BOQ Annual Reporting 2025

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Annual Report

The Group’s Annual Report sets out the activities of the group during FY25, detailing our financial and non-financial performance, it articulates how we aim to deliver long term value to our stakeholders and outlines our performance against social, environmental and economic challenges and opportunities.

This reporting includes our:

• Corporate Governance Statement
• Sustainability Report
• Remuneration Report
• Financial Statements

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Sustainability Data Pack

The Group’s Sustainability Data Pack provides further detail on our Environmental, Social and Governance performance.

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Investor Materials

The Group’s Investor Materials provide a high-level overview of the Group's performance against its strategy, environmental and social commitments, a detailed financial result analysis and a discussion on the outlook, which covers them macro environment, and the Group's high-level priorities.

This year has been one of considerable progress in delivering our strategy and improving BOQ's performance. We are transforming BOQ to a simpler, specialist bank with a superior customer experience and enhanced shareholder returns.

Benefits are starting to emerge through improved financial performance, enhanced customer experience, growth on the new digital banking platform, simplification of our distribution channels and new partnerships to deliver long-term value to customers, our people and shareholders.

The Group delivered $383 million in cash earnings, representing a12% increase on the prior year. Statutory earnings after tax of $133 million included one-off impacts aligning with our priorities to strengthen and simplify the Group and an impairment of the Goodwill allocated to the Retail Bank Cash Generating Unit.⁽¹⁾

Key financial metrics across margin, return on equity (ROE) and our cost to income ratio all improved against FY24, delivered against a backdrop of continued heightened competition in mortgages and deposits, sustained high inflation impacting Australian businesses and households and a significant regulatory change landscape.

The Board has determined to pay a final dividend of 20 cents per share, representing a yield of approximately 5.5%.⁽²⁾

Delivering our strategy
As a mid-sized bank, we have needed to think differently about how we deliver value to our stakeholders, recognising that smaller banks have a critical role to play in serving customers and communities, and supporting competition in banking and financial services. We are also faced with unique challenges. As a result, we have made bold decisions with a long-term view of value generation. The benefits of these decisions are starting to emerge both financially and operationally.

We are encouraged by the recent recommendations from the Council of Financial Regulators review of smaller banks, aimed at strengthening competition in the sector. In particular, the consideration of proportional regulation, a more transparent and simplified pathway to advanced accreditation, and an increase in the covered bond issuance limit represent meaningful steps toward a more equitable operating environment for banks like BOQ. We acknowledge and appreciate the Federal Government and Regulator's support for these proposals.

Risk uplift
The Group has progressed with delivery of the Remedial Action Plans (RAPs), which are addressing the two Court Enforceable Undertakings (EUs) with regulators. These are being addressed through Group-wide programs: Program rQ and AML First, these programs combined are now 44 per cent complete.

The cultural transformation underpinning the Group's transformation has continued this year, with a refreshed Code of Conduct, clearly articulating the expectations of BOQ employees and representatives. 

In our biannual people survey, we saw an increase in individuals feeling safe to speak up to 83 per cent, a material increase from 76 per cent prior to the commencement of our risk programs in 2022.

Branch strategy
As announced in August 2024, the Group made the decision to simplify distribution channels and align with evolving customer preference for digital banking, by converting all franchised branches to corporate branches. This conversion was completed by 1March 2025. This provides an avenue to expand the presence of business bankers within branches in identified growth corridors, as part of branch conversion, we also welcomed 602 new BOQ employees.

Digital progress
We undertook two significant projects this year in digitising BOQ Group. Firstly, we launched our digital mortgage in a phased manner. This is a key enabler for future success, allowing for cost efficient growth in a highly commoditised and competitive environment. The digital mortgage is expected to reduce the cost in both delivering and servicing a mortgage by half, compared to the heritage process, and provides customers with an improved experience, faster time to decision and far greater self-serve capabilities.

Secondly, we migrated the majority of ME deposit-only customers from the heritage to digital bank, and commenced the migration of ME home loan customers. Almost half of our retail customers are now on digital platforms, and customers are enjoying improved day-to-day banking on the digital platforms, which have been rated an average 4.6 from 5 stars, as compared to 1.2 from five on the heritage bank.⁽³⁾

Once ME customers have been migrated,there will be a material reduction of technology assets and vendors supporting this heritage environment, providing cost benefits and strengthening our operating environment. Customers will enjoy an improved experience and the ME brand will be the first fully end-to-end digital brand in the Group.

Technology and automation
As digitisation progresses, we continue to refine and simplify the technology landscape. Across the Group, 91 per cent of future­ state technology assets are securely stored in the cloud, allowing for efficient, personalised customer solutions and leveraging the latest technology releases. Automation efforts also continued and a further 72 processes, primarily customer and back-office related, were automated. To advance our ability to digitise at scale, and accelerate utilisation of artificial intelligence, the Group entered a new partnership with Capgemini, a global technology services and digital transformation leader.

Optimising financial performance and improving shareholder returns
Initiatives to improve shareholder returns have resulted in a ROE uplift of70 basis points on FY24, along with an increase in dividends per share and share price performance. We have continued with the careful allocation of capital and rebalancing our portfolio towards higher returning assets. To continue optimising our balance sheet, we are exploring⁽⁴⁾ capital partnerships and generating capital light revenue streams.

Commitment to customers and community
BOQ Group remains committed to serving customers and communities in which we operate to achieve our vision to be the bank customers choose. This year we grew our customer base by three per cent.

In the digital bank, we introduced biometric capability, leading to an average intervention rate of 98.3 per cent for would-be scam and fraud onboarding. We've supported 4,098 customers with individual solutions to their lending needs when financial difficulty impacted their budgets. We also resolved customer complaints faster, with a16-percentage point increase in the number of complaints resolved on the same day they were raised, compared to FY24.

In deepening our commitment to small and medium businesses, we have grown the number of business bankers, particularly within communities identified as key growth corridors. We will continue to grow the number of business bankers in FY26.

This year the Group proudly became a presenting partner for the Royal Queensland Show, the Ekka, joining another iconic Queensland institution, showcasing agriculture and supporting tourism. We also became a sponsor for the Queensland Reds, focused on grassroots support for local clubs.

In strengthening our partnership with Orange Sky Australia, a new volunteering program was launched for BOQ team members, advancing important work undertaken to support vulnerable Australians.

Board and management
In April 2025, we welcomed Paul Riordan as Non-Executive Independent Director to the BOQ Board, bringing more than 40 years' experience and expertise across banking, corporate governance, risk management, financial markets and treasury payments infrastructure.

As announced to the ASX on 19 August 2025, Warwick Negus will retire from the BOQ Board, effective 24 October 2025. This follows three successive terms as a Non-Executive Director, and appointment as Chair on 27 March 2023.

Non-Executive Director, Andrew Fraser, has been appointed Chair Elect, having been appointed to the Board in February 2024.

On 22 September 2025, the Group was pleased to appoint Keith Strachan as Group Executive Business Bank⁽⁵⁾.Since joining BOQ in 2021, Keith has held various senior roles within the Business Bank, is a highly regarded leader and has been instrumental in driving this year's success in business banking.

Outlook
Domestic economic growth gradually improved over the course of FY25, though remained below its long-run average. Looking to FY26, rising household disposable income growth should result in further improvement to the economy. The uncertain geopolitical climate is a potential downside risk. We will continue to support our customers to manage through uncertainty and are committed to the further growth of business lending.

Your Board and management team have a clear plan to deliver a simpler, specialist bank, with an improved customer and people experience. We continue to demonstrate material operational and financial improvements aimed at sustainably uplifting shareholder returns.

Thank you shareholders, for your continued support of BOQ and to our people for their unwavering commitment to customers, and our future.

Sincerely,

Warwick Negus                        Patrick Allaway
Chair                                          Managing Director & CEO