bingo bank, page-3

Hi SDE and HI ZWU,found this item on bingo bank,and LOL it deflates Hirst and tempers it that Bendigo is a little nervous to put quietly,article almost implies to me that Bendigo figures are a bit rubbery.

Add to this that I spoke to M&K and it was indicated to me that these investors that Bendigo are in court with are NOT clients of K&M.But the lawyers are sitting in there watching,further to that it gives the impression thar Bendigo is not travelling or as cocky to what we read in the news media,but we need to be vigilant and keep posting everybody.

On the tree chip prices GMT last figures were $40 at stump
Loaded on board tonnage $180,that is dry tonnage

Now rememnber were we not given a figure of $250 GMT per hectare,divide your tree hectare by 3 it gives the optimum per lot.Abit depressing I know,but if you take the difference from the 2002 figure of $20 GMT and the 2009 of $40,by my simpe constant rate of just under and incremental increase of just under $3 per ton per year increase,so 2003 scheme constant of $3 per ton comes to by 2014 of $53 GMT.
It is flawed in the calcs,but it trying to get it in perspective,






If it sounds too good to be true, it is February 16, 2010

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BENDIGO and Adelaide Bank's surprisingly good profit numbers turbo-charged the share price yesterday, but strip out the impact of acquisitions and accounting tomfoolery and some lurking issues remain.

These include a lack of organic growth, the relatively small level of provisions on its $510 million exposure to the collapsed Great Southern management investment scheme, rising costs and intense competition in home lending and deposit taking.

It is no surprise then that at the bank's half-year presentation group managing director Mike Hirst spruiked the idea that the bank was in the market for acquisitions, namely wealth management acquisitions.

In the six months to December 31, Bendigo's cash earnings jumped 23.8 per cent to $139.7 million for the six months to December 31, up from $112.8 million in the previous corresponding period, and net interest margins swelled 43 basis points to 2.09 per cent.

''The improved performance of the bank was a testament of its strong and low-risk balance sheet, the good work of staff, and the resilience of its business through the global financial crisis,'' Mr Hirst said.

But take away the acquisitions, and the result is less impressive. Importantly, residential loans fell 2.7 per cent over the six months, consumer loans flatlined and the two businesses that did grow, margin lending and commercial loans, were the direct result of acquisitions.

Last year Bendigo bought Macquarie Group's margin lending portfolio, lifted its stake in Rural Bank and bought out the residual 50 per cent interest in Tasmanian Banking Services, all of which helped bolster its margin-lending loan book and its commercial loan book.

In the case of Bendigo's NIM, which the bank believes is sustainable at 2 per cent, questions remain.

Costs are increasing and there is little asset growth. If deposit costs increase and securitisation costs continue to balloon in the short term, it will eat away at the margins. In addition, the bank's net interest margin was a major beneficiary of term deposit repricing, which is a one-off benefit.

And as Bendigo starts competing for new term deposits, it will see just how competitive the deposit market is getting, with some of the bigger banks offering five-year terms of 8 per cent. Its last annual report indicates that Bendigo had shortened the length of the maturity on its deposit offerings, presumably to keep costs down. If it keeps doing this, there will come a point when deposits start slipping.

There is also the issue of Bendigo's treatment of bad and doubtful debts. While asset quality across the bank has improved markedly, it is worth noting that the bank did a few tricky things with these.

It is worth remembering that changes in provisions go through the profit-and-loss account, so any reduction becomes a source of profit. Whereas any changes in general reserves for bad debts are booked through the balance sheet and therefore have no impact on profit. For the six months under review, Bendigo opted to reduce its provisions, which enabled it to book a profit of $3 million, but it increased its general reserves for bad debts by $15 million, which goes through the balance sheet. As Axiome Equities noted in an email to clients: ''It does seem that Bendigo likes to provide for bad debts as an allocation of capital rather than a deduction from profit.''

What makes this decision all the more curious is that impaired loans increased by $22 million to $253 million and it booked net write-offs of $25 million.

This is a good segue into its treatment of Great Southern, which tallies up to an exposure of more than $510 million to 8200 customers who had invested in managed investment schemes through Great Southern.

These loans are full recourse to each individual borrower, which means the loans are secured by wood-lots, and if the bank can't get all of its money through a sale of the plantation trees, it faces the messy and risky task of having to chase down each investor and get them to repay their loans individually. In some cases, this could mean the bank going after their homes.

At December 31, Bendigo had just $29 million allocated in specific and collective provisions against the Great Southern exposure. No provision is made for people who can afford to pay but refuse to pay.

In the latest results, it shows that in relation to Great Southern there are now $148 million loans in arrears. This is up 855 per cent on the previous six months and 2172 per cent on the previous corresponding period, which was $6.5 million loans in arrears.

Bendigo recently took legal action against a few Great Southern investors who are refusing to repay loans and a few months ago it started listing with credit agencies the details of other defaulters.

Hirst continues to talk tough, insisting that the bank will get its money back and therefore doesn't need to allocate any provisioning to those who refuse to pay. He is also pushing the line that as various schemes are sold or wound up, including the move last month by Gunns to take control of nine of Great Southern's pulpwood schemes, the situation will improve.

If he is wrong, the share price will be hit hard and his reputation will be damaged. If he is right, he will go down as the local hero.

Source: The Age