ME integration pays off for BOQ bottom line and bank's shareholders

BOQ’s (ASX: BOQ) integration of ME bank has ensured the parent recorded its fifth consecutive half of improved underlying performance, with the company posting a $212 million statutory net profit today.

The bank, which today revealed its results for the half year period ended 28 February 2022, saw profit rise by 38 per cent, as well as revenues of $833 million - up by 44 per cent.

BOQ says the results were achieved following the integration of ME bank, which it acquired for $1.33 billion. Since 1 July 2021, BOQ says ME has already delivered approximately $33 million of full year run-rate synergies during the half.

The company’s shareholders are some of the biggest winners from BOQ’s half year, with the company announcing they will receive a 22 cents per share fully franked dividend, which represents a 53 per cent payout ratio for 1H22.

“BOQ’s financial results for 1H22 highlights our progress on delivering quality sustainable profitable growth and reflects the sharp focus on our strategic priorities,” managing director and CEO George Frazis said.

“Today’s result demonstrates our disciplined execution of the ME integration and digital transformation program and represents our fifth consecutive half of improved underlying performance.

“This has been achieved during a period of ongoing economic uncertainty from COVID, and at a time of notable change as we bed down the integration of ME and upgrade our digital capability for customers and our people.”

In terms of BOQ’s lending businesses, home loan growth momentum continued, with $2.6 billion of growth in the half across all brands, while its business loan segment grew by $600 million.

Customer deposit growth also continued with an additional $1.8 billion of balances added during the half, which BOQ says enables it to reduce its reliance on term deposits.

While the company is reassured by continued economic recovery, low unemployment, and a large pipeline of residential and infrastructure construction, it notes uncertainty remains given geopolitical tensions, elevated inflation, rising interest rates, and supply chain and labour disruptions.

As such, BOQ says it will continue to progress the integration of ME, and “maintain a prudent approach to provisioning” through the second half of FY22.

Shares in BOQ are down 3.99 per cent to $8.19 per share at 10.43am AEDT.