BOQ record profit driven by expanding footprint


Bank of Queensland today announced a full-year NPAT for distribution to ordinary shareholders of $82 million for the 2005/06 financial year, an increase of 21% on last financial year, and at the upper end of market expectations.


Reporting the first full year result under the new Australian International Financial Reporting Standards, the record result is built on the rapid expansion in the bank’s distribution footprint and lending and deposit growth well above system.


The result comes on the back of a headline statutory net profit of $92.7 million, maintenance of net interest margins, strong cash diluted Earnings Per Share growth of 12.5% and improved ROE of 14% (up from 12.6%), based on normalised distributable earnings.


“The BOQ banking success story is one of genuine growth through diversified channels and exceptional focus on providing what today’s customer wants – good old-fashioned service and choice in how they interact with their bank,” Managing Director David Liddy said today.


The Board also announced an increased final ordinary dividend of 30 cents for the second half, bringing the total to 57 cents for the year, a 19% increase on last year (pcp).


BOQ has continued on track with its interstate branch expansion, maintained margins and grown revenue through strong increases in lending and deposits.


“We have completed a five year transformation program and there is no doubt that, in an extremely competitive market, the strategic decisions we have made over the last five years are now starting to bear fruit.


“We now have reached our key target of 215 branches, with 75 outside of Queensland, and expect to open our first branches in Tasmania and South Australia, completing our national reach, before Christmas,” he said.


“The branch expansion, the key growth and acquisitions in the business banking sector, the decision to withdraw from using mortgage brokers, our strategic alliances for both product and processing and new initiatives like the HBF agreement and the Genesys Wealth Management alliance have placed us in an extremely strong market position going forward.”


Key indicators highlighting the Bank’s success in growing in a competitive market include:


  • Loan approval growth of 33%;
  • Retail deposit growth of 18%;
  • Loans Under Management growth of 22%; and,
  • Maintenance of high credit quality.


Mr Liddy said the Bank’s retail expansion plans were well on target.


“We have a strong stream of new branches coming on line over the next six to eight months,” Mr Liddy said.


“It is a significant achievement to have opened 42 branches across six states and territories in one year, and I am extremely proud of my team and what they have accomplished.


“We have also now successfully transformed three of our corporate branches into Owner-Managed Branches, and all three are performing far in advance of their previous performance. We will look to more conversions of corporate branches to franchised branches in the next 12 months.


“This year we will continue our expansion with our first branches in South Australia and Tasmania completing the national reach of the Bank.”


Mr Liddy said the business banking portfolio continued to grow and contribute to the Bank’s overall growth.


“Key factors which have enhanced our business banking offer, particularly in the SME market, over the last 12 months have been the launch of our Enhanced Internet Banking platform and the roll-out of a new suite of business banking products, including Australia’s first genuine flat-fee transaction account for business,” he said.


“Our purchase this year of the ORIX debtor finance division, combined with our high performing equipment finance business and our strong retail branch network and business banking centres have allowed us to carve out strong market share growth in the SME market.


“I think any of our competitors would be happy with 23 per cent growth in business lending over the last 12 months while maintaining credit quality, particularly in the current environment,” Mr Liddy said.


Other key developments in the year include:


  • The formalisation of an alliance with Western Australia’s largest health membership organisation, HBF, which will offer white-labelled BOQ products to its 900,000 members from November.
  • A new alliance with Macquarie Bank to provide margin lending products to BOQ customers.
  • An alliance with Genesys and its 400 advisers to provide wealth management services to BOQ customers through our branches.
  • An outsourcing agreement with Keycorp for an upgraded and more extensive merchant offering.


“These new alliances put Bank of Queensland either on the same field or ahead of our larger competitors across the full range of finance options,” Mr Liddy said.


He said the Bank’s friendly merger with Pioneer Permanent Building Society was also progressing well.


“With the full support of the Pioneer board we hope the merger will be approved by Pioneer shareholders in late November. This will boost BOQ customers by 40,000, many of whom are in the boom central and north Queensland regions,” he said.


“The Bank of Queensland Board believes this is a great merger deal for Pioneer’s shareholders and customers and will give Bank of Queensland significant scale and presence in the regions of Queensland benefiting most from the current resources boom.”


Bank of Queensland 2006 Full Year Result Snapshot





Change on 2005 (pcp)

Net Profit After Tax available for distribution to ordinary shareholders*





Retail Deposits





Loan Approvals





Loans Under Management















Assets Under Management





Cost to Income Ratio*





Diluted Cash Earnings Per Share (available for ordinary shareholders)(1)





Dividend per Share(2)





Market Cap Value





* Excluding significant items (sale of ATM Solutions Australasia Pty Ltd in July 2005; tax benefit resulting from the capital loss booked on the disposal of the Bank’s previous banking platform in 2006.)
(1) Excludes significant items listed above, plus it also excludes movement in the general reserve for credit losses.
(2) Does not include Special Dividend of 15 cents per share paid in 2005.



  • Net Profit After Tax up 21% pcp: NPAT available for distribution to ordinary shareholders of $82 million continues strong growth in profit over the last five years.
  • Interest Margin on track: The Bank has maintained margins at 1.83%. Maintaining margins in the current, competitive environment, has been a significant achievement for the Bank.
  • Asset quality still strong: Impaired assets as a percentage of non-securitised loans remained low at 0.07% in 2006. This is a particularly good result considering the Bank’s growth in assets, particularly commercial assets, over the same period.
  • HBF alliance: BOQ will begin providing lending products to HBF for sale to its 900,000 members from November. This will be followed early in the new year by a suite of other Bank products.
  • Wealth Management: BOQ launched a strategic relationship with Genesys to provide wealth management for customers through its 400 financial planners. Demand for Wealth Management services from the targeted customer segments has been increasing by 50% on average month on month and is forecast to continue to increase throughout the new financial year. BOQ has also launched a market-leading margin lending product to supplement its offering in this sphere.
  • Product suite: BOQ’s successful product innovation saw financial services researcher Cannex award its top five-star rating to the Reverse Charges Account and the Cash Management Account. Australian Consumer Association’s Choice magazine awarded BOQ’s credit card a best and fairest award.
  • 42 new branches opened: BOQ opened 42 new branches in the financial year September 1 2005 to August 31 2006, bringing the total at that time to 215. This met the revised target set by the Bank, and included 75 branches outside of Queensland, a total of 160 Owner-Managed Branch franchisees and 55 corporate branches. BOQ continues to have a strong pipeline of new branches coming on line, including the Bank's first branches in South Australia and Tasmania.