Bendigo and Adelaide Bank is dealing with the fallout of a 2025 review that found it had deficient safeguards against money laundering before it self-reported to the banking regulator and AUSTRAC.
On Monday, it reported a 3.3 per cent fall in first-half net cash earnings to $256.4 million as lending fell.
Its performance for the six months ended December also produced a 6.4 per cent rise in statutory net profit to $230.6 million.
The bank's earnings were driven by deposit growth of 2.3 per cent to almost $74 billion and a more than six per cent reduction in operating expenses.
The value of its residential lending book retreated by 0.1 per cent to $65.1 billion after it exited a legacy mortgage partner business.
"We remain confident that our residential lending book will return to growth over the second half of the financial year," CEO Richard Fennel said, noting the bank would reach three million customers by the end of the financial year.
While Australian households continued to face cost-of-living headwinds, the bank said its home loan customers were resilient.
More than 45 per cent of those customers are more than a year ahead on their mortgage repayments and 88 per cent are maintaining their financial buffers.
The bank hired consultancy Deloitte in 2025 to conduct an independent review after suspicious activity at one of its branches apparently went undetected for six years until August 1.
The review, revealed in November, found the deficiencies extended beyond a single branch and identified weaknesses with many key aspects of money-laundering and counter-terrorism financing risk management.
The Australian Prudential Regulation Authority later told the bank it must hold $50 million in additional risk capital and investigate the extent of the issues in its operations.
AUSTRAC is continuing an enforcement investigation to examine whether Bendigo has complied with its obligations under anti-money-laundering and counter-terrorism laws.
Bendigo recently appointed a chief compliance officer and head of financial risk, Steve Blackburn, to lead its response.
"We've now received detailed recommendations, actions and a road map from Deloitte, which we're using to guide our remediation and uplift program with a focus on enhancing our enterprise-wide ... risk management, including transaction monitoring," Mr Fennell told analysts in an earnings call.
Bendigo expects the total cost for up to three years will be $70 million to $90 million, including an initial $15 million to be incurred in the second half of 2025/26.
"We continue to engage proactively with regulators," Mr Fennell said.
Shares in Bendigo, which will pay an unchanged first-half dividend of 30 cents per share, were down about one per cent to $11.32 in Monday afternoon trading.
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