Full Year 2023 Bank of Queensland Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jeff Cai - Jarden Limited, Research Division - Analyst : So first question on your medium-term targets on FY '26 ROE target. Just interested in -- like, to what extent have you factored in margin expansion and the cycle turning in your thinking? And can you just talk through some of the key building blocks and how you can improve your ROE from 6% to circa 9% going forward?

Question: Jeff Cai - Jarden Limited, Research Division - Analyst : Got it. And then a question on SME lending. I mean, volume growth has been pretty soft this half. How should we think about the growth outlook going forward? Are there some sort of existing initiatives in place working through that could materially boost growth in '24 and '25?

Question: Jonathan Mott - Barrenjoey Markets Pty Limited, Research Division - Analyst : Two questions, if I could. I just wanted to go back on the first one -- all the way back to Andrew Lyons' first question because I think this is probably the most important bet on what you can control, which is your cost in FY '26. So you're saying you expect $200 million of productivity, but that's going to be offset by inflation. And then you said that you're going to have growth in costs from investments. So I just want to be really clear, your cost base is just over $1 billion today. Does that mean going forward from here you're going to see netting off productivity inflation basically netting off over 3 years, depending on your cost inflation at that time, but the cost base will still be higher in FY '26. We can all have our own assumptions about volumes and margins, but what you can control is cost. I just want to make very clear what do you expect that cost growth to be in '26?

Question: Jonathan Mott - Barrenjoey Markets Pty Limited, Research Division - Analyst : Okay. So what you're saying is you don't know what inflation is going to be. So it's hard, I can understand that. That's fair. But you think the $200 million productivity should roughly offset inflation, give or take where that lands, and we're not going to hold it to that. But on top of that, you would then expect cost to be growing as a result of the investment spend continuing to grow. Am I interpreting that correctly?

Question: Jonathan Mott - Barrenjoey Markets Pty Limited, Research Division - Analyst : Okay. Can I ask a second question, and it goes back to a question asked 6 months ago, it goes to the owner-manager branches and the franchisees. And the issue that we were talking about 6 months ago was with the book contracting, it's going to be very difficult to motivate the franchisees when they can't -- their pricing [go out] of the market. And you're saying, well, what we're doing is we're refocusing the owner managers on to business banking. They're very intertwined with the communities and they're going to be able to grow. But it now looks like the business book is also contracting. So can you let us know within the Business Bank, how the growth is coming by the owner manager branch network? Or is that contracting as well? And in this environment, I think you're also saying that within the margins, the payouts, the owner managers of third parties, a part of that would be owner managers are falling as well. So how do you keep and motivate the owner managers when their personal outlook is so challenging.

Question: Joshua Freiman - Macquarie Research - Analyst : Just 2 questions for me. The first question is the margin impact was fairly disappointing, I would say, relative to consensus assessments. But it's clear that the exit margin could be considerably below that. Are you able to provide any color on the exit margin and trajectory of margins across the half given the significant move? And I'll come back for the second question after.

Question: Joshua Freiman - Macquarie Research - Analyst : Okay. Understood. I guess then if I sort of turn around and shift to expenses, you haven't really been willing to provide much clarity on sort of FY '26 end point. But if I sort of look at that $200 million of productivity benefits, are you able to provide any clarity on sort of phasing and what make up the key drivers in terms of quantum?