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BANK of Queensland (ASX: BOQ) has posted a record result of $301.2 million in cash earnings after tax, a 20 per cent increase from the previous financial year.
BOQ acting CEO Jon Sutton, who took over from Stuart Grimshaw last month, says the results come down to delivering on four key pillars that have been ingrained in the corporate culture over the past two years.
With the results, Sutton also announced BOQ has renewed a partnership with Hewlett-Packard for five years.
The company will service BOQ’s IT to underpin the bank’s transformation.
“The record profit we’ve announced today reflects our success on a number of fronts,” says Sutton.
“We continue to deliver against our four strategic priorities: putting the customer in charge, growing the right way, finding a better way and being loved like no other.
“The solid foundations we’ve put in place over the past two years are starting to deliver and we’re well on our way to building a bank that is lower risk, has lower volatility and is set up for a sustainable future.”
Impaired assets were reduced 25 per cent to $292.9 million, which is half the level reported in February 2012, and impairment expense was down 25 per cent for the year.
BOQ’s business bank also reported favourable results, growing at nearly twice the rate of the market, and the acquisition of specialist finance and leasing business Investec proved a positive move.
“Our business bank asset growth increased 1.7 times the system which shows there is a place for our relationship-based approach,” says Sutton.
“A huge achievement in the year was the acquisition of what is now called BOQ Specialist and we are delighted with its progress to date.
“BOQ Specialist wrote around $1 billion of mortgages in the past year and contributed $3.1 million in cash NPAT in its first month as part of the group, right in line with our expectations.”
BOQ’s retail asset growth lagged behind competitors, but Sutton says this was to be expected considering the bank is “not prepared to compromise our disciplined approach to pricing and risk”.
The company also reported a six per cent increase in expenses, indicating a more cautious approach to spending may be necessary.
However, this is in light of the company’s ongoing transformation which includes a new head office.
“While expense growth was higher than we would have liked, we remained committed to disciplined management of the bank’s expense base,” says Sutton.
“Expense growth reflected significant investment in frontline capabilities in line with our strategy to open more distribution channels, including expansion of our business banking capabilities and establishment of a broker support network and mobile banking unit.”
BOQ shareholders will be paid a final dividend of 34 cents per share on November 27, taking full year dividends to 66 cents per share fully franked, an increase of 14 per cent on the previous financial year.
BOQ shares were trading up 2.72 per cent at $12.1 per share following the announcement.
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