Half Year 2023 Bank of Queensland Ltd Earnings Call Transcript

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

Question: Jonathan Mott - Barrenjoey Markets Pty Limited, Research Division - Analyst : Got a question just about volumes as well, and we did see the sharp reduction across all the channels coming through over the last half. And you comment that you want to be rational and not compete in this environment, I can understand where you're coming from. Well my concern that it comes with, what then happens to the owner-managed branches, [considering] the franchisees, franchisees have effectively paid to grow their business and build a book over time and really grow their business. And yes, there is some payout where margins rise over a period of time, but that will upgrade going forward over the next period or 2. But if the competition remains for an extended period of time and the market can remain irrational for an extended period of time, how do you keep the franchisees? How do you keep them motivated, when they can see very little opportunities for growing their own business over a period of time? Patrick Newton-James Allaway - Bank of Queensland Limited - MD & CEO and Non-Executive Director Thanks for that, Jonathan. We've given that a lot of thought and this -- the other aspects of the business that are important to them. Obviously, we're growing deposits, and our owner manager branches play an important part in growing those deposits and benefit from that. We are increasingly also -- as we grow our focus on small to medium-sized businesses in the core centers of our owner-managers where they're located, we see an increasing opportunity to leverage their strong relationships in their communities to growing our SME business, and you would have seen very strong growth in the first half across our SME business, and we're getting strong returns from that. And so, there are other opportunities for the owner manager network to benefit from the products and services that we're offering.

Question: Jonathan Mott - Barrenjoey Markets Pty Limited, Research Division - Analyst : And a follow-up question, if I could. And this probably goes to you, Racheal. You talked about retention discounting costing 7 basis points in the period, and this is probably a big boundary for (inaudible) banks and bigger drags in the front book, back book. But can you give us a feel for how far through in the repricing you are? I know it's a dynamic situation, not statically you start from one point, but there's still a large number of customers who are on old pricing, and this is going to be an ongoing drag for a period of time. So even if mortgage competition eases, you still get that ongoing amortization of high-margin mortgages rolling off? How far through that process... Patrick Newton-James Allaway - Bank of Queensland Limited - MD & CEO and Non-Executive Director I'll pass it on to Racheal. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 20, 2023 / 12:30AM, BOQ.AX - Half Year 2023 Bank of Queensland Ltd Earnings Call

Question: Joshua Freiman - Macquarie Research - Analyst : I'll ask a couple of questions. Maybe the first, just on that mortgage competition, just continuing from Mottie's question. (inaudible) recently major banks have been attempting to raise their front book variable rates? I'm sure that's probably because they've seen competition on both sides of the balance sheet, and we've all seen subeconomic front book rates for mortgages. But I just want to ask, have you guys actually seen any noticeable change in the intensity of front book mortgage competition there, off the back of that? Patrick Newton-James Allaway - Bank of Queensland Limited - MD & CEO and Non-Executive Director Racheal will respond to that. Thank you, Josh.

Question: Joshua Freiman - Macquarie Research - Analyst : Perfect. And second question for me, just on the sort of growth of your myBOQ new digital deposits. I'm conscious that deposit costs for savings and at call accounts on the legacy system is really different to that on the myBOQ system, which is obviously significantly higher. If I sort of look at your deposit base, it appears be split 95% of your deposits in the legacy systems versus 5% in the new myBOQ and equivalent? I guess as you migrate customers, I assume that the impact of moving accounts to considerably more attractive deposit accounts will be materially lower than it is now? So I guess what plans do you have in place to mitigate this deposit shift margin [impact] over the medium term, or is that impact to margin something you have built into your budgets and plan? Patrick Newton-James Allaway - Bank of Queensland Limited - MD & CEO and Non-Executive Director So we certainly are offering an attractive deposit rate on our new banking apps to our customers, and we see that as a very important service to our customer base. As we sort of shift customers on to the platform, we're actually looking for more transactional sticky accounts, which is really, really important to us. So this is not just a deposit base. Obviously, in the current higher interest rate environment, we are seeing customers moving out of transaction accounts to higher-yielding deposit products. But our view is that we will actually have a good mix across both. We're going to have a much lower cost platform, in terms of servicing customers, and we think the net benefits will actually provide improved returns for BOQ. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 20, 2023 / 12:30AM, BOQ.AX - Half Year 2023 Bank of Queensland Ltd Earnings Call