BOQ to launch digital mortgages in 2H24

Non-major bank Bank of Queensland Limited (BOQ) has announced a focus on digitising the business during its financial results for the year ended 29 February 2024 (1H24).

Part of the shift towards digitisation includes the non-major bank progressing with its digital mortgage, having developed the legacy migration infrastructure during the first half of the financial year.

BOQ confirmed the first phase of its digital mortgages is set to be launched in the second half of 2024.

The bank’s roadmap for the financial year 2024–25 also includes the commencement of home loan migration of its subsidiary ME Bank to a new digital bank while decommissioning its legacy platform.

Managing director and chief executive of BOQ, Patrick Allaway, commented on the bank’s venture towards digitisation: “Our digital transformation is progressing on plan.

“We have built and tested both our digital mortgage and legacy migration infrastructure, with these key milestones moving to delivery stage in the second half.

“We have a dedicated and committed leadership team and a clear transformation roadmap.

“We continue to have high conviction that our transformation plan will address legacy issues and deliver a stronger and simpler bank.”

The CEO previously confirmed the bank will aim to address its “core structural disadvantages” and invest in “legacy issues” that impacted BOQ’s performance within a high interest rate environment.

Allaway stated during BOQ’s 2023 AGM in December that the bank would look to build on its deficiencies in the new year, particularly with its online banking capabilities.

Lending portfolio

Meanwhile, BOQ has reported that its housing portfolio contracted by $0.4 billion or 1 per cent to $80.7 billion on 2H23, representing below-system housing lending growth.

According to the bank, the housing growth profile for 1H24 reflected the “prioritisation of return over volume growth in a competitive market” along with the continued moderation of Virgin Money Australia (VMA) origination in the lead-up to its new digital housing platform.

Additionally, ME Bank’s portfolio grew in line with the system, with growth primarily being focused on variable-rate loans to owner-occupier customers with low loan-to-value ratios (LVRs).

BOQ’s commercial lending portfolio rose by 1 per cent or $31 million on the same period last year, largely driven by growth in the agriculture and healthcare sectors.

Lending to small- to medium-sized enterprises (SMEs) fell by $22 million due to growth in the healthcare sector being offset by contraction in owner-occupier commercial property lending.

Furthermore, the bank’s asset finance portfolio also contracted by 1 per cent or $27 million on the previous year, which was driven by a “contraction in non-core portfolios” and the equipment finance businesses, partly offset by growth in the structured finance portfolio.

BOQ’s financial report stated: “1H24 was characterised by fewer rate changes, rising cost of living pressures, and housing system growth slowing slightly on the prior year.

“Fixed-rate maturities peaked in 1H24. The strategic focus remains on supporting customers, product and process simplification, digitisation, and improved customer experience.”

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