Bank of Queensland Limited (ASX: BOQ) released its 2018 half year (HY) financial report to the ASX this morning.
Here are the key news headlines from BOQ’s HY report:
- Revenue came in at $555 million, up 4% over the same period from 2017
- Profit was $174 million, up 8% over the prior year period
- A fully franked dividend of 38 cents per share was declared, flat over the prior year
- BOQ’s cash net interest margin (the difference between what it costs to take in money and pay it out to borrowers) was 1.97%, up from 1.91%
- Its Tier 1 capital ratio (CET1) was 9.42%, up from 9.39%
BOQ’s principal operations are in retail banking and insurance, with brands such as BOQ Finance, St Andrew’s insurance and Virgin Money Australia.
Many of BOQ’s branches are owner-managed, which is different to other banks which are run by managers and owned by the bank.
“I am pleased to report that lending growth has improved,” BOQ CEO Jon Sutton said, commenting on today’s update.
“This was supported by our commercial niche segments, as well as home loan growth through the Virgin Money, BOQ Specialist and BOQ Broker channels.”
BOQ said its asset quality “remains sound” with impaired loans as a percent of all loans being 0.39%.
Sale Of St Andrew’s To Freedom
In a separate update to the ASX, BOQ announced the sale of St Andrew’s insurance to Freedom Insurance Group Limited (ASX: FIG) for $65 million.
“St Andrew’s has made a strong contribution to the BOQ Group since its acquisition in 2010, but industry and business dynamics have changed dramatically in recent years,” Mr Sutton said.
Proceeds from the sale will be split in two and Freedom has entered into an exclusive three-year agreement to offer insurance products to BOQ customers.
Outlook
Looking towards the future, Mr Sutton said the banking industry is facing uncertainty and headwinds. “The industry faces challenges of low credit growth, low interest rates, regulatory uncertainty, increasing consumer expectations and increased scrutiny of conduct and culture,” he said.
Currently, the banking and financial services sectors are facing off with a Royal Commission into their culture, risk management and financial advice.
“We also remain focused on our customers, investing in a number of initiatives across the group that will improve our digital offering, bring us closer to our customers and enable us to provide them with a differentiated service offering,” Sutton added.
“Our very strong capital position provides us with flexibility to consider options that will deliver the best value to our shareholders.”
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