Bendigo Bank profit of $228m boosted by bad debt fix

Australia's fifth-largest bank, the Bendigo and Adelaide Bank, has boosted its profit by 11 per cent on the back of falling bad debts and its acquisition of the Rural Finance Corporation of Victoria.

The company posted a net first half profit of $227.9million, up from $180.7 million in the previous corresponding period.

Cash earnings – which strips out one-off items – were also up around 11 per cent to $217.9 million.

Loan impairments shrank by $79.1 million, from $336.5 million to $257.4 million over the past year.

Revenue growth was largely supported by a $24 million contribution from the Rural Finance Corporation of Victoria acquisition, which was purchased from the Victorian Government last year for $1.8 billion.

Bendigo and Adelaide Bank chief executive officer Mike Hirst said the result was driven by maintaining net interest margins and balance sheet growth.

"Whilst demand for housing loans is solid, we are seeing an increase in customers paying down their debt across all portfolios," Mr Hirst noted.

The bank also boosted its balance sheet with a key measure, the Common Equity Tier 1 capital (CET1) ratio, increasing from 7.9 per cent to 8.1 per cent.

The CET1 ratio is designed to measure how robust a bank's finances are and whether it holds enough capital.

Mr Hirst also took a pot shot at the banking majors, saying the recommendations for change from the David Murray-led Financial Services Inquiry remained clear.

"The inquiry recognises the environment has changed for many reasons and they've taken a balanced approach in identifying the key issues, including the uneven playing field tilted in favour of larger players," he said.

Bendigo and Adelaide Bank also raised its interim dividend by 2 cents to 33 cents per share.

Investors did not warm to result and the bank's share price had fallen by 3.8 per cent to $13.84 at 11:00 (AEDT).