BOQ profit to take $79m hit from restructuring and changes at ME Bank

Redundancies, technological improvements and the consolidation of property have all contributed to an expected $79 million hit to the Bank of Queensland's (ASX: BOQ) after-tax profit for the second half of FY23, which for the Brisbane-headquartered group ended on 31 August.

BOQ estimates after-tax costs of $35 million from restructuring and $44 million for integrations with ME Bank - an acquisition made for $1.33 billion in mid-2021.

These costs, which amount to $113 million before tax, stem from a group-wide operating model review that prompted a simplification of BOQ operations with a focus on productivity.

The group has revealed 250 redundancies took place in FY23 and the first quarter of FY24 with related costs of approximately $25 million.

BOQ has also been optimising its property footprint by consolidating its corporate office floorspace across Perth, Melbourne, Sydney and Brisbane, but the company has also incurred property-related impairment costs of around $11 million.

In line with its digital roadmap, BOQ has decided to impair intangible assets, leading to technology costs of $14 million. At ME, legacy technology has been decommissioned and the division's digital transformation has been accelerated onto a single core-banking platform for the retail bank, implying an impairment of the ME core banking intangible asset of $27 million.

A legacy ME property lease in Melbourne has also been given a $16 million impairment as the company's real estate footprint is consolidated in the Victorian capital, while further integrations of ME cost $20 million in the half year.

BOQ estimates targeted annualised synergies of $72 million from the ME integration were delivered by the end of August of which the final $25 million were delivered in FY23. 

"These synergies were achieved through alignment of operating models and technology integrations, consolidation of investment roadmaps, supply chains and shared services functions," the group stated.