Bendigo Bank is anticipating a boost to its residential lending, particularly in Queensland, as it prepares to integrate the loan and deposit book of RACQ Bank. While the bank reported a slight decline in home lending during the first half of the fiscal year, executives are optimistic about growth in the latter half, fueled by this acquisition and the ongoing integration of Adelaide Bank customer accounts. The bank’s overall cash earnings after tax increased 2.8% sequentially to $256.4 million, signaling a period of positive momentum despite broader economic headwinds.
The strategic move to acquire RACQ Bank’s retail assets, first announced in December 2025, is expected to add over 90,000 customers to Bendigo Bank’s portfolio. This expansion comes at a time when many Australians are carefully considering their financial options, making access to competitive lending rates and personalized service increasingly important. The acquisition is still subject to regulatory approval, but Bendigo Bank CEO and Managing Director Richard Fennell expressed confidence in a smooth transition, highlighting the strong alignment of values between the two organizations.
Deposit Growth Offsets Lending Dip
Despite the anticipated growth from the RACQ Bank acquisition, Bendigo Bank experienced a slight decrease in home lending during the reported period. However, this was partially offset by a 1.1% sequential increase in customer deposits, reaching $73.7 billion. Total funding, however, saw a 1.6% decrease, landing at $93.6 billion. This deposit growth is seen as a positive sign, providing a solid foundation for future loan expansion. The bank’s strategy focuses on a deposit-led approach to drive sustainable loan growth, a tactic Fennell believes is “gaining momentum and improving our earnings.”
The bank is also actively integrating accounts from Adelaide Bank, further expanding its customer base and strengthening its position in the market. This ongoing process, combined with the RACQ Bank acquisition, is expected to contribute significantly to residential lending growth in the coming months. The focus on Queensland is particularly noteworthy, as RACQ Bank has a strong presence in the region.
Net Interest Margins Show Improvement
Bendigo Bank’s financial performance also showed improvement in net interest margins, which increased by four basis points to 1.92%. This indicates the bank is effectively managing its lending and borrowing rates, contributing to increased profitability. The increase in net interest margins, coupled with the growth in cash earnings, demonstrates the bank’s ability to navigate a challenging economic environment and deliver positive results for its shareholders.
Fennell emphasized the importance of technology and innovation in meeting the evolving needs of customers. Bendigo Bank has invested heavily in digital banking solutions, including the Up digital bank, and plans to leverage these investments to enhance the banking experience for RACQ Bank members. This commitment to innovation is seen as a key differentiator in a competitive market.
RACQ Bank Members to Benefit from Expanded Services
The sale of RACQ Bank’s retail lending and deposit business to Bendigo Bank was framed by RACQ Managing Director and Group CEO David Carter as the “right outcome for RACQ’s banking members.” Carter stated that Bendigo Bank’s scale, technology, and investment capabilities will allow it to deliver leading banking solutions and improved digital experiences. RACQ announced the sale, highlighting the benefits for its members in joining a larger, more technologically advanced bank.
The transition is expected to be seamless for RACQ Bank members, who will gain access to Bendigo Bank’s extensive network of branches and digital banking services. Bendigo Bank’s commitment to community banking, through its unique Community Bank model, is also expected to resonate with RACQ Bank members who value local support and engagement.
Looking ahead, Bendigo Bank is focused on executing its strategy of deposit-led growth and leveraging the opportunities presented by the RACQ Bank acquisition. The onboarding of RACQ Bank’s loans and deposits is expected to be completed in the second half of calendar year 2026, setting the stage for continued growth and success. The bank will continue to invest in technology and innovation to enhance the customer experience and maintain its competitive edge.
Disclaimer: This article provides general information about financial institutions and should not be considered financial advice. Consult with a qualified financial advisor before making any investment decisions.
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