not be making any prediction about any potential penalty if one is applied and to what value that will be. I would not read into the excess capital position we are holding today as any form of indication of what we are expecting on that front.

Speaker #3: I'm certainly don't have any view and will not be making any prediction about any potential penalty if one is applied. And to what value that will be.

Speaker #3: And I wouldn't read into the excess capital position we're holding today as any form of indication of what we're expecting on that front.

Speaker #5: And the staff issuance cash versus shares.

Speaker #3: Yeah. And that is more driven by making sure we've got a competitive offer for the majority of our people that we look to attract and retain to this organization.

Brian Johnson: Under staff issuance, cash versus shares.

Richard Fennell: Yeah. That is more driven by making sure we have a competitive offer for the majority of our people that we look to attract and retain to this organization. We want them to be shareholders, hence 50% of their bonus plan will remain in equity. But the reality for a lot of those people, they do really appreciate getting part of their bonuses in cash as well, rather than 100% equity. So that is the decision that was made by the organization, which has a one-off impact with a timing impact, effectively, bringing forward that cash element rather than being deferred by 12 months. That is the impact that is called out in the pack.

Speaker #3: We want them to be shareholders. Hence, 50% of their bonus plan, it will remain in equity. But the reality for a lot of those people, they do really appreciate getting part of their bonuses in cash as well rather than 100% equity.

Speaker #3: So that's the decision that was made by the organization, which has a one-off impact with a timing impact effectively bringing forward that cash element rather than being deferred by 12 months.

Speaker #3: That's the impact that is called out in the pack.

Speaker #5: Thanks, Richard. Appreciate it.

Speaker #3: No worries.

Speaker #1: Thanks, Brian. We're going to our final question from Christian Mazza at Jarden.

Brian Johnson: Thanks, Richard. Appreciate it.

Richard Fennell: No worries.

[Company Representative] (Bendigo Bank): Thanks, Brian. We are going to our final question from Christian Mazza at Jarden.

Sam Miller: Thanks, Brian. We are going to our final question from Christian Mazza at Jarden.

Speaker #5: Morning, team. Just one quick last question. Referring to slide 20 in the presentation, you mentioned there is 11.4% of your business portfolio exposures greater than 50 million.

Christian Mazza: Morning, team. Just one quick last question. Referring to slide 20 in the presentation, you mentioned there is 11.4% of your business portfolio exposures greater than AUD 50 million. Is there any exposures that exceed AUD 100 million? If so, what are they secured by?

Speaker #5: Is there any exposures that exceed 100 million? And if so, what are they secured by?

Speaker #3: I'm trying to we will come back to some more confirm afterwards. Let's get the data for you. We'll happily share that data. That's fine.

Richard Fennell: I'm trying to rec

Speaker #5: Yeah.

Andrew Morgan: We will come back, Christian. We'll confirm afterwards.

Richard Fennell: Yeah.

Speaker #3: From memory, Christian, I think there might be in the order of less than five but again, let us come back with the security information on those through a one-on-one discussion.

Andrew Morgan: Let's get the data for you. We'll happily share that data. That's fine.

Richard Fennell: Yeah.

Christian Mazza: Okay. No worries.

Richard Fennell: From memory, Christian, I think there might be in the order of less than five. But again, let us come back with the security information on those through a one-on-one discussion. But it is certainly for a bank of our size, anything with an exposure north of AUD 50 million, we make sure that there is very strong collateral in place, and we manage those very carefully.

Speaker #3: But it's certainly for a bank of our size, anything with an exposure north of 50 million dollars we make sure that there is very strong collateral in place and we manage those very carefully.

Speaker #5: Perfect, Doris. Thanks, team.

Christian Mazza: No worries. Thanks, team.

[Company Representative] (Bendigo Bank): Thanks very much. Thanks very much everyone for joining us, and we will talk to you all this afternoon.

Sam Miller: Thanks very much. Thanks very much everyone for joining us, and we will talk to you all this afternoon.