BOQ Announces $197.1 Million Profit

Thursday, 14/10/2010 


  • Normalised cash net profit after tax of $197.1m - up 5% on FY09
  • Loan growth 2.5 times system
  • Retail deposit growth 1.5 times system
  • Full year net interest margin (NIM) increased by 4bps to 1.60%, despite contraction in 2H10 due to higher funding costs
  • Cost-to-income ratio (normalised cash) decreased 4.1% to 45.8% 

BOQ today announced an increased normalised cash net profit after tax of $197.1 million for the 2009/10 financial year, an increase of 5% on last year. 

BOQ Managing Director David Liddy said a strong balance sheet and focused expense discipline, along with system-beating growth in lending and deposits, all contributed to securing a record profit in what has continued to be a challenging economic environment. 

“We have continued to deliver on our commitments to the market, despite the difficult conditions.  

We have reduced our cost-to-income ratio by 4.1% to 45.8%, thanks to cost initiatives implemented throughout the 2009/10 financial year.  

“We have continued to deliver on our growth strategy, purchasing an insurance business and a vendor finance business to assist us in diversifying our income sources, increase our overall margins, and reduce the capital intensity of our model. 

“We continue to outperform in both lending (2.5x system) and deposits (1.5x system) and have also increased our full year Net Interest Margin by 4bps, despite increasing funding costs putting pressure on margins in the second half of this financial year. 

“As per our guidance, we expect that bad debt losses have peaked in FY10, however we also expect that investments in collection processes and resources will improve specific portfolio performance.” 

Growth strategy
“The acquisition of St Andrew’s Insurance and CIT Australia and New Zealand demonstrate we are serious about delivering on our strategy of acquiring high margin, low capital businesses.   While these acquisitions haven’t made a material contribution to this year’s financials, we are extremely pleased with the business momentum that has been maintained and enhanced through the purchase process,” said Mr Liddy. 

Total capital paid for these acquisitions was $106m and they have pro forma FY11 ROE expectations of 25% to 30%. 

“All members of both management teams and key staff came across to the Bank and we expect the transition to be complete in January 2011.

“We believe there are real opportunities to create a best in class finance company going forward and have created a new division, BOQ National Finance, to manage the Bank’s equipment finance, vendor finance and debtor finance businesses.  We also intend to enter the motor vehicle finance market within the next year. 

“Our guidance for next year shows the important contribution these businesses will make to the Bank’s performance.” 

Asset quality
“As per guidance we have experienced an increase in bad debts expense during the year and, as a result, we have increased our provision coverage.  Some positive trends are emerging and our focus remains on well-secured housing and SME lending,” said Mr Liddy. 

Strong capital and liquidity
“The Bank maintained an exceptionally strong level of capital and liquidity throughout the year, which will enable us to capitalise on growth opportunities that are expected to progressively unfold going forward,” said Mr Liddy. 

“These excess holdings have diluted our Earnings Per Share in this financial year but provide a solid platform for future growth in earnings.” 

Pipeline of new products
“Over the next six months we will be rolling out a suite of new products to attract new customers and reduce our funding costs, kicking off with our innovative Save To Win account, launching next month. 

“Save To Win will be unique in the marketplace and gives customers the opportunity to win cash in a monthly prize draw.

“We’re also launching a new online share trading platform, a Business Privileges Package for SMEs, a SMSF high interest bearing investment account and a new transaction account, all within the next six months.” 

OMB network
“The Bank’s Owner-Managed Branch (OMB) Model remains core to the Bank’s distribution strategy.  We will continue to convert corporate branches to OMBs, and open new OMBs, in high growth areas over the next couple of years, however our focus remains on sourcing quality Owner-Managers and we intend to take the necessary time and care to ensure only the best bankers, and business people, become BOQ Owner-Managers. Obviously it is a difficult environment for all small business owners in Australia at the moment, which makes it harder to attract quality Owner-Managers, however we will be patient.” 


“Once again, we feel it prudent to maintain the dividend at 26 cents per share as paid in the interim dividend, which brings the total dividend for this financial year to 52 cents per share. 

“We are guiding the market to expect higher dividends in FY11.” 

Dividends remain fully franked.

Bank of Queensland 2010 full-year result snapshot




Change on 2009 (year on year)

Normalised Cash Profit After Tax 




Retail Deposits 




Loans Under Management:
(before collective provisions)
















Assets Under Management




Normalised Cash Cost to Income Ratio 




Normalised Diluted Cash Earnings Per Share




Dividend per share




  • Normalised Cash Profit after Tax of $197.1m, up 5% on FY09: Increased normalised cash profit despite peak bad debt losses, as per guidance.
  • Continued system-beating growth: Outperforming market with 2.5 times system lending and 1.5 times system deposit growth.
  • Cost-to-income reduced: Expense disciplines have seen cost-to-income ratio decrease to 45.8% in FY10, a 4.1% decrease from FY09.
  • Interest Margin improved: NIM improved 4bps from FY09 despite funding costs putting pressure on NIM in 2H10.
  • BOQ National Finance: New division with potential to grow lifetime customer relationships, which can be transitioned to banking customer service ‘experts’, BOQ’s Owner-Managers.
  • St Andrew’s Insurance: Capital-lite, high Return on Equity business, overcoming headwinds in banking non-interest income.  
  • Owner-Managed Branch network: Continue to look for opportunities to convert corporate branches to OMBs and open new OMBs in high growth areas.
  • Statutory profit: Increased by 27% to $179.6 million compared with the 2009 result of $141.1m.