Dear Shareholders,

BOQ has delivered an increased profit for a fourth successive year. This is a particularly good result in a challenging market, with net profit after tax increasing to $360 million and statutory profit after tax growing to $338 million. Given these results, the Board has declared a final dividend of 38 cents per share, taking the full year dividend to a record 76 cents per share.

2016 has been a difficult year for the banking sector. Global economic uncertainty has driven market volatility, and domestically the economy continues to shift from its traditional reliance on mining investment. The low interest rate environment and competition for both lending and deposit growth has created margin pressure on both the asset and liability sides of the industry. Additionally, uncertainty remains around the next phase of banking industry regulation.

These market conditions reinforce the need for BOQ to continue to deliver its strategy. 2016 was a positive year for the bank as we broaden our distribution channels, focussed on niche customer segments, improved our process capabilities and continued to create a culture that is a source of competitive advantage.

Most importantly, we’ve continued to implement our strategy without compromising credit quality and we’ve stayed ahead of the regulatory curve with conservative lending policies and capital ratios. We believe we’ve achieved the right balance between growth, asset quality and profitability to build a portfolio that performs throughout the business cycle. We would like to thank the collective efforts of everyone across the BOQ Group that has made this result possible.

2016 has also seen some major governance changes at Board level. During the year we farewelled long-standing director Carmel Gray who has provided wise counsel over nearly a decade of service on the Board. We also farewelled director Neil Berkett whose extensive experience across the finance, digital media and telecommunications sectors provided the Board with important insight following the acquisition of Virgin Money Australia. We thank Carmel and Neil for their invaluable service and wish them all the best for the future.

We were also delighted to welcome some new faces to the Board. Karen Penrose joined in November, John Lorimer in January and more recently Warwick Negus, joined in September. Karen has 30 years’ business experience in the finance and corporate sectors, offering specialist knowledge in finance and capital markets, risk management and compliance. John has more than 20 years in financial services and brings significant expertise in retail financial services, governance, regulation and risk management. Warwick’s extensive financial services industries background adds more than 20 years’ experience in investment banking and domestic and international funds management. We believe, these additions give the Board the right skills and experience to meet the needs of a rapidly changing market, and so we warmly welcome Karen, John and Warwick to the Board.

Finally, we’d also like to thank all of our shareholders for your strong ongoing support during 2016. This has enabled us to build a strong and profitable business that is delivering record earnings whilst maintaining a high quality loan portfolio and is positioning BOQ well for the future.