The non-major banking group saw broker channel growth of $1.1 billion in the financial year 2021, driven by “new and existing quality aggregators”.
The Bank of Queensland Group (BOQ) – comprising BOQ, BOQ Specialist, ME Bank and Virgin Money Australia (VMA) – has released its financial results for the 2021 financial year ended 31 August (FY21), in which it revealed strong home lending growth over the year.
Housing growth (excluding its new acquisition of ME Bank) was 1.7x system, taking it to a total of $2.9 billion, with growth delivered across all channels.
Brokers accredited with VMA and BOQ settled 39 per cent of its housing loans (excluding ME).
When excluding BOQ Specialist, housing loans for the retail bank (BOQ and VMA) grew by $2.5 billion, with BOQ driving the majority of new loans. Noting that the retail brand saw loans drop by $4 million in FY20, the managing director and chief executive George Frazis suggested that the marked improvement this last financial year was a result of its simplified mortgage processes, a new owner-manager incentive programme, improved banking capabilities, and “quality third-party broker relationships”.
BOQ Group’s home lending growth (excluding ME Bank) was particularly strong in the second half of the financial year, with just under $2 billion of the $2.9 billion home loans originated being written in that half.
It revealed that broker channel growth was $1.1 billion in FY21, which the CEO said was a result of “building quality relationships with new and existing brokers, simplifi[ing its] end-to-end mortgage processes, and enhanced customer retention activities.”
More than a quarter of BOQ Group’s total portfolio (excluding ME Bank) has now been originated by brokers, up from 21 per cent in FY20 to 26 per cent in FY21.
When including the ME Bank, broker flows account for 39 per cent of the portfolio.
It estimates that 13,274 brokers were accredited with ME as at 31 August 2021, just over 8,100 were accredited with BOQ, and around 5,800 were accredited with VMA.
The group also upgraded its broker portal and digital tools over the financial year, and “improved its broker experience”.
Just over $34.1 billion of mortgages were in BOQ Group’s portfolio at the end of FY21 (spot balance), up from $31.1 billion in FY20. When including ME Bank, this rises to $59.0 billion.
Housing arrears also continued their downward trend over the period.
The banking group suggested it expects strong lending growth to continue in FY22, particularly highlighting that ME Bank saw a 36 per cent increase in loan applications across August and September (compared to the FY21 average), which the CEO said has been partly attributed to the bank’s turnaround times.
In its financial report, it outlined that the “time to yes” was three days for the broker channel in FY21 (and one day in proprietary).
Mr Frazis said that the turnaround improvement was a result of the group’s ongoing digital banking journey with Temenos, which has shed the bank’s “constraints of legacy architecture with batch processing” and its “non-real time, complex lag technology” to become a “cloud-based digital bank” that will deliver a scalable, multi-brand group.
He added that business lending growth would be a “key focus” moving forward.
Overall, BOQ Business delivered a 221 per cent jump in statutory net profit after tax to $369 million for the year ended 31 August.
The group posted an 83 per cent rise in cash earnings after tax to $412 million, which Mr Frazis said reflected BOQ’s “strong business momentum” during the year.
“Our refreshed strategy announced in February 2020 set out a clear path to return the group to sustainable profitability and today’s results show our momentum with four consecutive halves of improving performance,” Mr Frazis said.
Commenting on BOQ’s acquisition of ME Bank, Mr Frazis said the transaction “delivers further scale in retail, enhances our portfolio diversification, and we have accelerated capturing synergies from the integration”.
Including ME Bank, BOQ’s gross loans and advances totalled $75.7 billion in FY21.
BOQ will pay a final fully franked dividend of 22 cents per share, bringing the full-year dividend to 39 cents per share. This represents a 61 per cent payout ratio for FY21.
Looking forward, the bank said it remains “cautiously optimistic that Australia remains well placed for economic recovery, characterised by further house price rises and solid growth in consumer spending and business investment”.
“There may still be uncertainty associated with COVID-19 over the next year. We expect that fiscal and monetary policy will continue to underpin the economic recovery,” Mr Frazis concluded.
[Related: BOQ completes ME Bank acquisition]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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