Bank of Queensland posts a 2% fall in net profit to $372 million, shares climb

Facebook / Bank of Queensland
  • Bank of Queensland reported a full-year cash profit of $372 million, down 2%.
  • Despite the impact of higher funding costs, the bank maintained its net interest margin in the financial year ended August 31.
  • Shares in BoQ were up more than 4% in early trade.

Shares in Bank of Queensland briefly rose by more than 4% in early trade, after it announced full-year results this morning.

The bank posted cash earnings after tax of $372 million, down 2% from the prior year. Net profit after tax fell 5% to $336 million.

BoQ was one of the first Australian banks to raise mortgage rates in June this year, to offset the negative effects from higher funding costs.

And today’s results showed the bank was able to maintain its net interest margin — a key benchmark of bank performance:

Bank of Queensland

“We have managed for the environment we are faced with, prioritising margin over growth,” CEO Jon Sutton said.

“Our lending growth was funded by an improved mix of deposits through our branch network. Pleasingly, expenses were contained while continuing to invest in the business.”

BoQ also said the quality of its assets improved, as loan impairment expenses fell by 15% to $41 million.

The bank said it maintained a strong capital position, with a Common Equity Tier 1 (CET1) capital ratio of 9.31%.

Australia’s big four banks will be required to have a CET1 ratio of 10.5% by 2020, in order to meet the banking regulator’s definition of “unquestionably strong”.

Dutton said BoQ will be increasing capital expenditure in the 2019 financial year, with a focus on its digital platforms and customer service offerings.

The company will pay a fully franked dividend of 38 cents per share, in line with the previous year.

“BoQ has transformed into a resilient, multi-channel business that is geographically diverse and serves a broader range of customers. This is a result of the clear and consistent strategy we have been implementing,” Sutton said.

“The environment remains one of change but we firmly believe that our strategy is the right one.”

A short time ago, BoQ shares were up 3.62% to $11.16, up from their 2018 low of $9.60 at the end of June.

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.