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The Bank of Queensland (BOQ) has released its financial results for the first half of the 2021 financial year (1HFY21), in which it reported lending growth of $1.065 billion as at 28 February, up from $782 million in 1HFY20.
The results were driven by a $997 million increase in home lending in 1H21, representing annualised growth of 6.5 per cent on 2H20, approximately 1.6 times system growth.
Growth was largely driven by increased owner-occupied loans and weighted to a higher proportion of fixed rate lending compared with previous periods, the bank said.
“The positive performance was driven by embedding the retail banking strategy, which included mortgage process simplification, improved retail banking and lending capability, an uplift in customer experience and quality third-party broker relationships,” the group said in its results.
The group also reported a $91-million growth in commercial and asset finance lending, but said that this was dampened by a $23-million reduction in consumer lending.
Commercial GLAs increased by $72 million in 1H21 despite “system contracting over that period” (down from growth of $272 million in 1H20), while asset finance loans recorded a $19 million rise, up from a $7 million contraction in 1H20.
BOQ reported that the housing growth represented a “material turnaround” in its retail bank, which increased housing loans by $795 million, a sharp increase from a $50-million contraction in 2H20.
The Virgin Money Australia (VMA) mortgage portfolio grew by $459 million during the reporting period, representing annualised growth of 28 per cent on 2H20, and taking the portfolio over to $3.7 billion.
The BOQ Specialist home lending portfolio recorded growth of $228 million, lifting considerably from the $49-million growth recorded in 2H20.
“Settlement volumes increased in the second quarter as the number of clients being managed through COVID-19 repayment relief declined significantly and focus returned to new business,” the group said.
The BOQ Blue portfolio grew by $310 million, which the group said was the first positive result since FY16, and attributed to a turnaround in branch performance as well as strong results reported through the broker channel.
As at the end of 1HFY21, BOQ’s balance sheet showed that it held total gross loans and advances (GLA) of $48.1 billion, up 5.0 per cent on 2H20 and up 2 per cent on 1H20.
BOQ’s total spot balance in its housing portfolio was now $32.2 billion, up from $31.2 billion in 1H20, with owner-occupiers making up 62 per cent (up from 61 per cent in 1H20), and investors contributing 38 per cent (down from 39 per cent in 1H20).
The group reported an overall statutory net profit of $154 million, up 66 per cent, and cash earnings of $165 million, a 9 per cent increase compared with 1H20.
Broker-originated loan share grows
The non-major bank also reported that 23 per cent of mortgages in its books are now originated by the broker channel, up from 20 per cent in 1H20 and 21 per cent in 2H20.
However, this is rising – with 35 per cent of settlements for the half coming from VMA and BOQ accredited brokers.
There were 5,579 brokers accredited with BOQ and 4,792 brokers accredited with Virgin Money Australia as at 28 February, according to the results.
Broker channel loans grew by $371 million in 1H21, representing annualised growth of 24 per cent, with BOQ stating that settlement volumes have more than doubled compared with 1H20 in the third-party channel.
BOQ said the result was achieved by continuing to build and grow new and existing third-party relationships, competitive pricing and consistent credit decisions.
“Levels of run-off were initially elevated but have moderated through focused client retention initiatives. Broker and customer experience have improved due to the release of new broker-enabled technologies and the delivery of consistent process efficiencies, reflected in an improved NPS result,” the group said.
Commenting on the overall results, BOQ CEO and managing director George Frazis said: “Pleasingly, our Home Buying Transformation Program has resulted in the group continuing to achieve growth in housing loans, with 1.6x system growth in the half and just under $1 billion in net housing GLAs, which is almost double the growth in 1H20. Our results have been achieved through an improved customer and banker experience, NIM (net interest margin) improvement to 1.95 per cent, and disciplined cost management.
“Over the past six months, the group has executed key initiatives in our strategy and transformation including home loan growth, digital transformation and the ME Bank acquisition. The focus on the customer remains central to our transformation, and customer satisfaction continues to track positively with overall BOQ Consumer NPS ranked fourth and BOQ Business NPS remaining at third.
“Our Home Buying Transformation Program has resulted in application volumes increasing significantly, and we have maintained good ‘time to conditional yes’ despite the increased volumes. This has seen our housing loan growth accelerating, and improvements to the mortgage customer experience has seen our BOQ Retail mortgage NPS (net promoter score) now ranked third, up from 11th in FY19.”