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Bendigo and Adelaide Bank (ASX: BEN) has followed up a lukewarm half-year result with plans to raise $300 million at a 9 per cent discount.
BEN reports a 28.2 per cent year-on-year decline in statutory net profit of $145.8 million, while dividends have been cut by four cents to 31 cents per share.
A pre-tax software impairment of $87.1 million was mostly to blame for the negative result, as well as an accelerated amortisation of $19 million.
The announcement follows a recovery since the start of 2020, preceeded by a steady fall in shares over the December quarter.
Now the company appears to be harnessing this recovery to raise funds, which will be used for bolstering a growing residential mortgage business as well as technology and regulatory-related change initiatives.
The capital will also go towards strengthening the bank's balance sheet and providing a buffer above the Australian Prudential Regulation Authority's CET1 capital ratio requirements.
The $300 million will be split into a fully underwritten $250 million institutional share placement and a $50 million non-underwritten share purchase plan.
Those wanting to buy into the raise will be able to acquire shares in the company at $9.34 per share; a 9 per cent discount to BEN's close price of $10.26 on Friday afternoon.
MD and CEO of BEN Marnie Baker says the group performed well in complicated market conditions.
"Our interim results, underpinned by our market leading trust ratings, strong growth, above system lending, margin management, asset quality and growth in new and existing markets, affirms our multi-year strategy to be Australia's bank of choice," says Baker.
"The market faces heightened regulatory focus, below average business confidence, increasing frequency and severity of weather events due to climate change, constantly changing and heightened customer preferences, global trade tensions and the longer-term impacts of drought, bushfires and Coronavirus.
"Despite this, we also see steady recovery in the housing market, employment growth up, and expect the RBA cash rate to remain below one per cent continuing to support economic growth."
Total lending grew by 2.8 per cent to $62.9 billion, with residential lending up 7.7 per cent and agribusiness lending down 6.8 per cent.
The group's focus on retail and third-party businesses resulted in the company's small business lending grow by 15.6 per cent.
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