BOQ PROFIT CLIMBS 6 PER CENT AMID 'VOLATILE' MARKET

BOQ PROFIT CLIMBS 6 PER CENT AMID 'VOLATILE' MARKET

BANK of Queensland (ASX:BOQ) has delivered a 6 per cent lift in full-year profit to $388 million amid low interest rates and increasing competition in the market.

The Brisbane-based bank posted a soft increase in cash earnings of $360 million for the 12 months to August 31 - up 1 per cent compared to a year earlier.

Bank of Queensland managing director and CEO Jon Sutton (pictured) says the main focus during this half was deposit gathering to position the company for future growth.

"Expectations of lower interest rates in Australia for longer has meant a lower rate of return on capital and low cost goods," Sutton says.

"A widening of spreads in term deposits and other liabilities has also emerged alongside fierce competition for deposits and pricing for new lending.

"We have taken steps to adapt to this low interest rate environment. Given the expensive funding environment and increased competition, we slowed asset growth in the second half, following a strong period of growth in the first half."

He says specialising in niche segments will deliver 'superior returns'.

BOQ Specialist, targeted towards medical, dental and veterinary professionals, has recorded 13 per cent commercial loan growth over the year. While the mortgage portfolio delivered $1.5 billion of growth.

Asset-based segment BOQ Finance increased by 3 per cent in a low-growth market.
"We have also expanded our presence in other niche business segments with positive results in retirement living, hospitality and agribusiness," Sutton says.

"I'm also pleased to report that Virgin Money has launched its Reward Me home loan product through the broker channel, with promising early signs.

"Since its launch in May 2016, we have received $100 million worth of loan applications."

BOQ has introduced a number of productivity and efficiency initiatives to counteract challenges in the finance industry, including $15 million invested in the operating model.

Underlying expense growth is expected to be kept to 1 per cent in FY17.

"While some of the headwinds experienced over the past year maybe one-off in nature, there are a number which will continue through 2017," Sutton says.

"Managing our costs in a disciplined way remains a key focus for the year ahead and this will be supported by the rollout of further efficiency initiatives and improvement in our digital capability."

The board will pay a dividend of 38c per share on November 22.

 

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