BOQ shares up as franchisees shift models

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Inside Franchise Business: BOQ shares up as franchisees shift modelsIn the midst of the royal commission into banking, Bank of Queensland’s (BOQ) shares have risen despite reporting a full-year profit slip of five per cent. 

The confidence comes after the lender announced a decrease in faulty loans and revealed plans to sell its life insurance division St Andrews to under-fire firm Freedom. 

The latest report strengthens BOQ’s commitment to reducing running costs and converting many of its franchise owners and managers to the new balance scorecard model, which chief executive Jon Sutton sees as crucial for compliance.

"There is no doubt 2018 has been a tough year for the banking sector," Sutton told investors on Thursday.

"Public scrutiny, regulatory change, flowing credit growth and changing customer expectations have all had an impact”.

Around 80 per cent of BOQ’s current franchisees have converted to the new balance scorecard model which offers a remuneration package that isn’t as heavily reliant on commission payments as its predecessor.

Despite the sector’s current concerns, Sutton remained buoyant about BOQ’s underlying revenue growth of two per cent to $1.1b.

"We have managed for the environment we are faced with, prioritising margin over growth," Sutton said.

“The ongoing inquiry into the banks combined with the declining housing market will put a dent in the lending industry; the economic landscape is changing”. 

The regional lender revealed in its full-year results it had spent $9 million on the royal commission and other regulatory matters so far.

BOQ also said it was moving ahead with the sale of its life insurance division St Andrews to under-fire insurance firm Freedom, and had factored in the $65 million sale despite the deal requiring regulatory approval.

It will declare a flat final dividend of 38 cents, fully franked.

BOQ shares were up 3.4 per cent to $11.14 at 1345 AEST.

Source: AAP

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