Buoyant business lending, prudent cost management stave off top-line losses
BOQ Group’s realignment of its ME Bank and Bank of Queensland (BOQ) business operations has coincided by a fairly hefty dip in home lending volumes.
In August 2024, BOQ Group paused the acquisition of new BOQ home loans through the broker channel to refocus its efforts on direct and digital mortgage lending. While BOQ Group has not committed to turning the broker tap off for BOQ completely, the pause is still in effect.
By early 2025, BOQ had effectively stopped selling brokered home loans, with ME Bank positioned as BOQ Group’s broker-focused brand.
To accommodate the pause, BOQ Group expanded ME Bank's lending composition and policy to align with the group’s growth targets.
Today, BOQ is focused on selling home loans and, increasingly, business loans, directly to customers through its branches and digital platform, with ME Bank selling predominantly through Australia’s vast broker network.
Annual results for the year ending 31 August show that this sweeping reorganisation of BOQ Group’s operations has coincided with a dip in mortgage volumes. There was an overall contraction of $4.3 billion in the year, representing a 7% year-on-year dip.
Yet it was ME Bank that staved off potentially deeper losses, with the portfolio growing, by BOQ Group’s estimations, 1.3-times wider industry averages.
BOQ Group gave numerous justifications for the decline in group-wide lending volumes.
It continues to “prioritise economic return over volume growth”, said the bank, by deliberately reducing exposure to low-margin mortgages and reallocating capital toward higher-return business lending.
BOQ Group also paused new originations on legacy systems (heritage BOQ and Virgin Money) as part of a digital migration, which temporarily impacted new loan volumes.
Rate competition has also eroded profitability across the entire banking sector, although group-wide net interest margins actually improved by eight basis points to 1.64%.
BOQ Group posts strong top-line results despite mortgage decline
Prudent business costing decisions in the financial year meant BOQ Group posted a 12% increase in cash earnings to $383 million, supported by higher margins and strong commercial loan growth.
Chief executive Patrick Allaway said BOQ’s pivot toward business lending was deliberate and central to improving returns. “We’ve seen encouraging momentum across our core businesses with strong growth in business lending and have expanded our proprietary acquisition channels,” he said.
Its commercial portfolio rose 14%, or about $1.6 billion, marking a second consecutive year of double-digit growth.
Despite the fall in home lending volumes, Allaway described 2025 as “the peak of contraction”, adding that the bank continues to prioritise sustainable returns over volume growth.
The lender still expects a “modest decline” in mortgages in the year ahead, as it “prioritises higher returning business lending and progressively transitions origination to the new digital banking platform”.
Allaway said the bank’s focus would remain on execution. “We are well progressed through this ambitious program of work to uplift operational resilience, simplify the way we operate, and deliver more sustainable returns,” he said.
