Brokers driving regional bank’s home loan settlements

However, when looking at the first half of this year compared to the first half of last year, the bank’s lending growth has risen by over $800 million (from negative growth of $157 million in the previous corresponding period).

The increase has been largely attributed to growth in BOQ’s commercial lending portfolio and an increase in mortgage lending through its third-party channel.

Mr Davis wrote: “[W]e believe our niche segment strategy is starting to deliver despite an ever-changing operating environment. We are now getting back to a steady rate of growth, with pleasing results especially in our business bank.”

He continued: “The BOQ business division has continued to benefit from maturing its niche strategy, with asset growth of nearly $300 million in the half. This has been delivered across target segments that seek a relationship banking proposition and value industry expertise, including medical and dental, corporate healthcare and retirement living, hospitality and tourism and the agribusiness sectors.”

The chairman added: “We have proactively sought to diversify our lending across the group over the past five years and we are seeing good results.

“Retail banking has continued to diversify its channels of home loan origination, with BOQ Broker and Virgin Money Australia contributing 40 per cent of retail banking’s home loan settlements in 1H18.”

“The bank is well prepared to adapt to whatever may eventuate”

Turning to the ongoing financial services royal commission, the chairman said that “there is no doubt that conduct and trust are a core focus for the industry”.

“At BOQ, we are very aware of these challenges and have worked hard and will continue to work hard to look after our customers to ensure their needs are met and respected,” the chairman told shareholders.

“Certainly, there has been a heavy load of regulatory change since 2007, with 57 external inquiries or reviews at a federal level being conducted into the banking industry.

“BOQ has been, and will continue to be, an active participant in these processes, with the board and management team active in advocating for more competitive neutrality and a level playing field between competitors.”

He concluded: “We expect there will be further structural changes in the industry as a result of continued industry scrutiny, but [we] continue to believe your bank is well prepared to adapt to whatever scenarios may eventuate.”

Looking forward, the chairman said that while credit growth had been slowing, there were signs of improvement in the Queensland and Western Australian economies and that BOQ “continues to find good opportunities in its target niche segments which tend to be in higher growth sectors of the economy”.

The bank is reportedly looking to improving user experience in digital channels in the coming months and is “actively upgrading its online platforms, partnering with fintechs to deliver better solutions for [its] customers”.

For example, it said that it will be launching an “improved merchant capability and the launch of a partnership with a digital payments provider” to make it easier for SME customers to receive payments and manage their transaction accounts.

Mr Davis concluded: “In summary, since 2012, BOQ has consciously evolved its business model. In the retail space, we have gone from being a monoline distribution business to a diversified multichannel retail bank. On the commercial side, we are now a niche specialist business bank with a focus on higher growth sectors of the economy. Across the group, we have expanded our geographical reach and now have a national presence.

“Underpinning this expansion is our commitment to growing the right way. Meeting our responsible lending obligations therefore remains core to our operating model.”

The bank has recently announced changes to its executive team, which included the appointment of a new chief operating officer, chief financial officer and group executive of retail banking.

[Related: Lending slows by 18% at regional bank]