Bendigo and Adelaide Bank unveils RACQ Bank acquisition in investor update

The Bendigo and Adelaide Bank Ltd (ASX: BEN) share price is in focus today as the bank announces an agreement to acquire RACQ Bank’s retail lending assets and deposits, with over 90,000 customers. The deal is expected to be accretive to return on equity (ROE) and cash earnings per share, and forms part of the company’s broader growth strategy.

What did Bendigo and Adelaide Bank report?

• Agreement to acquire $2.7 billion in retail loans and $2.5 billion in retail deposits from RACQ Bank (as at 30 June 2025)
• Purchase to be completed at book value, funded from cash reserves
• Net interest income of approximately $50–$55 million expected from the acquired lending book
• Estimated incremental cost to service the acquired book: $12–$14 million before tax
• Transaction is expected to be 35–40bps ROE and 4–5cps cash EPS accretive (annualised)
• Regulatory approvals required, with completion targeted for 1H27

What else do investors need to know?

Bendigo and Adelaide Bank’s acquisition will be funded from its existing cash reserves and is expected to use around 35 basis points of CET1 capital. Management aims to integrate the new lending assets and deposits by leveraging its simplified core banking system, which will be in place by the end of 2025.

Once the deal completes, Bendigo’s Queensland exposure for residential lending will increase from 15% to 18%, offering greater geographic diversity. The integration is expected to be efficient, minimising costs, and will include a strategic referral agreement with RACQ Bank.

What did Bendigo and Adelaide Bank management say?

CEO and Managing Director Richard Fennell said:

RACQ Bank’s strong deposit franchise and member focus complements Bendigo Bank’s own deposit franchise and longstanding focus on our customers and the community. This acquisition leverages our proven ability to efficiently integrate significant portfolios and is expected to drive improved shareholder returns through cost efficiencies and geographic diversification.

What’s next for Bendigo and Adelaide Bank?

The strategic focus for Bendigo and Adelaide Bank is on optimising its deposit base and gaining efficiencies through consolidation to one core banking system. The company plans to migrate RACQ Bank customers and assets upon regulatory approval and completion in the first half of FY27.

Management expects the deal to support the group’s 2030 return on equity target and drive further sustainable growth, particularly in Queensland. Investors will be watching for progress updates on the transaction and integration.

Bendigo and Adelaide Bank share price snapshot

Over the past 12 months, Bendigo and Adelaide bank shares have declined 25%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen around 2% over the same period.

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The post Bendigo and Adelaide Bank unveils RACQ Bank acquisition in investor update appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.