The weekly wrap 4: downgrades for Bendigo

Greg Peel of FNArena
If only that were true for Bendigo and Adelaide Bank.

As has been noted in this report often before, the regional banks have suffered more markedly in the GFC than the big banks. They do not have the same deposit ratios, they do not have enviable AA credit ratings with which to attract funds, and they had previously relied on the securitisation market, which is now dead in the water, for funding. There has been a flow of business out of smaller, riskier banks and into larger, safer banks ever since the credit crisis began.

In the wake of the Great Southern MIS (managed investment scheme) debacle, Bendigo has been forced to yet again downgrade its profit forecasts. And it may not be the last of the MIS-related downgrades, analysts suggest. The bank also raised its provisioning as a result.

The leading brokers are generally comfortable with Bendigo's bad-debt provisions although a lagging increase in bad debts is expected to hit the regionals harder. Unfortunately the RBS change of heart didn't make it past the big city centres, and the analysts downgraded Bendigo to Sell this week. This leaves the bank on a 2/4/4 buy/hold/sell ratio.

Regional compatriot Bank of Queensland is sitting on 2/3/5.


20090807 Bank Update-5

20090807 Bank Update-5




FNArena