The CEO of Rural Bank for the past six years, Alexandra Gartmann, will leave Bendigo. She was also responsible for partnerships, marketing, corporate affairs and climate risk.
Meanwhile, Bruce Speirs, who has been leading the business bank, will take up the new role of Bendigo chief operating officer, where he will work closely with chief transformation officer Ryan Brosnahan.
Bendigo managing director Marnie Baker said bringing business and rural lending together “will help us fast-track our transformation agenda and achieve our goal of becoming a bigger, better and stronger bank for our customers and the communities we serve.”
Rural Bank was founded in 2000 as a partnership between Bendigo and Elders and became a fully owned subsidiary of Bendigo in 2010, incorporating Elders Agri Finance. In the full 2021 year, cash earnings in the business division rose by 29 per cent to $175 million, while agribusiness earnings were 28 per cent higher at $90.6 million.
Rural Bank was created to capitalise on the major banks pulling back from rural lending. But the majors are getting more involved in the area now, with National Australia Bank hiring new rural bankers and Commonwealth Bank ramping up focus on business lending in the regions.
While Bendigo’s changes will provide sharper focus to compete in business lending, competition remains fierce in mortgages, an issue that will be focus when Westpac Banking Corp updates the market on Thursday. Its quarterly earnings are expected to show margin pressures, before Commonwealth Bank reports half-year results next Wednesday.
When Bendigo follows with its interim results on February 14, the focus is also likely to be on mortgage credit growth momentum and the impact of front book competition on margins.
Citi analyst Brendan Sproules is expecting consensus downgrades to Bendigo earnings over the coming months, due in part to the shift into fixed rate home loans. In a preview of the bank results season last week, he also said the market is waiting for more clarity on how Bendigo will reap returns from its transformation program.
“A combination of weaker NIMs (net interest margin) translating to a weaker revenue and higher transformation costs with lack of rationalisation benefits, is set to see core profit to slow and jaws to become negative,” Mr Sproules said.
Negative jaws refer to expenses growing faster than revenue.
