IT improvements boost Bank of Queensland profit by 14 percent

The Bank of Queensland has reported that digital improvements made to its back office systems during the first half of the 2015 financial year helped its statutory profit after tax reach AU$154 million.
Written by Aimee Chanthadavong, Contributor

The digitisation and transformation of its back office capabilities have helped the Bank of Queensland (BOQ) improve its statutory profit after tax for the first half of the 2015 financial year by 14 percent, to AU$154 million, on the prior comparative half.

The bank reported that total operating expenses were AU$256 million, up 31 percent on the previous comparative half year. Contributing to this value was IT expenses, which was AU$40 million, up 3 percent from the previous year.

Within IT expenses, data processing made up more than a third of expenses, costing the bank AU$31 million. Other IT expenses were computer software and the depreciation value of IT equipment.

The bank highlighted that IT expenses benefited from a number of strategic contracts being renegotiated to improve efficiency of IT services across the group.

In October, for instance, BOQ inked a five-year contract with Hewlett Packard for its information technology services. HP is helping the bank reduce the complexity of its IT environment, standardise and improve the delivery of technology services across the business, increase the speed and quality of project delivery, and reduce overall IT operating costs.

During the half year, the cost-to-income ratio also increased to 48 percent. The bank said this was impacted by one-off costs, such as the pilot customer relationship management (CRM) system, which was impaired for AU$10 million in February.

However, excluding such one-offs, the bank said the first full period of BOQ specialist, underlying expense growth was 3 percent from the prior half. The bank is also on target to transition to a 45 percent cost income ratio in the second half for the expanded group.

"We are continuing the journey of substantial system reinvestment to move to a digitised business which will provide a platform to deliver productivity and efficiency benefits, and drive future growth," BOQ reported.

BOQ also provided a progress update on its four strategic pillars: Putting the customer in charge; growing the right way; finding a better way; and being loved like no other. As part of this progress, the bank made improvements to mobile banking, its call centre, online, and social media.

BOQ managing director and CEO Jon Sutton said the result is evident of BOQ's steady progress in delivering its strategy.

"What you see today is a bank that has come a long way in recent years. Strong foundations are now in place, and we're well into building a bank that is lower risk, lower volatility, and set up for sustainable growth," he said.

Going forward, as part of its strategic journey, the company will continue to digitise its back office, bring in a new IT sourcing model, build new online capabilities, simplify its IT, and create a new IT sourcing model.

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