BOQ cautiously optimistic after a strong FY21
Bank of Queensland is cautiously optimistic that further house price rises and solid growth in consumer spending and business investment will drive economic recovery in Australia in this financial year.
This follows a strong performance in the year ended 31 August 2021.
The regional bank reported an 83 per cent jump in cash earnings after tax to $412 million. This was driven by a 13 per cent increase in total income to $1.26 billion and its improving net interest margin (NIM).
Excluding the impacts from ME Bank, BOQ’s underlying NIM increased 4bps for the year to 1.95 per cent. Management said this improvement was largely driven by lower funding costs and deposit mix, offset partially by market competition and the ongoing impact of a low interest rate environment.
Including ME Bank’s earnings for two months, statutory profit was up 221 per cent to $369 million and earnings per share grew 51 per cent.
QBE says this reflects balance sheet growth, margin management and improved economic conditions in the year just ended.
Excluding ME Bank, statutory profit was up 206 per cent to $352 million and cash earnings after tax are 73 per cent higher.
The final dividend per ordinary share was 22c, bringing the full-year dividend to 39c.
George Frazis, managing director and CEO of BOQ, says the integration of ME Bank is well progressed and QOB continues to execute against its strategic transformation roadmap.
“Over the next 12 months, the second phase of the VMA digital bank will be available to customers and will include home loans and additional deposit products. Work is also well progressed on the first phase of the BOQ digital bank which leverages the foundational investment in VMA.”
With the possibility of continued uncertainty associated with COVID-19 over the next year, Frazis expects fiscal and monetary policy to continue to underpin the economic recovery. “We will continue to maintain a prudent approach to provisioning given the ongoing impact of lockdowns. But we have a strong capital position and expect CET1 to remain comfortably above 9.5 per cent.”
That said, Frazis QBE expects NIM to decline by c.5-7bps in FY22, as competition continues and the low interest rate environment remains. “We expect expenses to grow by 3 per cent on an underlying basis to support business growth, which will be offset by accelerated integration synergies,” he says.