A ‘rebalancing’ of its asset mix, in line with strategy, has seen a pick up in business lending and a slump in consumer lending at Bank of Queensland.

BOQ reported its best earnings in some time, with a net profit of $171 million over the half year to February 2025, up from $134 million in the prior half and $151 million in the corresponding half, a result “driven by improved margins, lower costs and subdued credit losses.”

The bank’s return on average equity lifted to 5.8 per cent from 5.1 per cent a year earlier. 

The net interest margin was stable at 1.57 per cent, with “continued competitive pressure in housing and commercial lending margins was offset by improved portfolio mix as the Group focused on growing higher margin commercial loans.”

The conversion of owner-managed branches to corporate branches at the beginning of March – a necessary but highly controversial move – plus the closure of 20 branches has seen BOQ’s branch footprint fall to 111 branches, with plenty of scope for further rationalisation.

Home lending growth at the bank has fallen for two years in a row.

There was “continued moderation of home lending volumes as capital was deployed to higher returning business lending” CEO Patrick Allaway said.

Housing lending contracted by five per cent on the second half of 2024, “reflecting the continued prioritisation of economic return over housing volume growth.” 

Commercial lending increased 10 per cent on driven by growth in the healthcare and owner-occupied commercial property sectors.

The ME portfolio grew at 1.0 times system “with a focus on balancing the acquisition mix to support volume growth whilst optimising margins through increased investor and fixed rate loan origination.”

VMA and BOQ Broker volumes “continued to moderate, reflecting the decision to pause origination onto the legacy platform.”