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The bank’s commercial lending portfolio increased by $934 million or 7 per cent over the half, with balances up 16 per cent year on year to $14.1 billion.
Bank of Queensland (BOQ) said the result was driven by growth across a diversified mix of industries, including healthcare, agribusiness, and commercial property, as it continues to shift towards “higher-margin” business loans and “prioritise business lending growth over home lending in a competitive market”.
Growth was supported by ongoing investment in banker capability, an expanded frontline footprint, and a focus on key growth corridors.
Within the business bank, net interest income rose 8 per cent year on year, underpinned by higher lending volumes and a 15-basis-point increase in net interest margin to 2.94 per cent.
BOQ said it remains focused on specialist segments such as healthcare, agribusiness, and diversified industries, supporting both small and medium-sized family businesses and larger commercial clients.
At a group level, BOQ reported statutory net profit after tax of $136 million for the half, down 20 per cent on the prior corresponding period, while cash earnings declined 4 per cent to $176 million.
Total income increased 5 per cent to $832 million, with net interest income rising 4 per cent to $755 million and non-interest income up 13 per cent, driven by higher business banking fee income.
Net interest margin was 1.67 per cent, down 3 basis points on the previous half, reflecting competitive pressure across lending and deposits, partially offset by improved asset mix and funding optimisation.
Operating expenses rose 6 per cent year on year to $553 million, reflecting branch conversion costs, inflation, and continued investment in technology and business banking growth.
Rod Finch, managing director of BOQ, said: “This result reflects the strong execution and transformation capability within BOQ.
“We now have an end-to-end digital banking customer proposition in market. We continue to focus on simplifying our business and have delivered another period of disciplined cost management.”
Asset finance steady as BOQ executes Challenger partnership
BOQ’s asset finance portfolio remained broadly stable during the half, with balances increasing 1 per cent year on year to almost $7.0 billion, but declining 1 per cent over the period.
BOQ said that the contraction reflected the run-off of the cash flow finance portfolio and a seasonal decline in equipment finance volumes.
Growth was recorded in the structured finance segment, which increased by $102 million, supported by demand in novated leasing and electric vehicle financing.
During the period, BOQ also announced a capital partnership with Challenger, including a whole-of-loan sale of its equipment finance portfolio and a forward flow arrangement, as it seeks to optimise its balance sheet and funding position.
The transaction is expected to support capital management initiatives while allowing the bank to continue originating and servicing asset finance facilities under the new structure.
Finch added: “We enter a period of economic uncertainty with strong financial and operational resilience, a well-diversified and prudently provisioned portfolio of assets, and expect to optimise our balance sheet and funding position post completion of the capital partnership transaction with Challenger.
“BOQ is well positioned to navigate the current conditions and support our customers and the broader economy.”
Mortgage book contracts amid digital and proprietary shift
BOQ’s housing portfolio continued to decline in the first half, with home lending balances falling by $2.2 billion or 4 per cent to $50.1 billion as the bank prioritised business lending and transitioned origination to its digital platform.
The contraction was driven by lower settlement volumes and elevated run-off, alongside the bank’s decision to pause broker origination onto legacy systems during its transformation phase.
The bank said the result reflected “lower settlement volumes as origination transitions to the digital platform and elevated run‑off”.
Read more about BOQ’s residential results on Broker Daily sister brand The Adviser.
[Related: Macquarie tops broker satisfaction survey amid onshoring push]
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