The Bank of Queensland, its margins under pressure, is working on an organisational restructure.
It’s all about CEO Jon Sutton’s vision to create the “most loved bank” in Australia.
He says the size and shape of the business had changed significantly over the last three years with the bank growing organically and through acquisition.
“We have redefined our strategy over the last 12 months and need to ensure our organisational structure continues to support this strategy,” Sutton says.
The bank announced it was spending about $15 million this financial year on the organisational changes.
Its shares dropped 6% to $11.92 on the news.
“We expect this investment in fine-tuning our operating model will help accelerate our path towards a Cost to Income ratio in the low 40% range in the years ahead.” Sutton says.
He gave no details but this strategy update in November has some clues:
The bank has been performing better than its peers, posting record full year profit of $357 million, a rise of a 19%, and spreading to other states. More than half its business is now outside Queensland.
But there are headwinds. Sutton says uncertainty in the global economic outlook over recent months has resulted in a significant increase in volatility in funding markets.
“While strong competition for new business remains, this creates headwinds for our margin outlook,” he says.
“The challenges of this market reinforce the need for us to be more nimble and efficient to ensure we can take advantage of opportunities as they arise.”
The bank’s five strategic beliefs:
1. Trust is the currency of the future
2. Culture is the ultimate competitive advantage
3. Specialisation rather than scale will deliver higher growth, customer satisfaction and returns
4. Major banks are vulnerable to reputation risks and diseconomies of scale and scope
5. Digital is the new industrial revolution
The bank wants to be the leading player in mid-market asset and number one in technology vendor finance.
Niche target markets for the bank’s business banking include healthcare, aged care and retirement, hospitality and tourism, professional services, franchising and Agribusiness.
The bank is due to report its half year results on April 7.
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