Bendigo and Adelaide Bank says the cost of redundancies and a soft property market both weighed on its full-year profit, with more job losses possible at the regional lender.
The bank on Monday said staff redundancies and customer refunds associated with its former financial planning arm were mostly to blame for a 6.6 per cent decline in full-year cash earnings to $415 million.
It said further staff reductions were possible as the bank endeavours to cut ballooning costs.
Bendigo said 84 staff members were made redundant over the 12 months to June 30, while six branches and 15 agency outlets were closed as operating expenses increased by a "disappointing" 5.9 per cent to $954.9 million.
This figure included a total $16.7 million in remediation costs related to its financial planning arm's involvement in the fees for no service scandal, as well as other product failures.
Managing director Marnie Baker said she did not expect any further remediation charges following the sale of financial planning to IOOF in March, but noted that employee numbers would always be subject to review.
"Whilst we're continuing to invest in our capability and total income was steady, we maintain our ongoing focus to sustainably reduce our cost base," Ms Baker said.
Bendigo's income fell by 4.6 per cent to $1.57 billion in an environment Ms Baker said was beset by "low growth, political uncertainty, subdued consumer confidence and increasing competition".
Net interest margin was flat at 2.36 per cent but ended the year at 2.41 per cent.
Chief financial officer Travis Crouch said recent RBA cash rate cuts would likely bring it down to about 2.36 or 2.37 per cent.
Bendigo's full-year net profit also fell - dropping by 13.3 per cent to $376.8 million - with subdued property prices in Sydney and Melbourne driving $24.1 million in unrealised losses across the bank's Homesafe investment portfolio.
"There has been an uptick in auction clearance rates in Melbourne and Sydney, and business confidence is largely positive, being around the 10-year average," Ms Baker said.
"However, we acknowledge sentiment plays a significant role in supporting consumer confidence and business investment and that sentiment has of late been somewhat fickle."
However, the regional lender is targeting long-term growth after knocking five years off the age of its average customer.
It more than doubled the number of customers aged 23 to 38 to about 110,000 following the launch of digital bank Up during the year, bringing the average age of its customers below the national median of 37.
"As we continue to accelerate the digitisation of our offerings and focus on our priority markets, where we have a clear competitive advantage, establishing and fostering lasting relationships with this younger demographic will deliver significant long-term growth opportunities," Ms Baker said.
Bendigo shares were 3.12 per cent higher at $11.085 by 1218 AEST.
BENDIGO'S FY EARNINGS DIP
* Total income down 4.6pct to $1.57b
* Cash earnings down 6.6pct to $415m
* Net profit down 13.3pct to $376.8m
* Final dividend flat at 35 cents, fully franked