However, despite the COVID-19 disruption, the banking group still managed to bolster its loan portfolio with revenue rising 1 per cent to $1.096 billion thanks in part to lending growth of $827 million.
Lending increased across the group's housing and business lending portfolios in FY20, lifting net interest income by 3 per cent to $986 million.
The second half of FY20 was impacted by a sharp rise in loan impairments, which jumped to $147 million from $28 million in the first half. This figure largely reflected a $133m collective provision for the anticipated lifetime losses from COVID-19.
BOQ revealed that 21,000 customers accessed banking relief during the pandemic this year and, of those, 25 per cent continued to make full or partial repayments.
At the end of August, 12 per cent of BOQ's housing customers and 16 per cent of its SME customers were still accessing bank relief measures.
The full-year result included an $80 million provision for non-recurring expenses associated with BOQ's strategic review and restructure in the first half.
As part of this review, BOQ announced today plans to sell its St Andrews Insurance business to Matt Lancaster's Farmcove Investment Holdings for $23 million.
"The divestment enables us to focus on our niche customer segments while simplifying our business model," says BOQ's CEO George Frazis.
BOQ is expecting to book a loss of $27 million to $30 million on the conditional sale which is likely to settle in FY21 pending regulatory approvals.
Meanwhile, BOQ saw operating expenses rise 7 per cent to $594 million over FY20 in what BOQ says was a transitional year, driven by digital transformation and investments in risk and regulatory programs. Productivity savings of $30 million helped partially mitigate this increase.
Frazis says the FY20 result reflects the 'challenging environment and a year of transition' for the group.
"We are well provisioned for the potential impacts to our portfolio as a result of COVID-19," he says.
"Our updated economic assumptions are prudent and take into account the RBA forecasts and ongoing uncertainty.
"Given the government's stimulus and its good handling of COVID-19, there is potential upside opportunity should the economy recover at a faster rate than currently forecast."
Looking ahead, Frazis says BOQ is 'focused on executing on our strategy and maintaining momentum in our business'.
"We have a clear transformation roadmap and are delivering against it. Although difficult to predict in this environment, we expect to broadly deliver neutral jaws in FY21 driven by above system growth in lending.
"Our capital position is strong and organic capital generation will provide us with the ability to invest in and grow our business."
BOQ is paying a final dividend of 6c a share, bringing the total dividend for FY20 to 12c sharply lower than the 65c paid in FY19.
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