BOQ Posts 12% Rise in Cash Earnings, CET1 Ratio at 10.94%
Bank of Queensland reported a robust FY25 with 12% growth in cash earnings and significant progress in its digital banking and branch conversion initiatives. The bank’s focus on productivity and specialist business lending underpins its optimistic outlook despite ongoing economic uncertainties.
- 12% increase in cash earnings after tax to $383 million
- 44% of retail customers now on the digital bank platform
- 14% growth in commercial lending focused on specialist segments
- 4% reduction in underlying costs driven by productivity programs
- Strong capital position with CET1 ratio at 10.94% and stable dividend guidance
Strong Financial Performance and Strategic Execution
Bank of Queensland (BOQ) has reported a solid full-year performance for FY25, with cash earnings after tax rising 12% to $383 million. This growth reflects the bank’s successful execution of its strategic priorities, including a major branch conversion program and the ongoing migration to a new digital mortgage platform. The bank’s return on equity improved by 70 basis points to 10.94%, underscoring enhanced profitability and capital efficiency.
BOQ’s transformation efforts have been central to its results, with 44% of retail customers now banking digitally, a significant milestone in its shift towards a scalable, low-cost digital banking model. The digital mortgage platform launch has accelerated home lending growth through proprietary channels, contributing to a 13 basis point uplift in group net interest margin in the second half of FY25.
Focused Growth in Specialist Business Lending
The bank’s business lending division grew 14%, driven by targeted expansion in specialist segments such as healthcare, agriculture, and diversified businesses. This focus on higher-returning commercial lending aligns with BOQ’s strategy to optimise its balance sheet mix away from lower-yielding home loans. The branch conversion has enabled the redeployment of bankers into regional growth corridors, supporting small and medium enterprises (SMEs) more effectively.
Underlying costs were reduced by 4%, reflecting disciplined delivery of productivity initiatives, including simplification of the operating model and technology investments. BOQ’s $250 million productivity program, continuing into FY26, aims to offset inflationary pressures and fund ongoing transformation, with expected annualised cost savings of at least $30 million from a new IT and business processing partnership starting FY27.
Robust Risk Management and Capital Position
Portfolio quality remains sound, with loan impairment expenses below long-run averages and strong provisioning maintained. The bank’s Common Equity Tier 1 (CET1) capital ratio stands at a healthy 10.94%, above its management target range, supporting resilience and capacity for growth. BOQ’s dividend policy remains stable, with a fully franked final dividend of 20 cents per share and a dividend reinvestment plan expected to be satisfied through on-market share purchases.
BOQ continues to progress its remedial action plans under regulatory oversight, enhancing risk culture and governance. The bank has completed 44% of its remediation activities and strengthened its anti-money laundering frameworks, reflecting a commitment to compliance and operational resilience.
Outlook and Strategic Priorities for FY26
Looking ahead, BOQ anticipates an improving Australian economy but acknowledges ongoing geopolitical uncertainties and elevated competition, particularly in home lending. The bank expects a slowing decline in home lending volumes and targets system-level growth in business lending. Cost growth is expected to remain below inflation, supported by continued productivity gains.
BOQ’s FY26 priorities include scaling retail deposits and home lending via its digital platform, accelerating business bank growth in specialist segments, embedding improved risk practices, and completing the final year of its productivity program. The bank’s strong heritage, specialist focus, and digital capabilities position it well to navigate the evolving banking landscape.
Bottom Line?
BOQ’s FY25 results affirm its transformation momentum and financial resilience, setting the stage for disciplined growth amid a competitive and uncertain environment.
Questions in the middle?
- How will BOQ manage margin pressures amid ongoing competition and potential cash rate changes?
- What is the timeline and risk associated with completing the digital mortgage platform migration?
- How effectively will BOQ’s remedial action plans mitigate regulatory risks and enhance risk culture?