Bendigo and Adelaide Bank (ASX:BEN) is heading in a more comfortable operational direction following "strong" performance in the second half of fiscal 2026, and is sufficiently capitalized to absorb a potential fine resulting from regulatory issues, Jarden said in a Monday note.
In 2025, the Australian Prudential Regulation Authority (APRA) and the Australian Transaction Reports and Analysis Center (AUSTRAC) handed down actions in response to deficiencies in the bank's risk management.
Earlier this month, AUSTRAC said an investigation into 10 major Australian banks uncovered potential mortgage fraud involving inflated incomes, misrepresented employment, and fabricated or unverifiable business activity used to support loan applications.
"AUSTRAC issue remains outstanding and we expect likely to result in a fine," Jarden said, adding that the issues now appear to be factored into the stock price.
Bendigo and Adelaide Bank's fiscal second-half cash net profit after tax beat consensus estimates by 5% as underlying business trends are "notably strong" despite a challenging operating environment, the investment firm said.
It maintained an overweight rating on the company with a target price of AU$11.