Bendigo and Adelaide Bank: "It has not been a great run" but there could be more bad news yet

Research evidence excerpt

J P M O R G A N

Asia Pacific Equity Research

19 August 2026

Bendigo and Adelaide Bank

“It has not been a great run” but there could be more

bad news yet

Neutral

BEN.AX, BEN AU

Price (18 Aug 26):A$10.56

▼Price Target (Jun-27):A$10.50

Prior (Jun-27):A$10.90

We have updated our earnings forecasts following BEN’s announcement of a $70m

provision to address new licence conditions imposed by APRA in relation to

significant risk management failings. Despite this bad news, the FY26 result prerelease was slightly better than our forecast with the quality hard to judge without

full information and collective provision top-up looking modest compared to

peers. There could be more bad news yet, with AUSTRAC yet to conclude its

enforcement investigation, which could include a material financial penalty for

AML failings. In total, we have lifted FY26 NPAT forecasts by 4%, FY27 forecasts

are -12% on large/notable items flagged, and FY28 is +1%. With the AUSTRAC

decision not expected until late CY26/early CY27, we think this will remain a

significant overhang on the stock. A key question is whether BEN has enough

capital to absorb the RACQ Bank acquisition and a potential AUSTRAC penalty,

and still fund reasonable loan growth. While headline valuation multiples do not

look particularly demanding (12.5x FY27E PER, 0.9x P/BV for 7.7% ROE), we

think this is broadly fair value given the risks. Retain Neutral.

APRA puts pressure on BEN... APRA has imposed licence conditions on

BEN in response to the root cause analysis conducted by Deloitte which found

pervasive shortcomings in the management of non-financial risk. BEN has

taken a $70m pre-tax ($49m post-tax) provision to cover the cost of a

comprehensive rectification program expected to take 3 years. This is on top

of the $70m-$90m AML/CTF program of work flagged in 1H26 (taken over

3 years, to be absorbed in the existing investment spend envelope). In response

to a question on recent developments (including an $8m legal penalty for

contraventions of the Banking Act), CEO Richard Fennell admitted “it has not

been a great run”.

...but AUSTRAC could further increase the pain: AUSTRAC has an

…