Bank of Queensland (BOQ) H2 2024 earnings summary

Executive summary

• Cash earnings after tax for FY 2024 were AUD 343 million, with statutory net profit after tax at AUD 285 million, reflecting a 24% reduction in cash earnings year-over-year due to lower income from home lending contraction and margin pressure.

• Business lending grew 7% annualized in the second half, while retail bank income stabilized and net interest margin (NIM) improved by two basis points.

• Transformation initiatives focused on simplifying the bank, digitalization, and cost management, with foundational build of the digital retail bank largely complete and productivity target of AUD 250 million by FY 2026.

• The bank is recycling capital from lower-returning home lending to higher-returning specialist business segments and expects to return to home lending growth in FY 2026.

• Customer experience improved across digital platforms, with strong capital, liquidity, and asset quality maintained.

Financial highlights

• Total income declined 8% year-over-year to AUD 1,600 million, with net interest income down 9% and non-interest income down 4%.

• Total expenses increased 6%, driven by inflation and continued investment, but cost growth was held at 2.9% excluding investment and amortization.

• Underlying profit fell 27% to AUD 531 million; cash earnings after tax down 24% to AUD 343 million.

• CET1 ratio ended at 10.66%, at the top end of the target range, supporting a final dividend of AUD 0.17 per share (65.7% payout ratio on cash earnings).

• Statutory net profit after tax increased 130% to AUD 285 million, reflecting lower non-cash items and one-off adjustments.

Outlook and guidance

• Margins expected to remain broadly flat in the first half of FY 2025, with funding costs as the main headwind and benefits from the replicating portfolio continuing.

• Cost growth targeted to be broadly flat in FY 2025, with ongoing simplification benefits and a step-up in amortization in the second half.

• Home lending contraction to continue in FY 2025, with growth expected to resume in FY 2026 as digital mortgages and branch conversions scale.

• Business banking and finance company growth to accelerate, supported by increased banker headcount and investment in growth corridors.

• FY 2026 targets include 8% ROE and 56% CTI, driven by productivity initiatives, revenue growth, and digital transformation.