PROFITS FOR BANK OF QUEENSLAND

BANK of Queensland (BOQ) managing director David Liddy (pictured) says last half's profit result has created ‘further headroom’ to invest capital back into the brand.

Liddy says first-half net profit almost doubled and bad debts are stabilizing as the lender’s half year net profit increased to $90.9 million – up 15 per cent from last year.

“We have delivered on our commitment to improve our margins, increasing our net interest margins by 13 basis points from the first half of 2009 to 1.65 per cent, despite increased funding costs,” says Liddy.

“We have delivered on our commitment to improve our normalised cash cost to income ratio, reducing it by an impressive 9.2 per cent over the past 12 months to 45.1 per cent, with an overall reduction in total normalised cash operating expenses of 6 per cent compared to the first half last year.”

Liddy says the housing market had held up ‘surprisingly well’ and that the company was able to grow its commercial market at double digit growth.

The group's expenses for bad loans rose to $51.4m for the half, compared with $27.6m a year ago.

“As previously guided, bad debts increased in 1H10 as we expected they would, however we are now seeing an improved, more stable position,” says Liddy.

BOQ bolstered its operations with the acquisition of Western Australia-based St Andrew’s insurance business from the Commonwealth Bank (CBA). Liddy says the insurance company has 165,000 policy holders with annual gross written premiums of $75 million.

The transaction is due for completion in July and will not include St Andrew’s investments, retirement income, financial planning and superannuation businesses.

BOQ said it would pay an interim dividend of 26 cents a share, compared with 26c last year, in line with market expectations.