BOQ record profit driven by branch expansion and above system growth in loans and deposits


Bank of Queensland today announced an interim Net Profit After Tax of $48.4 million for the first half of the 2006/07 financial year, an increase of 21% on the prior comparable period (pcp).


The result comes on the back of growth in loans under management of 26% (pcp) and growth in retail deposits of 30% (pcp) and has been driven by BOQ’s expanded branch network, new products, business banking and equipment finance.


“We are exceeding our targets when it comes to lending and deposit growth and continue to be well ahead of the banking system,” BOQ Managing Director David Liddy said today.


The result is built on an underlying profit of $77.9 million (up 22% pcp) leading to growth in cash diluted Earnings Per Share of 15%.


Bank of Queensland’s Board also announced an interim ordinary dividend of 32 cents per share, an increase of 5 cents or 19% (pcp).


Key indicators include:

  • Lending growth of 1.7 times system (LUM growth of 26%);
  • Deposit growth 2.8 times system (retail deposit growth of 30%);
  • Improvement of net interest margin of 2 basis points over the half;
  • Maintenance of high credit quality;
  • Continued growth in numbers and performance of Owner-Managed Branch network; and,
  • Six successful conversions of corporate branches to OMBs.


“We now have a total of 10 Queensland branches we have changed from corporate branches to OMBs, and we have seen immediate and strong growth following the conversion in each and every one,” he said.


“We have scheduled 11 new Owner-Managed Branches to open this half including OMBs in South Australia, W.A. and Victoria along with the conversion of more Queensland corporate branches to OMBs.”


Mr Liddy said Bank of Queensland was bolstering its branch network through continued interstate expansion, conversion of Queensland corporate branches to OMBs, and the addition of Pioneer Building Society branches.


“The OMB has been a fundamental platform in BOQ’s success to date, and will continue to be so as we grow and expand nationally. Importantly, we are increasing our network of OMBs in Queensland which will have a direct impact on our revenue generation in our home state.”


Mr Liddy said business banking, particularly in the equipment finance, debtor finance and SME sectors, had continued to outperform the market.


“We have had 22% growth in the business loans portfolio compared to the first half last year. In particular, our equipment finance book has grown at 21% (pcp) and our debtor finance portfolio has grown 39% (pcp), leveraging the bolt-on Orix acquisition in December 2005.


“This growth, combined with our booming branch network, has BOQ perfectly placed for the SME market,” he said.


Pioneer integration:

The commencement of integration following the successful merger of Pioneer Permanent Building Society, based in Mackay, Queensland, during the half highlighted the strength of BOQ’s execution skills.


“We have seen excellent customer and business retention in the Pioneer customer base since the merger was approved by shareholders and integration commenced,” Mr Liddy said.


“The Pioneer merger will give us an expanded customer base in the fast-growing Central and North Queensland regions, and bring our branch numbers in Queensland up to a very competitive footprint.


“The Pioneer merger, along with our acquisitions of UFJ Equipment Finance and Orix Debtor Finance over the last few years, highlights the execution skills Bank of Queensland’s executive team has developed and the successful track record we have achieved.”


Bendigo Bank merger proposal:

Bank of Queensland is moving forward on its proposal to merge with Bendigo Bank. BOQ has proposed a timeframe and process which, if agreed, would see the transaction progress through due diligence towards a Merger Implementation Agreement.


“I see BOQ and Bendigo as natural allies against the big banks. It is our aim to create a sustainable force and alternative in the Australian financial services landscape,” Mr Liddy said.


“There have been some concerns raised in the past fortnight by some members of the Bendigo community, however as the merger discussions progress we believe these concerns will be allayed.


“We have committed to preserving Bendigo Community Bank branches. We have committed to preserving the Bendigo headquarters. We have committed to preserving the Bendigo brands. We have committed to retaining key executives and giving significant Board representation.


“If we work on the premise, and I believe most in the finance sector do, that mergers are going to occur involving the regional banks, then there is no better fit for Bendigo Bank than Bank of Queensland,” Mr Liddy said.


“For Bendigo shareholders we believe the price is extremely attractive and we believe a merged team is best-suited to understanding their culture, growing the business and has the operational and integration experience to make it work,” Mr Liddy said.


“We both understand how to run growing branch networks involving third parties, whether they are franchisees or community boards.


“I believe we have shown our skills and experience in execution and that together a combined BOQ and Bendigo Bank will be a powerhouse in the Australian retail banking market and provide greater returns to the shareholders of both companies,” he said. 


Bank of Queensland 2007 half year result snapshot





Change on 1H06 (pcp)

Net Profit After Tax





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





(1) Excludes significant items and excludes movement in the general reserve for credit losses.


  • Net Profit After Tax up 21% pcp: NPAT $48.4 million continues strong growth in profit over the last five years.
  • Interest Margin on track: The Bank has increased its margin 2 basis points to 1.85%. Improving our margin in the current competitive environment has been a significant achievement for the Bank.
  • Asset quality still strong: Impaired assets to non-securitised lending remains steady at 0.08% compared to the first half of 2006.
  • Expense growth: Expense growth of 25% (pcp) has been driven by business volume with associated increases in OMB commissions, processing and IT, along with salaries which were reviewed and increased to meet market demands.
  • Key alliances: Key alliances with Genesys (wealth management), BOQ insurance partners (Vero, St Andrews, CGU), Macquarie (margin lending), Challenger (non-conforming loans), Keycorp (merchant services) have added depth to BOQ’s customer offering.
  • Credit Card portfolio outsourcing: Bank of Queensland’s outsourcing of its credit card business is progressing with partner Citibank. Bank of Queensland intends to utilise its outsourcing agreement to expand its offering to customers through new BOQ-branded cards and products, better processing and more efficient manufacture.
  • Owner-Managed Branch growth: Four new interstate OMBs opened and six Queensland corporate branches converted to OMBs during the half.
  • Shareholder value increases: Market cap reaching approximately $1.9 billion (at close of trade yesterday) and Total Shareholder Return (TSR) of 24% (5 year average).