Bank of Queensland will look to "asset repricing" of its existing loans and the higher yield it can earn from its newly expanded business finance arm to deliver the improvement in margin needed to reach its goal of a return on equity of 15 per cent.BOQ yesterday reported a profit for the second half of its financial year that was slightly lower on a pre-tax and net basis, at $128.2 million and $88.2 million respectively. The full year profit was up 27 per cent to $179.6 million.The bank has a lot more capital on which to earn a return, and is working with almost three times the capital it held before the financial shock kicked in three years ago.The capital raisings have underpinned plenty of lending growth (at 11 per cent a little higher than system credit growth for housing, though the bank likes to put the multiple at 2.5 times overall bank credit growth).The above system growth is partly a function of the reworking of the commission payments to branch operators that increase the profit share earned by the bank but improve the incentives for branch owners.The new capital also paid for two acquisitions over the last year; the Australian arm of the vendor finance firm CIT (with a fair list of multinationals as clients) as well as the insurance business of BankWest (bought from CBA), and for which BOQ was the primary customer.CIT is the most significant of the two, with BOQ in practice folding its existing equipment finance business under the umbrella of CIT.Now styled as the bank's "national business finance" arm it will diversify into floor plan financing for motor vehicle dealers next year.David Liddy, managing director of BOQ, reminded an investor briefing yesterday on the profit that the bank's revised strategy called for investment in higher margin businesses that used less capital.Other aspects of the bank's strategy are working in the short term.Thus costs are being cut. Operating expenses fell six per cent in the year to August 2010. The bank's cost to income ratio fell four percentage points (to 45.8 per cent (using a normalised, cash profit). This ratio is down from 62.6 per cent three years ago.