The Bank of Queensland has revealed a massive 98 per cent slump in profits – but insists it is in good shape to survive the dramatic drop.
Profits after tax crashed to just $4million in the first half of the latest financial year after the bank was hit by two big one-off costs, totalling $260million.
The bank insisted revenue was actually higher however, rising nine per cent to $902million and easing fears for the bank’s long-term future.
The last year has seen Bank of Queensland’s share price also slide, down more than 20 per cent year on year, and down almost 40 per cent over the past five years.
But it actually rose after the latest figures were revealed, up two per cent to $6.40 within hours of the announcement as the market rallied around the bank.
The Bank of Queensland has revealed a massive 98 per cent slump in profits – but insists it is in good shape to survive the dramatic drop
The last year has seen Bank of Queensland’s share price also slide, crashed more than 20 per cent year on year (pictured), and down almost 40 per cent over the past five years
Despite the 98 per cent profits crash, cash earnings were down just four per cent to $256million, and interim dividends were cut 9 per cent to 20c per share.
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‘BoQ is in a strong financial position as we enter this more challenging economic cycle,’ said CEO Patrick Allaway.
Bank of Queensland CEO CEO Patrick Allaway (pictured) insists is in a strong financial position despite the massive profits slump
‘We are well positioned to continue to invest in our transformation to deliver a stronger and simpler low-cost digitally enabled bank.
‘We have made significant progress since announcing our strategy in 2020 across digitisation; improving our strategic position through the ME bank acquisition, achieving growth across our brands and strengthening our financial resilience.’
Slashing the bank’s profits was a $200m ‘impairment of goodwill’ write-down – where an acquisition has not delivered as expected – and a $60m pre-tax charge for an Integrated Risk Program to ‘strengthen its commitment to risk management’.
The bank reassessed its goodwill value over the 2007 acquisition of Home Building Society Limited based on the gap between its market capitalisation and value of assets.
Mr Allaway said the $60million risk management investment was for a three year program to strengthen processes, including against money laundering and counter terrorism.
Analysts at UBS said the market and key stakeholders are likely to welcome the bank’s investment to strengthen its risk management capabilities.
