Bank of Queensland Limited

Good morning and welcome to today's briefing. Following the opening presentations, we will move to a question and answer session. If you are on the phone line and wish to ask a question today, please dial star on your telephone keypad to join the queue. I will now hand over to the Bank of Queensland team.

Good morning and welcome to BOQ's financial results presentation for the full year ended 31st of August, 2026. My name is Jessica Smith and I am the General Manager of Investor Relations and Corporate Affairs at BOQ. On behalf of the management team, I would like to acknowledge the traditional custodians of the land we are meeting on today, the Gadigal people of the Eora Nation. We pay our respects to Elders past and present. I'm joined in the room today by BOQ's Managing Director and Chief Executive Officer Rod Finch and our Chief Financial Officer Rachel Kelleway who will present the results. We are also joined in the room by BOQ's Executive Team. Following the briefing there will be an opportunity for questions. I will now hand over to Rod.

Thanks Jess. Good morning everyone and thank you for joining. Today I'll take you through the strong progress BOQ have made in FY26 to position us for sustainable growth in FY27. We set the foundations of a simpler specialist bank, maintained disciplined cost management, strengthened our capital position and returned capital to shareholders. This year, BOQ delivered $358 million in cash earnings after tax, excluding notable items, with net interest margin of 1.7%. This was supported by the decisions we've made to optimise our balance sheet, improve our funding mix and grow with strong risk-adjusted returns. We completed our whole of loan sale and in August we paid a fully franked special dividend of 15 cents per share. Our on-market share buyback is also underway. The board has declared a fully franked final dividend of 20 cents per share, recognising the group's resilient financial position and strong capital levels. This brings total dividends for the year to 55 cents per share. With the completion of mean migration, all mere customers and 68% of all retail customers are now on the digital bank. We have begun scaling the digital mortgage with 88% of application volume and 83% of settlements occurring through digital channels. Our remedial action plans are well progressed with 74% of all activities now complete. While there is more work to do, the risk frameworks we have built through the programs are being embedded across the organisation, and our risk culture, measured through our people surveys, continues to improve. In FY26, we continued to recycle our balance sheet from home lending to business lending and established our capital partnership with Challenger. We supported 1.4 million customers across Australia. Our branch network has aligned to identified growth areas, especially focused on Queensland. We expanded our co-located retail and business banking centre model, and we continue to support the communities we operate in through deeply connected partnerships. Looking closer at the financial results, we delivered total income of $1.7 billion, up 1% year-on-year, and strong cost management meant expense growth was 2%, below inflation and in line with our guidance. We saw improved momentum in the second half with cash earnings of $182 million, up 3%, half on half, and a six basis point margin expansion. Rachel will talk to the financial results in more detail shortly. Since we reset the strategy in 2023, we have worked through an ambitious transformation agenda with a clear strategy to deliver a simpler specialist bank. Over the course of three years we developed and are now well progressed in delivering against our risk programs. This has given us strong foundations in our risk practices and operational resilience. Converting and optimising our branch network to align more closely with growth corridors and our Queensland heritage has given us the ability to deploy more business bankers into key geographies and better reflect customer preferences. 74% of branches are located in Queensland, reflecting our strategy in this key market. Our technology landscape has simplified throughout this time and we have halved our core banking systems. We decommissioned 41% of technology assets and 90% of target state IT assets are in the cloud. We have delivered 82% of our simplification agenda with line of sight to the remaining benefits into FY27. This program has delivered property footprint reduction, a simplified operating model and establishing our strategic partnership with Capgemini to create efficiencies. We completed the integration of MEE, built the digital end-to-end bank and all MEE customers are now on that platform. We are on track to complete the decommissioning of MEE legacy technology by the end of this calendar year. After three years of building the right foundations, simplifying our operations, Building and scaling the digital proposition, we now have the platform for a focused and disciplined return to growth. We remain committed to our strategy of becoming a simpler specialist bank, underpinned by our vision to be the bank that customers choose. To deliver a sustainable return to growth, we have refreshed our strategic pillars. These are growing our customer relationships, rewiring the bank for the future, accelerating the culture shift and optimising the bank economics. I'll step through these pillars now in more detail. Growing our customer relationships. We are clear and deliberate on the customer segments we are targeting growth in. We are concentrating on the segments where we feel we have the experience and capability to win, family-owned businesses and everyday Australians. This focus is anchored to our home state of Queensland, where our heritage and foundational strength means we are well positioned to capitalise on the growth underway. Deposits are central to how we want to grow, and we will use the improved offering in our digital bank to deepen relationships and fund our growth with quality deposits. Rewiring the bank for the future builds on the investments we've made to date to create operational leverage. We will continue to simplify and scale, benefiting from a modern technology and data platform, which supports faster delivery of customer features and has us well positioned to further deploy AI. We've simplified and better aligned our product suite to customer preferences and enabled more straight-through processing, and we will continue to add automation to these simpler services. Through accelerating the culture shift, we are creating a culture that is risk-focused, accountable and outcomes-based. We are committed to equipping our people with the skills they need in a dynamic environment, upskilling in AI capability and strengthening our leadership capabilities to adapt and better serve customers and compete in the future. Optimising the bank economics is an approach to growth that is disciplined and accretive to returns. We will do that through the careful allocation of capital and growing capitalite earnings. With our digital retail deposits fully in market, our funding mix will be a key focus in supporting profitable growth. Our business bank has continued to grow, with commercial lending up 16%. A proposition for business banking is underpinned by our strong position in Queensland and the deep industry expertise we offer in key segments, especially health, agriculture and diversified industry customers. Half of our lending is to our target segment, established family-owned and managed businesses supported by bankers who have enduring relationships, understand their customers and are committed to their growth and success over the long term. We have welcomed 42 additional business bankers since 2024 and they have provided strong volume growth. This year we expanded our co-located business and retail banking hubs in specific gross locations and these hubs have contributed 20% of the commercial lending growth. Within asset finance we established the capital partnership for the $3.6 billion whole of loan sale for equipment finance assets. The business bank is focused on scaling equipment finance lending through the partnership, which generates capital-like earnings without funding requirements and no direct credit risk. Excluding the whole of loan sale, asset finance grew 5% this year. This was driven by structured finance and novated leasing, in particular from continued strong demand for electric vehicles. Turning to the retail bank, we had two key priorities this year. completing the migration and shifting mortgage origination to digital channels. We have delivered both. All new customers are now on the digital bank, which offers greater automation, increased self-service and benefits the group with lower unit costs across both origination and servicing. As we focused on scaling digital mortgages, we exited the year with 88% of home lending flow through our digital channels. We've seen strong mortgage application volumes with a 14% increase in the second half, providing momentum into FY27.