Bendigo and Adelaide Bank expects its full-year earnings to be cut by a further 16 per cent after making extra provisions against its $550 million exposure to investors in Great Southern agribusiness schemes.
The bank has also established an internal taskforce to oversee the Great Southern portfolio and appointed external legal and corporate advisors Grant Samuel.
In a statement today, the bank said that additional collective and specific provisioning would affect previously advised cash earnings of 70 to 75 cents per share for the financial year ended June 30, 2009.
"The impact represents approximately eight cents per share, with forecast cash earning per share for the 2009 full year now approximately 63 cents," the bank said in a statement.
Bendigo and Adelaide Bank also released credit performance and provisioning levels for the group's entire loan portfolio.
The bank said a total of $20.2 million had been raised at June 30, 2009 in specific and collective provisions relating to loans which form the Great Southern portfolio.
Agricultural projects manager Great Southern called in administrators on May 16.
The bank's exposure to borrowers in Great Southern managed investment schemes was about $550 million, spread across 8,200 growers at an average exposure of less than $70,000 for each individual borrower.
The bank said the Great Southern portfolio represented less than 1.5 per cent of the bank's total asset base.
"The board has raised the provisions as a prudent response to the likely credit performance of the portfolio," the bank said.
The bank said an extra $14.4 million had been raised in specific provisions at June 30, 2009 due primarily to deterioration in asset values in the commercial property sector, and the effect this had had on the performance of a small number of loans held by the bank.
"However, excluding these loans, credit quality remains generally sound across the group, with 90-day arrears showing an improving trend across the residential mortgages, consumer and commercial portfolios (excluding Great Southern)," the bank said.
"Credit quality in the margin lending portfolio remains excellent."
The bank has also completed its impairment review, and said it does not expect any goodwill impairment in the 2009 full year.
Bendigo and Adelaide Bank is scheduled to release its annual results on August 10.
Shares in the bank fell 29 cents to $8.28 at 14:08 AEST.
