The Bank of Queensland Ltd (ASX: BOQ) share price is up 2% after reporting its FY26 result.
BOQ is best known as a leading regional bank and it also owns Virgin Money Australia and ME Bank.
FY26 result
Here are some of the highlights for the 12 months to 31 August 2026:
- Home lending declined 8%, or $4.6 billion
- Commercial lending grew 16%, or $2.06 billion
- Cash earnings declined 7% to $358 million
- Statutory net profit after tax (NPAT) jumped 88% to $250 million
- FY26 second half dividend per share of $0.20, flat
What happened in this result?
BOQ said that home lending declined because of lower settlement volumes and higher portfolio run-off in a period of “significant transformation activity”.
In the second half of FY26, housing application volumes and portfolio run-off improved, providing momentum for the planned return to home lending growth in FY27.
In terms of the ASX bank share’s loan impairment expense, it grew by $33 million to $54 million, primarily because a provision release in commercial lending happened in FY25 that wasn’t repeated in FY26. It said that loss rates in retail and commercial lending remained low.
Looking at the lending profitability, as measured by the net interest margin (NIM), increased during FY26. The NIM rose 6 basis points (0.06%) over the year to 1.70%.
BOQ said the rise of in the NIM reflected the full-year benefits of the branch conversion completed during FY25, funding optimisation and higher returns from the replicating portfolio and unhedged low-cost deposits and capital. However, competition across home and lending continues to be a negative.
Outlook for the BOQ share price
Bank of Queensland is expecting a further moderation in economic growth in FY27. Ongoing elevated competition for quality lending and deposit funding is expected.
Household and business confidence continues to be weighed down by inflation, rising cash rates and geopolitical uncertainty. BOQ said further interest rate rises are possible and a reduction is not expected before 2028.
The ASX bank share is planning for a sustainable return to growth in home lending in FY27 by expanding the digital mortgage to additional channels and customer segments. It’s also targeting a commercial lending growth rate that’s similar to FY26, with quality lending in target segments.
It also wants to achieve growth in digital deposits and an increase in commercial deposits.
BOQ is targeting a “modest uplift” in its margin in the FY27 first half, alongside higher non-interest income from the capital partnership.
Finally, it’s targeting flat annual cost growth, productivity benefits and a relatively stable loan impairment expense.
The ASX bank share is working on a number of areas to try to improve its profitability in FY27 (and beyond) and this could be a good catalyst for BOQ’s share price.
If I were a shareholder, I’d be happy with what I’m hearing, but the cash earnings decline isn’t ideal. Hopefully cash earnings can grow in the coming years, though it’s not one of the ASX dividend shares I’m looking to buy today.
