BOQ CEO Allaway says turnaround is on track
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Reporter's view: Banking and finance associate editor Andrew Cornell writes: Bank of Queensland has been a basket case since the shock end of George Frazis’ term as CEO two years ago followed by the equally shocking decision in August by current CEO Patrick Allaway to do away with the bank’s unique franchised branch model.
Speaking with Allaway today, he stressed behind the noise BoQ is making consistent progress on simplifying its business model and becoming more digital and sustainable.
Allaway said: “We’ve started the migration of ME Bank (onto a new digital platform). We've migrated 30,000 customers in the last month or two, we'll migrate another 90,000 before the end of this year, so we will scale that platform very quickly over this financial year".
A digital mortgage is also now in a soft rollout phase and Allaway maintains these initiatives are “very, very important milestones and proof points of the investment we've made in transforming the retail bank to a simple, scalable, low cost to serve model”.
Despite some — Allaway says not unexpected — legal challenges, the conversion of franchised branches to bank-owned remains on track for early next year.
With competition remaining intense in residential mortgages, BoQ will recycle more capital into opportunities in business banking and finance, particularly in Queensland growth corridors.
Meanwhile, while Allaway would not comment specifically on ANZ’s takeover of Suncorp Bank, he said BoQ’s marketing would emphasise its Queensland base.
“We're the last-standing major Queensland bank,” Allaway said. “We have a 150-year heritage in Queensland. We're going to leverage that strength, we've got really strong relationships. We are very bullish about the Queensland economy over the next 10 years. And so we see a strong, competitive advantage that we'll leverage.”
BOQ shares lift on better than expected FY results
More news: Shares in Bank of Queensland are up 4% to $6.52 after the embattled lender reported a lower than expected drop in profit and margins. Cash profit for the year was down 24% to $343 million as margins contracted and the lender cut its final dividend to 17 cents a share from 21 cents a year ago.
UBS analysts said the overall result was a beat relative to Visible Alpha consensus, with a better-than-expected net interest margin outcome and a higher than forecast second-half dividend. "Lending and earnings growth in second half were led by the Business Banking division, where BOQ will be recycling further capital. Market is likely to remain focused on the simplification agenda and the delivery against stated targets," they said in a note.
Bank of Queensland cuts dividend as FY cash profit drops
The news: Bank of Queensland has cut its final dividend after a drop in full-year cash profit and revenue in a competitive market.
The numbers: Statutory profit for the year to 31 August more than doubled to $285 million due to the absence of one-off items. However, cash profit for the year slumped 24% to $343 million as margins contracted. Total revenue dropped 9% to $1.60 billion on the back of lower home lending. The lender cut its final dividend to 17 cents a share from 21 cents a year ago.
The context: Bank of Queensland attributed the weaker performance to home lending and margin contraction in a highly competitive environment, even as expenses increased due to inflation and investment in transformation, technology, risk and compliance. It reported a 13 basis point decrease in net interest margin to 1.56%, while its home lending book contracted by nearly $1 billion, which the bank attributed to recycling lower-performing capital into better-performing segments.
The lender, already under pressure, had reported a 33% drop in cash earnings for the first half of the year and had reduced its interim dividend. In August, it announced plans to cut 400 jobs as part of a broader restructuring aimed at streamlining distribution and focusing on growth in its business bank.
“We have navigated through two difficult years, demonstrating consistent execution and are now starting to see the benefits of our transformation,” CEO Patrick Allaway told investors.
The source: ASX announcement
