AS Bank of Queensland Limited (BOQ) embarks on an ambitious branding strategy, managing director David Liddy hopes for a merger to boost national presence as a ‘real banking alternative’ to the Big Four.
“Our main M&A has been to seek out a complementary merger alternative to help us because we want to have a real alternative in Australian banking,” says Liddy.
“To achieve that we probably need to be twice our size, which can only come from a merger or from existing shareholders.”
To complement BOQ’s strategy for the year to continue attracting disillusioned customers from other banks, it will embark on its largest branding campaign yet.
He says the ‘your own personal bank’ campaign focuses on the BOQ tag more than Bank of Queensland, costing more money than the bank has ever spent on a campaign.
This comes as Liddy tries to shrug off the losses expected this year from bad debts, but he is confident the owner-manager system will help BOQ’s outlook this year.
“The lion’s share of growth comes from disaffected customers from the big banks, looking for an alternative way. We’ll continue to be competitive in the marketplace. Growth will not be as strong as last year but we’ll continue to do well,” he says.
“With last year’s data we outgrew the system and we didn’t use brokers, we generate our business through our owner managers – it goes to show that the owner manager branch model is very productive.
“We’ve got all the good things of a big bank with size and efficiency, and all the things of a small bank with responsiveness and responsibility.”
Following the Reserve Bank of Australia’s (RBA) decision to raise interest rates by 25 basis points to 4 per cent, he expects further rate rises as the economy recovers.
“One point to get across is that banks don’t set lending rates on the cash rate, because banks face higher costs – I wouldn’t promise anything for any bank when it comes to the response,” he says.
“There are a number of forces against us, like the pricing wholesale guarantee I’ve been quite vocal about – although it’s been removed it will still have lag effects.
“I encourage the government to promote competition in the Australian banking sector, to flatten the fee structure.”
Liddy also challenges concerns that SMEs are not able to find funding at the moment, as the money is there, just with higher risk priced into it.
“We kept the doors open throughout the financial crisis – we’ve got owner-managers who essentially run small businesses themselves. I don’t believe that small business can’t access funding,” he says.
“A lot of people think that debt is equity, but banks don’t provide equity, they provide debt. Risk has been priced higher probably forever, but it’s not that small businesses can’t get funding, some of them just don’t want to pay the higher price.”
“If anything’s come out of the financial crisis it’s that risk needs to be understood and we will price risk accordingly.”
Managing director: David Liddy
Market capitalisation: $2.3 billion
Revenue ’09: $629 million
Profit ’09: $187.4 million
Established: 1874 as Brisbane Permanent Benefit Building and Investment Society
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