Bank of Queensland (BOQ) H2 2024 earnings summary

Executive summary

• Cash earnings after tax for FY24 were AUD 343 million, down 24% year-over-year, and statutory net profit after tax was AUD 285 million, up 130% due to the absence of large one-off items from FY23.

• Business lending grew 7% annualized in the second half, with margin stabilisation and targeted growth in healthcare, agriculture, and commercial property.

• Transformation initiatives focused on digitalization, cost management, and productivity, with foundational digital bank build largely complete and a $250 million productivity target by FY26.

• Capital is being recycled from lower-returning home lending to higher-returning specialist business segments, with home lending growth expected to resume in FY26.

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

Financial highlights

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

• Operating expenses increased 6% to $1,069 million, driven by inflation and investment in risk, compliance, and technology.

• Loan impairment expense improved 72% to $20 million (2 bps to GLA), with commercial/asset finance arrears decreasing in the second half.

• Cost-to-income ratio rose to 52.2% (up 24%), with a CET1 ratio at 10.66%, supporting a final dividend of 17c per share.

• Fully franked final dividend of 17c per share, total 34c for the year, down 17% year-over-year.

Outlook and guidance

• Margins expected to remain broadly flat in the first half of FY25, with funding costs as the main headwind and benefits from the replicating portfolio continuing.

• Cost growth targeted to be broadly flat in FY25, with ongoing simplification benefits and a step-up in amortization in the second half.

• Home lending contraction to continue in FY25, with growth expected to resume in FY26 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.

• CET1 capital expected to remain within the 10.25–10.75% management target range, with transformation investment spend to materially reduce.