Bank of Queensland (BOQ) investor relations material

Executive summary

• Cash earnings after tax were AUD 176 million (or $176 million), down 4% year-over-year, reflecting margin compression, higher loan impairment expense, and increased expenses, but supported by revenue growth and digital transformation progress.

• Statutory net profit after tax was $136 million for H1 2026, down 20% year-over-year, impacted by non-cash items and a $31 million post-tax loss from the equipment finance portfolio sale.

• Over 70% of active retail customers and 75% of home lending flows migrated to the digital platform, with major branch conversion completed.

• Commercial lending grew 7% above system, led by healthcare, agribusiness, and commercial property, while home lending contracted.

• Announced a $3.7 billion equipment finance asset sale and forward flow partnership with Challenger, enabling capital return to shareholders.

Financial highlights

• Total income rose 5% year-over-year to $832 million, driven by branch conversion revenue uplift.

• Net interest income increased 4% to $755 million, with net interest margin at 1.67%, up 10bps year-over-year but down sequentially.

• Operating expenses were $553 million, up 6% year-over-year, reflecting inflation, branch conversion, and digital investment.

• Loan impairment expense rose to $20 million (5bps to GLA), mainly due to asset finance normalization and absence of prior provision releases.

• Fully franked interim dividend of AUD 0.20/share (20c), a 75% payout ratio, up 11% year-over-year.

Outlook and guidance

• Home lending contraction is expected to ease, with growth anticipated in FY 2027 as digital migration completes.

• Commercial lending targeted to grow at or above system in H2 2026.

• Cost growth targeted below inflation for FY 2026, with productivity and simplification initiatives planned.

• Loan impairment expense expected to remain below long-run averages in the near term, though downside risks persist.

• Completion of Challenger transaction expected by May 2026, with ~$300 million capital return to shareholders via special dividend and buyback, subject to approvals.