February 11, 2018 / 11:10 PM / 10 months ago

UPDATE 1-Bendigo and Adelaide Bank's H1 cash profit rises as margins improve

(Adds details, net interest margin, quote, background)

Feb 12 (Reuters) - Australia’s Bendigo and Adelaide Bank Ltd on Monday said first-half cash earnings rose about 11 percent as margins improved.

Cash earnings - which excludes one-off gains or losses - for the six months ended Dec. 31 rose to A$225.3 million ($176.1 million) from A$203.5 million a year ago, below the average of estimates by Goldman Sachs and Morgan Stanley of A$236 million.

Half year net interest margin before revenue share arrangements, a key gauge of profitability that measures the difference between interest costs and interest earned, expanded 18 basis points to 2.36 percent.

“This improvement (in margins) obviously reflects mortgage repricing in response to regulatory caps on interest only and investor lending, as we sought to restrict growth in those products,” the bank said in a statement.

Australia’s banking watchdog, The Australian Prudential Regulatory Authority last year set limits on interest-only and investor lending, in an effort to curb surging prices in the housing market, prompting some banks to hike mortgage rates for speculative buying.

The bank declared an interim dividend of A$0.35 per share, up from A$0.34 last year.

$1 = 1.2791 Australian dollars Reporting by Syed Saif Hussain Naqvi in Bengaluru; Editing by Daniel Wallis and Richard Pullin

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