






Dear Shareholders,
Our 2017 financial year marks the fifth successive year that BOQ has delivered an increased profit. Cash earnings after tax increased five per cent to $378 million whilst statutory profit after tax grew four per cent to $352 million. Based on these results, the Board has determined to pay a final dividend of 38 cents per ordinary share. Following clarity from the Australian Prudential Regulation Authority on 'unquestionably strong' in July this year, and given our very strong capital position, the Board has also determined to pay a special dividend of 8 cents per ordinary share, taking the full year dividend to 84 cents per ordinary share.
The financial services industry has faced further challenges over the past 12 months. Consumer concern about low wage growth and higher living expenses combined with APRA's new regulations to slow residential and particularly investor mortgage growth resulted in subdued credit growth. Low interest rates, higher term deposit funding costs and continued intense competition for new customers has contributed to margin pressure. Further, increased regulatory changes and technological advances present a growing expense burden.
Despite these challenges, we have continued to implement a strategy that positions us well to embrace opportunities in this dynamic environment and deliver ongoing value for shareholders. Our focus on niche customer segments has continued to deliver results with solid growth through BOQ Specialist, BOQ Finance and our target niche commercial segments. We have also continued to expand our presence in the broker market which has contributed to our Virgin Money business exceeding growth expectations in its home loan portfolio. Underlying this favourable trend is the continued exceptional service provided by our branch network which remains a core part of our business for both lending and deposits.
We have also benefited from our disciplined approach to expense management which has ensured we delivered on our promise to keep underlying expense growth to one per cent. Indeed, our continuous improvement program continues to create savings that we are reinvesting back into the business, particularly in technology projects that will help us future proof BOQ. This year's result was also supported by a $16 million profit on the disposal of a vendor finance entity.
Importantly, we have also continued to deliver growth and profits without compromising our robust risk management practices, with loan impairment expense reducing to 11 basis points of gross loans and advances. We remain committed to creating a bank that is more resilient over the longer term. Our disciplined approach to growth has also helped us maintain our strong capital position, giving us options for the future.
2017 was also a year characterised by greater political scrutiny of the banking sector. We are proud to lead a business that upholds the highest ethical standards and we have continued to focus on ethics, conduct and culture, ensuring we have a culture that supports positive relationships with our stakeholders.
Our solid performance in this environment has only been possible through the ongoing efforts of everyone across the BOQ Group. We would like to thank all of our employees for making BOQ the great organisation it is today.
Finally, we would like to thank all of our shareholders for your ongoing support. Our clear strategy, strong capital position and prudent approach to risk management position us well in this environment to continue delivering value for you into the future.
Roger Davis
Chairman
Jon Sutton
Managing Director & CEO
5% increase
in earnings
from
FY16 to
$0m
4% increase
in earnings
from
FY16 to
$0m
0¢
Up 2% from FY16
0¢
Unchanged from FY16
0¢
$0m
Down 28% from FY16
0%
Down 7bps from FY16
0%
Down 20bps from FY16
0%
Up 10bps from FY16
BOQ's Chief Financial Officer Anthony Rose explains how macro trends such as economic conditions, regulatory changes and political pressure are impacting the financial sector, including BOQ.
BOQ's Managing Director & Chief Executive Officer Jon Sutton explains how BOQ's strategy is making it easier for our customers to deal with us, growing our business the right way, finding better ways to do things and enhancing our customer focused culture.
We are improving our customers' experience by putting them in charge of when, where and how they choose to engage with us - regardless of whether they visit us in a branch, use our online services, call us on the phone or buy our products through a third party intermediary.
This year we have continued to put our customers in charge by:
We will continue to give our customers more choice of how they conduct their banking by improving our digital channels, increasing our broker presence, optimising our branch network and expanding Virgin Money's reach. Looking ahead, we will:
190 branches including
109 Owner Managed branches
upgraded ATMs
accredited brokers
We are building a strong and profitable business by making the right decisions about where and how we grow. This includes focusing on niche customer segments that value an intimate banking relationship.
This year we have continued to grow the right way by:
In areas where we can deliver a better proposition for customers, we will continue to compete by:
in lending to niche
business segments
Loan impairment expense
11 basis points of gross loans
and advances
Common Equity Tier 1 capital
We are committed to making our systems and processes simpler, faster and smarter. We want to improve efficiency, reduce costs and deliver better customer service.
This year we have continued to find better ways of operating by:
We will continue to future proof BOQ by modernising and unifying some of our core technology platforms,
infrastructure and architecture, and digitising our operations. We will simplify our operating model so we are more agile and nimble,
and able to quickly respond to emerging technologies and social changes. This will continue to improve productivity and
create a better customer experience.
In the near future we will:
with improvements to our retail, commercial and lease management systems
Underlying expense growth
We want to maintain positive stakeholder relationships by living our values, creating a place where our people love to work and contributing to the communities in which we operate. It is what we do to prove 'It's Possible to Love a Bank'.
This year we have continued to live that brand promise by:
We will continue to strengthen our stakeholder relationships and bring our brand promise to life by:
employees signed up to the
Banking and Finance Oath
women in leadership positions
in community investment
Proving it's possible to love a bank
BOQ is one of Australia's leading regional banks. We pride ourselves on building long-term customer relationships supported by banking products that genuinely meet our customers' financial needs. Our strategy is to focus on niche segments where customers value a more intimate banking relationship. It's all part of our mission to prove it's possible to love a bank.
Leading the way
We have a committed Executive Team delivering our strategy and an experienced Board of Directors overseeing our financial performance and ensuring strategic delivery continues to add value for our shareholders.
Find out how our Corporate Governance helps us manage risk and add value. Further disclosure on how we responsibly manage our business and positively engage with our stakeholders is available on the sustainability section of our website.
Watch the webcast of our 2017 full year results or read related documents
Find information on:
Link Market Services Limited
Level 15, 324 Queen St
Brisbane Qld 4000
Australia: 1800 779 639
International: +61 2 8280 7626
Email: boq@linkmarketservices.com.au
Web: linkmarketservices.com.au
BANK OF QUEENSLAND LIMITED
ABN 32 009 656 740
ACN 009 656 740
100 Skyring Terrace
Newstead Qld 4006
Australia
Telephone: +61 7 3212 3333
1300 55 72 72 Within Australia
+61 7 3336 2420 Overseas