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BOQ Group reports $2.6bn mortgage rise in 1H22

The non-major banking group's residential and commercial lending saw an uptick over the first half of 2022, including an end to ME Bank’s portfolio decline.

Bank of Queensland Group's (BOQ) results for the first half of the 2022 financial year (1H22) have revealed that the non-major bank experienced an uplift in residential and commercial loans, with managing director and chief executive George Frazis commenting during the results presentation that the housing portfolios for Virgin Money Australia (VMA) and BOQ “continue to outpace the market” and that the bank’s focus on SME lending has “delivered material uplift in business lending growth”.

According to these results, BOQ’s gross loans and advances were reportedly $78.95 billion at the end of 1H222, reflecting growth of 9 per cent (roughly $3.2 billion) compared to the second half of the FY21 (2H2021).

Of this figure, $61.64 billion were home loans – a sum that also marked growth, with BOQ reporting its housing lending increased by 8.8 per cent (roughly $2.59 billion) on 2H21. 

The recently-acquired ME Bank (ME) contributed marginally to this growth, with its loans increasing by $254 million during this half, reflecting growth of around 2 per cent and its first rise following a decline of $1.4 billion during 2021. 

By comparison, Bank of Queensland and VMA reported growth of 14 per cent. 

In September, a BOQ spokesperson told Mortgage Business that the non-major bank intended to “further lift the performance of ME’s loan book and return it to solid and sustainable growth in FY22”.

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Settlement volumes were also reported as increasing by 12 per cent compared to the second half of the FY21.

But while home loans did report the bulk of BOQ’s total portfolio, commercial lending saw a greater growth over this period. 

As per the group's figures, during the first half of FY22, BOQ’s commercial lending saw an uptick of 15.1 per cent ($740 million), with the non-major bank’s portfolio reaching just under $10.62 billion. 

This in itself was pushed heavily by BOQ Blue commercial lending, which increased by $578 million (16 per cent) over H122.

“The small business lending portfolio contributed 17 per cent annualised growth in 1H22 as it continued to benefit from several strategic initiatives including reshaping the go-to market proposition for small business customers enabled by the creation of a business unit solely focused on this customer segment,” BOQ stated in its report. 

Asset finance growth reported a loss of $101 million, reflecting a decline of 3.2 per cent, over this same period – contrasting from the $179 million growth reported in the second half of FY21. 

The non-major banking group also reported that its net interest margin (NIM) fell during the first half of FY22, dropping from H221’s 1.86 per cent to 1.74 per cent. 

BOQ chief financial officer and chief operating officer ​​Ewen Stafford told investors this fall was the result of “increased fixed rate housing volumes and rapidly rising swap rates”.

“Overall, we expect to see near-term margin pressure, but to a much lesser extent than experienced in the first half of 2022, and with medium term upside from a rising interest rate environment, Mr Stafford said.

“Looking into the second half of 2022, and whilst there are a number of moving parts and ongoing volatility, we expect the rate of NIM decline to materially slow.

“We expect slowing fixed rate lending impacts as the current pipeline of loans settle and fixed rate applications continue their reversion to normal levels.”

[Related: BOQ looks to reverse ME lending fall]

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