BoQ lauds its prudent policy
BANK of Queensland says evidence at the financial services royal commission of bad lending from its bigger rivals has justified the tougher approach the Brisbane- based financier took several years ago.
The 180- branch BoQ posted lower growth rates compared to rivals over recent years. Even in half- year profit results, released yesterday, BoQ’s lending was rising but remained below industry averages.
BoQ’s approach included validating every single mortgage application, asking expense questions and using expense modelling.
“We consistently saw for a considerable period of time, where we would lend say X, and another bank would lend X plus two, and therefore we would not win that business,” BoQ managing director Jon Sutton said.
“What’s become quite clear over the last few weeks in some of the evidence that’s been provided, is a lot of banks were just waving it through on ( household expenditure estimates) and not even really validating, truly, the customer expenses.”
Other factors that BoQ cited as impacting on the lending market included intensifying competition for owner- occupied loans in which principal was being paid and closure of branches. Industry sources have also said one problem for BoQ is converting customer queries into actual loans.
The comments came as BoQ revealed a 4 per cent rise in cash profits to $ 182 million, while earnings per share edged up 2 per cent to 46.5c. Dividends were flat at 38c.
The bank also revealed it would off- load life insurer St Andrew’s for $ 65 million to Freedom Insurance. BoQ had bought St Andrew’s in 2010 for $ 45 million and said the sale should result in an $ 8 million profit.
The overall result for the bank was solid given “very difficult circumstances”, Mr Sutton said.
“I don’t think it’s going to get any easier for BoQ,” he said.
The royal commission had raised the prospect of a crackdown on brokers, and this could potentially hit regional banks, he said. Brokers account for 20 per cent of BoQ’s home- loan settlements, accounts show.