Bank of Qld FY profit surges

Lender posts strong upswing in cash profit, revenue; urges govt's financial services address advantages for the big four banks.

Bank of Queensland (BOQ) has called for the federal government's financial services inquiry to address regulatory system inequities that favour the big four banks, after posting a strong lift in full-year cash profit.

In the year to August 31, Bank of Queensland's cash profit was $248.2 million, compared to the $20.9 million recorded in the previous year.

The previous full-year result was weighed considerably by high loan impairment charges.

The bank said a key driver of the improved profit result was a reduction in bad debts, due to its improved credit management practices.

In the same period revenue was $855.9 million, a 6% jump on the $804.3 million in fiscal 2012.

Bank of Queensland reported a net profit of $185.8 million, a sharp upturn from a loss of $17.1 million in the previous year.

The group will pay a fully-franked final dividend of 30 cents on December 4 to shareholders on the register at November 13.

The bank paid a fully-franked interim dividend of 28 cents, which brings its total dividend for the year to 58 cents, fully-franked.

Bank of Queensland chief executive officer Stuart Grimshaw said  the global business environment remained challenging, and the year ahead was likely to be similar.

“Domestically, small business and retail is still doing it tough and we don’t expect things to change significantly over the next 12 months,” he said.

“The relatively high exchange rate remains an issue - we have always said a lower rate would provide a real stimulus to the economy, particularly BOQ’s home state of Queensland given its dependence on tourism and flow-on benefits to the service sector."

Mr Grimshaw said federal government should set as the aim for its financial services inquiry the improvement of competition for consumers.

He said residential mortgage risk-weighting imbalances that result in major banks achieving significantly higher returns than smaller banks for customers with identical risk profiles was just one example of inequity that could be addressed.

Queensland housing market showing signs of recovery

Mr Grimshaw said that BOQ would also benefit from improvement to the Queensland housing market, where there are early signs of recovery.

However, the lender noted while the demand for housing finance continued to strengthen in NSW and WA, consistent with rising dwelling prices and lower interest rates, Queensland still lagged the other states (see Adam Carr's No property bubble: It's opportunity knocking).

"Average house prices in most state capitals increased over the six months to June 2013 and auction clearance rates remain at high levels," it said.

"This is expected to continue nationally with market confidence increasing with the change of government and supply starting to reduce.

"The Queensland economy is well positioned to benefit from the fall in the Australian dollar.

"The bank is similarly well positioned through its multichannel distribution strategy to leverage any improvement."