Bank of Queensland's full-year cash earnings fell 7% to $358 million in FY26, Business News Australia reported, as its home loan book shrank 8% to $52.9 billion while commercial lending added $2.1 billion driven by healthcare, agribusiness and diversified industries.
The FY26 result included a $170 million goodwill impairment, which affected the year-on-year statutory comparison. Cash earnings per share dropped 7% to 54.4 cents. Deposit balances fell 6% to $62.9 billion, with the bank attributing the decline to reduced funding needs as the mortgage book contracted.
The bank's net interest margin improved 6 basis points to 1.70%. Commercial lending had already grown 14% in FY25 before the further gains recorded in FY26.
Family-owned and managed businesses with exposures below $10 million account for half the commercial book, and 44% of the year's commercial lending growth came from the 42 bankers added since FY24. The Business Bank produced cash earnings excluding notable items of $269 million, a 4% decline, while income grew 4% to $794 million.
Loan impairment expense climbed $33 million to reach $54 million, principally because the prior year included a commercial lending provision release that was not repeated. Internal complaints doubled during the year, rising 99%, and complaints lodged with the Australian Financial Complaints Authority surged 134%. BOQ acknowledged in its annual report that the volume of complaints indicated customers were not receiving the standard of care the bank aims to provide.
Chief executive Patrick Finch described FY26 as a year of consistent delivery, pointing to the ME migration, the move of mortgage origination to digital channels and Business Bank growth as key achievements. In the fourth quarter, home loan applications reached $5.2 billion, described by the bank as its highest quarter in two years, with 88% of August applications coming through digital channels. BOQ completed the transfer of all ME Bank customers to its new digital platform during FY26 and delivered 82% of its productivity program.
The bank declared a fully franked final dividend of 20 cents per share; adding a 15 cents special dividend already paid, the total FY26 return to shareholders reaches 55 cents per share, against 38 cents in FY25. The $295 million capital return to shareholders of which the special dividend was a component followed the Challenger sale.
The second-half dividend equates to a payout ratio of 72.9% when measured against second-half cash earnings excluding notable items. BOQ said it will maintain a CET1 target range of 10.25 to 10.75% and a dividend payout target of 60 to 75% of cash earnings.
Finch said BOQ enters FY27 well placed for a sustainable return to growth, adding that despite uncertain economic conditions, the foundations in place give the bank confidence in serving customers and shareholders. BOQ identified elevated competition, the September rate increase and the prospect of further rate rises as risks to its outlook, and said it anticipates no cash rate reduction before calendar 2028.
Shareholders who held BOQ shares before the ex-dividend date of 27 October 2026 are entitled to the 20 cents per share fully franked final dividend, with payment scheduled for 19 November 2026. Those who want to receive new shares rather than cash through the dividend reinvestment plan must register their election by 5pm on 29 October 2026.
Reporting: Business News Australia, The Motley Fool Australia
Written by Pick & Scroll News from the reporting and documents linked above.
