After a reassuring reporting season that even prompted some upgrades in the sector, today’s shock update from the Bank of Queensland was a cold drench of reality for investors. And the move to cut 400 jobs and restructure the regional lender wasn’t even tied to its results, which are still two months away.
Patrick Allaway’s decision to radically alter BOQ’s business model, sack hundreds of staff and implement a swingeing simplification program is a sign that the lender is finally recognising the world has changed.
What was evident but manageable at other banks — margin pressure, early signs of a turn in the credit cycle, low revenue growth putting pressure on costs already hit by inflation — are existential threats for BOQ.
At an investor briefing, Allaway said that the “rivers of gold” in banking had dried up. “Markets have shifted on us, and that shift is accelerating. The sustainability of the model, if margins don’t recover, is very questionable in the current environment.”
