BOQ Result Beats Low Expectations but Outlook Remains Challenging

Bank of Queensland is smaller than its regional bank rival, Bendigo and Adelaide Bank, and is considerably smaller than the four major banks. BOQ grew aggressively through several years preceding the global financial crisis, much of this strong growth achieved through acquisitions and the rollout of the distinctive owner-manager branch franchise model. However, expanding the branch network and diversifying away from traditional residential lending comes at a cost, with additional equity required to fund growth and support significantly increased bad debts. Returns on equity have been subpar for several years.