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I like your post and share your concern over the muscle the bigger players have in the market but I think a couple of points need to be illustrated.

While Bendigo and other smaller community banks have hit a nerve with the community, the profitability of these banks is still significantly below that of the major banks in terms of return on Shareholder Funds, Return on Assets and Operating efficiency margins.

As an example Bendigo achieved a 7.5% return on Shareholders Funds while the majors can usually achieve close to 20%. Return on Assets was approx 0.5% while the majors can achieve over 1% (down from the heady days of 2% in the 80's) and Bendigo's operating cost was 78% v 50% - 55% for the majors.

With the advent of Aussie, RAMS etc.. mortgage lending is now a commodity business and thus the move towards charging fees for any and everything by the major banks and the move into funds management etc. And Bendigo is to be congratulated as approx 30% of their revenue is fee based.

So while I think the Bendigo Banks and their ilk will not compare on a profitability basis (and hence returns to shareholders) this is not to say they are not worth investing in.

My personal opinion is that Bendigo, Wide Bay, The Rock and co are above average businesses (and probably a better investment than most other stocks on the market) BUT the Commonwealth and National Australia Bank are very good businesses regardless of community sentiment.

If you're a business in Australia of any size it would be virtually impossible to bank with a community bank, you are virtually forced to be a customer of the majors to have access to the product range they offer.

I would certainly not discourage you from investing in them but I think the NAB or CBA represent a better business model from a shareholders point of view.
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