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The lender’s acting chief executive Jon Sutton said that with lending markets becoming increasingly competitive across all segments, BOQ has continued to compete selectively and prioritise credit quality and margin.
“In a low retail credit growth environment we’ve maintained our disciplined approach to growth,” Mr Sutton said.
“We’re not prepared to join the race to the bottom on pricing,” he said.
Mr Sutton’s comments come as BOQ yesterday posted a 20 per cent increase in profits to $301.2 million for the financial year to August 31.
Improved funding costs and deposit pricing initiatives helped the lender increase its net interest margin by 13 basis points over the same period to 1.82 per cent.
Mr Sutton said the bank’s retail growth has been impacted by its overweight position in Queensland, which is growing at around half the rate of the broader system.
“Continued run-off of legacy portfolios has reduced our exposure to riskier market segments,” he said.
“Our branch network remains in a period of transition with owner-manager branch numbers reducing, largely due to consolidations and retirements after a number of years in the network, and the corporate network undergoing changes to improve productivity.”
BOQ’s broker network today stands at around 1,300 accredited brokers and is in the process of expanding into Queensland.
“In the year ahead, a new commission model for owner-managers is ready to roll out when a new franchise code is finalised which will reward behaviours across a balanced scorecard and help drive greater alignment of interests,” Mr Sutton said.
“BOQ Specialist wrote around $1 billion of mortgages in the past year, which has to date been with third parties,” he said.
“We expect around 50 per cent of new mortgage originations to be on BOQ’s balance sheet within a year.”
Commercial lending was up six per cent over the year to $5.6 billion (excluding BOQ Specialist), supported by the appointment of business banking specialists outside of Queensland.