Mortgage brokers helped lift the Bank of Queensland's profits by 11%

Players walk into the water to recover from a circuit training session at Kurrawa Beach during the Carlton Blues AFL pre-season training camp on the Gold Coast. Michael Dodge/Getty Images

The Bank of Queensland, which now has more than half its business outside its state of origin, posted a 7% rise in first half cash earnings to $179 million on a strong home lending business.

Statutory profit grew by 11% to $171 million on a 4% rise in revenue to $561 million for the six months to the end of February.

The bank is squeezing better profits in percentage terms than the big four, whose shares have been sold down recently on fears of increasing bad loans.

In its half year results, the Commonwealth posted a 4% rise in cash profit to $4.804 billion. In 2015, the big four banks posted a combined $30 billion in cash profit but that represented a rise of 5.4%.

The Bank of Queensland today also announced rises in its lending rates.

The variable home loan rate rises by 12 basis points to 5.74% for owner-occupied loans from April 15. It raised investment loans more, up 25 basis points, in line with financial regulator APRA’s push to cap property loan growth at 10% a year.

The big four banks all raised their home loan rates late last year. The Commonwealth’s standard variable home loan rate is 5.6%.

“Given the fiercely competitive market and increased funding spreads and hedging costs, these increases are necessary to help us achieve the appropriate balance between growth, asset quality and profitability,” says Bank of Queensland CEO Jon Sutton.

The bank’s shares at first fell 4.4% but recovered to be flat at $11.51.

Sutton says the half year result was driven by housing lending growth. The bank also maintained its net interest margin at 1.97% and kept costs under control.

Housing mortgage growth for the half was $1.7 billion, driven by strong growth through the broker network.

“The momentum in the broker channel and BOQ specialist demonstrates the effectiveness of our strategy to expand our business,” says Sutton.

Total loan impairment expense was flat at $36 million.

“The successful implementation of our strategy is evident,” Sutton says. “It has helped diversify our housing loan book geographically with 62% of lending settlements in the half originating from outside Queensland.”

A fully franked dividend of 38 cents, a rise of 2 cents, was declared.

Queensland represents less than half of loans as the bank continues to push into other states. The breakdown in the bank’s loan business:

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