BOQ earnings and profit hurt by challenging regulatory environment

BOQ earnings and profit hurt by challenging regulatory environment

The Bank of Queensland (ASX: BOQ) has blamed a challenging operating environment and rising regulatory costs for its weak FY19 result.

FY19 cash earnings after tax were down 14 per cent to $320 million, while statutory NPAT was down by 11 per cent to $298 million.

Despite the weaker FY19 result, BOQ's new managing director and CEO George Frazis says the business will push through the challenges of FY20.

"Our capital is well positioned for 'unquestionably strong', we have a good funding position and our underlying asset quality is sound," says Frazis.

"There are numerous opportunities ahead for a revamped BOQ and I will be working closely with the executive leadership team to complete our strategic and productivity review, with a market update on our plans in February 2020."

During FY19 total income decreased by $21 million, and net interest income decreased by $4 million for the company named number seven in Brisbane's Top Companies 2019.

The bank says the reduction is attributable to the declining interest rate environment and continued strong competition for loans and deposits.

Banking income was also reduced by $11 million primarily because of lower fee income and a change in arrangements to BOQ's merchant offering.

The group saw growth in its niche offering Virgin Money, with the portfolio growing by $914 million to over $2.5 billion, while the BOQ Retail bank saw a further contraction of $1.4 billion in its residential housing loan book.

BOQ will invest $30 million of capitalised investment to complete the build of a new Virgin Money digital bank in FY20, which the company says is an investment in a long-term project.

"This is an investment in long term value creation for this iconic brand which has demonstrated success in attracting customers across its existing product suite," says BOQ.

Looking forward, Frazis says the bank is focusing on returning to profitable and sustainable growth.

"We expect lower year-on-year cash earnings in FY20 with revenue and impairment outcomes in line with FY29, higher post-Hayne regulatory and compliance costs, and increased operating expenses related to our investment in technology," says Frazis.

"I am very focused on delivering sustainable growth and improved shareholder returns."

Shares in BOQ are down 3.26 per cent to $9.34 per share at 10.03am AEDT.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

How communications technology can raise the bar on customer service, employee experience
Partner Content
From capturing feedback early to providing messages with a higher rate of cut-through, ...
Advertisement

Related Stories

Brisbane Broncos player Ryan James and Gold Coast’s BSKT launch new native food range

Brisbane Broncos player Ryan James and Gold Coast’s BSKT launch new native food range

Indigenous entrepreneur and Brisbane Broncos prop Ryan James will d...

Lewis Land steps up plans for $1.5b Harbour Shores amid Gold Coast housing crunch

Lewis Land steps up plans for $1.5b Harbour Shores amid Gold Coast housing crunch

Sovereign Islands developer Lewis Land Group has stepped up the pac...

FDA clears path for Bubs baby formula expansion in the US

FDA clears path for Bubs baby formula expansion in the US

An emergency policy in the United States to allow fast-tracked impo...

Steve McCann steps down as Crown Resorts CEO, replaced by Wynn Macau executive

Steve McCann steps down as Crown Resorts CEO, replaced by Wynn Macau executive

Following the $8.9 billion takeover of Crown Resorts by US investme...