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A drop in home loans, a sharp increase in business lending and a raft of job cuts have helped boost Bank of Queensland’s (ASX: BOQ) cash earnings by 12 per cent to $383 million in FY25.
Bank of Queensland’s cash earnings growth was supported by a 4 per cent lift in revenue to $1.6 billion, flat expenses and a moderate loan impairment expense of $21 million which was up 5 per cent from a year earlier.
While the Brisbane-based banking group recorded a 7 per cent drop in home loans, this was offset by a 14 per cent increase in higher-margin business loans as part of the broader group strategy.
The statutory net profit was 53 per cent lower at $133 million, which included a $170 million goodwill impairment and $43 million branch strategy costs.
During the year, Bank of Queensland converted all of its 114 owner-managed branches into corporate branches, delivering a 12 basis-point increase in margins for the group.
“We have made strong progress in FY25, delivering on our transformation and improving financial performance,” says Bank of Queensland CEO Patrick Allaway.
“In 2023 we reset our strategy to strengthen, simplify, digitise and optimise the performance of BOQ.
“We are well progressed through this ambitious program of work to uplift operational resilience, simplify the way we operate, scale customer growth with improved digital experiences, and shift our balance sheet mix to deliver more sustainable returns.”
Allaway says the group has been encouraged by the momentum across its core businesses, led by strong growth in business lending and the expansion of its proprietary acquisition channels through the integration of former owner-managed branches.
“We continue to invest in bankers and technology, improving our customer relationships and digital banking experience,” he says.
“Our ability to address emerging challenges and proven track record of executing our strategy are important factors supporting our transformation and future success.”
Bank of Queensland’s simplification strategy led to 850 roles within the group being impacted, including about 200 through an agreement with technology and outsourcing group Capgemini, which saw more than half of its contact centre jobs shifted to India.
The conversion of owner-managed branches also saw Bank of Queensland cut its property footprint by about 15,000sqm.
Bank of Queensland is expecting annualised productivity benefits of $250 million in FY26 as a result of the simplification measures it has implemented over the past year.
The group, which lifted customer numbers by 3 per cent to 1.5 million during the year, also notes that it has been successfully migrating customers off "heritage systems". About 44 per cent of retail customers are now on the digital bank - an operation that Bank of Queensland envisages will deliver lower service costs and scaleable growth for the business.
Bank of Queensland has an optimistic view of the year ahead after improvements in the Australian economy in FY25 and a rise in business and consumer confidence.
“It is expected that the economy will strengthen further over the course of FY26, reflecting the benefits of lower inflation and stronger growth in household disposable incomes,” says the bank.
“Additional cash rate reductions in FY26 are expected and this should provide further support to the domestic economic outlook.
“While ongoing geopolitical uncertainty has the potential to negatively impact on the economic and financial market outlook, the group remains optimistic about the longer-term view.”
Bank of Queensland is paying a final dividend of 20c per share, bringing its full-year payout to 38c per share.
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