The CEO of Bank of Queensland has said that its Virgin Money Reward Me home loan product has driven a surge in mortgage applications and helped increase profit for FY16 amid “industry headwinds”.
In a trading update to the ASX last week, the Bank of Queensland (BOQ) announced cash earnings after tax of $360 million (an increase of $3 million on the prior corresponding period) for the financial year to 31 August 2016.
The bank also revealed that its statutory net profit was up 6 per cent to $338 million.
Managing director and chief executive officer Jon Sutton highlighted that, since the launch of its Virgin Money Reward Me home loan product earlier this year, the bank has received $100 million worth of home loan applications.
“While in its early days, we believe this business will deliver a meaningful contribution to the group over time,” he said.
“We’re also planning to launch a Virgin Money deposit product in the next 12 months, enhancing the current customer offering,” he elaborated.
As well as good progress with the Virgin Money home loan, the bank also saw a marked rise in lending to “niche business segments”, with the bank bringing in $500 million in the last financial year, up 16 per cent on the year before. These “niche business segments” largely focus on micro to mid-market-sized businesses in healthcare and retirement living, agriculture, property, hospitality and professional service sectors.
In particular, the BOQ Specialist section, which focuses on lending to medical and accounting professionals, contributed $1.5 billion in home loans in the last financial year.
Mr Sutton also noted that the bank has started exploring the use of data analytics, which will provide “meaningful insights” into customer behaviours and preferences when it comes to mortgages and deposits.
He underscored that this marks the fourth consecutive year of increased cash earnings for the company, which is “a significant achievement in an environment of low interest rates and intense competition”.
“The bank has come a long way in recent years and we are confident that we have the right strategy in place and are well positioned for the future,” Mr Sutton concluded.
[Related: Virgin Money doubles home loan rewards]