BOQ to shed $15m in ‘fine-tuning’ operations

Bank of Queensland (BOQ) has announced it is likely to take a $15 million cash earnings hit over the course of 2015-16 in an attempt to reshape its organisational structure and match BOQ Group’s strategy.

Jon Sutton, chief executive and managing director of BOQ, said the size and shape of the business have changed significantly over the last three years as the group has grown organically and through acquisition.

“We have redefined our strategy over the last 12 months and need to ensure our organisational structure continues to support this strategy,” Mr Sutton said.

“We are building a more flexible and efficient operating model, which is increasingly important given the accelerated pace of change in financial services. This will also improve the way we work by reducing duplication and manual processes, and will assist us in finding better ways to share capabilities across the group.”

In order to implement these organisational changes, BOQ anticipates it will incur a pre-tax investment of $15 million in 2015-16, which it said should deliver 100 per cent payback through cost savings within 12 months.

“We expect this investment in fine-tuning our operating model will help accelerate our path towards a cost-to-income ratio in the low 40 per cent range in the years ahead,” Mr Sutton said.

“This uncertainty in the global economic outlook over recent months has resulted in a significant increase in volatility in funding markets. While strong competition for new business remains, this creates headwinds for our margin outlook.

“The challenges for this market reinforce the need for us to be more nimble and efficient to ensure we can take advantage of opportunities as they arise.”

[Related: BOQ announces board change]

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