BoQ cuts dividend payout

Bank tips more tough times after fall in earnings

BANK of Queensland has cut its payout after an 8 per cent slide in first-half cash earnings to $167 million, with the lender admitting its performance had missed expectations despite wider industry disruption.

BoQ management also flagged yesterday that the challenge would get steeper as it grappled with issues facing its retail bank and headwinds from the royal commission.

The regional lender said its cash profit for the six months to February 28 had fallen from $182 million a year ago, while statutory net profit after tax decreased by 10 per cent to $156 million.

Its net interest margin – the difference between the interest it earns from loans and what it pays to fund them – fell by three basis points from the prior half to 1.94 per cent.

Shares in the company dipped by 50 cents, or 5.31 per cent, to $8.91 at 1200 AEST yesterday, approaching the six-year low that followed February’s damaging earnings downgrade.

BoQ interim chief executive officer Anthony Rose said the bank expected new regulatory obligations would contribute to an increase in operating cash expenses in the second half of the year, which are predicted to rise from $268 million to between $280 million and $285 million.

But Mr Rose also admitted there was “significant room for improvement” at BoQ’s retail division.

“We do have a plan to address these challenges with a number of initiatives already under way which are all ‘must do’ priority activities,” Mr Rose said.

“We are also conducting a critical segment by segment analysis to identify opportunities that will sharpen our focus, simplify the way we do things and improve the long-term value creation for our customers and shareholders.” He said the BoQ mobile banking app and online banking experience were barriers for customers.

Mr Rose said the bank’s second-half earnings were unlikely to improve from the 1H19 level, although he was encouraged by a stronger performance across BoQ’s niche businesses, including Virgin Money Australia, BoQ Finance and BoQ Specialist.

“Although the current earnings profile is not at the level that we aspire to, there is a lot to be optimistic about in terms of the progress made through the niche strategy, Virgin Money Australia, and the opportunity of reinvigorating the retail banking business in the coming 12 months,” Mr Rose said. The interim dividend was cut by 4 cents to 34 cents per share, fully franked.