As expected the Bank of Queensland has reported a big drop in full-year earnings and slashed its final and only dividend for the 2019-20 year to August 31.
The bank said on Wednesday its annual profit fell 61% to $115 million, while cash earnings were down 30% to $225 million. That was better than market forecasts of $204 million.
That saw the bank cut its full-year dividend by 82% to 12 cents a share. It didn’t pay an interim earlier in the year.
Revenue was up 1% at $1.096 billion.
CEO George Frazis described it as a year like no other.
“Throughout these difficult times we have been working to support our customers, our people, and the broader economy,” Mr. Frazis said on Wednesday.
“While the potential impacts of COVID-19 remain uncertain, Australia is well-positioned given the government’s management of the health crisis and economic stimulus.”
He also expressed confidence that the home loan market had recovered more strongly and more quickly than expected earlier this year.
The Bank said its mortgage application volumes are back to pre-COVID levels and Mr. Frazis said confidence had started to return to the industry.
House prices had dropped in Victoria and New South Wales, Mr. Frazis said, but had now stabilised and were even trending higher in Queensland.
The bank also announced the $23 million sale of its St Andrew’s Insurance unit to Farmcove Investment Holdings (BoQ following the lead of its bigger rivals in selling off unwanted insurance and funds management businesses to focus more deeply on banking).
BoQ said it had seen a $2.3 billion growth in deposits over the year, partly due to liquidity brought on by government stimulus, meaning the deposit to loan ratio had increased to 74% from 69% the previous year. (All banks have been flooded with deposits since the pandemic surged in February and March).
And like its rivals, customers who asked and were given deferrals, are now resuming payments in increasing numbers.
“Of the 21,000 customers who accessed banking relief, 25% continued to make full or partial repayments. Since the peak in April, we have seen a reduction in the total loan balances on deferral by 18.8%.
“As at 31 August 2020, BOQ has 12% of housing customers and 16% of SME customers remaining on banking relief,” the Bank said on Wednesday.
In September Bank of Queensland revealed it had updated its financial modelling to better reflect the changes being wrought on the economy and customers by the pandemic and lockdowns.
As a result, its loan impairment expenses were increased to $175 million, up from $74 million in the previous year, through a $133 million COVID-19 provision.
Investors liked the results, sending the shares up4.7% to $6.70. That’s still well under NTA of $7.31 at the end of August.
