Instead, it was a disclosure toward the bottom of page 11 of Appendix 4D in which the bank disclosed it had changed the growth and discount rates of its Homesafe portfolio.

Unless you've been renting under a rock, you would know property prices are sliding. And given Bendigo is not just a lender to home owners but a significant home owner in its own right, changes in property prices have an immediate and direct effect of the value of its assets.

Bendigo Bank's Homesafe program, created in 2005, allows a retiree to cash in some proportion of the value of their house without going into debt. Bendigo, through the Homesafe Trust, is buying a share of the future sale proceeds of the house.

The product has proved popular, resulting in significant growth in the portfolio. At full year 2018, Bendigo Bank had committed $408.1 million of capital and was sitting on $327.9 million in gains, for a total asset exposure of $735.7 million.

But to account for the fact the property market was heading south, the bank adjusted how it values that portfolio. Bendigo Bank would no longer assume property prices would appreciate 3 per cent a year for the first 1½ years of the investment and 6 per cent thereafter. It would now assume no growth in the first year, 3 per cent a year from the second year and 4 per cent over the long run.

But how much did that affect its $735.7 million worth of property investments?

Well, based on Deutsche Bank's calculations, those valuation changes in isolation would have slashed the value of the Homesafe portfolio by $214 million, or 30 per cent. But the numbers showed only a modest $2 million adjustment.

That is because the bank simultaneously lowered the discount rate it uses to value the property by an equally whopping two percentage points, from 7.75 per cent to 5.75 per cent.

That alone helped to add back $180.8 million to the portfolio value, Deutsche Bank said, basing its analysis on sensitivity tables previously published by the bank. The net effect, after movements over the last period, was a modest increase in the value of the Homesafe portfolio to $745.2 million as the bank committed further funds.

The calculations demonstrate two important points.

One is the extraordinary power (and cynics would argue the convenience) of a discount rate change. The second is the sensitivity of this regional lender to big-city bright-light property prices.

The Homesafe product has proved innovative and popular. But the way the asset and related earnings have been accounted for has been a source of complexity and controversy for analysts and investors.

When property prices were in flight, Homesafe was an important source of earnings growth for Bendigo Bank. The bank's accounting policies allowed it to book gains on its portfolio of properties as profits, to the point where this typically accounted for between 10 and 15 per cent of the bank's reported earnings.

But in early June 2017, Bendigo Bank, then under the leadership of Mike Hirst, said it would no longer book unrealised income and losses relating to property movements as part of its cash earnings calculations. The move, which came weeks before the end of the financial year, led to a downgrade in past and pending earnings, and a 5 per cent slide in the share price, to $10.70.

The "hot take" from analysts was that Hirst had just called the top of the property market in ensuring profits could be boosted from rising profit prices, not hurt by the reverse. (The board agreed to use the "old" treatment to calculate 2017 bonuses, and adopt the new one in 2018.)

At the time UBS analyst Jon Mott titled his note "Ding Ding Ding", implying Bendigo had rung the bell on the property market. "It is only now as Sydney and Melbourne house prices are in bubble territory and house prices have begun to slip in recent weeks that BEN has changed its policy," he said.

But Hirst shrugged off these suggestions, calling it a case of "damned if you do, damned if you don't".

He said analysts had sought the change because it created too much volatility in earnings, and he was frustrated spending 70 per cent of his time on something that accounted for only 10 per cent of the profits.

Whether intended or not, Hirst did in fact call the top of the property market – Sydney peaked in July 2017 – with remarkable precision. The policy change allowed cash earnings (and executives) to benefit from gains from rising prices and not be affected by declines.

Last week management said it would take a 30 per cent decline in property prices to affect its earnings. Macquarie analysts point out that following the accounting change, Homesafe accounts for only 2 per cent of earnings.

But it seems the accounting change cannot quell the curiosity of all analysts.

Another point of contention is how Homesafe is treated in regulatory capital calculations. The unrealised gains from property in Homesafe are deducted from retained earnings when calculating its capital position, and, as management explained last week, it would take a 50 per cent decline in property prices before the gains were lost and the Tier I position affected.

But some analysts think the prudential regulator has gone easy on Bendigo Bank by allowing the funded component of the portfolio, which stands at $433 million, to have a 100 per cent risk weight. They believe rules could be interpreted such that the entire $745 million portfolio could be classified as unlisted equity and attract a 400 per cent risk weight. That would materially weaken the bank's Tier I capital ratio.

While there is no suggestion regulators are reviewing this, it shows the sensitivity to seemingly marginal interpretations.

Homesafe remains interesting to investors and intriguing to short-sellers, particularly those looking for the best way to bet against Australian property prices.

Macquarie analysts, however, took a more constructive view of the Homesafe situation. The sharemarket, Macquarie says, attributes little value to the Homesafe portfolio. So if it could dispose of it at a reasonable valuation, capital would be released and a share buy-back would make the transaction value-accretive.

By their calculations, if the portfolio could be disposed of for between 0.7 times to 1.1 times book value, the net benefit to earnings would be between 1.5 per cent and 3.2 per cent.

But for some analysts, it is simply another reason to avoid or even bet against Bendigo Bank. Based on Australian Securities and Investments Commission data, Bendigo is the most shorted Australian bank, which at 6.4 per cent of total shares loaned out to short sellers, is a marginally more popular short than Bank of Queensland.

Sean Sequeira of Alleron's Australian Eagle long short fund said the result last week was poor and while Bendigo's share price fell 9 per cent to $9.87, he was surprised how well it had held up.

Sequeira said he did not have a position but did not think Bendigo Bank's valuation compensated investors for the risks. For instance, the 7 per cent dividend yield, he said, was in line with Westpac, which was a larger, more diversified lender.

The outlook for the bank alone, with rising costs, falling margins and slowing growth, was enough reason to be cautious, he said.

Others are outright bearish, and if the property market continues to fall, believe Bendigo's share price could be collateral damage.

 – ​Australian Financial Review