2022
ANNUAL
REPORT
A true partnership that builds social capital
Mt Barney Lodge, an eco-retreat situated in the heart of
the Scenic Rim has been in the Larkin family since the late
1980s when Innes’ parents first purchased the property.
In 2003, Innes and his wife, Tracey took over managing
the property and business and in 2006 purchased it
from his parents, John and Jenny Larkin. They now run a
multiple award-winning eco-tourism business with the
help of their son, daughter and half a dozen employees.
“Eco tourism didn’t really exist 16 years ago when
we applied for our business loan, but BOQ was
open to considering the merits of our proposal.
Today many organisations are now realising the
value of strong ESG propositions as they create a
point of difference. With BOQ, we’ve been able to
build on our family’s sustainability legacy, inspire
hundreds of others who visit us each year, and
protect the beautiful Scenic Rim.”
- Tracey Larkin, BOQ business customer
Despite the family property and business being funded
by another bank for several years, Innes and Tracey were
shocked to experience resistance when they requested
the loan to be transferred to their names. All was quickly
resolved however after they were referred to BOQ Owner
Manager, Daniel Connor, who worked with them to
progress their loan.
Tracey said it is important to have a true banking partner
who understands your business, believes in what you’re
doing and is there when you need them.
“BOQ’s service and accessibility over the past 16 years
has been extraordinary,” she said. “My lender, Daniel
has supported the growth of our business and helped
us navigate around ‘the big punches’, namely drought,
bushfires and COVID-related closures – even responding
to my calls on a Sunday.”
With over 20 years' as the Owner-Manager of the Victoria
Point branch, Daniel is extremely passionate about
helping his community and enjoys visiting his customers
at Mt Barney Lodge. “Our role is more than just lending,
deposits and transactions. It’s about building mutually
beneficial partnerships that help build social capital
through banking.”
2
Bank of Queensland Limited and its controlled entities 4
6
8
11
12
16
20
53
67
71
103
105
106
107
108
109
113
114
180
181
189
194
195
About this report
Contents
This year’s Annual Report includes details of BOQ Group's purpose
and values, strategy, operations, audited financial statements and
other statutory disclosures. The report predominantly focuses on
our financial performance, with further detail on our non-financial
performance measures contained in the 2022 Sustainability
Report. We are continuing to enhance our reporting to explain to
stakeholders how we deliver long-term value.
Unless otherwise stated, the Annual Report encompasses
all BOQ Group activities for the financial year commencing
1 September 2021 and ending 31 August 2022. All monetary
values in this document are presented in Australian dollars, which
is the Group’s functional currency. Our Operating and Financial
Review can be found in pages 12 - 70 of this report.
Other documents in
our 2022 reporting suite
BOQ Group produces a range of reports designed to meet the
evolving expectations of a wide number of stakeholders. Our 2022
annual reporting suite includes the following documents:
FY22 financial results
Chairman’s review
Managing Director and CEO’s message
Directors’ report
About BOQ Group
Value creation and strategy
Financial performance
Governance and risk management
Directors’ details
Remuneration report
Lead auditor’s independence declaration
Financial report
Income statements
Statements of comprehensive income
Sustainability Report
Balance sheets
Our 2022 Sustainability Report outlines
information about our performance
against social, environmental and
economic opportunities and challenges.
This report is available on the Annual
Reports page of our website and is
supported by supplementary information
available on the Sustainability section of
our website.
Corporate Governance Statement
Our 2022 Corporate Governance
Statement discloses how we have
complied with the ASX Corporate
Governance Council’s Corporate
Governance Principles and
Recommendations (4th edition) and is
available on the Corporate Governance
page of our website.
FY22 Investor Materials
Our FY22 Investor Materials provide
a high-level overview of the Group’s
performance, a detailed result analysis
and a discussion on the outlook, which
covers the macro environment and the
Group’s high-level priorities. Investor
Materials are available on the Financial
Results page of our website.
Statements of changes in equity
Statements of cash flows
Notes to the financial statements
Directors’ declaration
Independent auditor’s report to the members
Additional information
Shareholding details
Shareholder information
Glossary
We are always looking for ways to improve our reporting. Please
send your questions or suggestions to our Investor Relations team
at InvestorRelations@boq.com.au
Bank of Queensland Limited
ABN 32 009 656 740
AFSL No. 244616
Level 6, 100 Skyring Terrace,
Newstead QLD 4006
3
2022 Annual Report FY22 financial results
Profit results
($ million)
Earnings and dividends
(¢ per ordinary share)
508
426
412
369
320
298
225
115
77.0
65
74.7
78.4
49.6
46
39
12
2019
2020
2021
2022
2019
2020
2021
2022
Cash earnings after tax
Reported statutory net profit after tax
Cash basic earnings per ordinary share
Dividends per ordinary share
Cash
earnings
after tax
Reported statutory
net profit
after tax
Cash basic earnings
per ordinary share
(¢ per share)
Dividends per
ordinary share
(¢ per share)
$508m
$426m 78.4¢ 46¢
↓ Down 5% from pro forma FY21
↑ Up 15% from FY21
↑ Up 5% from FY21
↑ Up 18% from FY21
Cash net interest
margin
Cash cost to
income ratio
Cash return
on equity
Cash loan impairment
expense
1.74% 55.7% 8.4%
$13m
↓ Down 12bps from pro forma FY21
↓ Down 10bps from pro forma FY21
↑ Up 20bps from FY21
↑ Up $42m from pro forma FY21
Note: The FY22 financial results should be read in conjunction with the financial performance definitions outlined in section 1.1, reconciliation of statutory profit to cash earnings.
4
Bank of Queensland Limited and its controlled entities 5 year financial summary
$ million (unless otherwise stated)
2022
2021
2020
2019
2018
Financial performance (1)
Net interest income
Non-interest income (2)
Total income (2)
Operating expenses (2)
Underlying profit before tax (3)
Loan impairment expense
Cash earnings before tax
Cash earnings after tax
Reported statutory net profit after tax
Financial position
Gross loans and advances (4)
Total assets (5)
Customer deposits
Total liabilities (5)
Total equity
Shareholder performance
Market capitalisation at balance date
Share price at balance date ($)
Statutory basic earnings per share (cents)
Statutory diluted earnings per share (cents)
Cash basic earnings per share (cents)
Cash diluted earnings per share (cents)
Fully franked dividend per ordinary share (cents)
Cash dividend payout ratio to ordinary shareholders
Cash earnings ratios
Net interest margin
Cost to income ratio (2)
Return on average ordinary equity
Capital adequacy
Common Equity Tier 1 ratio
Total Capital Adequacy ratio
1,529
1,128
153
130
986
128
961
144
965
160
1,682
1,258
1,114
1,105
1,125
(937)
(684)
(612)
(571)
(542)
745
(13)
732
508
426
574
502
21
(175)
595
412
369
327
225
115
534
(69)
465
320
298
583
(41)
542
372
336
81,250
75,748
47,043
46,216
45,279
99,930
91,439
56,772
55,597
52,980
60,489
56,469
34,762
32,428
31,325
93,245
85,242
52,541
51,738
49,124
6,685
6,197
4,231
3,859
3,856
4,551
6,063
2,785
3,721
4,565
7.03
65.7
60.1
78.4
71.2
46
58%
9.46
6.13
9.17
11.49
67.0
62.6
25.4
24.4
74.7
49.6
69.5
45.1
39
61%
12
24%
74.0
69.1
77.0
71.9
65
82%
85.5
81.2
91.5
86.7
76
81%
1.74%
1.92%
1.91%
1.93%
1.98%
55.7%
54.4%
54.9%
51.7%
48.2%
8.4%
8.2%
5.4%
8.3%
9.9%
9.57%
9.80%
9.78%
9.04%
9.31%
13.78%
12.60%
12.73%
12.40%
12.76%
(1) All amounts disclosed are on a cash basis except statutory net profit after tax. Further, all amounts disclosed are not presented on a pro forma basis. The 5 year financial summary
should be read in conjunction with the financial performance definitions outlined in section 1.1, reconciliation of statutory profit to cash earnings.
(2) Virgin Money Australia (VMA) operating costs have been restated from non-interest income and included in operating expenses as per Australian Securities Exchange (ASX)
announcement on 30 September 2021.
(3) Underlying profit before tax is profit before impairment on loans and advances, significant items and tax.
(4) Before specific and collective provisions.
(5) FY21 comparative information has been restated to reflect the prior period adjustments detailed in the financial statements Note 5.5 (C).
5
2022 Annual Report Chairman’s review
Dear Fellow Shareholders
Customers & communities
Customers are at the heart of our business and central to our
decision making. We have continued to deliver superior customer
experiences through the year, evidenced through our top 3 NPS
ranking for the BOQ Retail brand and portfolio growth during
the year. Our transformation gives us the opportunity to further
enhance our value proposition for customers, to make their
everyday and business banking a digital, seamless, and easy
process, to facilitate Australians buying their first home or taking
that next step in growing the family business.
We are focused on supporting our most vulnerable customers who
might be facing hardship and understand the key role we play in the
resilience of households and businesses through these uncertain
economic times. Our business bankers have strong relationships
with their customers and our Owner Managers have long term and
deep relationships within their local communities.
During the year we have continued our community partnerships
with Orange Sky Australia, Clontarf Foundation, Stars Foundation,
National Breast Cancer Foundation and the Mother’s Day Classic
Foundation. These organisations support vulnerable Australians,
First Nations youth and breast cancer research and are aligned to
our purpose. I am very proud of the role our people and BOQ plays in
advancing the important work of these organisations.
Business performance & capital management
Notwithstanding the uncertainty of this year, I am pleased to report
that BOQ has again delivered a solid financial performance with
reported statutory profit of $426m. After tax cash earnings for the
year was $508m which represented earnings per share of 78.4 cents.
BOQ is committed to prudent capital management to support
resilience through the cycle, disciplined investment and growth
targets, and acceptable dividends to our shareholders. Our end of
year CET1 ratio was 9.57%. Given the current economic environment
and the upcoming Basel III capital changes we will seek to retain
CET1 above 9.5% with a reconsideration of the appropriate setting
after we have finalised the Basel III re-weightings.
We have good business momentum with strong growth across
all our brands. Our Retail brands and channels have delivered
above system housing growth and our Business Bank has also
outperformed in the SME market in line with our renewed focus
on this area.
In balancing resilience with the investment required for our
transformation and the capital allocation for future growth, the
Board has determined a fully franked final dividend of 24 cents per
share be paid, bringing the FY22 total ordinary dividend to 46 cents
per share. This is slightly below our target payout ratio reflecting the
important reinvestment in the business.
FY22 has been a challenging year with unique circumstances to
navigate as we learnt to live with COVID-19, dealt with pressures
from inflation, labour shortages and experienced rising interest
rates for the first time in over 11 years. The year was also impacted
by severe flooding and extreme weather events across the country.
These economic, health and environmental factors have impacted
the lives of many of our customers and people.
It is against this backdrop that our purpose,
Building Social Capital through Banking was developed. The
importance of supporting each other and leveraging the strength
of our social connections has never been more critical. The new
purpose enables our people from across the legacy BOQ, Virgin
Money Australia and ME brands to come together under a new
common banner. The purpose is underpinned by new values
to inspire and guide our people as we deliver positive long term
sustainable outcomes for our customers, people, shareholders and
the communities in which we operate.
Board priorities and strategy
Throughout the year we have made good progress against our
strategy while supporting our customers through challenging times
and remaining focused on sustainable profitable growth.
We are executing on our digital transformation and are seeing
tangible benefits for customers and the business with strong
growth in digital transaction accounts and deposits. In March this
year we launched the BOQ brand transaction and savings products
on the new platform, joining VMA and proving out the multi-brand
capability of the platform. Work is well progressed on adding ME
to the platform which we expect to deliver next year. This will see
all three retail brands available on the new digital banking platform,
resulting in a superior customer experience and improved access to
lower-cost funding.
We have high conviction in the delivery of the cloud based
digital bank and are now halfway through this medium-term
transformation plan. The program requires considerable
investment with the uplift in efficiency, customer experience and
returns largely back ended to when we switch off our complex
legacy systems. Whilst the value of this investment is not as yet
reflected in our share price, we remain committed to staying the
course in our ambition to build a highly efficient and scalable digital
bank with an exceptional customer experience, low cost to income
ratio and improved returns on equity.
We are focused on growing our business in a quality way and
strengthening our financial and operational resilience and risk
controls and risk culture. There is more work to do on improving
our risk controls and risk culture, which is being supported by our
investment in moving off complex legacy systems and reducing
reliance on manual controls.
The right leadership and talent is critical to our success and we
understand the importance of building the skills needed for the
future through the development and retention of a high quality and
diverse team.
These elements are key to our future success, and we continually
assess broader consumer trends and market shifts such as
digitisation and decarbonisation, emerging opportunities and
market consolidation when evolving our strategy.
6
Bank of Queensland Limited and its controlled entities People & culture
Building social capital requires a commitment from all
our people to create a culture that enables exceptional
customer experiences, inclusion and diversity and
improving outcomes for all our stakeholders. We ask
our people to be accountable and speak up if they see
something that isn’t right in order to build a strong risk
culture where all our people see risk as part of their role.
Our values guide the way we do business, to make a
positive difference to the lives of our customers and our
communities. The strong leadership team we have in
place will enable us to continue executing on our strategy
and transform BOQ to a simpler, digital and sustainable
bank. Pleasingly, we have again seen an uplift in
employee engagement in FY22 which now stands at 67%.
We recognise there is more to do but are encouraged by
our steady progress since 2019.
In FY21 Performance Shares replaced short term
incentives (delivered via a combination of cash and
restricted shares) for the CEO and senior leadership team
to better align with shareholder outcomes. Recognising
the underperformance of BOQ’s share price in FY22
and the difficult year for many of our customers and
communities, balanced against the performance
ratings in our group scorecard, the Board supported the
recommendation from the Managing Director and CEO to
reduce his performance share conversion by 25% and by
10% for those allocated to the senior executive team.
Building a sustainable business
The Board recognises the importance of environmental
and social matters to our stakeholders and takes an
active role in shaping BOQ’s response. The devastation
experienced by our communities as a result of the floods
and weather events showcased the resilience of our
customers and people, but it also strengthened our
resolve to support Australians in the transition to a low
carbon future in order to address the impacts of
climate change.
BOQ is a certified carbon neutral organisation, ensuring
that our operational footprint is offset while we work to
reduce our emissions. We have committed to sourcing
100% of our energy needs from renewable sources
by 2025 and have made good progress with 54% of
our needs coming from renewable sources in FY22.
We are committed to ceasing the financing of assets
directly involved in the extraction of fossil fuels and
are committed to a 90% reduction in our scope 1 and 2
emissions by 2030 (1) along with a 40% reduction in our
supply chain scope 3 emissions. Sustainability is integral
to our new purpose and is critical to our future success.
(1) The emissions reduction target is based off a 2020 baseline.
“Our values guide the way
we do business, to make a
positive difference to the
lives of our customers and
our communities.”
Board composition
Dr Jennifer Fagg joined the Board on 13 October 2021,
bringing more than 25 years’ executive experience in
leading financial services institutions in Australia and
abroad, strong credentials in risk management and a
PHD in Risk culture. Her appointment completes the
board refresh and I am confident we have the right skills,
capabilities and diversity of thought in place which are
crucial to BOQ’s continued transformation.
The Board understands its critical role in oversight,
setting the tone for the business and its responsibilities to
our shareholders, our people and our customers.
Looking ahead
Our progress in delivering a fully cloud based end-to-end
banking platform across the group is well underway. We
look forward to continuing this progress over the coming
year, with a clear purpose supported by meaningful
values to continue to deliver strong results.
I would like to acknowledge our Managing Director & CEO,
George Frazis, the Executive Committee and all our BOQ
employees for their continued commitment to delighting
our customers, living our values and creating long term
value for our customers and shareholders. Through their
hard work, we will continue to execute on our strategy and
build social capital through banking.
On behalf of the Board, thank you to our customers and
shareholders for your support through what has been a
challenging year.
Patrick Allaway
Chairman
7
2022 Annual Report
Managing Director and CEO’s message
Dear Fellow Shareholders
This has been another year of economic uncertainty, devastating
extreme weather events and the first cash rate rise many of our
customers have ever experienced. We understand the important
role BOQ plays in supporting Australians through this period and
our team has remained focused on ensuring the resilience of our
business, our people and the communities in which we operate.
Business and operating performance
We have delivered a solid result for the year. Our continued focus
on improving the customer and broker experience has resulted
in strong, quality business momentum. In the housing portfolio,
we have returned ME to growth and maintained our above system
growth for both BOQ and VMA. In our business portfolio we have
maintained our focus on supporting family businesses and have
grown our SME market share during the year. Growth has resulted in
a 1% increase in income for the year, despite the impact on margins
from ongoing competition and significant volatility in swap rates.
Tight expense management as well as the benefits of integration
synergies and the productivity program have enabled us to make
significant investments in our transformation during the year while
maintaining a flat expense base. Our asset quality remains sound,
with improving credit risk metrics and our CET1 ratio of 9.57%
remaining above our target range.
We have delivered a statutory net profit of $426m for the year and
cash earnings of $508m.
Customers and community
Delighting our customers is at the heart of what we do. Through
our ongoing transformation, we have digitised a large number of
processes, increasing the options for customers to self-service and
bank how and when they choose. Joining our award winning Virgin
Money app, we launched our myBOQ app in March this year, which has
enabled customers to open a transaction or savings account and start
transacting in under five minutes, with real time payments, automatic
savings round ups and personal financial management tools.
“We recognise the role
we play in supporting our
people, customers and
communities in which
we operate.”
Our customers are our best advocates, and the changes we have
made this year combined with our ongoing commitment to a
superior customer experience has resulted in BOQ ranking 3rd for
main financial institution net promoter score. Delivering exceptional
customer experiences reflects the hard work of our dedicated
team, who have listened to customer complaints to identify key
areas for improvement and continue to embed the customer’s voice
throughout all decisions.
During the year we built on our capability to support vulnerable
customers, providing additional training and resources to our front
line teams to ensure they have the resources to identify and support
those in need in our community.
Throughout our 148 year history, the communities in which we operate
have been core to our business and we acknowledge the role and
opportunity we have to make a positive impact. Our ongoing partnership
with Orange Sky and the Clontarf and STARS Foundations enables us to
support their great work with some of the most vulnerable members of
our community. We also continued the long-standing support ME have
provided to the National Breast Cancer Foundation.
People
BOQ’s executive team boasts a high calibre and diverse set of
skills. During the year Racheal Kellaway was appointed to the
Chief Financial Officer role following three years as Deputy CFO for
the Group, Paul Newham was appointed to the Group Operations
Officer role after just over a year as the Chief Services Officer,
we welcomed David Watts as our new Chief Risk Officer and
Sally Cray as our new Chief of Public Affairs, Communications
and Investor Relations.
We are driving a customer-centric culture, tapping the collective
genius of our people to streamline processes and drive superior
customer outcomes. Furthermore, continuing to embed a strong
risk culture across the organisation means we encourage our
people to be accountable and to speak up if something isn’t right.
We strive to make BOQ Group a great place to work, with a focus
on flexible working practices and attracting and developing our
people into the leaders of tomorrow. During the year, we refreshed
our operating model as we brought the BOQ and ME businesses
together, which provided a number of our people with the
opportunity to take on expanded roles and progress their careers.
In addition, inclusivity is key to what we expect from our leaders,
ensuring our people can be themselves at work and harness diverse
thoughts and experiences to drive better business outcomes.
I am sincerely grateful for our people’s continued commitment to
our customers, to best practice, their resilience during a challenging
period and hard work over the year.
8
Bank of Queensland Limited and its controlled entities Progress against strategy
Outlook
This year we launched our new Group purpose, values
and strategic pillars which builds on the solid progress
we have made on our strategy since 2020. Our new
purpose ’Building Social Capital Through Banking’ is
underpinned by our values of spirited, optimistic, curious,
inclusive, accountable and lionhearted which set the
north star for our people and provides the platform
for ongoing transformation, continuing to delight our
customers and delivering sustainable profitable growth.
While uncertainty remains from elevated inflation,
rising interest rates, a weakening global economy
and geopolitical tensions, we believe Australia is well
positioned given low unemployment, high levels of
accumulated household savings, strong business order
books and robust growth in capex spending plans. We
remain sharply focussed on delivering our strategic
objectives, simplifying our business, strengthening risk
management, and building the digital bank of the future.
Our transformation is delivering strong outcomes and it
is wonderful to see the benefits of this investment. I am
confident the dedication of our people and leadership
team will continue to execute on our strategic priorities
and deliver sustainable profitable growth.
I would like to thank the Chairman and the Board for
their invaluable guidance, support, and contribution
throughout the year.
On behalf of our Executive Team, we extend our sincere
appreciation to our customers, our people and our
shareholders for their continued support.
George Frazis
Managing Director and CEO
Our refreshed strategy is built around 4 strategic pillars
– exceptional customer experience, cloud based digital
bank, sustainable profitable growth with improving
strength, risk and return and enriching people. These key
priorities set the direction for the next 5 years and will see
BOQ transform into a future fit, sustainable business.
We have made solid progress against our strategy during
the year. The digital transformation is moving at pace and
we launched the myBOQ app during the year on the new
digital bank platform. BOQ joins VMA in offering digital
transaction and savings account capabilities on the
platform and proves out the multi-brand capability.
Our recently announced five-year strategic partnership
with Microsoft makes us the first bank in Australia and New
Zealand to access Microsoft’s new customer experience
tools. This partnership will drive a key element of our digital
strategy, allowing us to simplify our infrastructure, build
new features for customers, automate more processes
and be able to deliver differentiated and personalised
experiences for our customers.
Our integration program is well progressed. We have
returned ME to growth, consolidated on to one ADI
licence, completed key integration streams and are
delivering synergies ahead of plan. Our productivity
program has also delivered material benefits during the
year, enabling us to accelerate our investment in the
digital transformation.
Regarding our sustainable profitable growth pillar, we
have developed plans, including our responsiveness to
the evolving risk landscape.
9
2022 Annual Report 2
0
2
2
R
E
P
O
R
T
.
I
D
R
E
C
T
O
R
S
’
About BOQ Group
BOQ Group is one of Australia’s leading regional banks,
having served customers for 148 years.
During BOQ Group's long history, it has evolved from a
Queensland-focussed, retail branch-based bank to a nationally
diversified financial services business with a focus on niche
commercial lending segments, highly specialised bankers and
branches run by small business owners who are deeply anchored
in their communities.
We provide a range of products and services to support the
financial needs of our customers and pride ourselves on building
long-term customer relationships that are digitally-enabled with a
personal touch.
Purpose and Values
In 2022, we reset our Group purpose:
‘Building social capital through banking’.
“These new values are
embedded in our purpose:
Building social capital
through banking.”
Our new values underpin this purpose, articulating the behaviours
we want to uphold every day to create value for our customers,
shareholders and people.
BUILDING
S CIAL CAPITAL
THROUGH BANKING
S O C
Spirited
Optimistic
Curious
Be outrageously
courageous
To infinity
and beyond
Be truly
madly deeply
interested
I
Inclusive
Tap the
collective
genius
A L
Accountable
Lionhearted
Be the rubber
that hits the
road
Be fiercely
caring
EXCEPTIONAL
CUSTOMER
EXPERIENCE
Through loved brands,
caring bankers, building
relationships and
enriching communities.
CLOUD-BASED,
DIGITAL BANK
With at scale unit costs,
impactful data
insights and fast
innovative solutions.
SUSTAINABLE
PROFITABLE
GROWTH
With improving strength,
risk and return.
ENRICHING
PEOPLE
By developing curious
bankers, building an agile
organisation and being a
good corporate citizen.
Group
Purpose
Group
Values
Strategic
Pillars
12
Bank of Queensland Limited and its Controlled Entities Spirited Be outrageously courageous
In banking, passion, courage, joy and spirit can be in short supply. Being different demands energy and courage.
The courage to take a different angle on the same problem. The courage to speak your mind and back it up with action.
The courage to speak up and support others when you see injustice. The courage to share both the good news and the
bad. The courage to commit and deliver great results for all our stakeholders. The courage to bring every atom of your
unique energy to work.
It's about a fundamental drive to shake up banking in this country, continuously improve and innovate our business,
build great relationships and support our customers’ success through unshakable courage, total vigour and game
changing energy.
Optimistic To infinity and beyond
We need everyone in our group to be an optimist because, when we work together to innovate and solve problems,
optimism creates opportunity. It's about assuming positive intent and about belief, hope, energy, honesty and
openness. It is not about being blindly positive.
It's about being ready to inspire, ready to help and ready to jump in with both feet. It's about being convinced that
as a powerful group that works together in the right spirit, we can build the brightest futures – for our customers,
shareholders, teams, owner managers and communities.
Curious Be truly, madly, deeply interested
This is about the power and value of curiosity. Curiosity is where change always begins, it's where we ask, "What if?"
and "Why not?". It’s where we listen, imagine, think and where we learn. It's the superpower that makes us bolder, more
innovative, unafraid to press against the norm and stretch the paradigm we operate in.
Equally as important is the ability and the desire to ask the right questions, interrogate unspoken needs and be
attuned to how we can be inspired to make the world better. For our teams, for our customers, our communities
and our shareholders.
Inclusive Tap the collective genius
Working together exponentially multiplies our potential. Our group will win by being united -deeply connected,
strengthened and inspired by each other, with an unshakeable fierce faith and pride in what we can achieve together.
Our group is home to a diversity and wealth of skills, experience, perspective and insight. If we harness that what we can
do together is infinite. ‘Inclusive’ means that our customers and communities are an integral part of our wider network,
and that supporting, amplifying and collaborating with them is as important as how we accept, respect, support, show
gratitude, amplify and collaborate with each other.
Accountable Be the rubber that hits the road
We get it. We’re in banking. We need to build trust by being honest, respectful and ethical every day. These are the non-
negotiables for running a business like ours.
And let’s lean in further. Our definition of accountable is that at a minimum, each of us holds ourselves to a standard of
impeccable citizenship and the pursuit of excellence.
It’s about embracing our opportunity to create value for our people, customers and shareholders. Beyond that is the
ability to really see what the right thing is to do, manage risk, speak up, own up, act with integrity and then be 100%
accountable for ensuring it actually gets done.
Lionhearted Be fiercely caring
Businesses are people. Products are for people. Markets are driven by people. Money is emotional. We think and care
with our heart and our head to help our customers, team members and BOQ flourish. Being fiercely caring is about
making decisions as a human, not just by a spreadsheet.
We care about equitable banking that creates real value for everyone. When we engage our lionheart, we have all the
necessary, and sometimes brave conversations, in the right way - because we care. Channelling empathy, curiosity, and
intelligent insights, to activate feelings is a vital skill in ‘Building Social Capital Through Banking’. When we do this, we
build life-long relationships and create value for all our stakeholders.
13
2022 Annual Report Our niche brand
segmentation strategy
Over time, BOQ Group has successfully acquired a portfolio of brands that form the basis of our multi-brand strategy. These different and
complementary business lines provide us with a competitive advantage due to our specialised knowledge in these niche segments.
Retail brands
BOQ - The Human Touch
VMA - The Optimiser
ME - The Striver
Younger, digitally savvy and aspirational
VMA is a digital-first retail financial services
company which provides a wide range
of financial products that are easy to
understand and is a compelling alternative
to the 'big banks'. BOQ Group acquired VMA
in 2013 and operates as a standalone brand
within the Group.
PAYG with more equity – digitally aware
and not requiring face to face support
ME is an online retail bank, which provides
a wide range of banking products to
customers through mobile bankers, direct
channels and brokers. ME was acquired by
BOQ Group in July 2021 and operates as a
distinct brand within the Group.
Digital home loans, deposit, credit cards,
insurance and superannuation.
Home loans, personal loans, deposits and
credit cards.
Mature customers who prefer personal
relationships, first time investors and first
home buyers
BOQ is the Retail banking arm of the BOQ
Group, which includes 154 branches across
Australia offering a range of banking
products. Our 111 Owner Managed
Branches (OMBs) are run by local
Owner Managers who understand the
importance of delivering quality customer
service and are deeply committed to the
communities in which they operate.
Retail and SME lending, deposits, credit
cards and insurance.
BOQ Business brands
BOQ Business
BOQ Finance
BOQ Specialist
BOQ Finance is a wholly-owned subsidiary
of BOQ specialising in asset finance and
leasing solutions. BOQ Finance is a mid-
market financier providing deep industry
and product skills to its partner base.
BOQ Finance has been operating in the
Australian and New Zealand markets for
more than 45 years.
Asset Finance, Cashflow
and Structured Finance solutions.
BOQ Specialist delivers
distinctive banking solutions to niche
market segments including medical, dental
and veterinary professionals. BOQ Group
acquired the business (previously Investec
Professional Finance) from Investec Bank
(Australia) Limited in 2014. BOQ Specialist
operates as a niche brand within BOQ’s
Business Bank.
Commercial lending, asset finance,
home loans and consumer banking.
Tailored
Specialist business and private banking
centred on niche customer segment.
A specific focus on the SME segment,
particularly growing medium
sized family business
BOQ Business is a relationship-led
business with specialist bankers providing
client solutions across small business,
agribusiness, corporate banking, property
finance, healthcare and retirement, and
tourism, leisure and hospitality. BOQ
Business also works closely with the
Owner-Manager network to support
commercial customers who value a more
intimate business banking relationship.
Commercial lending, deposits
and financial markets.
Group functions
BOQ Group's business lines are supported by a number of Group functions including Retail Banking, BOQ Business, People and Culture,
Finance, Operations, Risk, Public Affairs, Communication and Investor Relations, , Technology, Legal and Governance. These key functions
support our bank by managing our operations, property, strategy, finance, treasury, technology architecture, infrastructure and operations,
risk, compliance, legal, human resources and corporate affairs.
14
Bank of Queensland Limited and its Controlled Entities Australia wide
With customers and branches in every state and territory,
BOQ Group has a significant presence throughout Australia.
Customers (1)
1.3m
Branches
154
Accredited brokers
Customer deposits
Gross loan and advances
15.9k
$60.5bn
$81.3bn
(1) FY22 ME customer numbers adjusted to align to BOQ Group customer definition
15
2022 Annual Report How we create value
W
e
p
m
e
e
t
t
r
o
v
i
d
e
h
a
e
n
e
r
a
n
e
g
d
e
s
o
o
f
f
f
i
o
n
u
a
r
n
c
c
i
u
a
l
s
t
s
o
e
r
m
e
v
i
c
r
s
e
.
s
t
o
•
Q
u
a
l
i
t
y
c
u
s
t
o
m
e
r
C
U
S
T
O
M
E
R
r
e
l
a
t
i
o
n
s
h
i
p
s
•
E
C
U
S
c
a
r
i
n
g
a
n
b
a
d
T
h
r
n
o
E
X
T
O
M
C
E
e
k
u
E
n
e
r
r
g
R
P
i
s
h
T
c
,
l
E
I
h
i
b
o
n
u
g
i
l
v
e
X
O
P
N
d
d
c
i
b
E
A
o
n
R
L
g
m
r
a
I
r
n
E
m
e
l
u
a
d
N
s
,
C
o
E
t
i
n
i
t
i
e
n
s
s
.
h
i
p
s
T
E
D
C
A
T
H
c
a
p
f
f
i
c
i
e
n
a
b
t
A
N
ili
ti
e
a
n
s
d
O
C
A
L
O
P
A
G
Y
t
o
e
ff
e
d
e
liv
c
tiv
e
e
r
b
u
s
e
a
n
kin
g
s
N
D
S
A
of
BILITIE
digital
ervic
e
s
W
e
a
r
e
b
u
f
o
c
s
i
n
u
s
e
e
s
d
s
c
u
o
n
s
t
s
u
o
p
m
p
e
r
s
o
r
ti
n
i
n
g
o
u
in
divid
r
nic
h
e
u
als
s
e
g
a
n
d
m
e
fa
nts.
mily
Operating
Environment
c
r
e
d
e
n
v
i
i
r
t
S
l
o
w
o
g
i
n
r
n
m
o
g
w
e
t
n
h
t
C
h
c
a
u
n
s
t
g
in
n
o
e
m
g
e
d
s
e
r
B
BB
O
OO
Increased
regulatory
&compliance
requirements
C
L
O
Q’s
QQ’’ss SSttrraatteeggiicc
Strategic
UD-BASED,
DIGITALBANK
atscaleunitcosts,
pactfuldatainsightsand
fastinnovativesolutions.
With
im
BOQValue
BBOOQQ VVaalluuee
ENVIRONMENTAND
CLIMATECHANGE
•Impactonthenaturalenvironment
bothdirectlyandthroughtheuse
ofproducts
E
L
P
O
E
P
s
e
u
l
a
v
n
o
i
s
s
l
l
i
k
s
d
n
a
d
n
a
e
r
u
ult
c
al
n
atio
u
l
c
n
i
s
e
e
y
plo
d
n
a
m
E
•
y
sit
r
e
Div
•
a
p
a
C
•
s
bilitie
nis
a
Org
•
s
e
i
t
i
n
u
m
m
o
c
e
h
t
of
e.
t
a
g
ein
r
e
p
o
ellb
w
e
w
h
hic
e
th
to
w
in
ute
contrib
We
d
n
a
al
y
g
o
ol
s
t
n
e
m
Digit
n
h
c
e
c
n
te
a
v
d
a
and
M acro-
e c o n o mic
m o graphic
trends
d e
E n v i r o n m e
i m a t
& c l
t
n
e
ss
s
ll aa rr
l a r
PP ii ll
P i l
S U S T A I N A B
E
G R
P R O F I T A B L
W i
t h i m p r
i s k
r
g
r
o
v i n
d
n
a
H
E
O W T
g t h ,
n
n .
t r
u
t
L
s
e
e
r
ss
s
II nn pp uu tt
I n p u t
DDrrii vv ee rr
Dri v e r
F I N A N C E
s
r
o
t
s
e
i n v
a v a i l a b l e
• S h a r e h o l d e r s / d e b t
f u n d s
• P o o l o f
g
n
i
e
b
,
s
r
e
k
n
a
b
d
n
a
n.
e
n
tio
a
citiz
nis
a
orate
orp
c
N
E
G
HIN
E
L
P
O
RIC
s
u
urio
E
P
c
g
pin
org
d
o
agile
go
a
develo
an
By
building
M U NITY
m unities
M
O
C
elatio n s hip s withlocalco m
w n er m anagerbranches
• O
R
•
w ith
o r k f o r c e
w
y .
g
e
s i v
c l u
s t r a t e
d i n
r
u
o
n
e
a
t
u
e
c
s
e
r
e
x
e
d i v
o
t
a
s
Further information
on our strategic
priorities is contained
on page 18 - 19
W
OurBusiness
OOuurr BBuussiinneessss
eaimtoprovideexceptionalcustomerexperiences
andbelieveinfairoutcomesforcustomers.
AAccttiivvii tt ii ee ss
Activi t i e s
b u i l d
t o
i n o u r p e o p l e
k e y c o m p e t e n c i e
W e i n v e s t
Retail and SME lending,
deposits, credit cards
and insurance
Home loans, deposits,
credit cards, insurance,
and superannuation
Home loans, personal
loans, deposits and
credit cards
BOQ Value
CUSTOMER
TECHNOLOGY AND
DATA CAPABILITIES
ENVIRONMENT AND
CLIMATE CHANGE
• Build trusted customer relationships
•
with a personalised touch
• Achieve fair customer outcomes
• Support individuals and businesses
to achieve their financial goals
View our Sustainbility Report
at boq.com.au/2022
16
Improve customer experience
through flexible and resilient
digital infrastructure
• Data insights driving customer
relationships and experience
Increase business efficiencies
•
• Data security, governance and privacy
View our Sustainbility Report
at boq.com.au/2022
• Accountability of BOQ Group’s
impact on the environment
• Attract customers, employees and
shareholders whose values and
banking choices are aligned to BOQ
Group’s environmental goals
• Contribute to Australia’s transition to
a lower carbon economy
Pages 58 - 65
Bank of Queensland Limited and its Controlled Entities At the core of how we create long term value for our stakeholders is our purpose led culture and the execution of our strategy. This
is underpinned by our value drivers and the associated business activities which we undertake with the aim of delivering a set of key
outcomes for our stakeholders.
At the core of how we create long-term value for our stakeholders is our purpose-led culture and the execution of our
strategy. This is underpinned by our value drivers and the associated business activities, which we undertake with the
aim of delivering a set of key outcomes for our stakeholders.
•
Q
u
a
l
i
t
y
c
u
s
t
o
m
e
r
C
U
S
T
O
M
E
R
r
e
l
a
t
i
o
n
s
h
i
p
s
C
U
S
c
a
r
i
n
g
a
n
d
b
a
T
h
r
n
o
T
E
O
X
M
C
E
e
k
u
E
n
e
g
R
r
r
i
s
h
P
T
c
,
l
E
I
h
i
b
o
v
X
O
n
u
g
i
l
c
i
e
P
N
d
d
E
A
o
n
R
L
b
r
a
g
m
I
r
n
E
d
N
m
e
l
u
a
s
,
t
i
o
n
i
t
i
e
n
s
s
.
h
i
p
s
C
E
W
e
m
e
e
t
p
r
o
v
i
d
e
t
h
a
e
n
e
r
a
n
e
g
d
e
s
o
o
f
f
f
i
o
n
u
a
r
n
c
c
i
u
a
l
s
t
s
o
e
m
e
r
v
i
c
r
s
e
.
s
t
o
•
c
a
E
f
f
i
p
a
c
i
e
T
D
E
C
A
H
b
n
T
t
A
N
ili
ti
e
a
n
s
d
O
C
A
L
O
P
A
G
Y
t
o
e
ff
e
d
e
liv
c
tiv
e
r
e
u
s
e
b
a
n
A
BILITIE
N
D
S
of
kin
g
s
digital
ervic
e
s
W
e
a
r
e
b
u
f
o
s
i
c
u
n
s
e
e
s
d
s
o
n
c
u
s
t
s
u
o
p
m
p
o
e
r
s
r
ti
n
i
n
g
in
o
u
r
divid
nic
h
e
u
als
s
e
g
a
n
d
m
e
fa
nts.
mily
BB
B
OO
O
Q’s
QQ’’ss SSttrraatteeggiicc
Strategic
C
L
O
im
With
UD-BASED,
DIGITALBANK
atscaleunitcosts,
pactfuldatainsightsand
fastinnovativesolutions.
ENVIRONMENTAND
CLIMATECHANGE
•Impactonthenaturalenvironment
bothdirectlyandthroughtheuse
ofproducts
c
r
e
e
n
v
d
i
i
r
t
S
l
o
w
i
o
g
n
r
n
m
o
g
e
w
t
n
h
t
C
h
c
a
u
n
s
t
g
in
n
o
e
m
g
e
d
s
e
r
Operating
Environment
d
n
a
al
s
y
t
g
n
o
e
m
ol
Digit
n
e
h
c
c
n
te
a
v
d
a
and
M acro-
m o graphic
e c o n o mic
trends
d e
Increased
regulatory
&compliance
requirements
E n v i r o n m e
i m a t
& c l
t
n
e
P i l
PP ii ll
s
ss
l a r
ll aa rr
L
S U S T A I N A B
G R
P R O F I T A B L
g
t h i m p r
i s k
r
E
v i n
d
n
W i
o
a
e
r
s
H
E
O W T
g t h ,
n
n .
e
r
t r
u
t
BBOOQQ VVaalluuee
BOQValue
DDrrii vv ee rr
Dri v e r
s
ss
I n p u t
II nn pp uu tt
F I N A N C E
• S h a r e h o l d e r s / d e b t
f u n d s
• P o o l o f
t
s
e
i n v
a v a i l a b l e
n.
e
G
HIN
E
L
P
RIC
O
E
N
P
E
,
s
r
e
k
n
a
b
s
u
g
n
i
e
b
d
n
a
n
citiz
tio
urio
a
nis
orate
c
a
org
g
pin
orp
agile
develo
c
d
o
an
go
building
a
By
E
L
P
O
E
P
M
O
m unities
M U NITY
elatio n s hip s withlocalco m
w n er m anagerbranches
C
• O
R
•
s
r
o
s
e
e
y
n
o
i
s
u
l
c
n
i
d
n
a
y
sit
r
e
Div
s
l
l
i
k
s
d
n
a
s
s
e
u
l
a
v
d
n
a
e
r
u
ult
bilitie
c
al
n
atio
nis
a
Org
a
p
a
C
•
•
plo
m
E
•
•
s
e
i
t
i
n
u
m
m
o
c
e
h
t
e.
of
t
a
g
r
ein
e
p
o
ellb
e
w
w
h
e
hic
th
w
to
in
ute
contrib
We
W
OOuurr BBuussiinneessss
OurBusiness
eaimtoprovideexceptionalcustomerexperiences
andbelieveinfairoutcomesforcustomers.
Activi t i e s
AAccttiivvii tt ii ee ss
W e i n v e s t
i n o u r p e o p l e
b u i l d
k e y c o m p e t e n c i e
t o
w ith
o r k f o r c e
w
y .
g
e
s i v
c l u
s t r a t e
d i n
u
o
r
n
e
a
t
u
e
c
s
e
r
e
x
d i v
o
e
t
a
s
This report includes details on how we are
managing the key risks associated with our
value drivers on pages 54 - 55 to achieve
strong financial returns. Further information
on the management of non-financial risks
is contained within the FY22 Sustainability
Report and Corporate Governance Statement.
Commercial lending,
deposits, financial
markets, insurance
Commercial lending,
asset finance, home loans
and consumer banking.
Commercial
lending, deposits
and financial
markets.
Driver Outcomes
FINANCE
COMMUNITY
PEOPLE
• Returns to shareholders and capital
• Experienced bankers anchored in
• A resilient, adaptable, empowered,
reinvested for future growth
• Trusted to deliver sustainable returns
•
Increased quality market share
in niche segments
• Strengthen financial and
operational resilience
Financial Performance pages 20 - 57
•
•
the community
Increase access to financial services
and ongoing support
Improve financial literacy and
wellbeing of the community
View our Sustainbility Report
at boq.com.au/2022
diverse and inclusive workforce with a
strong sense of purpose and ethics
Increase skills and capabilities
of our people
•
• BOQ Group is seen as an
employer of choice
View our Sustainbility Report
at boq.com.au/2022
17
2022 Annual Report Our strategic priorities and value drivers
Developing and executing against our strategy
BOQ Group has the strength of a 148-year financial institution with strong relationships in the communities we serve through our
experienced bankers and branch network. In February 2020, BOQ Group laid out a refreshed strategy providing clear direction to continue
to deliver exceptional customer experiences through our multi-brand strategy and outlining a roadmap to address some of the structural
challenges BOQ Group faced against our peers.
Pleasingly, we have made significant inroads delivering on our strategy by executing on our digital transformation, building scale and
diversifying our business with the acquisition of ME in 2021. Importantly, our strategy has steered us through recent unprecedented times
with our people continuing to build a digital end-to-end bank for the future. As a result of our strong progress and the acquisition of ME,
we have taken the opportunity to review and evolve our strategy with the aim of further strengthening BOQ Group’s competitive advantage.
We have refined our strategic priorities and are focused on sustainable outcomes for our customers, people and shareholders.
We have made good progress across our priorities during FY22.
Strategic priority
Progress through FY22
Value
driver
Exceptional customer experience
At BOQ Group, our customers are at the heart of our decision making.
With us delivering on exceptional customer experiences, they will
benefit from:
• Lifelong relationships, centred on improving
their financial position;
• Digital offering with fast decisions, easy everyday banking with
the customer choosing how they want to interact; and
Innovative and personalised solutions.
•
• Launched myBOQ app with over 1 million transactions and 1.5 million app
logins since its launch in March this year, bringing younger customers to
the bank.
• BOQ Retail ranked 3rd on main financial institution (MFI) Net Promoter
Score (NPS).
• Returned ME to growth.
• Launched new general insurance offering.
Cloud-based, digital bank
We are leaving legacy technology behind committing to a cloud-
based, digital bank that is sustainable and provides BOQ Group with
the agility to innovate without needing to heavily invest. To achieve
this, we are building on the open Application Programming Interface
(API) architect foundations and a proven multi-brand digital stack
connected to a common platform that will power our business bank.
We have carefully selected global-recognised partners to manage
the execution risk and ensure we are not just solving for today.
• 43/64 of customer facing processes digitised for transaction and
savings accounts.(1)
• Quicker time to yes, with <1 day to conditional
approval for BOQ and ME brands.
• New streamlined process for SME lending, saving bankers
450 hours per month.
• Formed a strategic Microsoft partnership and strengthened our
relationship with Temenos.
Sustainable profitable growth
We remain committed to maximising the return
on our portfolio, deliberately growing in the segments that are
important to us, delivering sustainable returns for our shareholders.
Critical to remaining profitable is leveraging technology to drive
down costs and embed risk by design to protect our customers.
• New digital app for BOQ driving growth in transaction and savings
accounts.
• ME integration well progressed with higher synergies.
• Divestment of St Andrew’s.
• Strengthening financial resilience and uplifting risk controls.
Enriching people
Our people are our point of connection with our customers. We are
resolute in developing curious bankers that are driven to push the
boundaries of innovation and take ownership of customer outcomes.
Part of our journey is to support our people in preparing their banking
careers of the future.
• 67% employee engagement (increase from 59%).(2)
• Delivered training programs for business
bankers and leaders.
• Achieved carbon neutral accreditation.
• 54% of electricity needs powered by renewable energy.
• Uplift in risk culture.
(1) Remaining processes relate to cash and cheque transactions where manual processing is required to support customers.
(2) Engagement score was 59% as at August 2020 and 67% as at September 2022.
18
Bank of Queensland Limited and its Controlled Entities Alignment of our value drivers and strategic priorities
Customer
Community
People
Customers and quality relationships sit at
the heart of BOQ Group. We create value
by providing a range of financial services to
meet the needs of our customers. We aim to
provide exceptional customer experiences
and believe in fair outcomes. We aim to
support individuals and businesses to
achieve their financial goals.
• Best-in-class customer experience
through a leading digital offering
enabled by self-service and
seamless banking
BOQ Group recognises the importance of
contributing to the wellbeing of the wider
community. Led by the Owner-Managers,
who are experienced bankers anchored in
their local community, BOQ has established
deep relationships with the communities
in which it operates. We aim to ensure
ongoing access to financial services and
support and improve the financial literacy
and wellbeing of the community.
• Enhancing community partnerships
supporting vulnerable Australians
Our employees are key to the success of our
business. We value diversity and inclusion
and rely on their capabilities and skills to
deliver value for stakeholders. Grounded in
our organisational culture and values, we
seek to build a resilient, adaptable, diverse
and empowered workforce with a strong
sense of purpose and ethics so that BOQ
Group is viewed as an employer of choice.
• Capable bankers focused on customers
and embracing the new digital age
• Building social capital through capable
• Distinctive multi-brand strategy growing
• Leveraging our differentiated
leaders and an execution mindset
above system for the Retail Bank
• Superior SME offering powered by
specialist bankers, supported by
the Business Credit team, a highly
experienced cohort with long tenure in
industry, holding a significant level of
technical skill and commercial acumen.
Owner-Manager model to support
communities
• Fostering an inclusive and
diverse workplace
• Building social capital through banking
focusing on our customers
and communities
Environment and
climate change
Finance
Climate change is a risk to BOQ Group and
the Australian economy, society and the
environment. Banks play a central role in
supporting customers through the
transition to a lower carbon economy.
Taking accountability of BOQ Group’s
impact on the environment will attract
customers, employees and shareholders
whose values are aligned to the Group's
environmental goals. Further details on our
response to climate change can be found
on pages 58-65.
• Reduce BOQ Group's carbon footprint
with a goal of 100 per cent renewable
energy by FY25
• Support customers to transition to
a lower carbon economy
• Cease funding equipment directly
involved in the extraction of fossil
fuels by 2024
BOQ Group’s equity and debt investors
provide us with an important source of
funds, which are utilised through our
business activities with the aim of creating
value for our stakeholders. Investors expect
generated capital to be reinvested to fund
future growth and are seeking sustainable
returns on their investment. Further details
on BOQ Group’s financial performance can
be found on pages 20-52.
• Maintain group deposit-to-loan ratio
of >70 per cent
•
Improving cost-to-income ratio
• Ongoing Risk-Weighted Assets
(RWA) optimisation
Improving organic capital generation
•
• Disciplined risk management
• Maintaining strong financial resilience
Technology and
data capabilities
Continued investment in technology and
data capabilities is essential to delivering
an enhanced customer experience,
providing tailored products and service
for customers and simplifying how we do
business. Stakeholder expectations are
changing rapidly and the ability to harness
insights to tailor our offering will create
significant value for stakeholders, while
ensuring strong controls of data security,
governance and privacy are in place.
• Deliver the digital retail banking
platform for all brands
• Consolidate the business bank
to one core
• Transition customers from old to new
cloud-based core services platform and
decommission legacy
• Build an intelligent data platform
19
2022 Annual Report
Pro forma results for the 31 August 2022 and 28 February 2022
financial periods are not required because ME has been included
for the entire period whilst the profit from St Andrew’s prior to its
disposal, including the loss on sale, has been excluded from
cash earnings.
Pro forma results have not been subject to an independent audit or
review. They are provided to facilitate comparison of 31 August 2022
with prior periods. The pro forma result should be read in
conjunction with the reported results and historical financial
statements of BOQ and ME.
In the financial tables throughout the financial performance report,
‘large’ indicates that the absolute percentage change in the balance
was greater than 200 per cent or 500 basis points. ‘Large’ also
indicates the result was a gain or positive in one period and a loss
or negative in another.
Note on statutory profit and cash earnings
Statutory profit is prepared in accordance with the Corporations
Act 2001 and the Australian Accounting Standards, which comply
with International Financial Reporting Standards (IFRS). Figures
disclosed in the Financial performance report are on a cash
earnings basis unless stated as being on a statutory profit basis.
Cash earnings exclusions relate to:
•
Integration costs – costs associated with the restructure and
integration of ME;
• St Andrew’s – this represents the loss on sale and the net
earnings of St Andrew’s between 1 September 2019 and the
date of completion of the sale on 28 October 2021;
• Amortisation of acquisition fair value adjustments – this arises
from the acquisition of subsidiaries including ME; and
• Hedge ineffectiveness – this represents earnings volatility from
hedges that are not fully effective and create a timing difference
in reported profit. These hedges remain economically effective.
1.
1.1
Financial highlights
Reconciliation of statutory profit to cash earnings
Reported and pro forma comparatives
Bank of Queensland Limited and its controlled entities (BOQ or
the BOQ Group) acquired 100 per cent of Members Equity Bank
Limited (ME) on 1 July 2021. On 28 October 2021, the sale of St
Andrew’s Insurance (St Andrew’s) to Farmcove Investment Holdings
was completed.
Consistent with the results presented for 28 February 2022 and to
enhance the understanding and facilitate meaningful comparison
with the prior year, pro forma financial information for the year
ended 31 August 2021 has been prepared. This assumes that the
BOQ Group structure including ME and excluding St Andrew’s was
in effect for the full comparative periods from 1 September 2019
to 31 August 2021. As required for statutory reporting purposes,
the statutory financial information for the BOQ Group includes the
results of the current Group's assets from the date of acquisition of
ME and hence the statutory financial information for the year ended
31 August 2021 does not reflect the performance of the BOQ Group
as it is currently structured.
The following terms have been used to describe the result
throughout the financial performance section of the report:
•
•
•
•
“Reported results” refers to information prepared on the same
basis as the statutory consolidated financial statements of Bank
of Queensland Limited for the year ended 31 August 2021 and
31 August 2022. These incorporate the results of ME from 1 July
2021 for the year ended 31 August 2021 and includes the results
of St Andrew’s up to 28 October 2021 across both periods;
“Cash earnings” is a non-accounting standards measure
commonly used in the banking industry to assist in
presenting a clear view of the BOQ Group’s underlying
earnings. Cash earnings excludes a number of items that
introduce volatility or one-off distortions of the current
period performance and allows for a more effective
comparison of performance across reporting periods;
“Pro forma results” have been derived from the statutory
information of the BOQ Group. Material adjustments have been
made to include the results of ME assuming that the acquisition
was completed on 1 September 2019 and to exclude the results
of St Andrew’s, including the loss on sale, from the entire period
under review. Pro forma income statements are presented on
a cash earnings basis. Material one-off fair value adjustments
associated with the acquisition of ME have also been excluded
from the pro forma results; and
"Underlying profit" refers to profit before loan impairment
expense and tax.
20
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 1.1
Reconciliation of statutory profit to cash earnings (continued)
Reconciliation of statutory net profit to cash earnings after tax for FY22 ($ million)
426
57
24
(7)
8
508
Statutory net
profit after tax
Integration costs
St Andrew’s
Amortisation of
acquisition fair
value adjustments
Hedge
ineffectiveness
Cash earnings
after tax
a) Reconciliation of pro forma net profit after tax to reported statutory net profit after tax
($ million)
Cash earnings after tax
Integration costs
St Andrew's
Amortisation of acquisition fair value adjustments
Hedge ineffectiveness
Intangible asset review
Transaction costs
Employee pay and entitlements review
Statutory net profit after tax (Aug-21 pro forma)
Less: Pro forma ME cash earnings after tax (1)
Add: Pro forma statutory adjustments (2)
Reported statutory net profit after tax (3)
Year end performance
Half year performance
Pro
forma
Aug-21
Aug-22
vs Aug-21
Aug-22
Aug-22
Feb-22
Aug-22
vs Feb-22
508
(57)
(24)
7
(8)
-
-
-
426
-
-
426
532
(9)
-
(3)
(6)
(3)
(42)
(6)
463
(120)
26
369
(5%)
Large
100%
Large
33%
(100%)
(100%)
(100%)
(8%)
(100%)
(100%)
15%
240
(32)
2
11
(7)
-
-
-
214
-
-
214
268
(25)
(26)
(4)
(1)
-
-
-
212
-
-
212
(10%)
28%
Large
Large
Large
-
-
-
1%
-
-
1%
(1) Pro forma ME cash earnings after tax comprises earnings for the 10 months ended 30 June 2021 in FY21.
(2) Pro forma statutory adjustments comprises ME adjustments for the 10 months ended 30 June 2021 in FY21.
(3) Reported statutory net profit after tax is not presented on a pro forma basis and agrees to the audited, or auditor reviewed, consolidated income statement within the
financial statements.
b) FY22 non-cash earnings reconciling items
($ million)
Net interest income
Non-interest income
Total income
Operating expenses
Underlying profit
Loan impairment income
Profit before tax
Income tax expense
Profit after tax
Cash
earnings
Aug-22
Integration
costs
St Andrew's
Amortisation
of acquisition
fair value
adjustments
Hedge
ineffectiveness
Statutory net
profit Aug-22
1,529
153
1,682
(937)
745
(13)
732
(224)
508
-
-
-
(81)
(81)
-
(81)
24
(57)
-
1
1
(26)
(25)
-
(25)
1
(24)
11
(1)
10
(14)
(4)
14
10
(3)
7
-
(11)
(11)
-
(11)
-
(11)
3
(8)
1,540
142
1,682
(1,058)
624
1
625
(199)
426
21
Financial performance For the year ended 31 August 20222022 Annual Report 1.2
Financial summary
Cash earnings after tax ($ million) (1)
Reported statutory net profit after tax ($ million)
Down 19%
Flat
236
296
268
240
215
212
214
154
107
2H20P
1H21P
2H21P
1H22
2H22
22
2H20
1H21
2H21
1H22
2H22
Common Equity Tier 1 (CET1) (%)
Dividends per ordinary share (cents) (2)
Down 23bps
Up 9%
9.78
10.03
9.80
9.68
9.57
Deferred
6
6
17
22
22
24
2H20
1H21
2H21
1H22
2H22
2H20
1H21
2H21
1H22
2H22
Cash basic Earnings per Share (EPS) (cents)
Cash Net Interest Margin (NIM) (%) (1)
Down 5%
Down 11bps
35.5
38.8
41.1
36.8
1.81
1.86
1.86
1.74
1.75
15.8
2H20
1H21
2H21
1H22
2H22
2H20P
1H21P
2H21P
1H22
2H22
Cash Cost to Income (CTI) ratio (%) (1)
Cash Return on average Equity (ROE) (%)
Up 10bps
Down 100bps
56.4
55.7
55.8
55.5
55.9
7.8
8.8
9.1
7.8
3.4
2H20P
1H21P
2H21P
1H22
2H22
2H20
1H21
2H21
1H22
2H22
(1) When the period in the respective graphs ends in “P” it reflects a pro forma metric.
(2) Based on the Australian Prudential Regulation Authority guidance issued on 7 April 2020, BOQ determined to defer the decision on payment of an interim dividend. Refer to BOQ ASX
Release “BOQ FY20 Interim Dividend Deferral”, 8 April 2020.
22
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Cash net interest margin (1)
Cash operating expenses (1)
1.2
Financial summary (continued)
Net profit after tax (1)
$508m
Cash NPAT
Down 5% on FY21
$426m
Reported statutory NPAT
Up 15% on FY21
Cash Net Profit after Tax (NPAT) decrease of five
per cent on FY21, driven by the release of COVID-19
collective provisions in FY21.
1.74%
Decrease of 12 basis points on
FY21, driven by lower lending
margins and higher liquid assets.
2H22 NIM up one basis point due
to lower funding costs.
Loan impairment expense (1)
CET1
$13m
Reflects an overall increase of $42 million on FY21 and the
normalisation of collective provision following a $69 million
credit to the collective provision in FY21. FY22 also includes
the establishment of collective provisions for ME loans that
were recognised at fair value on acquisition.
9.57%
Decrease of 23 basis points
on FY21, driven by growth in
lending, investment and volatility in
reserves, partly offset by
cash earnings.
$937m
Flat on FY21, reflecting
savings from productivity
and synergies, offset by
increased investment in
technology transformation
and business growth.
Cash ROE
8.4%
Increase of 20 basis points on
FY21, driven by higher earnings.
BOQ’s cash earnings after tax for FY22 of $508 million was five
per cent lower than the pro forma FY21 result. The decrease
was primarily driven by the non-recurrence of a credit in loan
impairments in 2H22. Underlying profit grew one per cent on
pro forma FY21, driven by one per cent income growth and flat
expenses. The reported statutory net profit after tax was $426
million, a 15 per cent increase on FY21 reflecting the full year
ME result in FY22.
Operating expenses
Total operating expenses of $937 million were flat on pro forma
FY21. This reflected ongoing productivity initiatives and synergy
savings driven by operating model changes as part of the ME
acquisition, which led to a lower number of employees (FTE).
These were offset by higher expenses to support the technology
transformation and volume growth. This resulted in positive Jaws
and a CTI ratio of 55.7 per cent.
Net interest income
Loan impairment expense
Net interest income of $1,529 million decreased $10 million or one
per cent on pro forma FY21. This was driven by a 12 basis points
decrease in NIM to 1.74 per cent, partly offset by a six per cent
growth in average interest earnings assets.
Gross loans and advances grew seven percent in FY22, driven by
a seven percent increase in the housing portfolio and an 11 per
cent growth in the commercial lending portfolio. The ME housing
portfolio returned to growth by delivering an uplift of $1.1 billion
compared to a $1.4 billion contraction in FY21.
NIM of 1.74 per cent decreased by 12 basis points on pro forma
FY21. This was driven by the ongoing impact of competition for new
housing loans, customers switching from variable to lower margin
fixed rate loans, swap rates increasing faster than customer rates on
fixed lending and an increase in liquid assets.
NIM recovered by one basis point in the 2H22 to 1.75 per cent driven by
the benefits of a rising cash rate environment and deposit repricing.
Non-interest income
Non-interest income of $153 million increased by $19 million or
14 per cent on pro forma FY21. This was primarily driven by a
number of one-off revenue items including incentive income
realised through an updated card services arrangement, a
termination fee relating to a third party insurance provider and
realised gains on sale of investment securities.
(1) Metrics are compared to pro forma FY21.
The $13 million loan impairment expense for FY22 compares
to a credit of $29 million in FY21, which included a $69 million
reduction in the collective provision. The overall collective provision
expense for FY22 was $13 million driven by the establishment and
subsequent seasoning of collective provisions for ME loans that
were recognised at fair value on acquisition.
There was nil specific provision expense in FY22 primarily driven
by write backs as a result of strong property prices and improved
economic conditions across most industries, offset by an increase in
niche segments within the Asset Finance portfolio.
Capital management
The CET1 ratio of 9.57 per cent was 23 basis points lower than FY21.
This was primarily driven by cash earnings net of dividend, growth
in housing and commercial lending and the resulting growth in
risk weighted assets and loan origination costs. Widening credit
spreads on bonds held in the liquidity portfolio negatively impacted
the available for sale reserve. Additionally, the business continues to
invest in the digital transformation and the integration of ME. At 9.57
per cent, the CET1 ratio is above the upper end of the management
target range of 9.0 per cent to 9.5 per cent.
Shareholder returns
BOQ has determined to pay an ordinary dividend of 24 cents per
share, which is 64.7 per cent of 2H22 cash earnings. The Board has
committed to a target dividend payout ratio of 60-75 per cent.
23
Financial performance For the year ended 31 August 20222022 Annual Report 1.2
Financial summary (continued)
ME update
Purchase Price Allocation (PPA) update
Integration expenses and synergies
Integration expenditure is expected to range between $130 million
and $140 million (pre-tax) over the life of the program, with the
majority to be incurred in the first two years. Due to the size and
non-recurring nature of these costs, they are being treated as a
statutory adjustment and not included in cash earnings.
Total integration costs of $81 million in FY22, primarily related to
operating model consolidation, technology integration, the risk and
remediation program and program costs.
The accelerated completion of key integration initiatives has
resulted in pre-tax cost synergies exceeding FY22 targets.
In addition to cost synergies, revenue benefits, funding savings and
investment capex synergies have also been delivered.
Cost synergies of $38 million have been delivered in FY22 through
the successful implementation of aligned operating models,
integrating shared service functions and associated technology,
decommissioning systems, consolidating treasury, balance
sheet and payments processes and consolidating supply chains.
Furthermore, the associated run rate benefit of the FY22 synergies
delivered is $47 million, which is favourable to the expected run rate
target of $38-42 million for FY22. This ensures that there is positive
momentum to continue realising the remainder of the integration
synergies into FY23. Additional upside is expected in FY24 and
beyond following the completion of key technology and banking
transformation initiatives.
ME’s net assets recognised in the 2021 Annual Report were based
on a provisional assessment of their fair value, while the BOQ Group
continued to finalise various matters impacting the acquisition
accounting entries. All matters have been finalised in the current
period and resulted in adjustments detailed in Note 5.5 to the
financial statements.
Integration progress
The integration of ME has successfully completed the first full
year with delivery focused on quick win synergies, streamlining
governance, aligning and simplifying corporate functions,
standardising corporate applications, delivering supply chain
synergies and aligning policies. A disciplined approach to
integration execution resulted in a detailed implementation plan
with regular milestones and frequent reporting to the Board,
Leadership Team and external regulatory stakeholders. The next
phase of integration will focus on the transformational areas of
incorporating ME into the cloud computing strategy and into the
BOQ Group’s broader digital bank transformation.
In FY22, the ME integration completed the following
significant milestones:
• Returned ME lending portfolio to growth;
• Completed the handback of the ME Authorised Deposit-
taking Institution (ADI) licence on 28 February 2022 after
the consolidation of ME and BOQ onto a single ADI, a key
foundational activity for a number of synergies;
• Consolidated treasury desks, treasury and market risk systems,
enabling a single view of the combined balance sheet;
• Consolidated ME and BOQ payments clearing processes for
•
regulatory reporting;
Integrated Group Risk and Compliance risk management
application across all lines of risk;
• Rolled out a new operating model and organisation structure
across all functions;
• Partially consolidated property and IT networks nationally; and
• Combined key strategic vendor supply chain agreements.
24
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 2. Group performance analysis
2.1
Pro forma income statement and key metrics (1)
($ million)
Net interest income
Non-interest income
Total income
Operating expenses
Underlying profit
Loan impairment expense
Profit before tax
Income tax expense
Cash earnings after tax
Statutory net profit after tax (Aug-21 pro forma)
Reported statutory net profit after tax
Year end performance
Half year performance
Aug-22
Pro forma
Aug-21
Aug-22
vs Aug-21
Aug-22
Feb-22
Aug-22
vs Feb-22
1,529
153
1,682
(937)
745
(13)
732
1,539
134
1,673
(933)
740
29
769
(224)
(237)
508
426
426
532
463
369
(1%)
14%
1%
-
1%
Large
(5%)
(5%)
(5%)
(8%)
15%
788
63
851
741
90
831
(476)
(461)
375
(28)
347
(107)
240
214
214
370
15
385
(117)
268
212
212
6%
(30%)
2%
3%
1%
Large
(10%)
(9%)
(10%)
1%
1%
(1) Refer to Section 1.1 Reconciliation of statutory net profit to cash earnings after tax for a reconciliation of cash earnings to statutory net profit after tax.
Key metrics
Shareholder returns
Share price
Market capitalisation
Dividends per ordinary share (fully franked)
Cash earnings basis
Basic Earnings per Share (EPS) (1)
Diluted EPS (1)
Dividend payout ratio
Reported statutory basis
Basic EPS (1)
Diluted EPS (1)
Dividend payout ratio
Year end performance
Half year performance
Aug-22
Aug-21
Aug-22
vs Aug-21
Aug-22
Feb-22
Aug-22
vs Feb-22
($)
($ million)
(cents)
(cents)
(cents)
(%)
(cents)
(cents)
(%)
7.03
4,551
46
78.4
71.2
58.4
65.7
60.1
69.6
9.46
6,063
39
(26%)
(25%)
18%
74.7
69.5
60.6
67.0
62.6
67.7
5%
2%
(220bps)
(2%)
(4%)
190bps
7.03
4,551
24
36.8
33.6
64.7
32.9
30.1
72.6
8.00
5,141
22
41.1
37.7
52.7
32.3
29.9
66.6
(12%)
(11%)
9%
(10%)
(11%)
Large
2%
1%
Large
(1) The sum of 1H22 and 2H22 EPS does not equal FY22 due to the uneven distribution of cash earnings after tax across the two halves of the year.
25
Financial performance For the year ended 31 August 20222022 Annual Report 2.1
Pro forma income statement and key metrics (continued)
Year end performance
Half year performance
Aug-22 Aug-21 (1)(2)(3)
Aug-22
vs Aug-21
Aug-22
Feb-22
Aug-22
vs Feb-22
Key metrics
Profitability and efficiency measures
Cash earnings basis
Net profit after tax
Underlying profit (4)
Net Interest Margin (NIM) (5)
Cost to Income (CTI) ratio
Loan impairment expense to Gross Loans
and Advances (GLA)
Return on average Equity (ROE)
Return on average Tangible Equity (ROTE) (6)
Reported statutory basis (7)
Net profit after tax
Underlying profit (4)
NIM (5)
CTI ratio
Loan impairment expense to GLA
ROE
ROTE (6)
Asset quality
30 days past due (dpd) arrears
90dpd arrears
Impaired assets
Specific provisions to impaired assets
Total provision and Equity Reserve for
Credit Losses (ERCL) coverage / GLA
Capital
Common equity tier 1 ratio
Total capital adequacy ratio
($ million)
($ million)
(%)
(%)
(bps)
(%)
(%)
($ million)
($ million)
(%)
(%)
(bps)
(%)
(%)
($ million)
($ million)
($ million)
(%)
(bps)
508
745
1.74
55.7
2
8.4
10.6
426
624
1.76
62.9
-
7.1
9.0
827
444
153
51
47
532
740
1.86
55.8
(4)
8.2
10.2
369
517
1.92
58.7
(3)
7.4
9.2
941
593
243
47
(5%)
1%
(12bps)
(10bps)
Large
20bps
40bps
15%
21%
(16bps)
420bps
3bps
(30bps)
(20bps)
(12%)
(25%)
(37%)
400bps
63
(16bps)
240
375
1.75
55.9
7
7.8
9.8
214
323
1.77
62.0
3
7.0
8.8
827
444
153
51
47
268
370
1.74
55.5
(4)
9.1
11.5
212
301
1.74
(10%)
1%
1bp
40bps
Large
(130bps)
(170bps)
1%
7%
3bps
63.9
(190bps)
(4)
7.2
9.1
885
476
194
46
48
Large
(20bps)
(30bps)
(7%)
(7%)
(21%)
500bps
(1bp)
(11bps)
(13bps)
1%
Risk Weighted Assets (RWA)
($ million)
45,669
44,229
3%
45,669
45,162
(%)
(%)
9.57
13.78
9.80
12.60
(23bps)
118bps
9.57
13.78
9.68
13.91
(1) Cash earnings basis are on a pro forma basis except for the return on average equity and return on average tangible equity metrics, which are as previously reported.
(2) Asset quality metrics have been presented on a pro forma basis. Excludes the impact of the fair value adjustments on acquisition of ME. Arrears have been presented on an
unadjusted basis for all periods.
(3) Capital metrics are as previously reported.
(4) Profit before loan impairment expense and tax.
(5) NIM is calculated net of offset accounts.
(6) Based on after tax earnings applied to average shareholders’ equity (excluding preference shares and treasury shares) less goodwill and identifiable intangible assets (customer
related intangibles/brands and computer software).
(7) Reported statutory basis are as reported in the statutory financial statements and are not presented on a pro forma basis.
26
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 2.2
Net interest income
($ million)
Net interest income (1)
Average interest earning assets
Year end performance
Half year performance
Aug-22
1,529
87,780
Pro forma
Aug-21
Aug-22
vs Aug-21
1,539
82,523
(1%)
6%
Aug-22
788
Feb-22
741
89,503
86,057
NIM (%)
1.74
1.86
(12bps)
1.75
1.74
(1) Refer to Section 1.1 b) Non-cash earnings reconciling items for a reconciliation of cash net interest income to statutory net interest income.
Aug-22
vs Feb-22
6%
4%
1bp
Net interest income of $1,529 million decreased $10 million or one per cent on pro forma FY21 driven by a 12 basis points decrease in NIM,
partly offset by a six per cent growth in average interest earnings assets.
Net interest income of $788 million in 2H22 increased by $47 million or six per cent on 1H22 driven by a one basis point increase in NIM and
four per cent growth in average interest earnings assets. NIM was up one basis point on 1H22 as benefits from deposit repricing and higher
returns on invested and uninvested capital and low cost deposits more than offset strong competition for new housing loans, retention
discounting and the impact of sharply rising swap rates on fixed margins. Heightened liquidity levels driven by the removal of the Committed
Liquidity Facility (CLF) program also reduced NIM during 2H22.
Net interest margin (%) - February 2022 to August 2022
(0.15%)
0.13%
0.00%
0.08%
(0.05%)
2.04%
0.30%
1.74%
1H22
Asset pricing
and mix
Funding costs
and mix
Hedging
costs
Capital and low
cost deposits
Liquidity
and other
2.07%
0.32%
1.75%
2H22
NIM
Third party costs (1)
(1) Third party costs largely represent commissions to owner-managers and brokers.
NIM in 2H22 was 1.75 per cent, up one basis point on 1H22 at 1.74 per
cent. The key drivers of the movement are set out below.
Asset pricing and mix (-15bps): This was driven by ongoing
competition for housing and commercial lending through lower
front book rates and retention discounting. Customer preference
for fixed rate loans normalised in 4Q22 with competition in variable
loans continuing.
Funding costs and mix (+13bps): This was primarily driven by
repricing actions of retail at-call accounts and term deposits.
Short term wholesale margins were slightly improved as the full half
benefits from 1H22 and early 2H22 portfolio rollovers at lower costs
offset higher costs later in the half.
Hedging costs (flat): Cash-bills spreads were relatively steady in the
period and the basis remained narrow, driven by the decline of the
overnight cash-rate repricing gap as loans moved to fixed rate and
deposits to cash rate in prior periods.
Capital and low cost deposits (+8bps): The $8.1 billion replicating
portfolio covering BOQ’s capital and invested low cost deposits was
lengthened to five years and expanded in 2H22. Repricing of both
invested and uninvested capital and low cost deposits in the rising
rate environment also improved NIM.
Liquidity (-3bps): An increase in lower yielding liquid asset balances
was driven by the regulatory change in phasing out the CLF as a
means of meeting the minimum Liquidity Coverage Ratio (LCR).
Third party costs (-2bps): This was primarily driven by deposit margin
benefits flowing through to owner-managed branches.
27
Financial performance For the year ended 31 August 20222022 Annual Report 2.3
Non-interest income
($ million)
Banking income
Other income
Trading income
Non-interest income(1)
Year end performance
Half year performance
Aug-22
Pro forma
Aug-21
Aug-22
vs Aug-21
Aug-22
Feb-22
73
76
4
153
82
52
-
134
(11%)
46%
100%
14%
32
31
-
63
41
45
4
90
Aug-22
vs Feb-22
(22%)
(31%)
(100%)
(30%)
(1) Refer to Section 1.1 b) Non-cash earnings reconciling items for a reconciliation of cash non-interest income to statutory non-interest income.
Non-interest income of $153 million increased by $19 million or 14 per cent on pro forma FY21 driven by one-off revenue items and realised
gains on sale of investment securities primarily in 1H22.
Banking income decreased by $9 million on pro forma FY21. This reflects the alignment of ME card fee income to BOQ accounting
classification, which was earnings neutral and the removal of fees as part of product simplification. This was partly offset by higher volume
driven lending fee income and foreign exchange sales revenue.
Other income increased $24 million or 46 per cent on pro forma FY21. The increase was driven by one-off revenue items including incentive
income realised through an updated card services arrangement with a third party supplier and a termination fee relating to a third party
insurance provider. Underlying other income increased on FY21 due to an uplift in VMA third party insurance revenue.
Trading income increased by $4 million on pro forma FY21. This reflected gains from portfolio management activities and the sale of
Alternative Liquid Assets (ALAs) to purchase High Quality Liquid Assets (HQLA1) in order to maintain LCR targets as part of the phased
reduction in the CLF.
2H22 non-interest income of $63 million decreased by $27 million or 30 per cent. This was driven by the non-recurrence of one-off items
detailed above.
28
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 2.4
Operating expenses
($ million)
Salaries and on costs
Employee share programs and other
Employee expenses
Information technology services
Amortisation - intangible assets
Depreciation - fixed assets
Technology expenses
Marketing
Commission to Owner-Managed Branches (OMB)
Communications, print and stationery
Processing costs
Other
Operational expenses
Occupancy expenses
Administration expenses
Total operating expenses(1)
Cash CTI ratio
Number of employees (FTE)
Year end performance
Half year performance
Aug-22
Pro forma
Aug-21
Aug-22
vs Aug-21
Aug-22
Feb-22
Aug-22
vs Feb-22
420
24
444
184
66
5
255
48
4
27
14
52
145
54
39
937
55.7
3,040
447
18
465
153
65
4
222
48
4
28
14
64
158
50
38
933
(6%)
33%
(5%)
20%
2%
25%
15%
-
-
(4%)
-
(19%)
(8%)
8%
3%
-
55.8
3,300
(10bps)
(8%)
206
12
218
93
36
3
132
29
2
15
6
24
76
29
21
214
12
226
91
30
2
123
19
2
12
8
28
69
25
18
476
55.9
3,040
461
55.5
3,172
(4%)
-
(4%)
2%
20%
50%
7%
53%
-
25%
(25%)
(14%)
10%
16%
17%
3%
40bps
(4%)
(1) Refer to Section 1.1 b) Non-cash earnings reconciling items for a reconciliation of cash operating expenses to statutory operating expenses.
Summary
Operational expenses
Total operating expenses of $937 million remained flat on pro forma
FY21. This was driven by productivity and synergy savings, largely from
the alignment of operating models across ME and BOQ, which led to
lower employee expenses, offset by higher technology and
volume related costs.
Operational expenses of $145 million decreased by $13 million
or eight per cent on pro forma FY21. This was driven by savings
from productivity and synergies and alignment of ME to BOQ
accounting classification.
Occupancy expenses
Occupancy expenses of $54 million increased by $4 million or eight
per cent on pro forma FY21 primarily driven by a new lease in Sydney.
Administration expenses
Administration expenses of $39 million increased by $1 million
or three per cent on pro forma FY21 primarily driven by higher
insurance, partially offset by lower consulting fees.
Employee expenses
Employee expenses of $444 million decreased by $21 million or five
per cent on FY21. This was driven by a decrease of eight per cent
in full time equivalent staff and reductions in expenses relating to
employee leave entitlements, partly offset by the impact of inflation.
The decrease in the number of FTE was primarily driven
by synergy savings from the alignment of operating models.
Increased share based remuneration was driven by a higher
number of awards issued, a change in profile and awards issued
to ME employees.
Technology expenses
Technology expenses of $255 million increased by $33 million or 15
per cent on pro forma FY21. This was driven by additional costs to
support the technology transformation and higher lending volumes
including licenses, hardware and storage costs. It also reflected
additional costs as a result of the changes associated with the
treatment of Software as a Service (SaaS) costs.
Amortisation expense of $66 million increased by $1 million or two
per cent on pro forma FY21 with investment in the Digital Bank and
Open Banking largely offset by lower amortisation on SaaS assets,
which are no longer on the balance sheet.
29
Financial performance For the year ended 31 August 20222022 Annual Report 2.5
Capitalised investment expenditure
The focus of the digital transformation program continues to be on Retail Banking. Transaction accounts, savings accounts and credit
cards were delivered to VMA in March 2021 and to new BOQ Retail bank customers in March 2022. These foundations are now being
leveraged to provide the same enhanced customer experience to ME retail customers with delivery expected mid FY23. Significant progress
has been made over 2H22 on a multi-brand lending origination platform and it is on track to deliver cloud-based home loan capability to all
brands in FY24.
Major milestones were also achieved during the period in other programs. These included compliance with Phase Two and Three of
Open Banking requirements, an upgrade of the equipment finance platform, and successful transition of the legacy BOQ Specialist Data
Centres into the BOQ Group Data Centre. These projects alongside others have increased application stability, improved security, reduced
technical risk, improved productivity and customer experience. Over 2H22 work commenced building out the card management platform
incorporating ME, upgrading the online banking platforms for BOQ Retail and Business customers and updating the payments system.
Given this investment, the carrying value of intangible assets increased further. These investments enable BOQ’s digital transformation
strategy and provide customers with access to innovative and leading products and services through easy-to-use multi-channel digital
experiences that are focused on their needs.
Carrying value of IT intangible assets ($ million)
Software intangible assets
Assets under construction
379
246
133
388
235
153
439
263
176
Aug-21 (1)
Feb-22 (1)
Aug-22
(1) Comparative information has been restated to reflect the prior period adjustments detailed in Note 5.5(C) to the financial statements.
2.6
Lending
Gross loans and advances of $81.3 billion grew by $5.5 billion or seven per cent on FY21, primarily driven by increased home and commercial
lending volumes. Home lending, excluding ME, remained above system and delivered growth of $3.3 billion or 10 per cent on the prior year
representing 1.4x system. The ME home lending portfolio returned to growth, delivering $1.1 billion in FY22, as mortgage simplification and
integration activities drove efficiency and enabled higher volumes. Commercial lending grew by $1.1 billion or 11 per cent on FY21 with higher
than system growth in small and medium business lending.
($ million)
Housing lending
Housing lending - APS 120 qualifying securitisation (2)
Commercial lending
Asset Finance
Consumer
Gross loans and advances(3)
Provisions for impairment
Net loans and advances
As at
Aug-21
53,146
5,907
59,053
9,879
6,457
359
Feb-22
55,245
6,397
61,642
10,619
6,356
335
78,952
75,748
(289)
(311)
Aug-22
57,277
6,167
63,444
10,943
6,553
310
81,250
(295)
80,955
78,663
75,437
Aug-22
vs Feb-22 (1)
Aug-22
vs Aug-21
7%
(7%)
6%
6%
6%
(15%)
6%
4%
6%
8%
4%
7%
11%
1%
(14%)
7%
(5%)
7%
(1) Growth rates have been annualised.
(2) Securitised loans subject to capital relief under Australian Prudential Regulation Authority (APRA) Prudential Standard APS 120 Securitisation (APS 120).
(3) Gross loans and advances aligns to the financial statement Note 3.3 Loans and Advances, “Gross loans and advances” after deducting “Unearned finance lease income”.
30
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 2.6
Lending (continued)
Growth in housing lending ($ million)
Aug-21 P
2.6% Growth
BOQ Group (ex ME) 1.7x System (1)
ME - Negative
Aug-22
7.4% Growth
BOQ Group (ex ME) 1.4x System (1)
ME 0.6x System (1)
Combined 1.0x System (1)
4,391
1,206
579
1,470
1,136
VMA
BOQ Specialist
BOQ Blue (2)
ME
(1) Source: represents latest available APRA Monthly Banking
Statistics as at August 2022. Reflects the APRA definition of lending
and therefore will not directly correlate to the balance sheet growth.
(2) BOQ Blue includes Housing from both the BOQ Retail and
BOQ Business brands.
Nil
1,518
1,040
476
1,430
(1,428)
The total housing portfolio grew by $4.4 billion or seven per cent
on FY21, representing 1.0x system growth. Settlement volumes
increased by 30 per cent on FY21 as conversion rates improved
in a competitive and buoyant property market. FY22 was initially
characterised by strong market driven fixed rate flow, which
moderated and shifted towards higher margin variable rate loans
in 2H22. The focus remains on mortgage process simplification
and digitisation, improving customer and broker experience, and
uplifting Retail Banking and lending capability. The BOQ mortgage
Net Promoter Score (NPS) decreased from +4 in August 2021 to +3
in August 2022 whilst the ME mortgage NPS improved to +1 from
-14 in August 2021.
The BOQ Blue portfolio grew by $1.5 billion or six per cent on FY21.
The BOQ broker channel contributed $1.1 billion as settlement
volumes increased 14 per cent. The consistency in the broker
channel’s performance was enabled by quality third party
relationships, on boarded in FY21, and the continued investment
and uplift in the broker support ecosystem. The BOQ branch
portfolio grew by $0.4 billion or two per cent on FY21. The corporate
and owner-manager network performance was driven by a
combined uplift in settlement volumes of 17 per cent.
The VMA mortgage portfolio continued to perform well in FY22
growing by $1.2 billion or 28 per cent on FY21, taking the portfolio
to over $5.5 billion. The VMA brand is globally recognised and
contributes to the Group's geographical diversification by targeting
metropolitan-based customers across Australia.
ME's portfolio returned to growth after contracting $1.4 billion in
FY21. The portfolio grew by $1.1 billion or five per cent on FY21 as
settlement volumes increased by 65 per cent due to improved
conversion and retention rates. The return to growth was primarily
attributable to mortgage simplification and integration activities
focused on re-energising the broker and customer experience,
simplifying process and policies and improving customer
maintenance and retention.
BOQ Specialist home lending portfolio grew by $0.6 billion or 10
per cent on FY21. BOQ Specialist continues to deliver above system
growth by building relationships with health professionals in the
early stages of their careers and providing a quality online banking
solution. This creates future opportunities for BOQ Specialist to
meet the commercial lending needs of these health professionals
as they progress through their careers.
31
Financial performance For the year ended 31 August 20222022 Annual Report 2.6
Lending (continued)
Growth in commercial lending ($ million)
The commercial lending portfolio grew by $1.1
billion or 11 per cent in FY22, reflecting strong
growth across both the corporate, and Small and
Medium-sized Enterprise (SME) business
lending portfolios.
The SME portfolio delivered above system
growth of 11 per cent in FY22 and remains a
core focus area for BOQ Business. The SME
business strategy resulted in the creation of
a business unit solely focused on servicing
this customer segment and during the year
successfully delivered policy simplification,
building of banker and branch capability,
enhanced product features and business
lending process transformation.
BOQ Business also continued to provide support
to its larger, corporate clients, delivering growth
of 10 per cent in FY22. Growth came primarily in
the diversified industries and agriculture sectors,
while the business maintained a strong focus
on portfolio optimisation and improved risk
adjusted returns.
Growth in Asset Finance lending ($ million)
The BOQ Finance portfolio grew $157 million or
three per cent in FY22. Growth was delivered
primarily in the core equipment finance business
across the construction and transport segments,
while the impacts of ongoing supply chain issues
in the market were felt across the portfolio.
BOQ Specialist contracted $61 million as high
levels of liquidity and supply chain issues
impacted growth in the medical segment.
The business continued to deliver improvements
across key supplier relationships and processes
during the year.
Aug-21
4.2% Growth
0.8x System (1)
400
151
249
Aug-22
10.8% Growth
0.6x System (1)
1,064
89
975
BOQ Specialist
BOQ Blue
Aug-21
Aug-22
SME: 0.8x System (2)
SME: 1.5x System (2)
Corporate: 1.4x System (2)
Corporate: 0.6x System (2)
1,064
501
563
400
287
113
Corporate
SME
Aug-21
3.2% Growth
Positive System (3)
Aug-22
1.5% Growth
0.4x System (3)
198
273
(75)
96
157
(61)
BOQ Specialist
BOQ Finance
Nil
Nil
Nil
(1) Commercial system growth represents latest available APRA Monthly Banking Statistics as at August 2022. Reflects the APRA definition of lending and therefore will not directly
correlate to the balance sheet growth. “Positive system” represents a growth better than system whereas “Negative system” represents growth worse than system.
(2) System growth represents the latest available Reserve Bank of Australia (RBA) data as at July 2022. RBA figures include both business lending and asset finance balance growth.
The RBA definition of SME will not directly correlate to the BOQ internal definition.
(3) Asset Finance system growth represents latest available Australian Finance Industry Association (AFIA) system growth statistics as at July 2022.
32
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 2.7
Customer deposits
($ million)
Transaction accounts
Term deposits
Savings and investment accounts
Sub-total
Mortgage offsets (2)
Customer deposits
Deposit to loan ratio
As at
Aug-21
5,377
21,991
24,293
51,661
4,808
Feb-22
6,214
20,693
26,099
53,006
5,278
58,284
56,469
74%
75%
Aug-22
vs Feb-22 (1)
Aug-22
vs Aug-21
6%
42%
(21%)
6%
18%
8%
-
19%
14%
(4%)
6%
20%
7%
(1%)
Aug-22
6,400
25,056
23,283
54,739
5,750
60,489
74%
(1) Growth rates have been annualised.
(2) Mortgage offset balances are netted against home loans for the purposes of customer interest payments.
Customer deposits
Term deposits
Customer deposits grew by $4.0 billion or seven per cent on FY21
reflecting the BOQ Group’s strategy to increase stable sources of
funding and increasing the number of customers that consider BOQ
their main bank.
The Retail Bank remains the primary source of customer
deposits with the majority generated through BOQ and VMA with
ME broadly flat. The majority of the inflows for FY22 were through
the new digital platform and term deposits.
The BOQ Group has continued to maintain a strong liquidity
position with the deposit to loan ratio at 74 per cent.
Term deposits increased by $3.1 billion or 14 per cent on FY21. The
majority of the inflows occurred in 2H22 as swap rates increased,
shifting customer preferences towards higher yielding accounts.
Savings and investment accounts
Savings and investment accounts contracted by $1.0 billion or four
per cent on FY21 with the majority of the contraction in Retail Bank
driven by margin optimisation in the ME brand. The myBOQ and
VMA digital propositions attracted strong balance growth while
legacy portfolios contracted.
Transaction accounts and mortgage offsets
Transaction accounts and mortgage offsets grew by $1.0 billion
or 19 percent and $0.9 billion or 20 per cent on FY21 respectively.
The growth in transaction accounts reflected the impact of
lockdowns in 1H22 and the BOQ Group’s ongoing focus on
increasing main bank customers. Higher offset balances also
reflected the growth in home lending in FY22.
33
Financial performance For the year ended 31 August 20222022 Annual Report 3. Business settings
3.1
Asset quality
($ million)
Loan impairment expense (1)(2)
($ million)
Loan impairment expense / GLA (1)(2)
(bps)
Impaired assets
30dpd arrears (1)
90dpd arrears (1)
90dpd arrears / GLA(1)
Total provision and ERCL / GLA (3)
($ million)
($ million)
($ million)
(bps)
(bps)
Year end performance
Half year performance
Aug-22
Pro forma
Aug-21
Aug-22
vs Aug-21
Aug-22
Feb-22
Aug-22
vs Feb-22
13
2
153
827
444
55
47
(29)
(4)
243
941
593
78
63
Large
Large
(37%)
(12%)
(25%)
(23bps)
(16bps)
28
7
153
827
444
55
47
(15)
(4)
194
885
476
60
48
Large
Large
(21%)
(7%)
(7%)
(5bps)
(1bp)
(1) Excludes the impact of the fair value adjustments on acquisition of ME. Arrears have been presented on an unadjusted basis.
(2) Feb-22 loan impairment expense includes $5 million credit related to Purchased or Originated Credit Impaired (POCI) loans, transferred out of cash earnings in 2H22 in line with other
ME fair value adjustments.
(3) ERCL gross of tax effect.
The loan impairment expense was $13 million for FY22. This was primarily driven by a $13 million increase in the collective provision over
the year. 1H22 saw a credit of $15 million predominantly as a result of the strong recovery as the economy emerged from COVID-19. 2H22
expense of $28 million reflected the increased uncertainty around rising inflationary and interest rate pressures, portfolio growth and
seasoning of the ME collective provision after the establishment, in 1H22, of collective provisions for ME loans that were recognised at fair
value on acquisition.
Impaired assets decreased to $153 million in FY22 from $243 million in FY21. Decreases in the Retail portfolio and BOQ Commercial are in
line with low levels of new specific provisions as a result of strong asset prices and the general strength of economic conditions.
Arrears in both the 30 day and 90 day categories reduced compared to both FY21 and 1H22. Retail and Commercial reduced in both
30+ and 90+ over the half and full year periods, offset by an increase in Asset Finance 30+ arrears. Loan growth, low unemployment and
the general strength of economic conditions in FY22 have contributed to the reducing levels of arrears. To date, interest rate rises have
had no material impact on the level of arrears.
34
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 3.1
Asset quality (continued)
Loan impairment expense
($ million)
Aug-22
Pro forma
Aug-21
Aug-22
Feb-22
Year end performance
Half year performance
Expense
($m)
Expense
/ GLA (bps)
Expense
($m)
Expense
/ GLA (bps)
Expense
($m)
Expense
/ GLA
(bps) (1)
Expense
($m)
Expense
/ GLA
(bps) (1)
42
(19)
(10)
13
7
(17)
(15)
2
(19)
(9)
(1)
(29)
(4)
(9)
2
(4)
29
2
(3)
28
10
4
(9)
7
13
(21)
(7)
(15)
4
(40)
(22)
(4)
Retail lending
Commercial lending
Asset Finance
Total loan impairment expense
(1) Metrics have been annualised.
The $13 million loan impairment expense for FY22 was primarily driven by increases in Retail collective provisions. The overall collective
provision expense for FY22 was $13 million driven by the establishment and subsequent seasoning of collective provisions for ME loans
that were recognised at fair value on acquisition. This was partially offset by the weighting assigned to the severe scenario, portfolio quality
improvements and strong property prices observed through FY22. Economic forecasts were updated throughout the year to reflect higher
inflation, cash rate expectations and forecast property price declines.
There was nil specific provision expense in FY22 driven primarily by write backs as a result of strong property prices and improved economic
conditions across most industries, offset by an increase in niche segments within the Asset Finance portfolio.
Retail loan impairment expense of $42 million for FY22 was driven by the establishment of ME’s collective provision and offset by portfolio
improvements. Specific provisions saw a $4 million credit driven by strong property prices.
Commercial loan impairment expense was a credit of $19 million for FY22 driven by a reduction in the collective provision of $18 million due
to portfolio improvements. Specific provisions were also lower resulting in a $1 million credit due to strong property prices and the general
strength of economic conditions across most industries.
Asset Finance loan impairment expense was a credit of $10 million for FY22 driven by a reduction in the collective provision of $15 million
offset by $5 million specific provision expense primarily in the forestry and health care sectors.
35
Financial performance For the year ended 31 August 20222022 Annual Report 3.1
Asset quality (continued)
Impaired assets
($ million)
Retail lending
Commercial lending
Asset Finance
Total impaired assets
Impaired assets / GLA
As at
Aug-22
Feb-22
Aug-21
Aug-22
vs Feb-22
Aug-22
vs Aug-21
61
54
38
153
95
63
36
194
128
77
38
243
(36%)
(14%)
6%
(21%)
(52%)
(30%)
-
(37%)
19bps
25bps
32bps
(6bps)
(13bps)
BOQ impaired assets of $153 million decreased by $90 million or 37 per cent on FY21 as a result of low specific provisioning activity.
Retail impaired assets decreased by $67 million or 52 per cent on FY21 as strong house prices, low unemployment and a strong economy
supported low specific provisioning activity, with one facility contributing $9 million or seven per cent of the decrease following a partial
recovery of the debt.
Commercial impaired assets decreased by $23 million or 30 per cent on FY21. This was due to low specific provisioning activity and one
large Agribusiness facility of $5 million returning to performing in 1H22.
Asset Finance impaired assets remained flat from FY21 but increased $2 million or six per cent on 1H22 driven by the impairment of one
forestry facility of $2 million in 2H22. Improved asset values and loan servicing, reflective of improved economic conditions were offset by a
slower recovery within niche medical practices impacting Asset Finance.
The BOQ Group holds one exposure with an impaired balance greater than $5 million, totalling $10 million. This decrease from $22 million at
1H22 was primarily due to the $9 million partial recovery of the Retail debt mentioned above.
The following chart outlines the movements in impaired assets since August 2021.
Impaired assets ($ million)
29
11
14
4
(78)
(13)
(47)
(18)
243
38
128
77
27
9
11
7
(68)
(7)
(45)
(16)
194
36
95
63
(37%)
153
38
61
54
Aug-21
New impaired
Realisations
Feb-22
New impaired
Realisations
Aug-22
Commercial
Retail
Asset Finance
36
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 3.1
Asset quality (continued)
Provision coverage
($ million)
Specific provision
Collective provision (CP)
Total provision
ERCL ($ million)
Excluding fair value adjustments (1)
Specific provisions to impaired assets
Total provisions and ERCL coverage / impaired assets (2)
CP and ERCL / Total RWA (bps) (2)
Total provisions and ERCL coverage / GLA (2)
Including fair value adjustments
Specific provisions to impaired assets
Total provisions and ERCL coverage / impaired assets (2)
CP and ERCL / Total RWA (bps) (2)
Total provisions and ERCL coverage / GLA (2)
(1) Excludes the impact of the fair value adjustments on acquisition of ME.
(2) ERCL gross of tax effect.
As at
Aug-22
Feb-22
Aug-21
Aug-22
vs Feb-22
Aug-22
vs Aug-21
78
217
295
58
51%
247%
66bps
47bps
51%
247%
66bps
47bps
90
199
289
63
46%
195%
64bps
48bps
46%
195%
64bps
48bps
107
204
311
52
47%
198%
84bps
63bps
44%
158%
63bps
51bps
(13%)
9%
2%
(8%)
(27%)
6%
(5%)
12%
500bps
400bps
Large
2bps
(1bp)
500bps
Large
2bps
(1bp)
Large
(18bps)
(16bps)
Large
Large
3bps
(4bps)
Total provisions of $295 million decreased by $16 million or five per cent from FY21. This was driven by decreases in specific provisions
which were offset by an increase in the collective provision.
Specific provisions of $78 million decreased by $29 million or 27 per cent from FY21. Specific provisions were subdued in FY22 driven by
increases in security valuations and low arrears due to general economic strength.
The collective provision of $217 million increased by $13 million or six per cent from FY21, due to increases in portfolio growth and increases
in the ME collective provision. Portfolio quality improved from FY21 partially offsetting the increases. Since 1H22 increases to overlays
have been implemented to cater for specific portfolio effects or industries where inflation and cash rate increases could result in additional
stress. Management overlays are appropriately managed to ensure sufficient provisions are held. Economic forecasts have catered for the
uncertain outlook, including cash rate rises and property price declines, which are offset by continued strength in unemployment rates.
Including the fair value adjustments, total provisions and ERCL coverage to GLAs decreased by four basis points from FY21 as a result of the
decreases in specific provisions.
The following chart outlines the movements in specific provisions since August 2021.
Specific provisions ($ million)
107
4
15
8
3
32
33
42
(32)
(12)
(12)
(8)
90
28
25
37
3
17
8
6
(11)
(29)
(6)
(12)
78
30
17
31
Aug-21
New specific
Realisations
Feb-22
New specific
Realisations
Aug-22
Commercial
Retail
Asset Finance
37
Financial performance For the year ended 31 August 20222022 Annual Report Portfolio
balance
($m)
The BOQ
Group
3.1
Asset quality (continued)
Arrears
Key metrics
Total lending - portfolio balance ($ million)
30 days past due ($ million) (1)
90 days past due ($ million) (1)
30 days past due GLAs
90 days past due GLAs
By portfolio
30 days past due GLAs (Retail) (1)(2)
63,754
90 days past due GLAs (Retail) (1) (2)
30 days past due GLAs (Commercial)
10,943
90 days past due GLAs (Commercial)
30 days past due GLAs (Asset Finance)
6,553
90 days past due GLAs (Asset Finance)
Aug-22
81,250
827
444
1.02%
0.55%
1.03%
0.57%
1.01%
0.61%
0.88%
0.24%
Feb-22
78,952
885
476
Aug-21
75,748
941
593
Aug-22
vs Feb-22
Aug-22
vs Aug-21
3%
(7%)
(7%)
7%
(12%)
(25%)
Proportion of portfolio
1.12%
0.60%
1.24%
0.78%
(10bps)
(5bps)
(22bps)
(23bps)
1.11%
0.60%
1.32%
0.84%
0.85%
0.24%
1.26%
0.83%
1.52%
0.93%
0.69%
0.20%
(8bps)
(3bps)
(23bps)
(26bps)
(31bps)
(23bps)
(51bps)
(32bps)
3bps
-
19bps
4bps
(1) Excludes the impact of the fair value adjustments on the acquisition of ME. Arrears have been presented on an unadjusted basis.
(2) Retail arrears includes housing and consumer lending.
Retail arrears
Asset Finance arrears
Asset Finance arrears increased by 19 basis points in the 30 day
category and four basis points in the 90 day category since FY21.
The deterioration in 30 day arrears was driven by a small number
of customers in the forestry and construction sectors. The minor
90 day arrears deterioration was driven by a small number of
customers in the construction sector.
Retail arrears decreased in both the 30 day and 90 day categories
by 23 and 26 basis points respectively since FY21 and are in line
with pre-COVID-19 levels. Low unemployment rates and the strong
economy in FY22 contributed to lower arrears. The downward trend
continued to decline with improved credit quality in the growth of
the retail portfolio over the year. Interest rate rises have not had
an impact on portfolio arrears to date, however will continue to be
closely monitored.
Commercial arrears
Commercial arrears decreased by 51 basis points in the
30 day category and by 32 basis points in the 90 day category
since FY21. The decreases were driven by improvements in all
business segments as a result of strong economic conditions in
FY22 and overall portfolio growth. Interest rate rises have not had
an impact on portfolio arrears to date, however will continue to be
closely monitored.
38
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 3.2
Funding and liquidity
BOQ’s liquidity and funding risk appetite strategy is designed to ensure that the BOQ Group has the ability to meet its financial obligations
as they fall due under all market conditions. Management of liquidity risk at BOQ is focused on developing a stable customer deposit base,
maintaining access to diversified wholesale funding markets and disciplined management of maturity profiles. BOQ regularly stress tests its
liquidity risk profile to identify vulnerabilities under a diverse range of market scenarios and ensuring an appropriate level of liquidity is held.
Liquidity Coverage Ratio (LCR)
LCR - August 2022 (139%)
APRA requires that ADIs maintain a minimum LCR of 100 per cent.
BOQ manages its LCR on a daily basis and actively maintains a
buffer above the regulatory minimum in line with BOQ’s prescribed
risk appetite and policy settings.
BOQ’s level two LCR at 31 August 2022 was 139 per cent, which
was 12 per cent lower than the elevated 1H22 LCR. The average
level two LCR for the half was 137 per cent. The CLF decreased by
$1.2 billion on 1 May 2022. Net Cash Outflows (NCO) grew by $679
million, which was primarily influenced by an increase in wholesale
funding due to a higher balance of at-call deposits and Negotiable
Certificates of Deposit (NCD) maturities in the LCR window. HQLA1
increased by $1.4 billion to compensate for the reduction in the CLF
and increase in NCO. The Alternative Liquid Assets (ALA) portfolio
was further reduced to assist in the funding of HQLA1.
$15.2 billion
Other ALA (1)
CLF
Internal RMBS
High Quality
Liquid Assets
(HQLA)
$10.9 billion
Other cash outflows
Wholesale funding
Customer
deposits
LCR waterfall (%) - 28 February 2022 to 31 August 2022
14.0%
(13.9%)
Liquid assets
Net cash outflows
150.8%
(2.5%)
2.0%
(10.4%)
(0.7%)
139.3%
Feb-22
HQLA1
Internal
RMBS
Other
ALA
Customer
deposits
Wholesale
funding
Other cash
outflows
Aug-22
CLF
(1) ALA qualifying as collateral for the CLF, excluding internal Residential Mortgage Backed Securities (RMBS), within the CLF limit.
39
Financial performance For the year ended 31 August 20222022 Annual Report 3.2
Funding and liquidity (continued)
Net Stable Funding Ratio (NSFR)
NSFR - August 2022 (125%)
The NSFR encourages ADIs to fund their lending activities with
more stable sources of funding, thereby promoting greater balance
sheet resilience. BOQ manages its NSFR on a daily basis and
actively maintains a buffer above the regulatory minimum of 100 per
cent, in line with BOQ’s prescribed risk appetite and policy settings.
BOQ’s level 2 NSFR at 31 August 2022 was 125 per cent, which is a
decrease of two per cent over the 1H22 NSFR. The CLF decrease
had a negative impact on the NSFR via additional growth in the
residential mortgages category, but growth in stable funding
sources was sufficient to offset this impact.
$68.6 billion
Wholesale funding
& other liabilities
Customer
deposits
$54.9 billion
Other loans
Residential
Mortgages ≤ 35%
Risk Weight
Capital
Liquids & other
assets
Available stable funding
Required stable funding
NSFR waterfall (%) - 28 February 2022 to 31 August 2022
1.6%
0.1%
(7.2%)
5.7%
127.0%
(0.1%)
1.3%
(3.4%)
125.0%
Feb-22 (1)
Capital
Customer
deposits
Wholesale
funding
& other
liabilities
Liquid
assets
Residential
mortgages
≤ 35% Risk
Weight
Other loans
Other assets
Aug-22
(1) NSFR for 28 February 2022 was restated due to the reclassification of residential mortgages into self-securitised assets used as collateral for the CLF and Term Funding Facility (TFF).
Liquid assets
BOQ maintains a portfolio of high quality, diversified liquid assets to facilitate balance sheet liquidity and meet internal and regulatory requirements.
Liquid assets are comprised of: HQLA1 and alternative liquid assets covered under the CLF provided by the RBA. CLF assets can include senior
unsecured bank debt, covered bonds, Asset Backed Securities (ABS) and RMBS that are eligible for repurchase with the RBA.
As of 31 August 2022, BOQ’s CLF was $2.4 billion. BOQ is scheduled to hand back a further $1.2 billion of CLF on the 1 September 2022.
In response to the increase in HQLA available to the banking system to meet LCR requirements, APRA has confirmed that the CLF allowance
for the banking system will be reduced to zero by the end of 2022.
40
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 3.2
Funding and liquidity (continued)
Funding
BOQ’s funding strategy and risk appetite reflects the BOQ Group’s business strategy, adjusted for the current economic environment.
Funding is managed to allow for various scenarios that may impact BOQ’s funding position.
Funding mix ($ billion)
83.5
17.7 (21%)
9.3 (11%)
87.4
19.4 (22%)
9.7 (11%)
91.5
19.4 (21%)
11.6 (13%)
Long term wholesale ($ billion)
56.5 (68%)
58.3 (67%)
60.5 (66%)
17.7
3.0
7.6
2.4
3.7
1.0
19.4
3.0
7.9
2.3
4.4
1.8
19.4
3.0
7.5
2.5
4.6
1.8
Aug-21
Feb-22
Aug-22
Aug-21
Feb-22
Aug-22
Customer deposits (1)
Long term wholesale (2)
Short term wholesale
Additional tier 1 notes/subordinated debt (3)
Senior unsecured
Securitisation
Covered bond
TFF
(1) The classification of customer deposits is defined as all deposits excluding those from financial institutions as defined under APS 210 Liquidity.
(2) Foreign currency balances have been translated at end of day spot rates.
(3) Includes $0.3 billion additional tier 1 capital notes at 28 February 2022, which are in ‘other equity instruments’ in the financial statements: Consolidated Statement of Changes
in Equity.
Wholesale funding
BOQ focuses on three main strategic elements in delivering its wholesale funding objectives - capacity growth, resilience and diversity -
while minimising the cost of funds and maintaining its ability to take advantage of opportunities in the most appropriate markets.
BOQ continues to optimise the mix of wholesale and retail funding, whilst also increasing stable sources of funding.
In 2H22, BOQ continued focus on growing customer deposits through a variety of channels. Growth in customer deposits has seen
the deposit to loan ratio remain above 70 per cent, ending the period at 74 per cent and flat with 1H22. The remaining customer deposit
funding gap was primarily funded by accessing wholesale funding markets, including both short and long term and in both secured
and unsecured formats.
41
Financial performance For the year ended 31 August 20222022 Annual Report 3.2
Funding and liquidity (continued)
Term funding issuance
BOQ accessed term funding markets in 2H22 using a range of long term wholesale products despite market volatility, with the intention
of refinancing existing maturities as well as funding loan growth and complementing the inflow of customer deposits. This included a
$650 million domestic senior unsecured benchmark issuance in April 2022, a EUR600 million covered bond and a $200 million domestic
covered bond increase of the existing May 2025 maturity.
BOQ has a diverse range of unsecured and secured debt programmes. This provides funding diversification benefits and also enables BOQ
to fund future asset growth and manage term maturity towers over the next five years, including refinancing the TFF.
Major maturities ($ million) (1)(2)(3)(4)
1,112
150
811
350
H2
1,245
200
H2
875
200
H1
667
100
H1
896
260
400
800
H1
H2
900
250
H2
950
690
600
H1
H2
H1
2023
2024
2025
2026
2027
Additional tier 1
Covered bond
Subordinated debt
Senior unsecured
TFF
(1) Any transaction issued in a currency other than AUD is shown in the applicable AUD equivalent hedged amount.
(2) Senior unsecured maturities greater than or equal to $50 million shown, excludes private placements.
(3) Redemption of subordinated debt notes and additional tier 1 notes at the scheduled call date is at BOQ’s option and is subject to obtaining prior written approval from APRA.
(4) Halves are reflected in line with BOQ’s financial reporting year.
42
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 3.3
Capital management
The BOQ Group’s capital management strategy aims to ensure adequate capital levels are maintained to protect deposit holders. The BOQ
Group’s capital is measured and managed in line with Prudential Standards issued by APRA. The capital management plan is updated
annually and submitted to the Board for approval. The approval process is designed to ensure the plan is consistent with the overall business
plan and for managing capital levels on an ongoing basis.
Capital Adequacy
($ million)
Qualifying capital for level 2 entities (1)
Common Equity Tier 1 Capital
Ordinary share capital
Reserves
Retained profits, including current period profits
CET1 capital before regulatory adjustments
Regulatory adjustments
Goodwill and intangibles
Deferred expenditure
Other deductions
Total CET1 regulatory adjustments
CET1 Capital
Additional Tier 1 Capital
Total Tier 1 Capital
General Reserve for Credit Losses (GRCL) (2)
Tier 2 Capital
Total Tier 2 Capital
Total Capital
Total RWA
CET1 ratio
Net Tier 1 Capital ratio
Total Capital adequacy ratio
Aug-22
Feb-22
Aug-21
Aug-22
vs Feb-22
Aug-22
vs Aug-21
5,258
781
300
6,339
(1,257)
(404)
(308)
(1,969)
4,370
910
5,280
176
836
1,012
6,292
5,218
487
349
6,054
(1,197)
(350)
(136)
(1,683)
4,371
910
5,281
167
836
1,003
6,284
5,213
346
277
5,836
(1,180)
(311)
(11)
(1,502)
4,334
610
4,944
178
450
628
5,572
45,669
45,162
44,229
1%
60%
(14%)
5%
5%
15%
126%
17%
-
-
-
5%
-
1%
-
1%
1%
126%
8%
9%
7%
30%
Large
31%
1%
49%
7%
(1%)
86%
61%
13%
3%
9.57%
11.56%
13.78%
9.68%
11.69%
13.91%
9.80%
11.18%
12.60%
(11bps)
(13bps)
(13bps)
(23bps)
38bps
118bps
(1) APRA Prudential Standard APS 001 Definitions defines Level 2 as the BOQ Group and all of its subsidiary entities other than non-consolidated subsidiaries. The non-consolidated
subsidiaries excluded from Level 2 regulatory measurements at 31 August 2022 are:
• Bank of Queensland Limited Employee Share Plans Trust;
• Home Credit Management Pty Ltd;
• Series 2012-1E REDS Trust;
• Series 2013-1 REDS Trust;
• Series 2015-1 REDS Trust;
• Series 2017-1 REDS Trust;
• Series 2018-1 REDS Trust;
• Series 2019-1 REDS Trust;
• Series 2022-1 REDS MHP Trust;
Hence, the balances in the table will not directly correlate to the Consolidated Balance Sheet.
(2) Reflects the APRA definition for GRCL.
• SMHL Series Securitisation Fund 2015-1;
• SMHL Series Securitisation Fund 2016-1;
• SMHL Series Securitisation Fund 2017-1;
• SMHL Series Securitisation Fund 2018-2;
• SMHL Series Securitisation Fund 2019-1;
• SMHL Series Private Placement Trust 2017-2;
• SMHL Series Private Placement Trust 2019-1;
• SMHL Series Private Placement Trust 2019-2; and
• SMHL Securitisation Trust 2020-1.
43
Financial performance For the year ended 31 August 20222022 Annual Report 3.3
Capital management (continued)
The BOQ Group’s CET1 ratio decreased by 11 basis points during 2H22 from 9.68 per cent to 9.57 per cent and was above the top end of the
target range of 9.0 – 9.5 per cent (1).
Cash earnings after tax generated 53 basis points of capital, which was offset by:
• Payment of the FY22 Interim Dividend net of Dividend Reinvestment Plan (DRP) (2) share issuance (23 basis points decrease);
• Underlying RWA growth and increased loan origination costs (27 basis points decrease). RWA growth excludes the impact of capital
efficient securitisations; and
Investment in line with the strategic roadmap, net of amortisation, utilised 10 basis points of capital.
•
Capital efficient securitisations issued over the half contributed 12 basis points of capital. This was partially offset by run-off in
capital relief securitised loans increasing RWA, which utilised seven basis points. The overall net impact of securitisations in 2H22 was
a five basis points increase.
Other items mainly driven by statutory adjustments, a decrease in the available for sale reserve and deferred tax movements decreased the
ratio by nine basis points. The available for sale reserve decreased by $26 million or six basis points, primarily driven by the widening credit
spreads on bonds in the liquidity portfolio.
2H22 CET1 Walk (%)
0.53%
(0.23%)
(0.27%)
(0.10%)
0.05%
(0.09%)
9.68%
9.57%
1H22
Cash earnings
after tax
Dividend
net of DRP
RWA (3)
Investment (4)
Securitisation
Other items
2H22
3.4
Tax expense
BOQ tax expense arising on cash earnings for FY22 amounted to $224 million. This represented an effective tax rate of 30.6 per cent,
which is above the corporate tax rate of 30 per cent primarily due to the non-deductibility of interest payable on Capital Notes issued
in FY18 and FY21.
(1) BOQ intends to operate above the management target range of 9.0 – 9.5 per cent in FY23 until the final impacts of APRA’s changes to RWAs and capital calibration are understood.
(2) The DRP operated with a 2.5 per cent discount. Participation was 24.4 per cent.
(3) Includes loan origination costs.
(4) Capitalised expenses net of amortisation.
44
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 4. Divisional performance
4.1
Retail income statement, key metrics and financial performance review
Overview
The Retail Bank meets the financial needs and services of personal customers. The division supports customers through a network of 111
owner-managed and 36 corporate branches, third party intermediaries, more than 2,300 Automated Teller Machines (ATM), an Australian
based customer call centre, digital services and mobile mortgage specialists. The acquisition of ME strengthened the multi-brand
proposition enabling the BOQ Group to optimise the use of multi-channels and geographical strengths while leveraging best practices and
scale to drive growth across all brands.
MyBOQ was successfully launched in March 2022, representing the first deployment of multi-brand capability onto the new Digital
Bank platform. MyBOQ is a significant milestone and execution proof point for the BOQ Group in the strategy to move towards a single
consolidated digital platform across all retail brands.
($ million)
Net interest income
Non-interest income
Total income
Operating expenses
Underlying profit
Loan impairment expense
Profit before tax
Income tax expense
Cash earnings after tax
Key metrics (1)
Performance indicators
CTI ratio
Net interest income/ Average GLA (2)
Asset quality
90dpd arrears
Impaired assets
Loan impairment expense / GLA
Balance sheet
GLA
Housing
Other retail
(%)
(%)
($ million)
($ million)
(bps)
($ million)
($ million)
($ million)
Year end performance
Half year performance
Aug-22
Pro forma
Aug-21
Aug-22
vs Aug-21
Aug-22
Feb-22
Aug-22
vs Feb-22
943
98
1,041
(642)
399
(41)
358
(109)
249
981
85
1,066
(663)
403
29
432
(134)
298
(4%)
15%
(2%)
(3%)
(1%)
Large
(17%)
(19%)
(16%)
483
36
519
(321)
198
(22)
176
(54)
122
460
62
522
(321)
201
(19)
182
(55)
127
5%
(42%)
(1%)
-
(1%)
16%
(3%)
(2%)
(4%)
Year end performance
Half year performance
Aug-22
Pro forma
Aug-21
Aug-22
vs Aug-21
Aug-22
Feb-22
Aug-22
vs Feb-22
61.7
1.86
339
46
7
62.2
1.99
(50bps)
(13bps)
487
87
(5)
56,646
56,436
210
52,883
52,626
257
61.8
1.86
339
46
8
61.5
1.85
350
85
7
56,646
56,436
210
55,072
54,838
234
19,142
18,852
33,319
10,378
4,517
14,217
4,207
31,442
7,380
4,022
15,979
4,061
30bps
1bp
(3%)
(46%)
1bp
6%
6%
(20%)
3%
12%
81%
24%
(22%)
7%
(30%)
(47%)
Large
7%
7%
(18%)
2%
11%
31%
22%
(4%)
20%
Credit risk weighted assets
($ million)
19,142
18,716
Customer deposits (3)(4)
Term deposits
Mortgage offsets
Savings & investment
Transaction accounts
($ million)
($ million)
($ million)
($ million)
($ million)
33,319
10,378
4,517
14,217
4,207
29,978
7,913
3,689
14,884
3,492
Deposit to loan ratio (4)
(%)
59
57
200bps
59
57
200bps
(1) Balance sheet key metrics have been annualised.
(2) Calculated on a pro forma net profit after tax basis and net of offsets accounts.
(3) Treasury managed deposits are included in the Group’s Other operating segment.
(4) ME Treasury deposits have been removed from Retail customer deposits and included in the Other operating segment. Previous periods have been restated.
45
Financial performance For the year ended 31 August 20222022 Annual Report
4.1
Retail income statement, key metrics and financial performance review (continued)
FY22 vs FY21
2H22 vs 1H22
Retail Bank cash earnings after tax of $249 million decreased
$49 million or 16 per cent on FY21. Underlying profit decreased by
one per cent on FY21 as revenue contraction of two per cent was
partially offset by a three per cent reduction in operating expenses.
Retail Bank cash earnings after tax of $122 million decreased
$5 million or four per cent on 1H22. Higher net interest income
reflected the benefit of a rising cash rate environment and
improved deposit margins.
Net interest income
Net interest income
Net interest income of $943 million decreased $38 million or four
per cent on FY21 as net interest margins contracted 13 basis points.
This was partially offset by a seven per cent increase in housing loan
balance growth.
Net interest income of $483 million increased $23 million or five per
cent on 1H22. This was driven by a one basis point improvement in
net interest margin, six per cent growth in the housing loan portfolio
and an increased day count in 2H22.
Spot balance sheet movement included:
Spot balance sheet movement included:
• Housing growth of $1.6 billion or six per cent on 1H22. Housing
growth moderated from 1H22 due to the slowing of system and
margin optimisation.
• Customer deposits grew $1.9 billion or 12 per cent on 1H22 as
rising swap rates provided an opportunity to optimise funding
through term deposit growth of $3.0 billion, offset by a reduction
of $1.8 billion in lower margin at-call savings balances.
Net Interest margin of 1.86 per cent increased one basis point
reflecting improved deposit margins, which benefitted from a
rising cash environment. The housing portfolio mix normalised
as customer preference reverted to variable rate lending in 2H22.
Continued competitive pressures remain a headwind to margin.
Non-interest income
Non-interest income of $36 million decreased $26 million or 42
per cent on 1H22 due to the non-recurrence of one-off revenue
items in the half. 2H22 revenue was impacted by the accounting
classification alignment of ME card fee income, which was earnings
neutral. Underlying non-interest income was marginally down as an
increase in VMA third party revenue was offset by a reduction in
ME fee income.
Operating expenses
Operating expenses of $321 million were flat on 1H22 as ongoing
productivity and synergy realisation offset higher Retail digital
transformation spend, absorbing corporate costs previously
included in the other segment and the impact of inflation. The
impact of an accounting classification alignment of ME card fee
income was offset by a change in the treatment of marketing spend
incurred to acquire deposit accounts.
Loan impairment expense
Loan impairment expense of $22 million increased $3 million
or 16 per cent on 1H22. The uplift was driven by the establishment
and subsequent seasoning of collective provisions for ME loans that
were recognised at fair value on acquisition, and lending growth
across the portfolio.
• Housing growth of $3.8 billion or seven per cent on FY21,
representing 1.0x system growth. ME returned to growth in
FY22, delivering growth of $1.1 billion at 0.6x system, compared
to FY21 during which it contracted $1.4 billion. FY22 was initially
characterised by strong, market driven, fixed rate flow, which
normalised in the second half.
• Customer deposits grew $3.3 billion or 11 per cent on FY21 as
transaction and offsets balances delivered strong growth in 1H22.
Rising swap rates provided an opportunity to optimise funding
through term deposit growth of $2.5 billion, partially offset by a
reduction of $0.7 billion in lower margin at-call savings balances.
Net interest margin of 1.86 per cent decreased by 13 basis points
reflecting continued competitive pressures in home lending and
customer preference for fixed rate lending in a period of increasing
swap rates. This was partly offset by improved deposit margins,
which benefitted from a rising cash rate environment.
Non-interest income
Non-interest income of $98 million increased $13 million or 15 per cent on
FY21. This was attributable to one-off revenue items including incentive
income realised through an updated card services arrangement, a
termination fee relating to a third-party insurance provider and realised
gains on sale of investment securities. 2H22 revenue was impacted by
an accounting classification alignment of ME card fee income, which was
earnings neutral. Underlying non-interest income increased on FY21 due
to an uplift in VMA third party insurance revenue.
Operating expenses
Operating expenses of $642 million decreased $21 million or three
per cent on FY21. Productivity and synergy realisation more than
offset investment to support increased volume growth, investment
to enable the Retail digital transformation, absorbing corporate
costs previously included in the other segment and the impact
of inflation. The impact of an accounting classification alignment
of ME card fee income was offset by a change in the treatment of
marketing spend incurred to acquire deposit accounts.
Loan impairment expense
The loan impairment expense of $41 million compares to a credit
of $29 million in FY21 and reflects the normalisation of collective
provisioning following prior period COVID-19 provisioning impact, the
establishment and subsequent seasoning of collective provisions for
ME loans that were recognised at fair value on acquisition.
46
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities ($ million)
Net interest income
Non-interest income
Total income
Operating expenses
Underlying profit
Loan impairment expense
Profit before tax
Income tax expense
Cash earnings after tax
Key metrics (1)
Performance indicators
CTI ratio
Net interest income/ Average GLA (2)
Asset quality
90dpd arrears
Impaired assets
Loan impairment expense / GLA
Balance sheet
GLA
Housing
Commercial and other
Asset Finance
4.2
BOQ Business income statement, key metrics and financial performance review
Overview
BOQ Business includes BOQ branded commercial lending, BOQ Finance, BOQ Specialist and financial markets. The division provides
tailored business banking solutions, including commercial lending, equipment finance and leasing, cashflow finance, foreign exchange
hedging and international transfers, interest rate hedging, transaction banking and deposit solutions for business customers. The division
also provides home loans and consumer banking for BOQ Specialist customers.
Year end performance
Half year performance
Aug-22
Aug-21
Aug-22
vs Aug-21
Aug-22
Feb-22
Aug-22
vs Feb-22
593
50
643
555
48
603
(295)
(262)
348
28
376
(115)
261
341
-
341
(106)
235
7%
4%
7%
13%
2%
100%
10%
8%
11%
313
25
338
(155)
183
(6)
177
(54)
123
280
25
305
(140)
165
34
199
(61)
138
12%
-
11%
11%
11%
Large
(11%)
(11%)
(11%)
Year end performance
Half year performance
Aug-22
Aug-21
Aug-22
vs Aug-21
Aug-22
Feb-22
Aug-22
vs Feb-22
(%)
(%)
($ million)
($ million)
(bps)
45.9
2.63
105
106
(11)
43.4
2.64
250bps
(1bp)
118
123
-
(11%)
(14%)
(11bps)
($ million)
24,604
22,865
($ million)
($ million)
($ million)
7,008
11,043
6,553
6,427
9,981
6,457
45.9
2.70
105
106
5
45.9
2.55
126
109
(29)
24,604
23,880
7,008
11,043
6,553
6,804
10,720
6,356
19,533
19,114
11,668
11,889
2,021
1,233
6,220
2,194
1,573
1,255
6,909
2,152
-
15bps
(17%)
(3%)
Large
6%
6%
6%
6%
4%
(4%)
56%
(3%)
(20%)
4%
8%
9%
11%
1%
8%
8%
45%
10%
(3%)
17%
Credit risk weighted assets
($ million)
19,533
18,147
Customer deposits (3)
($ million)
11,668
10,838
Term deposits
Mortgage offsets
Savings & investment
Transaction accounts
($ million)
($ million)
($ million)
($ million)
2,021
1,233
6,220
2,194
1,393
1,119
6,443
1,883
Deposit to loan ratio
(%)
47
47
-
47
50
(300bps)
(1) Balance sheet key metrics have been annualised.
(2) Calculated on a cash earnings basis and net of offsets accounts.
(3) Treasury managed deposits are included in the Group's Other operating segment.
47
Financial performance For the year ended 31 August 20222022 Annual Report 4.2
BOQ Business income statement, key metrics and financial performance review (continued)
FY22 vs FY21
2H22 vs 1H22
BOQ Business cash earnings after tax of $261 million increased
$26 million or 11 per cent on FY21. This was driven by a seven
per cent increase in total income and a $28 million credit in
loan impairment expense following reduced levels of collective
provisioning. This was partly offset by operating expense growth
of 13 per cent resulting in an underlying profit increase of
two per cent.
Net interest income
Net interest income of $593 million increased by $38 million or
seven per cent, reflecting an eight per cent growth in lending assets
and an eight per cent growth in customer deposits, partly offset by
a one basis point contraction in net interest margin.
Spot balance sheet movements included:
• Commercial lending growth of 11 per cent was driven by
above system growth in small and medium business lending.
Lending to large corporates originated primarily in the diversified
industries and agriculture sectors, with a continued focus on
portfolio optimisation;
• Asset Finance growth of one per cent was subdued by supply
chain challenges across the market, with growth coming
primarily in the core equipment finance business;
•
• Housing growth of $0.6 billion or nine per cent was driven by
above system growth in the BOQ Specialist channel; and
Improvements made to online banking in BOQ Specialist
helped facilitate customer deposit growth of $0.8 billion or
eight per cent, primarily across transaction and term
deposit accounts.
Net interest margin of 2.63 per cent decreased by one basis point,
reflecting the impact of rising swap rates on fixed margins, and
competitive pressure on front book lending rates, partly offset by
benefits from repricing of the deposits portfolio and higher early
termination fees in the leasing portfolio.
BOQ Business cash earnings after tax of $123 million decreased
$15 million or 11 per cent on 1H22. This was driven by higher
operating expenses and a $40 million increase in loan impairment
expense, partly offset by 12 per cent improvement in net
interest income.
Net interest income
Net interest income of $313 million increased $33 million or 12 per
cent on 1H22. This was driven by a six per cent growth in lending
assets, a 15 basis point improvement in net interest margin, and an
increased day count in 2H22.
Spot balance sheet movements included:
• Commercial lending growth of six per cent driven by growth
in lending to small and medium businesses, partly offset by a
continued focus on portfolio optimisation activity across the
corporate book;
• Asset Finance growth of six per cent was driven by the core
equipment finance business, partly offset by continued supply
chain challenges across the market;
• Housing portfolio growth of six per cent was driven by the
BOQ Specialist channel; and
• Deposit balances contracted $0.2 billion or four per cent
reflecting lower savings and investment deposits, partly offset
by shifting customer preferences towards higher yielding term
deposit accounts which grew 56 per cent in 2H22.
Net interest margin of 2.70 per cent increased 15 basis points in
2H22, driven by repricing actions across the deposits portfolio,
partly offset by competitive pressure on front book lending rates.
Non-interest income
Non-interest income was flat on 1H22, as higher lending-related
fees were offset by reduced incentive income from a third party
supplier and lower gains from sales of leasing equipment.
Non-interest income
Operating expenses
Non-interest income of $50 million increased by $2 million or four
per cent driven by higher lending-related fees and foreign exchange
sales revenue, partly offset by reduced income from third-party
supplier incentives and trading income.
Operating expenses increased by $15 million or 11 per cent , driven
by increased investment in technology projects, higher risk and
compliance related costs, absorbing corporate costs previously
included in the other segment and the impact of inflation.
Loan impairment expense
Loan impairment expense of $6 million increased $40 million
on 1H22 reflecting lower levels of collective provision releases.
Specific provisioning activity remained low due to strong
property prices and the general strength of economic
conditions across most industries.
Operating expenses
Operating expenses of $295 million were up 13 per cent. This
reflected increased investment in technology projects, higher risk
and compliance related costs, absorbing corporate costs previously
included in the other segment and the impact of inflation.
Loan impairment expense
Loan impairment expense was a credit of $28 million. This reflected
lower collective provision charges due to portfolio improvements,
and low levels of specific provisioning activity due to strong
property prices and the general strength of economic conditions
across most industries.
48
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 4.3
Other segment income statement and financial performance review
Overview
The Other segment includes Treasury and Group Head Office. Previously, the Other segment included St Andrew’s Insurance, which was
sold during 1H22 and therefore excluded from the pro forma result below.
($ million)
Net interest (expense) / income
Non-interest income
Total (loss) / income
Operating expenses
Underlying (loss) / profit
Loan impairment expense
(Loss) / profit before tax
Income tax expense
Cash (loss) / earnings after tax
Year end performance
Half year performance
Aug-22
Pro forma
Aug-21
Aug-22
vs Aug-21
Aug-22
Feb-22
Aug-22
vs Feb-22
(7)
5
(2)
-
(2)
-
(2)
-
(2)
3
1
4
(8)
(4)
-
(4)
3
(1)
Large
Large
Large
(100%)
(50%)
-
(50%)
(100%)
100%
(8)
2
(6)
-
(6)
-
(6)
1
(5)
1
3
4
-
4
-
4
(1)
3
Large
(33%)
Large
-
Large
-
Large
Large
Large
Financial performance review
Cash loss after tax of $2 million was $1 million lower than pro forma FY21.
Net interest (expense) / income
Net interest expense of $7 million decreased by $10 million on FY21. This was primarily driven by lower break costs, trading book accrual
and interest rate hedging losses in the changing interest rate environment as well as higher lease liability expenses not allocated out to the
operating divisions.
Non-interest income
Non-interest income of $5 million reflected gains from portfolio management activities and the sale of ALAs to purchase HQLA1s in order to
maintain LCR targets as part of the phased reduction in the CLF.
Operating expenses
Operating expenses decreased by $8 million in FY22 as all Group Head Office expenses were allocated to the Retail and Business divisions.
4.4
Outlook
Australia remains well placed given the current low levels of unemployment, high level of household savings, strong business order books,
robust growth in capex spending plans and high terms of trade. However, uncertainty remains given elevated inflation, rising interest rates,
geopolitical tensions and supply chain and labour disruptions. Housing and business system growth are both expected to slow in FY23 with
both residential and commercial property prices facing the prospect of declines.
BOQ remains focused on quality, sustainable profitable growth and we will continue to maintain a prudent approach to provisioning and
capital given the ongoing uncertainty around economic conditions.
49
Financial performance For the year ended 31 August 20222022 Annual Report 5. Appendix to Financial performance
5.1
Cash EPS calculations
Reconciliation of cash earnings for EPS
Cash earnings after tax
Returns to other equity instruments (2)
FV adjustment on ME AT1 Capital Note
($ million)
($ million)
($ million)
Cash earnings available for ordinary shareholders
($ million)
Effect of Capital Notes 1
Effect of Capital Notes 2
Cash diluted earnings available
for ordinary shareholders
Weight Average Number of Shares (WANOS)
Basic WANOS - Ordinary shares
Effect of award rights
Effect of Capital Notes 1
Effect of Capital Notes 2
Diluted WANOS for cash earnings EPS
Cash earnings per share
Cash basic EPS - Ordinary shares
Cash diluted EPS - Ordinary shares
Year end performance
Half year performance
Aug-22
Aug-21
Aug-22
vs Aug-21
Aug-22 (1)
Feb-22 (1)
Aug-22
vs Feb-22
508
(12)
9
505
10
8
523
412
(1)
-
411
9
5
425
643
550
4
49
37
733
3
38
21
612
23%
Large
100%
23%
11%
60%
23%
17%
33%
29%
76%
20%
240
(6)
4
238
6
4
268
(5)
-
263
5
3
248
271
644
640
6
49
37
736
4
43
32
719
(10%)
20%
100%
(10%)
20%
33%
(8%)
1%
50%
14%
16%
2%
($ million)
($ million)
($ million)
(million)
(million)
(million)
(million)
(million)
(cents)
(cents)
78.4
71.2
74.7
69.5
5%
2%
36.8
33.6
41.1
37.7
(10%)
(11%)
(1) The sum of 1H22 and 2H22 EPS does not equal FY22 due to the uneven distribution of cash earnings after tax across the two halves of the year.
(2) Other equity instruments of $314 million include AT1 securities assumed on the acquisition of ME. The securities are perpetual, non-cumulative, subordinated and unsecured notes.
Refer to Note 3.10(b) to the financial statements. The return in FY21 represents two months since the acquisition.
50
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 5.2
Average balance sheet and margin analysis
The following tables outline the major categories of interest earning assets and interest bearing liabilities of the BOQ Group together with the
respective interest earned or paid and the average interest rate for each of 1H22, 2H22, FY21 and FY22.
Interest earning assets
Loans & advances (1)
Investments & other securities
Total interest earning assets
Non-interest earning assets
Property, plant & equipment
Other assets
Provision for impairment
Total non-interest earning assets
Total assets
Interest bearing liabilities
Retail deposits
Wholesale deposits & borrowings (2)
Total interest bearing liabilities
Non-interest bearing liabilities
Total liabilities
Shareholders' funds
Total liabilities & shareholders' funds
Interest margin & interest spread
Interest earning assets
Interest bearing liabilities
Net interest spread
Benefit of free funds
NIM - on average interest earning assets
89,503
788
(1) Net of average mortgage offset balances.
(2) Includes hedging costs, execution costs and dealer fees.
Average
balance
$m
2H22
Interest
$m
Average
rate
%
Average
balance
$m
1H22
Interest
$m
Average
rate
%
75,159
14,344
1,141
59
89,503
1,200
3.01
0.82
2.66
71,966
14,091
997
16
86,057
1,013
2.79
0.23
2.37
270
2,345
(301)
2,314
91,817
54,629
30,067
84,696
995
85,691
6,126
91,817
231
1,926
(380)
1,777
87,834
53,479
27,123
80,602
1,154
81,756
6,078
87,834
202
210
412
0.73
1.39
0.96
132
140
272
0.50
1.04
0.68
89,503
1,200
84,696
412
2.66
0.96
1.70
0.05
1.75
86,057
80,602
1,013
272
86,057
741
2.37
0.68
1.69
0.05
1.74
51
Financial performance For the year ended 31 August 20222022 Annual Report 5.2
Average balance sheet and margin analysis (continued)
Interest earning assets
Loans & advances (1)
Investments & other securities
Total interest earning assets
Non-interest earning assets
Property, plant & equipment
Other assets
Provision for impairment
Total non-interest earning assets
Total assets
Interest bearing liabilities
Retail deposits
Wholesale deposits & borrowings (2)
Total interest bearing liabilities
Non-interest bearing liabilities
Total liabilities
Shareholders' funds
Total liabilities & shareholders' funds
Interest margin & interest spread
Interest earning assets
Interest bearing liabilities
Net interest spread
Benefit of free funds
Average
balance
$m
FY22
Interest
$m
Average
rate
%
Average
balance
$m
FY21
Interest
$m
Average
rate
%
73,562
2,138
14,218
75
87,780
2,213
2.90
0.53
2.52
69,801
2,188
12,722
40
82,523
2,228
3.13
0.31
2.70
251
2,136
(340)
2,047
89,827
54,054
28,595
82,649
1,075
83,724
6,103
89,827
185
1,890
(445)
1,630
84,153
49,396
26,833
76,229
1,414
77,643
6,510
84,153
334
350
684
0.62
1.22
0.83
353
336
689
0.71
1.25
0.90
87,780
2,213
82,649
684
2.52
0.83
1.69
0.05
1.74
82,523
2,228
76,229
689
82,523
1,539
2.70
0.90
1.80
0.06
1.86
NIM - on average interest earning assets
87,780
1,529
(1) Net of average mortgage offset balances.
(2) Includes hedging costs, execution costs and dealer fees.
52
Financial performance For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Managing our risk landscape
We believe that Risk is Everyone’s Business, it is at the core of our strategy. As part of a Group Risk Management
Framework, which is overseen by the Board, we identify and manage key risks. This framework includes Business Plans,
Risk Management Strategy and Risk Appetite Statement, as well as capital and funding plans.
The Group Risk Appetite Statement is a cornerstone of the enterprise-wide strategy, which covers the principal sources of
risk and is adopted at a business unit level as part of the business unit planning process, qualitatively (through risk policies,
standards and operating procedures) and quantitatively (through risk limits, settings and decision authorities).
The other foundation of the enterprise-wide strategy is the annual Board Strategic Review, which provides a forward
outlook taking into consideration various factors:
Internal, environmental and competitive assessment
• Macroeconomic and financial services outlook
•
• Group strategic, risk and financial objectives
• Group strategy statement
• Financial forecast
• System growth assumptions and relative returns of
business lines
• Key strategic initiatives
• Strategic goals and targets
• Material strategy execution risks and proposed
mitigating actions
The below diagram illustrates the governance framework for managing BOQ’s key risks and how they are identified,
measured, monitored and reported from Management up to the Board.
Bank of Queensland Board
Board Risk Committee
Executive Risk Committee
Asset and
Liability
Committee
Executive
Credit
Committee
Executive Comittee (ExCo)
Non-financial Risks
Financial Risks
Operational
risk
Technology and
data risk
Reputational
risk
Liquidity and
funding risk
Financial performance
and management
Compliance and regulatory
engagement risk
Transformation and
change risk
Conduct
risk
Culture
risk
Financial
crime risk
Capital
risk
Market
risk
Credit
risk
Strategic
Risk
Environment,
social and
corporate
governance
risk
53
Governance and risk management 2022 Annual Report BOQ’s operations and performance are impacted by strategic risks, financial risks and non-financial risks. Key risks are identified and
managed as part of BOQ’s risk management framework. The below table outlines the key risks impacting the business and how BOQ
manages these.
Risk
Value Drivers
Description
Compliance and regulatory
engagement risk
The risk of failing to comply with any legal or regulatory obligations or respond to regulatory
change, includintg improper licensing, data privacy, financial crime-related and cross-border
activities. This includes the risk of not effectively managing interactions or requirements
of the Group’s regulatory relationships, and participation in industry forums to influence
developments in regulatory policy.
Conduct risk
Culture risk
Credit risk
Liquidity and funding risk
Capital risk
Financial performance &
management
Market risk
Operational risk
Financial crime
Technology and data risk
Transformation & change risk
Reputational risk
Strategic risk
Environmental, social &
corporate governance risk
The risk of failing to act in accordance with customers’ best interests; not designing and
distributing products and services to customers in an adequate, accurate and proper manner;
and not acting in accordance with fair market practices, Workplace Health and Safety laws
and the Group’s Code of Conduct.
The risk of an ineffective culture impacting the ability to deliver strategic objectives. This
includes culture and risk culture across the organisation, covering areas such as talent
and succession planning, recruitment and retention, remuneration and consequence
management practices, risk and governance architecture as well as behaviours aligned with
BOQ’s values.
The risk that a debtor or transactional counterparty will default and/or fail to meet their
contractual obligations and includes the risk of loss of value of assets due to deterioration
in credit quality and credit concentration risk. This risk primarily arises from BOQ’s lending
activities and the holding of various financial instruments for investment or liquidity purposes.
The risk of not meeting payment obligations when they fall due, loss on converting a position
or selling an asset for cash to meet such obligations; and the inability to fund the balance
sheet growth of the business in a timely and cost effective way.
The risk of ineffective management which could result in a negative impact on the Group’s
capital levels and potential regulatory action or enforcement should the Group not meet
minimum prudential requirements.
The risk of loss arising from a failure to effectively manage the financial performance of the
business, and/or customer requirements of pricing lending and deposit products, impacting
customers, shareholders and key stakeholders.
The risk to the Group’s earnings arising from changes in interest rates, currency exchange
rates and credit spreads, fluctuations in bond or equity prices, or from changes in the volatility
of these risk factors.
The risk of loss resulting from inadequate or failed internal processes, people and systems,
and/or from third party or external events. As such, operational risk captures business
continuity plans, crisis management, process, systems and operations risk, people-related
risks and health and safety-related risks.
The risk of fraud attempted or perpetrated against the organisation by an internal or external
party; or failure to comply with restrictions imposed by sanctions, or appropriately monitor,
detect and control potentially suspicious financial crime activity.
The risk of loss resulting from impacts to system availability or information security incidents,
including the loss, theft or misuse of data and information. This includes managing and
maintaining all types of data, such as client data, employee data, and the organisation’s
proprietary data.
The risk of failure to deliver projects in accordance with scope, cost, schedule and benefits;
and delivered change including people, process and system not having effective embedded
controls for managing the risks in our business.
The risk to earnings and capital arising from negative public opinion resulting from the loss
of reputation, public trust or standing. This is a risk derived from business activities and is
considered in conjunction with the underlying risks resulting from those activities.
The risk that might arise from the pursuit of a business model or strategy that is not viable,
or failure to execute on the strategy and delivery of expected outcomes
Environmental, Social and Corporate Governance (ESG) considers the risk of factors related to
climate change, natural resources and pollution; managing human capital, human rights and
responsible lending in supporting the community; and the risk associated with our corporate
governance and behaviours.
Management of risk
with relevant laws and regulations.
BOQ has an established Compliance Management Framework, which sets out the Group’s approach to identifying and managing compliance risk and complying
The Compliance Management Framework is supported by a range of Group-wide policies and procedures to manage particular compliance risks, comply with
particular laws and regulations, and to manage conduct risk, including for example the Group-wide Privacy Policy and the Group-wide Conflicts of Interest Policy.
BOQ uses its Governance Risk and Compliance tool to capture and document the financial services laws and obligations that it must comply with, as well as the
processes in place to ensure compliance.
The Group also has an established process to identify and record incidents, to assess those incidents to identify potential breaches of its compliance
obligations, and where relevant, to provide notifications to regulators in a timely manner. This process is also supported by a formal Committee, comprised of
members of senior management, to consider and assess certain incidents. The Group also has an established Group-wide Regulatory Change Framework, to
identify, assess, communicate and implement relevant regulatory changes. BOQ has also established a range of policies and procedures to manage financial
crime and ensure compliance with relevant financial crime obligations.
BOQ maintains a strong ethical culture via embedded principles and policies, including the BOQ Code of Conduct, Whistleblower Policy and Conduct Risk
Standard. The Group regularly monitors the risk with Group Risk Appetite Measures in place.
The Board oversees the Group’s culture, with Board sub-committees in place to support, including the People, Culture & Remuneration Committee and Board
Risk Committee. Key policies, procedures and plans that underpin our organisational culture and risk culture, include the Group’s Purpose and Values, Code of
Conduct, Whistleblower Policy, Consequence Management Framework, and Remuneration Framework.
Monitoring and reporting is supported through risk appetite measures, regular surveys to all employees, and interviews with employees leaving the organisation.
Risk management practices in place to support effective credit risk management include the establishment and ongoing maintenance of a limits monitoring
and management framework. BOQ’s Credit Risk Management Principles provide core standards for the provision of credit for all customers. The credit risk
management principles express the expectations of the Board for both the analytical and behavioural aspects of granting of credit to customers. BOQ maintains
a suite of credit policies to address the range of lending products provided to customers and to satisfy the Board level requirements expressed in the Credit Risk
Management Principles and Risk Appetite Statement.
BOQ maintains a diverse and stable pool of potential funding sources. The Bank maintains adequate liquidity buffers and short-term funding capacity to
withstand periods of disruption in long-term wholesale funding markets. BOQ adopts a robust limit framework including stress testing and scenario analysis that
enables risk based decisioning ensuring the business remains within risk appetite.
The Board, through the Board Risk Committee, approves and oversees capital limits, triggers and target ranges set out in the Group Risk Appetite Statement,
as well as the Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP and Group Recovery Plan are designed to help identify and manage potential
threats to the ongoing viability of the Bank.
The financial performance of the Group is governed through the Board, led by the Group Chief Financial Officer and the Executive. A product & pricing
committee is in place to support decision-making in respect to pricing, fee structure and financial performance of our products.
Financial risk policies include all Board and management accounting policies which form the basis for the recording and reporting of the financial statements,
including group taxation. These policies are governed by the Board Audit Committee.
BOQ’s Credit Portfolio Limit Framework and Risk Appetite measures enable effective management of market risk. BOQ applies common risk management
practices across all Group subsidiaries. The performance of subsidiaries is subject to ongoing review and oversight, with senior management representation on
subsidiary management committees and boards.
BOQ has an Operational Risk Management Framework and underlying standards and procedures that outline how operational risks are identified and managed
within risk appetite and tolerance to meet regulatory, customer, operational and strategic requirements. This includes mechanisms to undertake risk-reward
business decisions, taking into account operational risk exposures and the control environment. These risks are managed through our GRC tool.
The Board is ultimately responsible for overseeing the management of financial crime risk and is assisted by the Board Risk Management Committee and
Executive Risk Management Committee.
The Group’s AML/CTF obligations are articulated in the Part A and Part B AML/CTF Programmes. These programmes are supported by a range of underlying
policies, guidelines and standards. Additionally, the Group’s broader financial crime risk obligations are managed through a range of supporting policies and
standards including the Financial Crime Policy, Anti-Bribery and Corruption Policy, Fraud Controls Policy, Insider Risk Framework, and Major Fraud Framework.
The Board Risk Committee assists the Board in overseeing technology risks. They do this through oversight of the technology portfolio health by reference to
internal and external benchmarks on the quality, stability, reliability and security of the IT services and the impact on customer experience.
Additionally, this includes constantly monitoring and assessing the cyber threat landscape and hardening our environment to protect our data from cyber threat.
The TTC assists the Board in overseeing the transformation agenda for the Group. This is done through the oversight of the strategic project portfolio through
reporting on critical and significant Tier 1 projects, monitored in line with the Group’s risk appetite.
Governance for Reputational Risk is integrated in the Group’s broader risk governance framework, including Crisis Management and Business Continuity Plans.
The Conduct Risk Standard, Code of Conduct, and Reputational Risk Framework outline the approach to establishing and maintaining a strong ethical culture via
embedded principles and policies throughout the Group.
Business strategy development incorporates risk management practices to ensure any potential changes in the level of risk, including new risks, are
continuously considered when making strategic decisions. Key strategic risks are subject to ongoing review and analysis with monthly reporting provided to
management and the Board including performance against strategic growth targets.
Refer to page 58 for full details on how we are managing ESG Risk.
Governance and risk management
Risk
Value Drivers
Description
Management of risk
Compliance and regulatory
engagement risk
The risk of failing to comply with any legal or regulatory obligations or respond to regulatory
change, includintg improper licensing, data privacy, financial crime-related and cross-border
activities. This includes the risk of not effectively managing interactions or requirements
of the Group’s regulatory relationships, and participation in industry forums to influence
developments in regulatory policy.
Conduct risk
Culture risk
Credit risk
Liquidity and funding risk
Capital risk
Financial performance &
management
Market risk
Operational risk
Financial crime
Technology and data risk
Transformation & change risk
Reputational risk
Strategic risk
Environmental, social &
corporate governance risk
The risk of failing to act in accordance with customers’ best interests; not designing and
distributing products and services to customers in an adequate, accurate and proper manner;
and not acting in accordance with fair market practices, Workplace Health and Safety laws
and the Group’s Code of Conduct.
The risk of an ineffective culture impacting the ability to deliver strategic objectives. This
includes culture and risk culture across the organisation, covering areas such as talent
and succession planning, recruitment and retention, remuneration and consequence
management practices, risk and governance architecture as well as behaviours aligned with
BOQ’s values.
The risk that a debtor or transactional counterparty will default and/or fail to meet their
contractual obligations and includes the risk of loss of value of assets due to deterioration
in credit quality and credit concentration risk. This risk primarily arises from BOQ’s lending
activities and the holding of various financial instruments for investment or liquidity purposes.
The risk of not meeting payment obligations when they fall due, loss on converting a position
or selling an asset for cash to meet such obligations; and the inability to fund the balance
sheet growth of the business in a timely and cost effective way.
The risk of ineffective management which could result in a negative impact on the Group’s
capital levels and potential regulatory action or enforcement should the Group not meet
minimum prudential requirements.
The risk of loss arising from a failure to effectively manage the financial performance of the
business, and/or customer requirements of pricing lending and deposit products, impacting
customers, shareholders and key stakeholders.
The risk to the Group’s earnings arising from changes in interest rates, currency exchange
rates and credit spreads, fluctuations in bond or equity prices, or from changes in the volatility
of these risk factors.
The risk of loss resulting from inadequate or failed internal processes, people and systems,
and/or from third party or external events. As such, operational risk captures business
continuity plans, crisis management, process, systems and operations risk, people-related
risks and health and safety-related risks.
The risk of fraud attempted or perpetrated against the organisation by an internal or external
party; or failure to comply with restrictions imposed by sanctions, or appropriately monitor,
detect and control potentially suspicious financial crime activity.
The risk of loss resulting from impacts to system availability or information security incidents,
including the loss, theft or misuse of data and information. This includes managing and
maintaining all types of data, such as client data, employee data, and the organisation’s
proprietary data.
The risk of failure to deliver projects in accordance with scope, cost, schedule and benefits;
and delivered change including people, process and system not having effective embedded
controls for managing the risks in our business.
The risk to earnings and capital arising from negative public opinion resulting from the loss
of reputation, public trust or standing. This is a risk derived from business activities and is
considered in conjunction with the underlying risks resulting from those activities.
The risk that might arise from the pursuit of a business model or strategy that is not viable,
or failure to execute on the strategy and delivery of expected outcomes
Environmental, Social and Corporate Governance (ESG) considers the risk of factors related to
climate change, natural resources and pollution; managing human capital, human rights and
responsible lending in supporting the community; and the risk associated with our corporate
governance and behaviours.
BOQ has an established Compliance Management Framework, which sets out the Group’s approach to identifying and managing compliance risk and complying
with relevant laws and regulations.
The Compliance Management Framework is supported by a range of Group-wide policies and procedures to manage particular compliance risks, comply with
particular laws and regulations, and to manage conduct risk, including for example the Group-wide Privacy Policy and the Group-wide Conflicts of Interest Policy.
BOQ uses its Governance Risk and Compliance tool to capture and document the financial services laws and obligations that it must comply with, as well as the
processes in place to ensure compliance.
The Group also has an established process to identify and record incidents, to assess those incidents to identify potential breaches of its compliance
obligations, and where relevant, to provide notifications to regulators in a timely manner. This process is also supported by a formal Committee, comprised of
members of senior management, to consider and assess certain incidents. The Group also has an established Group-wide Regulatory Change Framework, to
identify, assess, communicate and implement relevant regulatory changes. BOQ has also established a range of policies and procedures to manage financial
crime and ensure compliance with relevant financial crime obligations.
BOQ maintains a strong ethical culture via embedded principles and policies, including the BOQ Code of Conduct, Whistleblower Policy and Conduct Risk
Standard. The Group regularly monitors the risk with Group Risk Appetite Measures in place.
The Board oversees the Group’s culture, with Board sub-committees in place to support, including the People, Culture & Remuneration Committee and Board
Risk Committee. Key policies, procedures and plans that underpin our organisational culture and risk culture, include the Group’s Purpose and Values, Code of
Conduct, Whistleblower Policy, Consequence Management Framework, and Remuneration Framework.
Monitoring and reporting is supported through risk appetite measures, regular surveys to all employees, and interviews with employees leaving the organisation.
Risk management practices in place to support effective credit risk management include the establishment and ongoing maintenance of a limits monitoring
and management framework. BOQ’s Credit Risk Management Principles provide core standards for the provision of credit for all customers. The credit risk
management principles express the expectations of the Board for both the analytical and behavioural aspects of granting of credit to customers. BOQ maintains
a suite of credit policies to address the range of lending products provided to customers and to satisfy the Board level requirements expressed in the Credit Risk
Management Principles and Risk Appetite Statement.
BOQ maintains a diverse and stable pool of potential funding sources. The Bank maintains adequate liquidity buffers and short-term funding capacity to
withstand periods of disruption in long-term wholesale funding markets. BOQ adopts a robust limit framework including stress testing and scenario analysis that
enables risk based decisioning ensuring the business remains within risk appetite.
The Board, through the Board Risk Committee, approves and oversees capital limits, triggers and target ranges set out in the Group Risk Appetite Statement,
as well as the Internal Capital Adequacy Assessment Process (ICAAP). The ICAAP and Group Recovery Plan are designed to help identify and manage potential
threats to the ongoing viability of the Bank.
The financial performance of the Group is governed through the Board, led by the Group Chief Financial Officer and the Executive. A product & pricing
committee is in place to support decision-making in respect to pricing, fee structure and financial performance of our products.
Financial risk policies include all Board and management accounting policies which form the basis for the recording and reporting of the financial statements,
including group taxation. These policies are governed by the Board Audit Committee.
BOQ’s Credit Portfolio Limit Framework and Risk Appetite measures enable effective management of market risk. BOQ applies common risk management
practices across all Group subsidiaries. The performance of subsidiaries is subject to ongoing review and oversight, with senior management representation on
subsidiary management committees and boards.
BOQ has an Operational Risk Management Framework and underlying standards and procedures that outline how operational risks are identified and managed
within risk appetite and tolerance to meet regulatory, customer, operational and strategic requirements. This includes mechanisms to undertake risk-reward
business decisions, taking into account operational risk exposures and the control environment. These risks are managed through our GRC tool.
The Board is ultimately responsible for overseeing the management of financial crime risk and is assisted by the Board Risk Management Committee and
Executive Risk Management Committee.
The Group’s AML/CTF obligations are articulated in the Part A and Part B AML/CTF Programmes. These programmes are supported by a range of underlying
policies, guidelines and standards. Additionally, the Group’s broader financial crime risk obligations are managed through a range of supporting policies and
standards including the Financial Crime Policy, Anti-Bribery and Corruption Policy, Fraud Controls Policy, Insider Risk Framework, and Major Fraud Framework.
The Board Risk Committee assists the Board in overseeing technology risks. They do this through oversight of the technology portfolio health by reference to
internal and external benchmarks on the quality, stability, reliability and security of the IT services and the impact on customer experience.
Additionally, this includes constantly monitoring and assessing the cyber threat landscape and hardening our environment to protect our data from cyber threat.
The TTC assists the Board in overseeing the transformation agenda for the Group. This is done through the oversight of the strategic project portfolio through
reporting on critical and significant Tier 1 projects, monitored in line with the Group’s risk appetite.
Governance for Reputational Risk is integrated in the Group’s broader risk governance framework, including Crisis Management and Business Continuity Plans.
The Conduct Risk Standard, Code of Conduct, and Reputational Risk Framework outline the approach to establishing and maintaining a strong ethical culture via
embedded principles and policies throughout the Group.
Business strategy development incorporates risk management practices to ensure any potential changes in the level of risk, including new risks, are
continuously considered when making strategic decisions. Key strategic risks are subject to ongoing review and analysis with monthly reporting provided to
management and the Board including performance against strategic growth targets.
Refer to page 58 for full details on how we are managing ESG Risk.
Governance and risk management
Managing the evolving risk environment
Building an organisational culture of accountability underpinned by strong risk foundations is a strategic enabler to enhance operational
and financial resilience for the Group. Our risk culture is below where we would consider best practice and BOQ are dedicated to advancing
maturity in risk behaviours and architecture to strengthen our resilience and responsiveness to the evolving risk landscape.
The financial services industry continues to receive significant focus from the Federal Government, regulators, investors and consumers.
A summary of key areas of reform and areas of increased risk focus are outlined below.
Conduct and Culture (continued)
Financial Accountability Regime
The Banking Executive Accountability Regime (BEAR) which has
been applicable to ADIs since 2018 (and applicable to BOQ since
1 July 2019), is set to be absorbed in the Financial Accountability
Regime (FAR).
FAR imposes a strengthened responsibility and accountability
framework within financial institutions, absorbs the BEAR
requirements and represents a significant milestone for the further
implementation of recommendations from the Hayne Royal
Commission Response. BOQ is committed to complying with its
requirements under FAR.
Risk Culture and Governance
Shaping an organisational culture that supports a mature risk
culture remains a key area of focus for BOQ in FY23. BOQ is
dedicated to evolving how the organisational culture influences
good risk outcomes and ensures early identification and
accountability of current and future risks.
Recent reviews have identified areas for improvement in our
risk culture and governance. BOQ is dedicated to advancing
maturity in risk behaviours and architecture to strengthen our
management framework and practices. BOQ has engaged with and
expects to continue to engage with regulators in respect of various
matters related to operational and financial resilience and
risk culture and governance.
BOQ will appoint specialists to support a review of our control
environment which, when combined with our own control
self-assessment, will support an integrated plan to strengthen
our risk culture.
Complementing this plan is the investment in our
transformation program, which is critical to simplifying our
technology and automating our processes. The ultimate aim of
the program is to continue to provide better outcomes for our
customers, bankers, and shareholders.
Regulatory developments
Policy and Priorities
In February 2022, APRA released its policy and supervision
priorities for the coming 18 months, with the following focus for
ensuring system stability, and resilient and prudent institutions:
•
Improving cyber resilience and crisis preparedness, and
finalising new prudential standards on Financial Contingency
Planning and Resolution Planning;
• Continued support to Treasury in the development of the
Financial Accountability Regime;
• Development of a new prudential standard for Operational
Risk, that will combine the existing Outsourcing and Business
Continuity Management prudential standards;
• Continued focus on risk culture following the completion of a
•
survey across all regulated entities to benchmark perceived risk
behaviours and the effectiveness of risk structures;
Implementing the capital reforms that were largely finalised in
2021, to embed “unquestionably strong” capital ratios and the
Basel III reforms; and
• Publishing APRA’s Macroprudential Policy Framework
In August 2022, ASIC released a corporate plan outlining key
priorities and actions over the next four years, including:
• Drive compliance with new design and distribution obligations;
• Proactively supervise and enforce governance, transparency
and disclosure standards on sustainable finance; and
• Focus on technology impacts on financial services and address
digitally enabled misconduct including scams.
Conduct and Culture
Royal Commission into Misconduct in the Banking,
Superannuation and Financial Services Industry
(Royal Commission)
The package of reforms following the 2020 Financial Sector Reform
(Hayne Royal Commission Response) implemented a significant
number of commitments made by the Government to improve
consumer protections and strengthen regulators.
BOQ has implemented controls to comply with new breach
reporting and anti-hawking obligations that commenced during the
2022 financial year, in response to recommendations made by the
Royal Commission.
BOQ has enhanced its approach to identify, assess and manage
new and changed laws and regulations, through the establishment
of a formal, Group-wide Regulatory Change Framework.
56
Governance and risk management Bank of Queensland Limited and its Controlled Entities Managing the evolving risk environment (continued)
Regulatory oversight and change
Financial crime
Anti-Money Laundering and Counter Terrorism
Financing Compliance
Financial crime is a topic of material importance for BOQ,
recognising the important role banks play in preventing and
detecting financial crime. BOQ continues to build its financial
crime capability through technology, people, partnerships and a
strong Anti-Money Laundering (AML)/Counter Terrorism
Financing (CTF) framework.
BOQ continues to engage with Australian Transaction Reports and
Analysis Centre (AUSTRAC) in relation to BOQ’s AML/CTF program
and continues to enhance and strengthen its AML/CTF systems
and controls.
Credit risk
Over FY22 BOQ has continued to enhance credit models to enable
a greater understanding of the impact of economic movements on
BOQ’s key portfolios. This uplift has resulted in more accurate and
granular sensitivity analyses available to the group.
BOQ has continued to enhance credit frameworks for commercial
lending with the implementation of standardised customer review
and risk grading frameworks.
Regulatory Guide 271 – Internal Dispute Resolution
In October 2021, Regulatory Guide (RG) 271 on Internal Dispute
Resolution (IDR) became enforceable. This RG raised the
internal dispute resolution standards across the financial sector
and requires an increased focus on complaints handling
across the industry.
In response, BOQ has transformed its complaint management
system and increased front-line training to better capture and
respond to customer complaints. These initiatives have seen the
total number of internal complaints recorded increase by 69per
cent compared to last year, due in part to BOQ’s more mature
complaint capturing model. The average time to resolve front line
complaints this year was two days.
Effective and appropriate management of complaints continues to
be a strong focus for BOQ.
Consumer Data Right (CDR) and Open Banking
The CDR regime (commonly referred to as “Open Banking” in the
banking sector) is overseen by the Australian Competition and
Consumer Commission (ACCC) and aims to give consumers more
control over their banking data and improve customers’ ability
to compare and switch between products and services. BOQ is
committed to complying with the CDR regime, and continues to
progress implementation of CDR requirements.
While BOQ (excluding ME) did not initially meet the Phase one, two
or three compliance dates, on 30 June 2022 BOQ confirmed to
the ACCC that all three phases had been successfully delivered.
Separately, ME received an exemption from the ACCC for the CDR
requirements until 30 June 2022. ME successfully commenced data
sharing on 28 June 2022.
There are a number of further compliance requirements under
the CDR regime that are due throughout 2022. This includes
requirements to deliver joint account functionality by 1 October
2022, as well as secondary user capability and non-individual
accounts by 1 November 2022. While BOQ is largely on track to
deliver these requirements, it is likely there will be some delay,
although BOQ expects to still deliver each of these requirements
by the end of October and November 2022 respectively. The Group
also continues to progress implementation of several other CDR
requirements, including improvements to ensure that the Group’s
products have commensurate latency between digital channels and
CDR APIs.
BOQ has a Rectification Schedule in place with the ACCC, which
sets out the status of its implementation of CDR requirements. The
Rectification Schedule is publicly available at ACCC's website.
On 23 June 2022, the ACCC issued BOQ with an infringement
notice in relation to non-compliance with the CDR rules. The notice
includes a monetary penalty of $133,200. It is uncertain what other
actions (if any) will result following the delay in meeting other CDR
requirements as set out in the Rectification Schedule.
57
Governance and risk management 2022 Annual Report 58 58
Bank of Queensland Limited and its Controlled EntitiesBank of Queensland Limited and its Controlled EntitiesGovernance and risk management BOQ Group and climate change
We acknowledge the impact climate change is having on our customers, our people, our suppliers and in the
communities in which we operate.
We have delivered on our initial commitment of carbon neutrality of BOQ Group operations, are well progressed to meet our target to source
100 per cent renewable energy by 2025, and have set ambitious 2030 emission reduction targets aligned with science.
Through scenario analysis we understand that action to reduce emissions will not be enough. In response, we have integrated our
understanding of physical and transition climate risks into our risk management and resilience activities. This has allowed us to rapidly
respond and support our customers and communities with emergency relief to support rebuilding and resilience activities.
Engagement with regulators and banking peers has revealed that climate is still an emerging risk with standardised and consistent
identification, measurement, and management approaches still under development. BOQ Group will continue to evolve our assessment of
climate risks and its impact on our business and look for opportunities to influence the transition to a resilient low-carbon economy.
Climate risk position
BOQ Group accepts climate change is the product of human influence and supports the transition to a net-zero carbon economy in
alignment with the Paris Agreement.
We are committed to support the transformational change needed in every sector to keep global warming to 1.5 degrees Celsius and
improve the resilience of customers, our people, our suppliers and society as we live through the impacts of climate change.
We are doing our part through being a carbon neutral organisation, setting operational emission targets aligned with science, accelerating
plans to reduce our own emissions, and working to support our customers, our people and our suppliers' climate resilience and
transition to net zero.
90%
Emission reduction
target by 2030 (1)
Renewable energy
contracts signed
towards target of
100% renewable
electricity by 2025 (2)
19%
Reduced operational
GHG emissions (3)
Collaboration
to standardise
the assessment
and reporting
of climate risk
(1) Bank of Queensland Limited commits to reduce organisational scope 1 and 2 emissions by 90% and organisational supply chain scope 3 emissions by 40% by 2030
compared to a 2020 baseline. The Science Based Targets initiative recommends a 42% absolute emission reduction between 2020 and 2030 to align with a 1.5 degree Celsius
reduction pathway
(2) Agreements in place at all locations where BOQ Group has a choice of electricity supplier. Renewable certificates used at major support centres without a
choice of electricity supplier.
(3) Includes scope 1, 2 and scope 3 emissions.
59
Governance and risk management 2022 Annual Report BOQ Group and climate change (continued)
Governance
Risk management
The identification and assessment of climate-related risks is
integrated into multi-disciplinary company-wide risk management
activities including the impact on material credit and operational
risks. Losses due to climate change are seen as a subset of credit
risk, notably that transition or physical risk can drive a customer
default or cause asset devaluation.
Our Risk Management Strategy (RMS) and Risk Appetite Statement
(RAS) specifically addresses climate and sustainability risk. These
policies set out expectations regarding the degree of ESG and
climate risk that the BOQ Board is prepared to accept.
The RMS and RAS are updated annually, informed by workshops
to validate and prioritise our approach to climate change risks. This
process is supported by reviews of the impact of climate-related
events and includes scenario analysis and input from external
climate consultants and scientists.
Scenario analysis has been used to inform potential future exposure
to material climate risks and opportunities. We have used this
analysis to inform how climate change mitigation and adaptation
could be incorporated into our strategy to capture
commercial opportunities, support our customers and
maintain resilient operations.
The management of climate change is embedded in our business
through credit policies overseen by the Executive Credit Committee
such as our Prohibited and Restricted Industries List and the
Ecological Care and Sustainability Lending Policy. Credit risk
operational activities are assessed at a portfolio level as well as
at an individual credit exposure level on a case by case basis.
Property valuations take into account factors such as flooding
and environmental risk including insurance impacts in estimating
the value of properties, which BOQ Group uses as a basis for
determining an appropriate level of lending to be extended relative
to that property value. The climate scenario analysis has been
undertaken at the portfolio level.
We are also continually monitoring trends, concerns, publications,
and actions that emerge from regulators and investors through
structured engagement and industry forums.
We have engaged with APRA and the Australian Banking
Association's (ABA's) sustainability and climate risk working groups
as the industry’s understanding of climate-related risks, its impact
on business and assessment and disclosure knowledge evolves.
This allows BOQ Group to keep abreast of changes to climate-
related risks including compliance with any legislative or
regulatory obligations.
The BOQ Group Board and Risk Committee directly oversees
responses to climate-related risks, opportunities and strategies and
are responsible for reviewing and approving respective
climate-related objectives, performance, goals and targets.
Progress on climate change commitments and targets are reviewed
by the Board on a quarterly basis through our Sustainability
Balanced Scorecard. Updates to policy, regulatory and liability
responses to climate change are reported to the Board and the
Risk Committee on a regular basis as needed. The Board delegates
the day to day management of environmental and social risks and
opportunities including climate change to the Executive Team.
The Executive Team is accountable for BOQ Group’s actions and
commitments to embed climate change into Group’s business
strategy and risk management.
Topics presented to the Executive Team and Board in FY22 include:
• ESG education program including climate risk management and
developments in sustainable finance;
• Updates to development of international sustainability climate
risk reporting standards;
• Regulatory updates including climate-related legislation;
• Climate change-related targets and performance of emission
reduction activities; and
• Outcomes of APRA's climate risk survey participation.
The Sustainability Working Group (SWG) supports the Executive
Team with the development and implementation of climate
initiatives and reporting requirements. The SWG is made up of
senior representatives across the Group who are involved in the
day to day management of climate change and other sustainability
matters. SWG members are responsible for ensuring the leadership
teams across the bank remain informed on climate-related issues
and our progress on climate change commitments and targets.
Board
The Board is responsible for oversight of the Group's approach to and
management of climate change
Risk Comittee
Oversight of management of climate-related risks
Executive Team
Ultimately responsible for embedding climate change into the Group's risk
management and business strategy
Sustainability Working Group
Supports the Executive Team with development and implementation of
climate initiatives and reporting requirements'
60
Governance and risk management Bank of Queensland Limited and its Controlled Entities
BOQ Group and climate change (continued)
Risk management (continued)
Between February and March 2022 a series of weather systems
brought unprecedented rainfall and subsequent flooding to vast
areas of Queensland and New South Wales resulting in devastating
loss of life and property. Our 2021 climate scenario analysis
previously identified increases in extreme rain as likely to be
experienced across Australia’s east coast.
A succession of extreme rainfall events continued to impact
affected communities multiple times through March and into April
hampering recovery efforts and impacting our operations, people,
customers and the communities in which we operate. Our Gympie
and Lismore branches were entirely submerged, and streets around
our Newstead Head Office were impassable during the flood event
(shown below).
We activated our business continuity plans ensuring the security
of cash and documents and physical safety of locations while
continuing to support our customers, our people and the
communities in which we operate.
Our critical incident Employee Assistance Program (EAP) support
was mobilised providing support for our people directly impacted;
and our employees accessed over 2,000 hours of community
service and flood leave during the flood recovery.
Over $180,000 was donated as emergency relief across multiple
services aiding affected local communities, including the
Queensland Fire and Emergency Services, New South Wales State
Emergency Service, BOQ’s charity partner (Orange Sky) and other
local area initiatives.
The impact of the evolving situation was closely monitored by
a cross-functional team using post code and street matching
mapping tools to identify potential exposure from flood affected
business and retail customers across all brands. Additional weekly
portfolio analysis reporting was developed for BOQ and VMA Retail
and BOQB with the highest proportion of physical collateral located
in Queensland.
BOQ made its Emergency Fast Track Relief assistance available to
affected customers providing relief to over 200 customers by way
of loan deferrals and temporary overdraft facilities. Retail customers
represented 70 per cent of the number of flood hardship requests
and approximately 80 per cent of the potentially impacted GLAs.
While a large number of postcodes were impacted by floods, within
those postcodes the flooding impact was found to be localised.
Despite the unprecedented scale of flooding, the impact on
the Group portfolio is immaterial with flood hardship-approved
customers representing only 0.09 per cent of total GLAs.
61
Governance and risk management 2022 Annual Report BOQ Group and climate change (continued)
Strategy
BOQ Group is committed to supporting Australia and our customers to transition to a low-carbon and climate-resilient economy. Our
approach to climate change is informed by prioritised risks and opportunities. We consider our climate-related risks and opportunities
focused on credit, liquidity markets and operational risks and they are prioritised over the short term (0-5 years), medium term (10 years) and
long term (20+ years).
Climate Risks (R) / Opportunities (O)
Timeframe
Potential impacts on BOQ Group customers and the Group
Physical
Acute
R & O
Chronic
Extreme weather events including flooding
associated with extreme rain, cyclones,
storms and bushfires
Short to long term
R
Long-term weather changes such as rising
temperatures, sea levels and drought
Long term
Transition
Policy
• Decline in value of assets due to impact
• Rise in insurance premiums or inability to obtain insurance
• Business disruption
• Devaluation of collateral
Increased expenses
•
• Reduced profitability
•
Increased arrears, hardship and impairments
R
R
Government climate policies (e.g. carbon
taxes and cross border tariffs)
Short to
medium term
• Reduced market competitiveness
•
•
Increased operating costs / complexity
Increased credit risk
Increased climate regulation for
financial institutions
Short term
• Enhanced reporting and compliance obligations
Technology
R & O
Transition to renewable energy, lower
emissions technology and electrification
Short to
medium term
Increased / decreased costs
Increased / decreased profitability
•
•
• Obsolete assets
•
Increased / decreased credit risk
Market
R
O
Disruption of carbon-intensive industries and
associated value chains
Short to
medium term
Growth of low carbon sectors
Short to long term
• Obsolete assets
• Devaluation of collateral
•
Increased arrears, hardship and impairments
Increased profitability
•
• Reduced carbon intensity of loan book
R & O
Shift in demand for services
and products
Short to
medium term
•
•
Increase / decrease of customers and income
Increased costs / complexity from new products
Reputation
R & O
R & O
Liability
R
Increased climate risk focus
from investors
Alignment with customer and employee
values on climate change
Short to
medium term
Short to
medium term
•
Increased / decreased cost of capital
• Higher productivity, increased ability to retain and attract talent
•
Increase / decrease of customers and income
Increased stakeholder activism / litigation
against organisations demonstrating
insufficient climate action
Short to
medium term
• Business disruption, increased costs
• Director liability
• Reputational damage
Climate scenario analysis
In FY22 we leveraged our understanding of physical and transition risks from climate extremes to BOQ Group’s residential lending and
business portfolios gained through our 2021 climate program. Technical information on the climate scenario analysis undertaken in the
2021 climate program is available in the 2021 Annual Report.
We used this understanding to move forward in collaborating with banking peers and regulators both in Australia and overseas to
standardise the assessment of climate risk through scenario analysis and inclusion of climate risk factors in capital frameworks.
62
Governance and risk management Bank of Queensland Limited and its Controlled Entities
BOQ Group and climate change (continued)
Physical risk analysis outcomes (1)
Transition risk analysis outcomes (2)
BOQ Group has a nationally diversified geographic spread with
highest concentrations on the Queensland coast, central and south-
east New South Wales coast and metropolitan Victoria. Scenario
analysis found increases in extreme rain and conversely extreme
heat events are likely to be experienced under a range of scenarios
and timeframes.
Our exposure to physical climate risk remains low with strategy
and risk management controls in place including enhanced
consideration of potential hazards in valuations at origination and
our customers maintaining insurance protection in accordance with
their lending contracts.
In the longer term, insurance affordability or inability to insure will
need to be tracked. In FY22 BOQ Group partnered with Honey
Insurance who offer smart technology to lower the cost of home
insurance and the risk of under-insurance. Honey Insurance
provides national coverage that supports the footprint of
BOQ branches and customers including far north Queensland.
Targets and metrics
Industry exposures
More than 70 per cent of BOQ’s business lending portfolio is
exposed to sectors with a minimal impact from the additional costs
expected during a transition to net-zero emissions under a range of
scenarios and timeframes.
BOQ’s business lending portfolios have minimal exposure to high
emitting sectors with elevated exposure to transition risk under the
most ambitious decarbonisation scenario. BOQ’s lending portfolio
has no exposure to fossil fuel power generation and minimal direct
exposure to fossil fuels extraction.
Industries including agriculture, non-metallic mineral product
manufacturing and waste collection and disposal services are likely
to face transition challenges despite their products remaining in
demand. BOQ Group’s behavioural loan term for these sectors is
generally short providing an opportunity to re-assess and support
our customer’s transition at renewal points.
The table below outlines the proportionate credit exposures of lending activities.
Credit risk
Sector
FY22
FY21
$m
% of Total Exposure
$m
% of Total Exposure
Residential mortgages
63,444
78.6%
59,053
78.5%
Property & construction
Healthcare
Professional services
Agriculture
Transportation
Manufacturing & mining
Hospitality & accommodation
Other
Total (3)
Per Balance Sheet (4)
6,115
3,127
1,548
1,276
801
792
770
2,862
80,735
81,250
7.6%
3.9%
1.9%
1.6%
1.0%
1.0%
1.0%
3.5%
100.0%
5,627
3,017
1,453
1,232
843
779
622
2,598
75,244
75,748
7.5%
4.0%
1.9%
1.6%
1.1%
1.0%
0.8%
3.5%
100.0%
(1) Summary of physical climate risk scenario analysis undertaken in 2021 for all residential lending and the BOQ Business property and construction portfolio.
(2) Summary of transition climate risk scenario analysis undertaken in 2021 for BOQ Business portfolios including commercial and asset financing from BOQB, BOQS and BOQF.
(3) Due to rounding, numbers presented may not add up to the totals provided.
(4) This includes unearned income reallocated in Credit Risk and the balance of credit cards, overdrafts and personal loans.
63
Governance and risk management 2022 Annual Report BOQ Group and climate change (continued)
Financed emissions
BOQ Group recognises that measuring financed emissions is an important consideration in managing climate-related
risks and opportunities.
The carbon intensity of the loan book in FY22 was 0.23kg of CO2-e per $1 loaned (1), a reduction of 25 per cent (2) largely driven by a change in
emissions attribution that more closely aligns to the approach recommended by the Partnership for Carbon Accounting Financials (PCAF)
framework and by the incremental decarbonisation of Australia’s electricity supply.
Residential and commercial property makes up 86 per cent of our credit risk exposure and comprises 45 per cent of the carbon emissions
from our lending portfolio as at August 2022.
20%
22%
4%
4%
BOQ Group
Lending
% of emissions
by sector (3)
11%
23%
3%
4%
9%
Residential mortgages
Property and construction
Healthcare
Hospitality and accommodation
Professional serivces
Manufacturing and mining
Agriculture
Transport
Other
(1) Financed emissions calculations include estimated greenhouse gas emissions associated with residential mortgages, commercial loans and asset financing.
(2) The FY21 carbon intensity of the loan book has been revised to 0.30 kg of CO2-e per $1 loaned.
(3) Due to rounding, numbers presented may not add up to the totals provided.
64
Governance and risk management Bank of Queensland Limited and its Controlled Entities BOQ Group and climate change (continued)
Operational greenhouse gas footprint
Climate-related targets
In FY22 we continued to be carbon neutral across our operations
achieving a balance between the greenhouse gas emissions
associated with running our business and the emission reduction
activities we support.
We recognise that being carbon neutral is only part of the solution
and have made significant progress on our emissions reduction
journey. We have re-baselined our FY20 and FY21 emissions
on proforma basis inclusive of ME using the same operational
boundary as the BOQ Climate Active certification. From FY22, BOQ
Group's Climate Active certification will include ME operations.
BOQ Group commits to reduce organisational scope 1 and 2
emissions by 90 per cent and organisational supply chain Scope
Three emissions by 40 per cent by 2030 compared to our 2020
baseline. These targets are aligned to the science-based emission
reduction trajectory needed to meet the goal of net zero
emissions by 2050.
BOQ Group is committed to cease funding equipment directly
involved in the extraction of fossil fuels by 2024. As at 31 August
2022, our exposure to this industry was $9.1 million representing
0.01 per cent of lending.
We have reduced emissions through the introduction of electric and
hybrid vehicles into our fleet, operating our major Brisbane, Sydney
and Melbourne support centres on renewable electricity, and
entered into GreenPower 100per cent certified renewable energy
contracts for all sites where the Group can
choose its energy supplier.
In FY22 we continued our commitment to being a carbon neutral
organisation via the Australian Government Climate Active
certification program. The BOQ certification will be integrated with
ME's in 2022 to include operations and supply chain contribution
from BOQ Retail (including branches), Virgin Money Australia, BOQ
Business, BOQ Finance and BOQ Specialist.
We are well progressed with our commitment to source 100 per
cent of our operational electricity from renewable sources by 2025.
For FY22 BOQ Group operated on 54 per cent renewable electricity
and has contracts in place for renewable energy contracts for
all sites where the Group can choose its energy supplier. For
other locations we will work with landlords or separately contract
renewable certificates to meet our commitments by 2025.
We engaged with 11 of our material upstream suppliers on their
climate policies and ways to collaborate to reach net zero. Made
possible through the implementation of our Supplier Code of
Conduct, our supplier engagement allows for more accurate
calculation of Scope Three emissions that acknowledges the
emission reduction activities of our partners.
While we work towards minimising our footprint BOQ Group
supports accredited projects that reduce emissions and produces
verified offsets. Our use of offsets can be found in our FY22
Sustainability Report on page 22.
Greenhouse
gas emissions
(tCO2-e) (1)
Scope 1
Scope 2
Scope 3
Total
FY22
FY21
Change
423
2,567
429
4,583
35,025
41,896
38,045
46,908
(1%)
(43%)
(16%)
(19%)
(1) Emissions estimates are calculated in accordance with the GHG Protocol using the factors consistent with Climate Active's carbon neutral program. FY21 is restated to include ME.
Scope 1 includes direct emissions from transport fleet. Scope 2 includes electricity purchased. Scope 3 includes purchased goods and services, capital goods, fuel and energy-
related emissions from fuel extraction, waste generated in operations, business travel, employee commuting and working from home. Due to rounding, numbers presented may not
add up to the totals provided.
65
Governance and risk management 2022 Annual Report Our approach to corporate governance
BOQ continues to focus on enhancing our governance and risk management practices to meet the expectations of our stakeholders. Further
details on our Corporate Governance policies and practices are set out in our Corporate Governance Statement which has been prepared in
accordance with the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (4th edition). The FY22
Corporate Governance Statement can be viewed at boq.com.au/2022.
Corporate governance framework
BOQ’s Board is responsible for setting the strategy and risk appetite of the Bank and for leading the culture and values for our people. The
Corporate Governance framework sets out how the Board delegates to Management and provides oversight and governance of key decisions.
Shareholders
BOQ Board
Investment
Committee
Audit
Committee
Nomination and
Governance
Committee
Risk
Committee
People, Culture
and Remuneration
Committee
Transformation
and Technology
Committee
Board Reserved Powers and Delegation of Authority Policy
Managing Director and Chief Executive Officer
Executive Committee (ExCo)
Board areas of focus
During FY22, the Board and its Committees have focussed on the following 8 key strategic, governance and oversight activities.
1.
Financial Resilience
4. New Purpose and Values
7. Leadership and Talent
Strengthening BOQ’s capital and
liquidity position, to ensure resilience
through the cycle
2.
Digital Transformation
Continuing the technology program,
which will see the bank move from
complex legacy systems to an end-to-
end cloud based digital and data led
scalable organisation
3. Profitable and Quality Growth
Disciplined growth, with a focus on
quality SME lending
66
Setting the tone from the top, by living
our values, enabling curiosity and
accountability, to do the right thing and
make a positive difference
Ensuring future fit skills and capabilities
to achieve our ambitions, through the
development and retention of a quality
and diverse team
5.
Customer Experience
8. 2030 Strategy
Focus on the voice of the customer in
all board decisions, and maintaining a
focus on NPS ranking
6. Risk Culture
Ongoing focus on embedding
risk culture, ensuring divisional
accountability, building a risk culture
where risk is everyone’s business
Work on the 2030 BOQ. Considering
market consolidation, disruption,
new opportunities for growth and
diversity of earnings to address the key
consumer trends and market shifts
Governance and risk management Bank of Queensland Limited and its Controlled Entities Board of Directors
Patrick Allaway
BA, LLB
George Frazis
B. Eng (Hons), MBA
Bruce Carter
B. Econ, MBA, FAICD, FICA
Karen Penrose
B. Com, CPA, FAICD
Independent non-executive
director since May 2019.
Chairman since October
2019. Chair, Investment and
Nomination & Governance
Committees. Member, People,
Culture & Remuneration,
Transformation & Technology,
Audit & Risk Committees.
Managing Director and
Chief Executive Officer since
September 2019.
Independent non-executive
director since February 2014.
Chair, Risk Committee. Member,
Audit, Transformation &
Technology, Investment, People,
Culture & Remuneration, and
Nomination & Governance
Committees.
Independent non-executive
director since November
2015. Chair, Audit Committee.
Member People, Culture
& Remuneration, Risk,
Transformation & Technology,
Investment, and Nomination &
Governance Committees.
Warwick Negus
B Bus, M Com, SF Fin
Mickie Rosen
BA, Economics, MBA
Deborah Kiers
B Sc (Hons), MPA, MAICD
Dr Jenny Fagg
PhD, B Econ
Independent non-executive
director since September
2016. Chair, People, Culture
& Remuneration Committee.
Member, Audit, Risk,
Transformation & Technology,
Investment, and Nomination &
Governance Committees.
Independent non-executive
director since March 2021.
Chair, Transformation &
Technology Committee.
Member, Risk, People, Culture
& Remuneration, Audit, and
Nomination & Governance
Committees.
Independent non-
executive director since
August 2021. Member,
Audit, Risk, Nomination &
Governance, People, Culture
and Remuneration, and
Transformation & Technology
Committees.
Independent non-executive
director since October 2021.
Member, Transformation &
Technology, Risk, People,
Culture & Remuneration, Audit,
and Nomination & Governance
Committees.
67
Directors’ details For the year ended 31 August 20222022 Annual Report The Directors present their report together with the financial report of Bank of Queensland Limited (the Bank or BOQ) and of the
Consolidated Entity (or the Group), being the Bank and its controlled entities, for the year ended 31 August 2022 and the independent
auditor’s report thereon. The Directors of the Bank at any time during or since the end of the financial year are:
Name, qualifications & independent status
Experience, special responsibilities, and other Directorships
Mr Allaway was appointed as a Non-Executive Director of the Bank on 1 May 2019 and was appointed Chairman on
18 October 2019.
Mr Allaway has extensive senior executive, non-executive, and corporate advisory experience across the financial
services, property, media, and retail sectors.
Mr Allaway’s executive career was in financial services with Citibank and Swiss Bank Corporation (now UBS) working
in Sydney, New York, Zurich, and London. Mr Allaway was Managing Director SBC Capital Markets & Treasury with
direct responsibility for a global business.
Mr Allaway brings over 30 years of experience in financial services across financial markets, capital markets, and
corporate advisory. This included an advisory role in the media sector, responding to considerable digital disruption.
Mr Allaway has over 15 years of Non-Executive Director experience and was formerly a Non-Executive Director
of Macquarie Goodman Industrial Trust, Metcash Limited, Fairfax Media, Woolworths South Africa, David Jones,
Country Road Group, and Nine Entertainment Co. Mr Allaway chaired the Audit & Risk Committees for Metcash,
David Jones, and Country Road Group.
Mr Allaway is currently a Non-Executive Director of Allianz Australia and Dexus Funds Management Limited and
a member of the Adobe International Advisory Board. He chairs BOQ’s Investment and Nomination & Governance
Committees and is a member of the People, Culture & Remuneration, Transformation & Technology, Audit, and
Risk Committees.
Mr Frazis joined BOQ as Managing Director and CEO on 5 September 2019 and has over 26 years of corporate
experience.
Mr Frazis has a long history in Banking and Finance, having worked in the industry for the past 17 years. Most
recently he was Chief Executive of Westpac Group’s Consumer Bank. Prior to that Mr Frazis was CEO, St. George
Banking Group and Chief Executive, Westpac New Zealand Limited.
Mr Frazis has held senior executive roles at National Australia Bank, Commonwealth Bank of Australia, as well as Air
New Zealand. He started his career as an officer in the Royal Australian Air Force.
Mr Carter was appointed a Director of BOQ on 27 February 2014.
Mr Carter was a founding Managing Partner of Ferrier Hodgson South Australia, a corporate advisory and
restructuring business, and has worked across a number of industries and sectors in the public and private sectors.
He has been involved with a number of state government-appointed restructures and reviews, including chairing
a task force to oversee the government’s involvement in major resource and mining infrastructure projects. Mr
Carter had a central role in a number of key government economic papers, including the Economic Statement on
South Australian Prospects for Growth, the Sustainable Budget Commission, and the Prime Minister’s 2012 GST
Distribution Review.
Mr Carter has worked with all the major financial institutions in Australia. Before Ferrier Hodgson, Mr Carter was at
Ernst & Young for 14 years, including four years as Partner in Adelaide. During his time at Ernst & Young, he worked
across the London, Hong Kong, Toronto, and New York offices.
Mr Carter is currently Chair of the AIG Australia Limited, Australian Submarine Corporation and Sage Group Holdings
Limited Boards. He formerly chaired the Boards of Aventus Capital Limited and One Rail Australia and was a Non-
Executive Director of Crown Resorts Limited and SkyCity Entertainment Group Limited.
Mr Carter is Chair of the Risk Committee and a member of the Audit, Transformation & Technology, Investment,
People, Culture & Remuneration, and Nomination & Governance Committees.
Ms Penrose was appointed a Director of BOQ on 26 November 2015.
Ms Penrose is an experienced non-executive director and banker. As a banker, Karen has 20 years of experience
leading businesses within Commonwealth Bank of Australia and HSBC and over ten years in accounting and finance
roles. Ms Penrose has particular expertise in the financial services, health, property, resources and energy sectors.
Ms Penrose is a Non-Executive Director of Cochlear Limited, Ramsay Health Care Limited and Estia Health Limited.
She is also a Director of Ramsay Générale de Santé and Rugby Australia Limited. Ms Penrose was formerly a Non-
Executive Director of Vicinity Centres Limited, AWE Limited, Spark Infrastructure Group, Landcom, and Future
Generation Global Investment Company Limited. She is a member of Chief Executive Women.
Ms Penrose is Chair of the Audit Committee and is a member of the People, Culture & Remuneration, Risk,
Transformation & Technology, Investment and Nomination & Governance committees.
Patrick Allaway
BA/LLB
Chairman
George Frazis
B. Eng (Hons), MBA
Managing Director and
Chief Executive Officer
Bruce Carter
B. Econ, MBA, FAICD, FICA
Non-Executive
Independent Director
Karen Penrose
B. Com, CPA, FAICD
Non-Executive
Independent Director
68
Directors’ details For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Name, qualifications & independent status
Experience, special responsibilities, and other Directorships
Warwick Negus
B Bus, M Com, SF Fin
Non-Executive
Independent Director
Mickie Rosen
BA, Economics, MBA
Non-Executive
Independent Director
Deborah Kiers
B Sc (Hons), MPA, MAICD
Non-Executive
Independent Director
Dr Jenny Fagg
PhD, B Econ
Non-Executive
Independent Director
Mr Negus was appointed a Director of BOQ on 22 September 2016.
Mr Negus brings more than 30 years of finance industry experience in Asia, Europe, and Australia. His most recent
executive roles include Chief Executive Officer of 452 Capital, Chief Executive Officer of Colonial First State Global
Asset Management, and Goldman Sachs Managing Director in Australia, London, and Singapore. He was also a Vice
President of Bankers Trust Australia and a Director of the University of NSW (UNSW) Foundation and FINSIA.
Mr Negus is Chair of Pengana Capital Group and a Non-Executive Director of Washington H Soul Pattinson & Co Ltd,
Dexus Funds Management Limited, Virgin Australia Holdings Pty Ltd, and Terrace Tower Group. He is a member of
the Council of UNSW and Chair of UNSW Global Limited.
Mr Negus is Chair of the People, Culture & Remuneration Committee and a member of the Audit, Risk,
Transformation & Technology, Investment, and Nomination & Governance Committees.
Ms Rosen was appointed a Director of BOQ on 4 March 2021.
Ms Rosen has three decades of strategy, operating, advisory, and board experience across media, technology, and
e-commerce. She has built and led global businesses for iconic brands such as Yahoo, Fox, and Disney, as well as
early-stage companies including Hulu and Fandango.
Ms Rosen is also a Non-Executive Director of Nine Entertainment Co and of Ascendant Digital Acquisition Company
and FaZe Clan in the United States. Prior, Ms Rosen served on the board of Pandora Media and was the President
of Tribune Interactive, the digital arm of Tribune Publishing, and was concurrently the President of the Los Angeles
Times. Ms Rosen commenced her career with McKinsey & Company, is based on the West Coast of the United
States, and holds an MBA from Harvard Business School.
Ms Rosen currently chairs the Transformation & Technology Committee and is a member of the Risk, People, Culture
& Remuneration, Audit, and Nomination & Governance Committees.
Ms Kiers was appointed as a Non-Executive Director of the Bank on 5 August 2021.
Ms Kiers previously acted as a Director of ME since July 2020 and acted as Chair of the ME Board’s People and
Culture sub-committee and as a member of the Risk and Compliance Committee.
Ms Kiers brings over 30 years of corporate advisory and consulting experience to boards, CEOs, and executive
management teams across a range of industries including Financial Services, Energy and Resources, Industrials,
Property, Infrastructure and Regulated Utilities, both in Australia and internationally.
As Managing Director of JMW Consultants (Asia Pacific), her corporate support included strategic advice,
transformation initiatives, M&A integration, leadership transition and development, and building synergies between
purpose, strategy, culture, and performance.
Ms Kiers is currently a Non-Executive Director for IFM Investors and holds the position of Chair of the Responsible
Investment and Sustainability Committee and is a member of the Board Audit and Risk Committee. Ms Kiers is also
Chair of Tiverton Agriculture Impact Fund and Non-Executive Director of Downforce Technologies Limited.
Ms Kiers is a member of the Audit, Risk, Nomination & Governance, People, Culture and Remuneration, and
Transformation & Technology Committees.
Dr Fagg was appointed a Director of BOQ on 13 October 2021.
Dr Fagg brings to the Board more than 25 years executive experience across leading financial services institutions
in Australia and abroad. Currently, she is the CEO of 2Be Finance. Previously, Dr Fagg served as Chief Risk Officer
for AMP Limited driving a critical transformation agenda for risk culture and systems following the Hayne Royal
Commission. She is recognised for her turnaround credentials fostered during her time at CIBC (Canada), as CEO
of ANZ National Bank (New Zealand) and as Managing Director of ANZ Consumer Finance. Dr Fagg has a PhD in
Management (Risk) from University of Sydney and a Bachelor of Economics (Honours in Psychology) from the
University of Queensland.
Dr Fagg is a member of BOQ’s Transformation & Technology, Risk, People, Culture & Remuneration, Audit, and
Nomination & Governance Committees.
69
Directors’ details For the year ended 31 August 20222022 Annual Report Company Secretaries
Fiona Daly
LLB, LLM, AGIA, ACG, MAICD
Ms Daly joined BOQ in October 2018 and was appointed joint company secretary on 30 April 2019. Ms Daly commenced her career as a
corporate lawyer at Phillips Fox (now DLA Piper) before joining Allens. Prior to working for BOQ, Ms Daly held senior legal and regulatory roles
including as senior legal counsel, global regulatory affairs manager and joint company secretary at Energy Developments, an international
energy company.
Nicholas Allton
LLB (hons), LLM, GAICD
Mr Allton joined BOQ as Group General Counsel and Company Secretary on 1 February 2021. Mr Allton has more than 28 years’ experience
across Financial Services, including 11 years in private practice for top-tier Australian, English and US firms. Prior to joining BOQ, Mr Allton
held the role of Group General Counsel and Company Secretary at MLC and spent 15 years working across a number of senior roles within
the Macquarie Group.
Directors’ Meetings
The number of meetings of the Bank’s Directors (including meetings of Committees of Directors) and the number of meetings attended by
each Director during the financial year were:
s
r
o
t
c
e
r
i
D
f
o
d
r
a
o
B
16/16
15/15
16/16
15/16
2/2
15/16
16/16
14/16
14/14
4/5
Patrick
Allaway
George
Frazis
Bruce
Carter
Karen
Penrose
Warwick
Negus
Mickie
Rosen
Deborah
Kiers
Jenny
Fagg (1)
John
Lorimer (2)
s
r
o
t
c
e
r
i
D
f
o
d
r
a
o
B
s
w
e
r
d
n
A
t
S
–
e
e
t
t
i
m
m
o
C
k
s
i
R
e
e
t
t
i
m
m
o
C
t
i
d
u
A
&
n
o
i
i
t
a
n
m
o
N
e
c
n
a
n
r
e
v
o
G
e
e
t
t
i
m
m
o
C
e
r
u
t
l
u
C
,
l
e
p
o
e
P
n
o
i
t
a
r
e
n
u
m
e
R
&
e
e
t
t
i
m
m
o
C
n
o
i
t
a
m
r
o
f
s
n
a
r
T
y
g
o
l
o
n
h
c
e
T
&
e
e
t
t
i
m
m
o
C
t
n
e
m
t
s
e
v
n
I
e
e
t
t
i
m
m
o
C
s
r
o
t
c
e
r
i
D
f
o
d
r
a
o
B
k
n
a
B
E
M
–
–
e
e
t
t
i
m
m
o
C
t
i
d
u
A
k
n
a
B
E
M
e
c
n
a
i
l
p
m
o
C
&
k
s
i
R
E
M
–
e
e
t
t
i
m
m
o
C
k
n
a
B
7/7
7/7
2/2
6/6
4/4
2/2
4/4
3/3
3/3
4/4
6/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
6/7
5/5
5/5
2/2
6/6
4/4
2/2
4/4
3/3
3/3
2/2
5/6
4/4
2/2
3/4
3/3
3/3
2/2
6/6
4/4
2/2
3/4
3/3
3/3
2/2
6/6
4/4
4/4
3/3
3/3
1/2
1/1
5/6
4/4
2/4
3/3
3/3
3/3
4/4
2/2
1/1
1/1
3/3
4/4
1/1
4/4
1/1
3/3
3/3
3/3
1
3
t
a
s
a
e
r
u
n
e
T
2
2
0
2
t
s
u
g
u
A
3 years,
4 months
3 years
8 years,
6 months
6 years,
9 months
5 years,
11 months
1 year,
6 months
1 year,
1 month
10
months
5 years,
10
months
(1) Jennifer Fagg was appointed as a Director on 13 October 2021
(2) John Lorimer ceased as a Director on 7 December 2021
(3) ME Bank meetings held between the date of acquisition (1 July 2021) and ADI Handbank (28 February 2022)
70
Directors’ details For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities
1. Remuneration snapshot
2. Key Management Personnel
3. Remuneration outcomes
4. Remuneration strategy and structure
5. Remuneration governance
6. Non-executive Director remuneration
7. Statutory tables
Dear Shareholder
Introduction
In FY22, we have simultaneously progressed the integration of ME
Bank and our digital and cultural transformation, while navigating
challenges such as extreme weather events, learning to live with
COVID-19 and rising interest rates alongside our people, customers,
shareholders and communities.
The launch of our new purpose, ‘Building Social Capital through
Banking’, and values is something that we are especially proud of.
They enable our people across all brands to join together under a
common banner to deliver on our refreshed strategy.
On behalf of the Board I am delighted to present the Remuneration
Report for the period 1 September 2021 to 31 August 2022 (FY22)
and share with you our progress and achievements against our
people and culture strategies.
Key management personnel changes
Chris Screen was appointed to the role of Group Executive, Business
Banking on 1 October 2021. David Watts commenced as Group
Chief Risk Officer on 3 March 2022. Paul Newham was appointed
Chief Operations Officer effective 6 June 2022 and Racheal
Kellaway was appointed Chief Financial Officer effective 1 July 2022.
On the Board, we welcomed a new Non-executive Director (NED),
Dr Jenny Fagg on 13 October 2021.
I thank our former key management personnel (KMP) Fiamma
Morton (former Group Executive, Business Banking), Adam
McAnalen (former Chief Risk Officer), Ewen Stafford (former Chief
Financial Officer & Chief Operating Officer), and John Lorimer (former
Non-executive Director) for their valuable contributions to BOQ.
FY22 remuneration structure
There were no changes to the Senior Executive Remuneration
Framework (the Framework) in FY22. As in FY21, Senior Executives
were compensated via fixed reward and a total variable reward
opportunity comprising Performance Shares and Premium Priced
Options; there is no cash component of variable reward. The
Framework is focused on alignment with shareholders, balanced
measures of performance and long-term deferral.
FY22 remuneration outcomes
After two years in the role, the fixed reward of our Managing Director
and Chief Executive Officer was benchmarked and increased
from $1.3m to $1.5m, effective from 1 September 2021. Two other
Senior Executives also received increases in their fixed reward
from 1 September 2021 – the Chief Information Officer and Group
Executive People and Culture. A fixed reward increase was awarded
to the Group Executive Retail Banking and Chief Executive Officer
ME, effective 1 April 2022.
73
75
76
84
86
90
91
Fixed reward for newly appointed Senior Executives was determined
based on a combination of the executive’s experience and capability,
competitiveness relative to the financial services sector and similarly
sized ASX listed companies, and internal relativities.
At the beginning of FY22, Senior Executives were awarded grants
of Performance Shares and Premium Priced Options. Performance
Shares are granted as Rights which convert to Restricted Shares
based on the Board’s assessment of collective performance
against the Group Scorecard, risk matters and any other
considerations by the Board.
Premium Priced Options have a single performance hurdle - an
exercise price that is 120 per cent of the share price after the Annual
General Meeting (AGM) in December. This aligns the interests of
Senior Executives with those of Shareholders, as participants derive
zero value unless the share price at between the vesting date (four
and five years from the grant date) and expiry date (six and seven
years from the grant date) exceeds the exercise price. Share price
is dependent on financial performance, effective risk management
(including conduct risk), and other non-financial factors (including
reputation, customer growth and future outlook).
The Chief Financial Officer, who was promoted into the role on
1 July 2022, was awarded a pro-rata award of Performance Shares
in respect of the period 1 July to 31 August 2022.
Remuneration outcomes for FY22 reflect a range of relevant factors:
•
•
the Group’s performance in relation to the five strategic
priorities, the Group Scorecard and achievement of the
Board-approved financial and non-financial measures;
regard to executive contribution to Group Scorecard
performance and progress toward the achievement of our
strategic priorities;
• explicit consideration of risk events, behaviours and outcomes
based on input from the Group Chief Risk Officer and Board Risk
Committee; and
the experience of our shareholders during the year in terms of
share price and dividends.
•
Some highlights for the year include the Group making steady progress
on building our new digital bank which is providing a markedly better
banking experience for our customers. Already, the Virgin Money
Australia and BOQ transaction and savings functions are operating on
our new cloud digital bank, and work is well advanced to move ME Bank
deposit transactions to the new cloud platform. We have delivered
solid quality growth across retail and particularly in our business bank
with medium sized family businesses. Importantly, we have returned
ME Bank to growth and we are completing the integration ahead of
schedule and with increased synergies.
71
Remuneration Report For the year ended 31 August 20222022 Annual Report However, recognising the underperformance of BOQ’s share price
in FY22, we understand the impact that paying below our target
dividend range has on our shareholders. We also understand that
cost of living pressures are a real factor for our customers and the
communities we serve.
The MD and CEO has proposed that 75% of his FY22 Performance
Shares convert and, supported by the executive team, that 90%
of Senior Executives’ FY22 Performance Shares convert. Based
on the Group Scorecard outcomes and the Board’s holistic
consideration of risk, performance, behaviours and outcomes for
our shareholders, the Board deems this to be fair. Consequently,
25% of the MD and CEO’s Performance Shares will lapse, as will 10%
of those held by other Senior Executives.
The BOQ Performance Shares differ to traditional short-term
incentive plans where typically a portion is paid in cash and the
balance deferred into equity, using the share price at around the end
of the year. The BOQ Senior Executives receive no cash incentives.
As the Performance Shares are allocated and priced during the
relevant performance year (after the AGM), the Senior Executives
are fully aligned with the experiences of shareholders. In making its
decision regarding the conversion of FY22 Performance Shares, the
Board considered the impact of the share price since grant (which
represented a 12 per cent reduction in value to 31 August 2022).
To encourage alignment between employees and shareholders
and to promote ownership across the employee population, BOQ
delivers a portion of total reward at Senior Manager level and above
using equity. BOQ offered a tax-exempt employee gift share plan,
which we refer to as ThankQ Shares, again in FY22. The ThankQ
Share Plan was offered to eligible employees who would generally
not participate in other forms of equity-based remuneration,
including those who joined the Group through the ME acquisition.
At BOQ, we have a strong focus on encouraging employee
ownership through equity.
FY23 remuneration
As we enter the third year of our Senior Executive Remuneration
Framework, it was an opportune time for the Board to review its
effectiveness. This review showed that a clearer articulation of
the ability for “upside” and “downside” variation to Performance
Share outcomes would allow the Board to better differentiate
performance and accountability. The results of our benchmarking
exercise also showed that the Senior Executives’ total variable
reward (TVR) opportunity, “at risk” remuneration, is less than our
financial services peers. Therefore, effective from 1 September
2022, our Senior Executives’ TVR opportunity, will increase from
130 per cent to 150 per cent (maximum opportunity of 170 per cent)
of fixed reward, with the MD and CEO increasing from 146 per cent
to 170 per cent (maximum of 200 per cent) of his fixed reward. The
target opportunity for Performance Shares remains at 60 per cent
of TVR, with the remaining 40 per cent of TVR delivered using
Premium Priced Options.
There is no further upside opportunity for the Premium Priced
Options component. These TVR opportunities are still toward the
lower end of peer benchmarking. BOQ remains committed to strong
alignment with the experience of our shareholders. All variable
reward for Senior Executives is delivered in BOQ equity.
72
The FY23 Group Scorecard continues to focus our Senior Executives
on achieving the Group’s strategy and fulfilling our ambition. The
Group’s refreshed strategy comprises four strategic pillars which are
the foundation of the Group Scorecard. It is these against which the
collective performance of Senior Executives, and the conversion of
Performance Shares granted in FY23, will be assessed.
Following an increase in FY22, NED fees remain unchanged for FY23.
APRA Prudential Standard CPS 511 (CPS 511) will come into effect on
1 January 2023. Our remuneration frameworks are being reviewed
and any required changes to our executive remuneration settings
will be implemented on 1 September 2023, which is the start of the
Group’s first full performance period under CPS 511.
People and Culture strategy
In May 2022 we launched the Group’s new Purpose - Building social
capital through banking, strategic pillars, and values - Spirited,
Optimistic, Curious, Inclusive, Accountable and Lion-hearted. These
values support our new purpose and refreshed strategy. The People
and Culture strategy supports the Group Strategy.
A comprehensive culture diagnostic was launched in May 2022,
with the outputs informing the next phase of our culture plan.
We are delighted to see positive progress across all cultural
dimensions. Additionally, through the six-monthly Pulse survey,
we were pleased to see consecutive improvements to employee
sentiment in the areas of engagement and culture. Further detail is
provided in section 3.5 (Group Scorecard).
Conclusion
The Board remains committed to ensuring that the Group’s people,
culture and remuneration frameworks and practices further the
interests of all stakeholders, including customers, shareholders,
regulators and employees.
We are halfway through an exciting and ambitious digital
transformation which will give us the flexibility of a neobank but
with the scale, strong capital position and proven brands of an
established institution with 148 years in banking. This will provide a
compelling advantage over both new and existing competitors.
In consideration of this, our continued progress against our
strategic priorities and including the need to do more work on
improving our control environment and uplifting our risk culture, it
is the Board’s view that the remuneration outcomes for FY22 are
appropriate and consistent with our new purpose and values and
reflect the environment in which we operate.
Thank you to all our people across all our brands (BOQ, Virgin Money
and ME Bank) for your fantastic contribution to BOQ Group’s success.
I welcome any feedback on the remuneration report and look forward
to seeing many of you again in person at the AGM in December.
Yours faithfully
Warwick Negus
Chair, People, Culture and Remuneration Committee
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 1. Remuneration snapshot
BUILDING
S CIAL CAPITAL
THROUGH BANKING
S O C
Spirited
Optimistic
Curious
Be outrageously
courageous
To infinity
and beyond
Be truly
madly deeply
interested
I
Inclusive
Tap the
collective
genius
A L
Accountable
Lionhearted
Be the
rubber that
hits the road
Be fiercely
caring
EXCEPTIONAL
CUSTOMER
EXPERIENCE
Through loved brands,
caring bankers, building
relationships, and
enriching communities.
CLOUD BASED,
DIGITAL BANK
With at scale unit costs,
impactful data
insights and fast
innovative solutions.
SUSTAINABLE
PROFITABLE
GROWTH
With improving strength,
risk and return.
ENRICHING
PEOPLE
By developing curious
bankers, building an agile
organisation and being a
good corporate citizen.
Group
purpose
Group
values
Strategic
pillars
Remuneration
objectives
Reward
sustainable,
profitable
growth as BOQ
executes its
strategy
Reward our
people for
delivering an
exceptional
customer
experience
Align our
people to long
term value
creation for our
shareholders
Attract and
retain curious
bankers
through
performance
and reward
frameworks that
are consistent
with community
expectations
Reward
structures that
support our
purpose and
values and drive
a strong risk
culture
Take into
account
prudent risk
management
in accordance
with BOQ’s
risk appetite
and regulatory
expectations
73
Remuneration Report For the year ended 31 August 20222022 Annual Report Senior Executive Remuneration Framework Summary
The Framework is anchored in the remuneration objectives and designed to support the Group’s Purpose by facilitating the successful
achievement of the strategic priorities and prudent risk-taking, in line with our purpose and values.
Fixed reward
Performance Shares
Premium Priced Options
Purpose
To attract and retain talent and
reflect the individual’s skills,
capabilities and experience.
To focus Senior Executives on
delivering against the Group’s
strategy collaboratively and as
a team.
To align Senior Executives’
interests with the interests of
shareholders to achieve improved
outcomes for all stakeholders and
grow shareholder value.
Delivery
Cash.
Proportion of
fixed reward
N/A
Rights that convert to Restricted
Shares.
Options with a premium exercise price
(120% of share price at grant).
MD and CEO: 88%
MD and CEO: 58%
Other Senior Executives: 78%
Other Senior Executives: 52%
Performance
criteria
Satisfactory performance,
compliance with the
terms and conditions of
employment including
the Code of Conduct and
fulfilment of accountabilities
under the Banking Executive
Accountability Regime (BEAR).
Performance against the Group
Scorecard over the one-year
performance period (the FY) modified
by the Board’s overall assessment of
risk, performance and behaviours
determines the conversion from
Rights to Restricted Shares.
BOQ’s share price must exceed
the exercise price set for the award,
and a risk assessment conducted by
the Board.
Risk
N/A
Risk assessment prior to vesting.
Risk assessment prior to vesting.
Vesting profile
N/A
Unvested awards are subject to malus.
Unvested awards are subject to malus.
A clawback period of two years
applies to each tranche.
Each tranche is subject to dealing
restrictions for one year after vesting.
33% in December 2023, 33%
in December 2024 and 34% in
December 2025 (i.e., after two, three
and four years).
A clawback period of two years
applies to each tranche.
50% in December 2025 and 50% in
December 2026 (i.e., after four years
and five years).
74
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 2. Key Management Personnel
This section identifies Directors and Senior Executives who are KMP and sets out the changes that have occurred within this cohort during
FY22 and up until the date of this Report.
Table 1 - Executive and Non-Executive Directors
Current Directors
Patrick Allaway
Chair (Non-executive)
Bruce Carter
Non-executive Director
Dr Jenny Fagg
Non-executive Director (commenced 13 October 2021)
George Frazis
Managing Director and Chief Executive Officer
Deborah Kiers
Non-executive Director
Warwick Negus
Non-executive Director
Karen Penrose
Non-executive Director
Mickie Rosen
Non-executive Director
Former Directors
John Lorimer
Non-executive Director (ceased 7 December 2021)
Table 2 - Other senior executives
Current Senior Executives
Debra Eckersley
Group Executive People and Culture
Martine Jager
Group Executive Retail Banking and Chief Executive Officer ME Bank
Racheal Kellaway
Chief Financial Officer (commenced as KMP 1 July 2022)
Paul Newham
Chief Operations Officer (commenced as KMP 6 June 2022)
Craig Ryman
Chief Information Officer
Chris Screen
Group Executive Business Banking (commenced as KMP 1 October 2021)
David Watts
Group Chief Risk Officer (commenced 3 March 2022)
Former Senior Executives
Adam McAnalen
Chief Risk Officer (ceased as KMP 2 March 2022 and ceased employment 9 September 2022)
Fiamma Morton
Group Executive, Business Banking (ceased as KMP 30 September 2021 and ceased employment 31 October 2021)
Ewen Stafford
Chief Financial Officer and Chief Operating Officer (ceased employment on 1 July 2022)
75
Remuneration Report For the year ended 31 August 20222022 Annual Report 3. Remuneration outcomes
This section details remuneration outcomes for Senior Executives during the FY22 year.
3.1
Remuneration mix
Figure 1 illustrates the mix of Fixed Reward, Performance Shares and Premium Priced Options awarded to Senior Executives in FY22.
Figure 1 - Remuneration Mix (at Target level)
MD and CEO
Senior Executives
40.7%
43.5%
35.6%
33.9%
23.7%
22.6%
Fixed Reward
Performance Shares
Premium Priced Options
3.2
Fixed reward
Fixed reward for Senior Executives is set based on a combination of the executive’s experience and capability, competitiveness relative to
the financial services sector and similarly sized ASX listed companies, and internal relativities.
After two years in the role, the fixed reward of our Managing Director and Chief Executive Officer was benchmarked and increased from
$1.3m to $1.5m, effective from 1 September 2021. Three other Senior Executives received increases during FY22 - effective from 1 September
2021 for the Chief Information Officer and Group Executive, People & Culture and effective from 1 April 2022 for the Group Executive Retail
Banking and Chief Executive Officer ME Bank.
Fixed reward levels for the four newly appointed Senior Executives, the Group Executive Business Banking, the Group Chief Risk Officer, the
Chief Operations Officer and the Chief Financial Officer were determined based on the principles outlined above.
3.3
Other awards
During FY22 the Board approved a make-good award for David Watts, Group Chief Risk Officer and a one-off award for Paul Newham upon
his appointment to the Chief Operations Officer role.
Mr Watts’ award was in respect of unvested long-term incentive and deferred short-term incentive forgone upon resignation from
his previous employer. The make-good award was valued at $1,025,000 and granted on 21 March 2022 using Deferred Award Rights,
comprising:
• $801,000 in respect of forfeited LTI, vesting 33 per cent in July 2022, 33 per cent in July 2023, and 34 per cent in July 2024 to align with
the vesting schedule of the LTI forfeited; and
• $224,000 in respect of forfeited deferred STI vesting 50 per cent in July 2022 and 50 per cent in July 2023 to align with the vesting
schedule of the deferred STI forfeited.
Mr Newham’s award was valued at $100,000 and granted on 25 July 2022 using Restricted Shares that will vest 50 per cent in December
2022 and 50 per cent in December 2023.
The equity issued to Mr Watts and Mr Newham is subject to employment service conditions and the Board’s assessment of risk.
76
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 3.4
Linking performance and reward outcomes
The Group’s financial performance is summarised in Table 3, together with its relationship to the aggregate value of Performance Shares
granted and converted in relation to FY22 and FY21 and, for prior years, the amount of STI paid.
Table 3 - Group performance
5 Year company performance
Statutory net profit/(loss) after tax
Cash net profit after tax (2)
Cash basic earnings per share (2)
Cash cost to income ratio (2)
Share price at balance sheet date
Total shareholder return
Value of dividends paid
Senior Executive Performance Shares converted / STI awarded (3)
FY22 (1)
FY21 (1)
FY20
FY19
FY18
426
508
78.4
55.7
7.03
369
412
74.7
54.4
9.46
115
225
49.6
54.9
6.13
298
320
79.5
51.0
9.17
336
372
94.7
47.5
11.49
(21.04)
63.75
(29.80)
(13.90)
(2.70)
282
3.52
164
3.79
126
1.78
288
-
341
2.73
($m)
($m)
(cents)
(%)
($)
(%)
($m)
($m)
(1) All results are inclusive of ME.
(2) Non-statutory measures are not subject to audit.
(3) Performance Shares are converted based on the Board's assessment of the Group Scorecard and other considerations.
Figure 2 compares the total Performance Shares converted based on Group Scorecard results since FY21 and STI awarded to Senior
Executives from FY18 to FY20 with BOQ’s Cash NPAT over the past 5 years.
Figure 2 - FY22 Performance Shares converted / STI awarded vs 5-year NPAT
m
$
T
A
P
N
h
s
a
C
600
550
500
450
400
350
300
250
200
150
100
50
0
FY22
FY21
FY20
FY19
FY18
Cash NPAT ($m)
KMP Performance Shares converted / STI awarded ($m)
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
m
$
d
e
d
r
a
w
a
I
T
S
/
d
e
t
r
e
v
n
o
c
s
e
r
a
h
S
e
c
n
a
m
r
o
f
r
e
P
P
M
K
77
Remuneration Report For the year ended 31 August 20222022 Annual Report
3.5
Group Scorecard
At the commencement of FY22, the Group Scorecard was approved by the Board. The Group Scorecard was based on the priorities that
underpinned the strategy announced in 2020.
The Group Scorecard articulates the areas of focus that support the achievement of the strategy and sets the tone for how achievement is
measured throughout the performance period, for Senior Executives and all other employees of the Group. It connects the Group’s vision
with tangible outcomes that contain an appropriate degree of stretch.
The Board’s assessment of achievement against the Group Scorecard, together with holistic consideration of risk, performance and
behaviours, determines the conversion of Senior Executives’ Performance Shares.
For FY22, the overall outcome against the Group Scorecard is between Threshold and Achieving. Whilst there have been strong people and
customer outcomes and good traction on our digital transformation, the experience of our shareholders has been poor, and our risk maturity
remains a focus. It is the judgment of the Board and MD and CEO that the Group hasn’t delivered the value we aspire to for our shareholders.
We understand the impact that paying below our target dividend range has on our shareholders. We also understand that cost of
living pressures are a real factor for our customers and the communities we serve. Having undertaken its assessment the Board
supports the MD and CEO’s proposal to convert 75 per cent of his Performance Shares and, for Senior Executives, to convert 90 per
cent of their Performance Shares.
Figure 3 details the FY22 Group Scorecard, including strategic priorities, measures, targets and weightings set by the Board, together with
FY22 outcomes.
Figure 3 - Assessment of FY22 Group Scorecard
Strategic priorities & measures
Performance
Our empathetic culture
sets up apart (10%)
Below threshold
Threshold
Achieving
Exceeds
Exceptional
Delight our customers -
Net Promoter Score:
BOQ Retail main financial institution ranked 3rd (target: top 3); ME Bank any financial relationship ranked 4th
(target: top 4); Business SME any financial relationship ranked 4th (target: top 3).
Engagement, culture
and leadership:
Improvements in Employee Engagement (67%) and I feel safe to speak up 76% (on target); strong momentum
on cultural transformation (as measured by the OCI tool), with an ongoing focus on risk culture; Senior Women in
Leadership 37% (target: 40%); Overall Women in Leadership 38% (target: 42%).
Retention of talent:
Voluntary turnover just above target of 25%; total turnover in critical role cohort below target of 10%.
Climate change:
Reduction of carbon emissions in line with publicly communicated targets; built on our carbon neutral status
with a new commitment to reduce our emissions by 90% by 2030; progress made on target of 100% renewable
energy with 53% of the Group’s energy needs now coming from renewable sources.
Distinctive brands serving attractive
niche customer segments (10%)
Below threshold
Threshold
Achieving
Exceeds
Exceptional
Mortgage
growth:
BOQ Blue & VMA 1.4x system (target: 1.5x system); ME Bank mortgage growth 0.6x system (target: 0.7x system);
all Retail brands 1.0x system (target: 1.3x system).
Business lending growth:
Business Banking delivering revenue growth of 7%; successful execution of strategy to tilt portfolio towards
medium-sized family business lending resulted in growth of $0.6bn at 1.5x system; other Business segments
growing at below system growth.
ME Integration:
Delivered synergies above target of $38m (target: $30m-$34m) and annualised run rate $47m (target:
$38m-$42m).
78
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Strategic priorities & measures
Digital bank of the future
with a personal touch (10%)
Performance
Below threshold
Threshold
Achieving
Exceeds
Exceptional
Delivery of a
new digital bank:
MyBOQ launched 21 March 2022 (target: March 2022); Expanded VMA deposit offering with launch of Locked
Saver Notice Account feature on 4 April 2022 (target: March 2022); project investment overspend due to
accelerated delivery and additional compliance costs.
Digital sales
and service:
$1.5bn in deposit balances, attracting a younger customer segment, a significantly faster rate of customer
acquisition on new digital platform; 67% of processes digitised and 54 releases across core banking, mobile
app and broader platform.
Simple and intuitive business, with
strong execution capability (10%)
Productivity benefits:
$30m (target $30m)
Below threshold
Threshold
Achieving
Exceeds
Exceptional
Product simplification:
44 products and features closed in FY22, taking total reduction to 72% on 2019 baseline (target: 50%
reduction).
Closing out
legacy systems:
ME Bank legacy core banking system decommissioned including 7 applications and over 50 servers
generating ~$2.15m in annual benefits (target: $2.2m); further 25 IT assets decommissioned (target: 20)
reducing operating expenses and simplifying the tech environment.
Time to
conditional yes:
All Retail Brands 1 day; BOQ branch median 3 days; BOQ broker median <1 day; VMA broker median 4 days;
ME Bank Broker median <1 day; ME Bank Proprietary median <1 day (target: 4 days across all Retail Brands).
Strong risk position (10%) (1)
Strengthen
the bank:
CET1 ratio 9.57% (target: 9.72%); Deposit to loan ratio 74% (target: 72%); consolidated our business under one
ADI licence with the successful handback of the ME ADI in February 2022 (on schedule).
Below threshold
Threshold
Achieving
Exceeds
Exceptional
Strong risk and
compliance outcomes:
Strong credit risk with improving 90 day past due in benign environment. The Board considered the ACCC
fine of $133,200 for an Open Banking delay. As a part of our overall transformation strategy, the bank has
recognised there is more work to do to improve its risk management framework and practices. BOQ is
committed to an integrated plan to strengthen our financial and operating resilience and risk culture.
Attractive, sustainable returns (50%)
Below threshold
Threshold
Achieving
Exceeds
Exceptional
Profitable and sustainable
growth in cash earnings &
earnings per share:
Cash earnings $508m, includes non-interest income one-offs of $12m in 1H, (target: $494m);
earnings per share 78.4c (target: 75c).
Return on equity:
Return on equity 8.4% (target: 8.2%).
Contained expense
growth & positive Jaws:
0% operating expense growth (target: 0%); 1% Jaws (target: 2%).
Overall
(1) Risk is also specifically considered as part of Board judgement
79
Below threshold
Threshold
Achieving
Exceeds
Exceptional
Remuneration Report For the year ended 31 August 20222022 Annual Report 3.6
Grant and conversion of Performance Shares
Performance Shares were granted to Senior Executives in FY22. The face value of the MD and CEO’s allocation was 88 per cent of fixed
reward; for other Senior Executives, the face value of their allocation was 78 per cent of fixed reward. Annual grants were made on 31 January
2022. David Watts’ award was granted on 21 March 2022 and Racheal Kellaway’s pro-rated award granted on 25 July 2022.
The MD and CEO’s grant of Performance Shares was approved by shareholders at the 2021 AGM.
The number of Performance Shares allocated as part of the annual grant was determined using the face value of the award divided by the
VWAP of BOQ shares over the ten trading days immediately following the 2021 AGM, as was David Watts’ award. Racheal Kellaway’s award
was priced using the VWAP over the ten trading days immediately preceding her commencement as Chief Financial Officer on 1 July 2022.
Performance against the Group Scorecard over the one-year performance period (1 September 2021 to 31 August 2022), modified by
the Board’s overall assessment of risk, performance and behaviours, determines the conversion of Performance Shares from Rights to
Restricted Shares. Having undertaken this assessment, the Board supports the MD and CEO’s proposal to convert 75 per cent of his
Performance Shares, and for Senior Executives to convert 90 per cent of their Performance Shares. In making its decision, the Board also
considered the devaluation in the share price since grant, which represented a reduction of 12 per cent to 31 August 2022. Post-conversion,
the Restricted Shares will vest over three years, subject to continued service, a pre-vesting assessment by the Board and all other original
terms, including malus.
Performance Shares that convert to Restricted Shares will vest in three tranches, 33 per cent in December 2023, 33 per cent in December
2024, and 34 per cent in December 2025, subject to the Board’s assessment of risk prior to each vesting date. Each tranche is subject to a
clawback period of two years from the vesting date.
Table 4 details the grants and conversion of FY22 Performance Shares.
Table 4 – FY22 Performance Shares granted and converted
Fixed reward
at time of
grant
Performance
Shares as %
of FR
Face value of
Performance
Shares award
Performance
Shares
granted
VWAP
% of
Performance
Shares
converted
Performance
Shares
lapsed
Values of
Performance
Shares Award
at 31 August
2022 (1)
$1,500,000
88% $1,314,000 $7.9884
164,489
75%
41,122
$867,266
$640,000
78%
$499,200 $7.9884
62,491
90%
6,249
$395,379
$685,000
78%
$534,300 $7.9884
66,885
90%
6,688
$423,178
$660,000
78%
$90,000 $6.7072
13,419
$750,000
78%
$585,000 $7.9884
73,232
$660,000
78%
$514,800 $7.9884
64,444
$750,000
78%
$585,000 $7.9884
73,232
90%
90%
90%
90%
1,342
$84,902
7,323
$463,339
6,444
$407,734
7,323
$463,339
$675,000
78%
$526,500 $7.9884
65,909
90%
6,591
$417,006
$800,000
78%
$624,000 $7.9884
78,114
0%
78,114
$0
Name
Position Title
Current Senior Executives
George
Frazis
Debra
Eckersley
Martine
Jager
Managing Director
and Chief
Executive Officer
Group Executive
People and
Culture
Group Executive
Retail Banking and
CEO ME Bank
Racheal
Kellaway (2)
Chief Financial
Officer
Craig
Ryman
Chris
Screen (3)
David
Watts (4)
Chief Information
Officer
Group Executive
Business Banking
Group Chief
Risk Officer
Former Senior Executives
Adam
McAnalen (5)
Chief Risk
Officer
Ewen
Stafford (6)
Chief Financial
Officer and Chief
Operating Officer
(1) Based on closing share price of $7.03.
(2) Racheal Kellaway commenced as a KMP on 1 July 2022 and was awarded a pro-rata grant of Performance Shares.
(3) Chris Screen commenced as a KMP on 1 October 2021 and, as an existing employee, was awarded a full year grant of Performance Shares.
(4) David Watts commenced as a KMP on 3 March 2022; he was awarded a full year grant of Performance Shares in accordance with his employment contract.
(5) Adam McAnalen ceased as a KMP on 2 March 2022.
(6) Ewen Stafford ceased employment on 1 July 2022. 100% of his Performance Shares were forfeited.
Note: Paul Newham will receive his first grant of Performance Shares as a KMP in FY23. Paul was awarded Performance Shares in his prior role in FY22.
80
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 3.7
Premium priced options granted
Premium Priced Options were granted to Senior Executives in FY22. As approved by shareholders at the 2021 AGM, the face value of the MD
and CEO’s allocation was 58 per cent of fixed reward. For other Senior Executives, the face value of their allocation was 52 per cent of fixed
reward. Annual grants were made on 31 January 2022. David Watts’ award was granted on 21 March 2022.
To determine the number of Premium Priced Options each Senior Executive was allocated, the face value of their award was divided by the
fair value. For the annual grant, the Board determined that the value of a Premium Priced Option was 11 per cent of the VWAP over the ten
trading days immediately following the 2021 AGM. The Exercise Price was set at 120 per cent of the same VWAP. This valuation also applied
to David Watts’ grant.
Intra-year awards for other Senior Executives who joined part way through the performance period were determined using the same
methodology to derive a value reflective of the current conditions and based on the VWAP of BOQ shares over the ten trading days
immediately preceding their date of commencement with BOQ. This approach is adopted so that the Exercise Price for intra-year awards
remains consistent with the Exercise Price for annual grants.
Table 5 details the Premium Priced Options awarded to participants in FY22.
Table 5 – FY22 premium priced options awarded
Fixed
reward
at time of
grant
Options
as % of
FR
Face value
of Options
award
VWAP
Options
value
Options
granted
Exercise
price
Options
forfeited
Name
Position Title
Current Senior Executives
George
Frazis
Managing Director
and Chief Executive
Officer
Debra
Eckersley
Group Executive
People and Culture
Martine
Jager
Group Executive
Retail Banking and
CEO ME Bank
Craig
Ryman
Chief Information
Officer
Chris
Screen (1)
Group Executive
Business Banking
David
Watts (2)
Group Chief Risk
Officer
Former Senior Executives
Adam
McAnalen
(3)
Ewen
Stafford (4)
$1,500,000
58%
$876,000
$7.9884
$0.8787
996,928
$9.5861
$640,000
52%
$332,800
$7.9884
$0.8787
378,742
$9.5861
$685,000
52%
$356,200
$7.9884
$0.8787
405,372
$9.5861
$750,000
52%
$390,000
$7.9884
$0.8787
443,838
$9.5861
$660,000
52%
$343,200
$7.9884
$0.8787
390,577
$9.5861
$750,000
52%
$390,000
$7.9884
$0.8787
443,838
$9.5861
-
-
-
-
-
-
-
Chief Risk Officer
$675,000
52%
$351,000
$7.9884
$0.8787
399,454
$9.5861
Chief Financial Officer
and Chief Operating
Officer
$800,000
52%
$416,000
$7.9884
$0.8787
473,427
$9.5861
473,427
(1) Chris Screen commenced as a KMP on 1 October 2021 and, as an existing employee, was awarded a full year grant of Options.
(2) David Watts commenced as a KMP on 3 March 2022; he was awarded a full year grant of Options in accordance with his employment contract.
(3) Adam McAnalen ceased as a KMP on 2 March 2022.
(4)
Note: Racheal Kellaway and Paul Newham will each receive their first grant of Options as KMP in FY23. Both were awarded Options in their prior roles in FY22.
Ewen Stafford ceased employment on 1 July 2022. 100% of his Options were forfeited.
81
Remuneration Report For the year ended 31 August 20222022 Annual Report 3.7
Premium priced options granted (continued)
Participants derive value from Premium Priced Options only if the BOQ share price exceeds the exercise price between the vesting date and
the applicable expiry date. Premium Priced Options vest four and five years after grant.
3.8
Equity vested during FY22
For a number of Senior Executives, Tranche 1 (40 per cent) of the Restricted Shares awarded in respect of FY20 STI vested in December 2021.
No grants of Performance Award Rights (PARs) were scheduled to vest during FY22, as the performance period increased from three years
to four years with the 2018 grant. Whilst PARs are no longer offered by the Group, the last remaining awards from FY18 and FY19 remain
on-foot, to be tested in FY23 and FY24 respectively. The vesting date for the 2018 grant is 1 October 2022; however, the performance hurdle
testing cannot be completed until December 2022. The outcome will be disclosed in the FY23 remuneration report.
Figure 4 - Percentage of LTI vesting over the last five years
60%
50%
40%
30%
20%
10%
0%
55%
N/A
FY22
0%
FY21
0%
FY20
FY19
FY18
16%
3.9
Senior Executive total reward outcomes for FY22 (non-statutory disclosure)
This section provides a summary of the total benefit earned by Senior Executives with respect to performance over FY22. As in previous
years, this non-statutory table shows the Senior Executives’ actual remuneration in respect of FY22.
Table 6 includes a breakdown of the following components of Senior Executive remuneration:
• FY22 fixed reward (including base salary and employer superannuation contributions);
•
•
the value of non-monetary and other short-term benefits provided in FY22; and
the value of any variable remuneration which vested, lapsed of forfeited during FY22.
82
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities .
i
i
l
n
o
i
t
a
n
m
r
e
t
r
o
t
e
m
g
n
e
b
t
o
n
s
e
d
r
u
h
g
n
i
t
s
e
v
f
o
t
l
u
s
e
r
a
s
a
d
e
t
i
e
f
r
o
f
s
t
n
u
o
m
a
y
t
i
u
q
e
s
a
l
l
i
e
w
s
a
2
2
Y
F
g
n
i
r
u
d
e
v
i
t
u
c
e
x
e
r
o
n
e
s
h
c
a
e
y
b
d
e
v
e
c
e
r
t
n
u
o
m
a
e
h
t
s
w
o
h
s
w
o
e
b
e
b
a
t
e
h
T
i
l
l
l
i
s
e
v
i
t
u
c
e
x
e
r
o
n
e
s
-
e
r
u
s
o
c
s
i
d
y
r
o
t
u
t
a
t
s
-
n
o
N
-
6
e
b
a
T
l
.
7
n
o
i
t
c
e
s
n
i
i
l
d
e
s
o
c
s
d
s
t
n
u
o
m
a
o
t
r
e
f
f
i
d
l
l
i
l
i
w
e
b
a
t
s
h
t
d
n
a
s
d
r
a
d
n
a
t
s
g
n
i
t
n
u
o
c
c
a
h
t
i
w
e
c
n
a
d
r
o
c
c
a
n
i
d
e
r
a
p
e
r
p
n
e
e
b
e
v
a
h
s
t
n
u
o
m
a
l
l
a
t
o
N
'
s
r
a
e
Y
r
o
i
r
P
y
t
i
u
q
E
)
5
(
d
e
s
p
a
L
/
d
e
t
i
e
f
r
o
F
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
)
3
4
9
7
6
(
,
)
6
3
5
,
1
1
2
(
)
1
0
3
,
1
5
9
,
1
(
l
a
t
o
T
d
r
a
w
e
R
)
4
(
l
e
u
a
V
,
2
7
2
7
5
8
,
1
,
5
9
8
6
0
4
,
1
3
5
2
,
3
5
7
,
7
4
0
8
5
5
6
6
4
9
1
7
,
2
1
1
,
0
4
2
9
5
8
8
1
1
,
5
2
5
9
6
1
,
4
0
1
,
0
8
7
1
5
3
3
1
7
,
0
7
6
,
1
3
6
,
2
1
7
0
9
6
5
9
1
,
6
8
4
6
5
9
,
1
0
7
,
1
0
0
6
5
4
1
5
3
3
1
7
,
8
5
6
,
1
1
8
3
5
6
8
6
7
,
f
o
e
u
a
V
l
d
e
r
r
e
f
e
D
n
o
i
t
a
n
m
r
e
T
i
d
e
t
s
e
V
y
t
i
u
q
E
f
o
e
u
a
V
l
s
t
i
f
e
n
e
B
)
3
(
d
o
i
r
e
P
n
i
)
2
(
s
t
i
f
e
n
e
B
d
e
x
F
i
)
1
(
d
r
a
w
e
R
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
0
0
0
5
3
,
-
,
8
0
7
2
5
2
3
6
8
8
0
1
,
-
-
-
-
-
-
4
9
6
7
1
,
6
2
1
,
2
1
0
3
6
5
1
3
,
-
-
9
3
1
,
5
4
1
3
2
8
2
2
,
3
1
0
4
3
,
0
5
3
,
2
2
1
4
8
7
7
0
1
,
3
8
6
,
1
1
1
8
9
5
5
,
-
8
3
5
8
,
1
7
9
2
,
6
0
7
6
,
3
8
1
,
3
4
5
3
3
1
,
0
4
8
5
1
,
6
5
2
,
2
1
2
2
6
6
,
9
7
3
3
,
7
2
5
6
,
2
0
3
,
1
0
4
8
5
1
,
9
0
9
,
2
2
4
0
0
7
4
,
,
0
8
7
6
9
4
,
1
,
2
1
2
5
9
2
,
1
,
2
9
7
8
3
6
,
7
4
0
8
5
5
8
2
9
0
1
7
,
1
4
1
,
7
3
2
3
5
1
,
2
1
1
2
4
3
6
6
1
,
6
5
0
9
4
7
,
,
1
1
5
7
9
6
8
8
2
7
0
6
,
0
6
4
8
6
3
,
7
7
6
7
3
3
,
6
0
6
2
7
6
,
6
8
6
0
7
,
,
1
1
5
7
9
6
,
9
9
3
6
6
6
9
4
6
,
1
2
7
r
a
e
Y
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
e
r
u
t
l
u
C
d
n
a
e
p
o
e
P
e
v
l
i
t
u
c
e
x
E
p
u
o
r
G
l
y
e
s
r
e
k
c
E
a
r
b
e
D
r
e
c
i
f
f
O
e
v
i
t
u
c
e
x
E
f
e
h
C
d
n
a
i
r
o
t
c
e
r
i
D
g
n
g
a
n
a
M
i
s
i
z
a
r
F
e
g
r
o
e
G
e
l
t
i
t
n
o
i
t
i
s
o
P
e
m
a
N
s
e
v
i
i
t
u
c
e
x
E
r
o
n
e
S
t
n
e
r
r
u
C
k
n
a
B
E
M
O
E
C
d
n
a
i
g
n
k
n
a
B
l
i
a
t
e
R
e
v
i
t
u
c
e
x
E
p
u
o
r
G
r
e
g
a
J
e
n
i
t
r
a
M
r
e
c
i
f
f
O
s
n
o
i
t
a
r
e
p
O
i
f
e
h
C
)
7
(
m
a
h
w
e
N
l
u
a
P
r
e
c
i
f
f
O
n
o
i
t
a
m
r
o
f
n
I
i
f
e
h
C
n
a
m
y
R
g
a
r
C
i
r
e
c
i
f
f
O
l
a
i
i
c
n
a
n
F
f
e
h
C
i
)
6
(
y
a
w
a
l
l
e
K
l
a
e
h
c
a
R
i
g
n
k
n
a
B
s
s
e
n
s
u
B
e
v
i
i
t
u
c
e
x
E
p
u
o
r
G
)
8
(
n
e
e
r
c
S
s
i
r
h
C
i
g
n
k
n
a
B
s
s
e
n
s
u
B
e
v
i
i
t
u
c
e
x
E
p
u
o
r
G
)
1
1
(
n
o
t
r
o
M
a
m
m
a
F
i
r
e
c
i
f
f
O
k
s
R
i
i
f
e
h
C
p
u
o
r
G
)
9
(
s
t
t
a
W
d
v
a
D
i
r
e
c
i
f
f
O
k
s
R
i
i
f
e
h
C
)
0
1
(
l
n
e
a
n
A
c
M
m
a
d
A
s
e
v
i
i
t
u
c
e
x
E
r
o
n
e
S
r
e
m
r
o
F
r
e
c
i
f
f
O
g
n
i
t
a
r
e
p
O
i
f
e
h
C
d
n
a
r
e
c
i
f
f
O
l
a
i
i
c
n
a
n
F
f
e
h
C
i
)
2
1
(
d
r
o
f
f
a
t
S
n
e
w
E
t
o
n
s
i
i
h
c
h
w
l
,
t
n
e
m
y
o
p
m
e
f
o
n
o
i
t
a
n
m
r
e
t
n
o
p
u
t
u
o
d
a
p
s
i
i
i
t
a
h
t
e
v
a
e
l
y
n
a
s
e
d
u
c
n
l
i
i
s
h
t
P
M
K
g
n
i
t
r
a
p
e
d
r
o
F
.
r
a
e
y
e
h
t
g
n
i
r
u
d
d
a
p
e
v
a
e
i
l
l
a
u
n
n
a
g
n
d
u
c
n
l
i
i
,
'
i
n
o
i
t
a
r
e
n
u
m
e
r
d
e
x
i
f
s
e
v
i
t
u
c
e
x
E
r
o
n
e
S
a
p
u
e
k
a
m
n
o
i
t
a
u
n
n
a
r
e
p
u
s
d
n
a
y
r
a
a
s
e
s
a
B
l
.
7
n
o
i
t
c
e
s
n
i
l
2
1
d
n
a
1
1
s
e
b
a
T
y
r
o
t
u
t
a
t
S
n
i
d
e
d
u
c
n
l
i
e
h
t
n
o
e
c
i
r
p
e
r
a
h
s
g
n
s
o
c
e
h
t
l
i
t
a
d
e
r
u
s
a
e
m
n
e
e
b
e
v
a
h
s
e
r
a
h
S
e
c
n
a
m
r
o
f
r
e
P
d
n
a
s
e
r
a
h
S
d
e
t
c
i
r
t
s
e
R
,
s
R
A
P
i
l
i
.
t
n
e
m
y
o
p
m
e
g
n
s
a
e
c
f
o
t
l
u
s
e
r
a
s
a
r
o
/
d
n
a
t
e
m
g
n
e
b
t
o
n
s
e
d
r
u
h
f
o
t
l
u
s
e
r
a
s
a
r
a
e
y
e
h
t
g
n
i
r
u
d
d
e
s
p
a
l
l
t
a
h
t
y
t
i
u
q
e
o
t
s
e
t
a
e
r
s
h
T
l
i
.
d
o
i
r
e
p
e
h
t
g
n
i
r
u
d
t
s
e
v
t
o
n
d
d
t
a
h
t
s
r
a
e
y
s
u
o
v
e
r
p
n
i
i
i
d
e
t
n
a
r
g
s
d
r
a
w
a
y
t
i
u
q
e
d
e
r
r
e
f
e
d
s
e
d
u
c
x
e
t
I
l
.
d
o
i
r
e
p
e
h
t
g
n
i
r
u
d
d
e
t
s
e
v
t
a
h
t
i
l
)
e
t
a
d
g
n
i
t
s
e
v
e
h
t
n
o
e
c
i
r
p
e
r
a
h
s
g
n
s
o
c
e
h
t
g
n
s
u
(
s
d
r
a
w
a
y
t
i
u
q
e
r
o
/
d
n
a
h
s
a
c
d
e
r
r
e
f
e
d
i
l
l
l
a
f
o
e
u
a
v
e
h
T
.
l
l
e
v
a
r
t
d
n
a
n
o
i
t
a
c
o
e
r
r
o
n
o
i
t
a
d
o
m
m
o
c
c
a
,
i
i
l
g
n
k
r
a
p
r
a
c
s
a
h
c
u
s
)
T
B
F
d
e
t
a
c
o
s
s
a
d
n
a
(
s
t
i
f
e
n
e
b
o
t
s
e
t
a
e
r
d
n
a
s
t
i
f
e
n
e
b
m
r
e
t
-
t
r
o
h
s
r
e
h
t
o
d
n
a
y
r
a
t
e
n
o
m
-
n
o
n
h
t
o
b
s
e
d
u
c
n
l
i
s
t
i
f
e
n
e
b
f
o
e
u
a
V
l
.
d
o
i
r
e
P
n
i
d
e
t
s
e
V
I
l
T
L
f
o
e
u
a
V
d
n
a
s
t
i
f
e
n
e
B
n
o
i
t
a
n
m
r
e
T
i
,
d
o
i
r
e
P
n
i
d
e
t
s
e
V
y
t
i
u
q
E
d
e
r
r
e
f
e
D
f
o
e
u
a
V
l
,
I
T
S
h
s
a
C
,
s
t
i
f
e
n
e
B
f
o
e
u
a
V
l
,
n
o
i
t
a
r
e
n
u
m
e
r
d
e
x
i
f
f
o
e
u
a
v
r
a
l
l
l
o
d
l
a
t
o
t
e
h
t
s
i
i
s
h
T
.
.
.
.
s
n
o
i
t
p
O
2
2
Y
F
r
o
f
1
6
8
5
9
$
d
n
a
s
n
o
i
t
p
O
1
2
Y
F
r
o
f
7
3
3
3
9
$
f
o
e
c
i
r
p
e
s
c
r
e
x
e
e
h
t
d
e
e
c
x
e
t
o
n
d
d
e
c
i
r
p
e
r
a
h
s
e
h
t
i
i
,
e
t
a
d
g
n
s
p
a
i
l
e
h
t
t
a
s
a
,
l
e
s
u
a
c
e
b
o
r
e
z
t
a
d
e
u
a
v
n
e
e
b
e
v
a
h
s
n
o
i
t
p
O
d
e
c
i
r
P
m
u
m
e
r
P
i
.
e
t
a
d
e
s
p
a
l
.
l
2
2
0
2
y
u
J
1
n
o
P
M
K
a
s
a
d
e
c
n
e
m
m
o
c
y
a
w
a
l
l
e
K
l
a
e
h
c
a
R
.
1
2
0
2
r
e
b
o
t
c
O
1
n
o
P
M
K
a
s
a
d
e
c
n
e
m
m
o
c
n
e
e
r
c
S
s
i
r
h
C
.
2
2
0
2
e
n
u
J
6
n
o
P
M
K
a
s
a
d
e
c
n
e
m
m
o
c
m
a
h
w
e
N
l
u
a
P
.
2
2
0
2
h
c
r
a
M
3
n
o
P
M
K
a
s
a
d
e
c
n
e
m
m
o
c
s
t
t
a
W
d
v
a
D
i
)
1
(
)
2
(
)
3
(
)
4
(
)
5
(
)
6
(
)
7
(
)
8
(
)
9
(
.
1
2
0
2
r
e
b
m
e
t
p
e
S
0
3
n
o
P
M
K
a
s
a
d
e
s
a
e
c
n
o
t
r
o
M
a
m
m
a
F
i
)
1
1
(
.
2
2
0
2
h
c
r
a
M
2
n
o
P
M
K
a
s
a
d
e
s
a
e
c
n
e
a
n
A
c
M
m
a
d
A
l
)
0
1
(
.
l
l
2
2
0
2
y
u
J
1
n
o
t
n
e
m
y
o
p
m
e
d
e
s
a
e
c
d
r
o
f
f
a
t
S
n
e
w
E
)
2
1
(
83
Remuneration Report For the year ended 31 August 20222022 Annual Report
4. Remuneration strategy and structure
This section outlines the Group’s remuneration strategy and the structure of senior executive remuneration.
4.1
Strategy
The Group’s remuneration objectives articulate the remuneration strategy, and apply at all levels throughout the organisation. These are to:
reward sustainable, profitable growth as BOQ executes its strategy;
reward our people for delivering an exceptional customer experience;
•
•
• align our people to long term value creation for our shareholders;
• attract and retain curious bankers through performance and reward frameworks that are consistent with community expectations;
•
•
reward structures that support our purpose and values and drive a strong risk culture ; and
take into account prudent risk management in accordance with BOQ’s risk appetite and regulatory expectations.
4.2
Structure
Senior Executives’ remuneration is structured in accordance with the Framework that was introduced on 1 September 2020. The particular
objectives of the Framework are to:
increase alignment with shareholder interests by delivering a sizeable proportion of total remuneration in equity;
•
• encourage long-term performance, with an appropriate focus on financial and non-financial metrics;
•
• provide a simple and transparent executive remuneration framework; and
• attract and retain A-class executive talent.
focus senior executives of improving absolute shareholder returns;
The features of the Framework are outlined in Table 7.
Table 7 - The Senior Executive Remuneration Framework
Fixed Reward
Performance Shares
Premium Priced Options
Purpose
To attract and retain talent and
reflect the individual’s skills,
capabilities and experience.
To focus Senior Executives on
delivering against the Group’s
strategy collaboratively and as
a team.
To align Senior Executives’ interests
with the interests of shareholders
to achieve improved outcomes for
all stakeholders and grow
shareholder value.
Delivery
Cash.
Rights that may convert to Restricted
Shares after one year.
Options with a premium exercise
price (120% of share price at grant).
Opportunity
N/A
MD and CEO: 88% of FR
MD and CEO: 58% of FR
Eligibility
N/A
Other Senior Executives: 78% of FR
Other Senior Executives: 52% of FR
At least three months’ active
employment during the
performance period.
At least three months’ active
employment during the
performance period.
84
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Fixed Reward
Performance Shares
Premium Priced Options
Allocated value
Fixed reward levels are informed by
benchmarking comparable roles in
financial services and/or similarly
sized ASX listed companies.
The face value of the Senior
Executive’s award and dividing that
by the volume weighted average
price (VWAP) of BOQ shares.
For the annual grant, the VWAP over
the 10 trading days immediately
following the 2021 AGM.
For Senior Executives who joined
part-way through the performance
period, the VWAP over the 10 trading
days immediately preceding their
commencement date.
Performance
criteria
Satisfactory performance,
compliance with the terms and
conditions of employment including
the Code of Conduct and fulfilment
of accountabilities under the Banking
Executive Accountability Regime
(BEAR).
Performance against the Group
Scorecard over the one year
performance period (the FY)
modified by the Board’s overall
assessment of risk and performance
determines the conversion from
Rights to Restricted Shares.
Face value of each Senior Executive’s
award divided by a percentage of
the VWAP of BOQ shares over the 10
trading days immediately following
the AGM.
For the annual grant, 11% of the
VWAP over the 10 trading days
immediately following the 2021 AGM.
For Senior Executives who joined
part-way through the performance
period, a percentage of the VWAP
over the 10 trading days immediately
preceding their commencement
date.
BOQ’s share price must exceed the
exercise price set for the award, and
a risk assessment conducted by
the Board.
Risk
N/A
Risk assessment prior to vesting.
Risk assessment prior to vesting.
Vesting profile
N/A
Unvested awards are subject
to malus.
Unvested awards are subject
to malus.
A clawback period of two years
applies to each tranche.
Each tranche is subject to
dealing restrictions for one year after
vesting.
A clawback period of two years
applies to each tranche.
33% in December 2023, 33%
in December 2024 and 34% in
December 2025 (i.e., after two, three
and four years).
50% in December 2025 and 50% in
December 2026 (i.e., after four years
and five years).
4.3
Delivery and realisation timeframes
Figure 5 illustrates the delivery profile of the different components of Senior Executives’ remuneration for FY22.
Figure 5 - Delivery and realisation timeframes
Fixed Reward
Cash
Performance Shares
Premium Priced Options
33%
33%
34%
50%
50%
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
Grant
Convert
Vest
Restrictions lift
Can be sold
Clawback period
85
Remuneration Report For the year ended 31 August 20222022 Annual Report 5. Remuneration governance
5.1
Group remuneration policy
The Group Remuneration Policy (the Policy) sets out the governance structure for oversight of BOQ’s remuneration frameworks and
practices and the minimum expectations for their implementation. Specifically, the Policy requires that the Group’s performance and
remuneration frameworks:
• align the design and management of remuneration with:
– BOQ’s strategic, customer and financial objectives; and
– prudent risk-taking, incorporating adjustments to reflect:
•
•
•
the outcomes of business activities,
the risks related to those activities taking account, where relevant, the cost of the associated capital, and
the time necessary for the outcomes of those business activities to be reliably measured; and
• encourage behaviours that:
– are consistent with BOQ’s purpose and values;
– align with and reward the delivery of superior customer outcomes;
– support BOQ’s Risk Management Framework (RMF), prudent risk-taking and long-term financial success;
– prevent matters that may negatively impact prudential standing or reputation; and
– comply with all relevant jurisdictional legislative and regulatory requirements.
The Policy is currently being reviewed in advance of APRA Prudential Standard CPS 511 taking effect on 1 January 2023 and will be
presented to the Board for approval in December 2022. The Policy is reviewed regularly for effectiveness in supporting BOQ’s purpose,
strategy and objectives, and as developments and changes in the regulatory environment become known. The Policy will be updated as
required to ensure appropriate reflection of regulatory and legislative developments, including APRA Prudential Standard CPS 511 and
the Financial Accountability Regime.
5.2
Roles and Responsibilities
5.2.1
The Board
The Board is responsible for determining BOQ’s Remuneration Policy and, through the People, Culture and Remuneration Committee
(PCRC), focuses on strategic human resources, culture and remuneration.
The Board must, at least annually, review and approve:
•
•
the Policy;
individual remuneration arrangements, including but not limited to fixed remuneration levels, variable reward targets and outcomes,
make-good awards, retention awards and other benefits of significant value for those employees designated as Accountable Persons
and Responsible Persons;
• collectively, remuneration structures for other cohorts specified by APRA; and
• all equity plans, including the terms and conditions under which grants are offered.
5.2.2 The People, Culture and Remuneration Committee
In accordance with its Charter, the PCRC will:
•
review and make recommendations to the Board on the performance objectives and individual remuneration arrangements for the MD
and CEO at least annually;
• make recommendations to the Board on individual remuneration arrangements for Accountable Persons and Responsible Persons,
including Senior Executives, at least annually as part of the remuneration review, and as otherwise required (e.g., on appointment, for out-
of-cycle awards, and on separation if outside of policy);
• make recommendations to the Board on collective remuneration arrangements for other cohorts specified by APRA;
• at least annually, review the Policy and, where necessary, recommend amendments to the Board. The review must include an
assessment of the Policy’s:
– effectiveness and compliance with prudential standards and any other relevant legal, regulatory and/or governance requirements,
including an assessment of underlying procedures, controls and oversight;
– effectiveness in supporting BOQ’s purpose, strategy and objectives, including to identify material deviations from the intent of the
Policy and unreasonable or undesirable outcomes that flow from existing arrangements;
– effectiveness in protecting the interests of customers and quality outcomes for customers;
– alignment with shareholder interests; and
– alignment with BOQ’s RMF and the protection of BOQ’s long-term financial soundness.
86
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities The PCRC may seek advice from external advisers to assist with the execution of its responsibilities.
5.3
Board discretion
Senior Executives’ remuneration is determined by the remuneration strategy, Policy and the Framework. Remuneration outcomes are
determined in accordance with relevant performance measures, plan design and Equity Incentive Plan (EIP) rules.
The PCRC and Board recognise that there are a range of factors which are specific to current and future years, and these may be taken into
account when considering the overall remuneration outcomes for each year. To account for those factors, the PCRC and Board may make
discretionary adjustments to remuneration outcomes for Senior Executives and those employees classified as Accountable Persons and/or
Responsible Persons. These discretionary adjustments may impact an individual’s remuneration positively or negatively. In accordance with
this principle, remuneration outcomes have been adjusted both positively and negatively in prior years.
The criteria used by the PCRC and the Board to recommend and approved discretionary adjustments respectively include:
•
•
factors either not known or not relevant at the beginning of a performance period or financial year, which can impact performance
positively or negatively during the course of that performance period or financial year;
the degree of stretch implicit in the performance measures and targets, and the environment and market context in which the targets
were set;
• whether the operating environment during the performance period or financial year was materially different than forecast;
• comparison of the Group’s performance relative to its competitors;
•
•
• whether leadership behaviours consistent with the Group’s Code of Conduct and values have been regularly demonstrated throughout
the emergence of any major positive or negative risk or reputational issues;
the quality of financial results as shown by their composition and consistency;
the performance period or financial year; and
• any other matters that the PCRC and Board deem to be relevant and which are not outlined above.
5.4
Risk adjustment
The Chief Risk Officer presents a report to the PCRC on a biannual basis. This report covers significant and thematic risk events and is used
by the PCRC to inform variable reward decisions including the granting of equity to Senior Executives and other employees, and the Board’s
assessment of risk prior to vesting of equity awards.
In FY22, an enhanced risk adjusted reward framework was developed. The risk adjusted reward framework works in conjunction with other
consequence management mechanisms and provides guiding principles for leaders, the PCRC and the Board regarding appropriate and
proportionate actions to be taken to respond to risk events across the organisation.
The PCRC and Board have at their disposal three avenues for making risk adjustments to remuneration. These include:
in-period adjustment, where all, or a portion, of potential variable reward may be reduced, including to zero;
•
• malus, where the Board may determine that all, or a portion of any unvested award will be lapsed or forfeited; and
• clawback, where, subject to legal limitations, the Board may seek to recover all, or a portion of an award that has been paid and/or vested.
Circumstances in which the PCRC may recommend, and the Board may approve, to invoke in-period adjustment, malus and/or clawback
provisions include, but are not limited to those where, in the opinion of the Board, a Senior Executive or other individual has:
• engaged in serious misconduct or a breach of their employment obligations (including fraud, dishonesty, gross negligence, recklessness
•
or wilful indifference);
failed to meet BOQ’s conduct and behavioural standards, including a determination that a former employee engaged in conduct that
would be considered failure of the conduct and behavioural standards if still employed;
• contributed to poor risk outcomes;
• contributed to a material misstatement in, or omission from, BOQ’s financial statements, or a misstatement of a performance condition
applicable to a variable remuneration plan;
• acted, or failed to act, in a way that contributed to material reputational damage to BOQ; or
•
received a variable reward where all or part of the initial award was not justified having regard to the circumstances or information which
has come to light after an award was made under a variable remuneration plan.
87
Remuneration Report For the year ended 31 August 20222022 Annual Report 5.5
Cessation of employment and change of control
The treatment of future awards and unvested deferred awards depends on the circumstances under which employment ceases. Generally:
•
•
in the event of summary dismissal or resignation, Senior Executives are not eligible to be awarded any further grants of Performance
Shares or Premium Priced Options, and any unvested equity, unless the relevant service has been completed, will be lapsed or forfeited
(as relevant to the particular award and/or instrument).
In particular circumstances, referred to as Qualifying Reasons, it may be possible and permitted for a Senior Executives’ unvested equity
to remain on foot. Qualifying Reasons include redundancy; retirement; death; mutual agreement for cessation; and total and permanent
disablement.
• Where a Senior Executive ceases employment for a Qualifying Reason but is subsequently employed by a competitor of BOQ within 6
months of ceasing, any unvested equity will be lapsed or forfeited (as relevant to the particular award and/or instrument) as though they
had resigned, unless the Bank consents otherwise.
The Policy and various plan documentation also sets out the relevant treatment on change of control.
Generally speaking, in relation to awards granted up to and including FY22, where an employee separates for a Qualifying Reason or due to a
Change of Control event, unvested awards will be pro-rated to cessation date and remain on foot to vest in the normal course, subject to the
original terms and conditions unless the Board determines otherwise.
5.6 Minimum shareholding requirements
NEDs are required to hold shares equal in value to one times their base fee within three years of their appointment to the Board.
There are no minimum shareholding requirements for Senior Executives. However, the prevalence of equity and the long-dated vesting
timeframes that underpin the Framework ensures that all Senior Executives will have, at a minimum, equity interests reflecting at least one
times their fixed remuneration once they have been awarded an annual grant of Performance Shares and Premium Priced Options.
5.7
Securities trading policy
The Group’s Securities Trading Policy regulates dealings by Directors, employees and contractors in BOQ securities. Under the policy,
Prescribed Persons (those employees with the authority, responsibility, participatory role in, or knowledge of the planning, directing or
controlling of the activities of the Group) are prohibited from dealing in BOQ securities during certain blackout periods, including:
•
•
the period commencing 1 March and ending at the close of trading on the ASX one day after the announcement of BOQ’s half year results;
the period commencing 1 September and ending at the close of trading on the ASX one day after the announcement of BOQ’s full year
results; or
• any other period nominated from time to time by the Chair, MD and CEO or Chief Financial Officer of BOQ.
If a Director, employee or contractor has inside information about the BOQ Group, they must not deal in BOQ securities at any time, including
outside of a blackout period.
5.8
Use of remuneration consultants
Where necessary, the Board seeks advice from independent experts and advisors, including remuneration consultants. The remuneration
consultants are engaged by the Chair of the PCRC in order to ensure, upon engagement, that the appropriate level of independence exists
from Management. Reports provided by independent consultants are submitted directly to the Chair of the PCRC. Where the consultant’s
engagement requires a recommendation, the recommendation is provided to and discussed directly with the PCRC Chair in accordance
with the requirements of the Corporations Act.
During FY22 the PCRC did not engage independent advisors to assist with decision-making.
88
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 5.9
Senior executive contract terms
The remuneration and terms of Senior Executives’ employment are formalised in their Executive Services Agreement (ESA). Each ESA
provides for the payment of fixed and performance-based variable remuneration, superannuation and other benefits such as statutory leave
entitlements. The employment terms of each ESA is summarised in Table 8 below.
Table 8 - Summary of Executive Services Agreement for Senior Executives
Name
Position
Title
Current Senior Executives
George
Frazis
Managing Director and
Chief Executive Officer
Debra
Eckersley
Group Executive
People and Culture
Notice Period
by Executive
Employer
Notice Period
Termination Payments
(includes Notice Period) (1)
6 months
9 months
9 months’ fixed remuneration in lieu of notice
6 months
6 months
6 months’ fixed remuneration in lieu of notice
Martine
Jager
Racheal
Kellaway
Paul
Newham
Craig
Ryman
Chris
Screen
David
Watts
Group Executive Retail
Banking and Chief Executive
Officer ME Bank
6 months
6 months
6 months’ fixed remuneration in lieu of notice
Chief Financial Officer
6 months
6 months
6 months’ fixed remuneration in lieu of notice
Chief Operations Officer
6 months
6 months
6 months’ fixed remuneration in lieu of notice
Chief Information Officer
6 months
6 months
6 months’ fixed remuneration in lieu of notice
Group Executive
Business Banking
6 months
6 months
6 months’ fixed remuneration in lieu of notice
Group Chief Risk Officer
6 months
6 months
6 months’ fixed remuneration in lieu of notice
Former Senior Executives
Adam
McAnalen
Chief Risk Officer
6 months
6 months
6 months’ fixed remuneration in lieu of notice
Fiamma
Morton
Group Executive
Business Banking
Ewen
Stafford
Chief Financial Officer
and Chief Operating Officer
6 months
6 months
6 months’ fixed remuneration in lieu of notice
6 months
6 months
6 months’ fixed remuneration in lieu of notice
(1)
In the event of redundancy, Senior Executives may also be entitled to redundancy pay in line with National Employment Standards.
89
Remuneration Report For the year ended 31 August 20222022 Annual Report 6. Non-Executive Director remuneration
6.1
Fee pool
NED fees are determined within an aggregate fee pool limit. The pool currently stands at $2,800,000 inclusive of superannuation and was
approved by shareholders on 30 November 2016. The fee pool allows the Board flexibility with changes to its size and composition. The
Board will not be seeking an increase to the fee pool at the 2022 AGM.
6.2
Remuneration framework
NED fees are set to attract and retain individuals of appropriate calibre to the Board and Committees. Fees are reviewed annually by the
PCRC having regard for the external market of similarly sized and comparably complex organisations.
The Chair’s fee is determined independently from the fees of other Directors and is also based on the external market. The Chair is not
present at any discussions relating to the determination of his own remuneration.
In order to maintain independence and impartiality, NEDs do not receive any performance-based remuneration including share options or
rights subject to a performance condition in addition to their prescribed fees. NEDs are not provided with retirement benefits apart from
statutory superannuation.
The BOQ Constitution allows the Company to pay Directors additional remuneration for extra or special services performed.
6.3
Board committees
All NEDs serve on the Board Audit; Nomination and Governance; People, Culture and Remuneration; Risk; and Transformation and
Technology Committees.
6.4 ME Bank
BOQ NEDs were Directors of ME Bank Limited from the completion of the acquisition until the handback of ME’s Authorised Deposit-taking
Institution (ADI) licence on 28 February 2022, with all NEDs having assumed equivalent roles with ME Bank Limited, for example, Patrick
Allaway was the Chair of the ME Bank Board and all other NEDs were members of the ME Bank Board.
In accordance with APRA regulation, the Board of ME Bank Limited was required to maintain its own Board Audit and Board Risk
Committees. Karen Penrose served as the Chair of the ME Bank Board Audit Committee and Bruce Carter served as the Chair of the
ME Bank Board Risk Committee. All other NEDs were members of both committees.
No additional fees were paid for chairmanship or membership of the ME Bank Board or its Board committees.
90
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 6.5
NED fee structure
To reflect the revised committee composition and to provide fairness and simplicity, BOQ NEDs are remunerated using a flat fee structure,
inclusive of superannuation which is payable up to the maximum contributions base. The only instances where additional committee fees
are payable are in relation to the Due Diligence Committee and the Investment Committee, which are paid on a per-meeting basis.
Following a benchmarking exercise completed during FY22, NED fees will not increase for FY23. The FY22 and FY23 fee structures are set
out in Table 9.
Table 9 - FY22 and FY23 NED fees
FY22 (01/09/2021 - 31/08/2022)
FY23 (01/09/2022 - 31/08/2023)
Chair /
Committee Chair (1)
$
Directors /
Committee Members
$
Chair /
Committee Chair (1)
$
Directors /
Committee Members
$
Annual fees
Base fees
Committee fees (2)
St Andrew’s Board (3)
Per meeting fees
Investment Committee
Due Diligence Committee
500,000
50,000
-
2,500
2,500
185,000
80,000
50,000
1,750
1,750
500,000
50,000
n/a
2,500
2,500
185,000
80,000
n/a
1,750
1,750
(1) The Chair receives no additional remuneration for involvement with Committees.
(2) A flat fee applies for the following Committees: Audit; Nomination and Governance; People, Culture and Remuneration; Risk; and Transformation and Technology.
(3) Karen Penrose was also a member of the St Andrew’s Board of Directors. The sale of St Andrew’s Insurance was completed on 28 October 2021.
6.6
NED fee sacrifice rights plan
At the beginning of FY22, as in prior years, offers were made under the NED Fee Sacrifice Rights Plan. Four NEDs elected to participate in the
Plan, a summary of which is provided in Table 10.
Table 10 - terms of the NED fee sacrifice rights plan
Purpose
Value
Vesting Period
The Plan’s purpose is to provide an opportunity for NEDs to increase their shareholding in a tax effective manner.
The Plan meets regulatory and tax requirements.
At the beginning of the participation period, NEDs can nominate a percentage of their pre-tax annual fees (up to
100 per cent) to receive in Rights to shares in BOQ.
Rights vest and convert to shares following the completion of the participation period. For FY22 the participation
period was the twelve months from 1 September 2021 to 31 August 2022. The rights do not have any performance
conditions in order to preserve the NEDs’ independence.
Disposal Restrictions
Shares received on exercise will be subject to a disposal restriction of the earlier of retirement from the Board or at
least three years, or longer as nominated by the Director (up to 15 years).
Cessation of
Directorship
If a participant ceases to be a NED prior to the Rights vesting, they will retain a pro-rata number of Rights based
on the period they were a NED. If directorship ceases during the restriction period, any disposal restrictions on the
shares will be lifted on the cessation date.
7. Statutory tables
7.1
Statutory disclosures
The following tables include details of the nature and amount, as required by the Corporations Act 2001, of each major element of the
remuneration of each Director and Senior Executive of the Group, calculated in accordance with accounting standards.
91
Remuneration Report For the year ended 31 August 20222022 Annual Report d
e
t
a
l
e
r
f
o
n
o
i
t
r
o
p
o
r
P
e
c
n
a
m
r
o
f
r
e
p
n %
o
i
t
a
r
e
n
u
m
e
r
$
l
a
t
o
T
s
e
r
a
h
S
) $
7
(
s
t
i
n
u
d
n
a
) $
6
(
s
t
h
g
R
i
s
t
i
f
e
n
e
B
) $
5
(
m
r
e
t
g
n
o
l
$
$
)
4
(
t
n
e
m
y
o
p
m
e
l
s
t
i
f
e
n
e
b
n
o
i
t
a
n
m
r
e
T
i
r
e
h
t
O
t
s
o
P
l
a
t
o
T
m
r
e
t
t
r
o
h
s
-
-
-
-
-
-
-
-
-
-
-
-
-
-
%
4
4
%
9
3
,
2
2
3
8
4
8
2
,
,
2
6
6
8
9
4
6
1
7
,
1
3
3
2
,
,
9
4
7
5
2
2
4
4
1
,
0
0
5
,
5
2
4
6
5
4
1
3
5
,
1
8
2
2
8
5
6
5
2
,
,
9
2
6
4
3
2
6
0
1
,
2
5
2
5
0
7
6
1
,
0
3
3
,
1
8
2
3
0
3
,
1
7
2
6
3
9
8
1
3
,
,
7
8
7
5
6
3
0
0
0
5
1
3
,
7
3
3
2
2
1
,
1
5
0
,
1
7
0
0
0
5
4
2
,
-
0
2
4
0
7
,
9
8
9
7
7
2
,
,
1
5
5
0
3
2
-
-
1
5
5
3
9
,
9
8
9
7
7
2
,
,
1
5
5
0
3
2
2
0
8
7
2
,
3
4
2
7
2
,
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
0
8
2
4
7
,
,
1
2
7
5
8
6
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
4
3
6
3
,
8
6
3
4
2
,
9
9
9
3
2
,
3
6
1
,
2
2
9
9
9
3
2
,
1
8
2
4
2
,
8
1
3
5
2
1
,
2
9
1
5
,
1
0
5
2
,
1
2
3
7
8
,
1
2
-
7
7
4
,
1
6
5
6
9
1
,
3
1
1
,
3
2
2
6
1
,
9
1
6
6
5
0
1
,
4
3
2
6
,
5
2
4
,
1
2
,
1
1
5
6
4
5
,
1
,
5
1
7
3
7
3
,
1
0
3
4
4
9
,
3
4
8
5
9
,
4
5
3
3
1
,
0
4
8
5
1
,
,
7
2
7
8
3
4
,
1
,
2
3
0
2
6
2
,
1
2
2
0
2
1
2
0
2
e
g
r
o
e
G
s
i
z
a
r
F
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
t
n
e
r
r
u
C
$
r
e
h
t
O
m
r
e
t
t
r
o
h
s
)
3
(
s
t
i
f
e
n
e
b
y
r
a
t
e
n
o
m
-
n
o
N
y
r
a
l
a
S
) $
2
(
s
t
i
f
e
n
e
b
)
1
(
s
e
e
f
d
n
a
$
r
a
e
Y
e
m
a
N
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
5
4
1
,
6
7
4
4
2
7
,
1
6
3
4
2
2
,
3
6
0
9
3
2
,
9
7
3
3
1
2
,
2
8
6
6
3
1
,
6
8
1
,
5
1
1
4
3
3
,
5
7
2
9
3
,
8
7
4
,
1
7
2
1
3
4
5
1
3
,
8
3
8
5
9
2
,
1
7
7
,
1
1
1
7
1
8
4
6
,
,
5
7
5
3
2
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
.
r
a
e
y
e
h
t
g
n
i
r
u
d
d
e
u
r
c
c
a
e
v
a
e
l
l
5
4
1
,
6
7
4
4
2
7
,
1
6
3
4
2
2
,
3
6
0
9
3
2
,
9
7
3
3
1
2
,
2
8
6
6
3
1
,
6
8
1
,
5
1
1
4
3
3
,
5
7
2
9
3
,
8
7
4
,
1
7
2
1
3
4
5
1
3
,
8
3
8
5
9
2
,
1
7
7
,
1
1
1
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
r
e
t
r
a
C
e
c
u
r
B
)
8
(
g
g
a
F
y
n
n
e
J
k
c
i
r
t
a
P
y
a
w
a
l
l
A
h
a
r
o
b
e
D
s
r
e
K
i
i
k
c
w
r
a
W
s
u
g
e
N
e
s
o
r
n
e
P
n
e
r
a
K
i
e
k
c
M
i
n
e
s
o
R
7
1
8
4
6
,
,
5
7
5
3
2
2
2
2
0
2
1
2
0
2
)
9
(
r
e
m
i
r
o
L
n
h
o
J
s
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
-
n
o
N
r
e
m
r
o
F
a
u
n
n
a
g
n
d
u
c
n
l
i
i
,
l
y
r
a
a
s
e
s
a
b
s
e
d
u
c
n
l
i
s
e
e
f
d
n
a
y
r
a
a
S
l
r
o
s
m
r
e
t
e
h
t
o
t
e
d
a
m
n
e
e
b
s
a
h
e
g
n
a
h
c
o
n
-
s
n
o
i
t
i
d
n
o
c
g
n
i
t
s
e
v
e
h
t
y
f
s
i
t
a
s
o
t
s
e
c
v
r
e
s
g
n
d
v
o
r
p
n
g
e
b
s
e
e
y
o
p
m
e
e
h
t
n
e
h
w
e
t
a
d
e
h
t
i
l
i
i
i
t
a
e
c
n
e
m
m
o
c
o
t
d
e
d
n
e
m
a
n
e
e
b
s
a
h
r
a
e
y
e
h
t
t
u
o
h
g
u
o
r
h
t
d
e
t
n
a
r
g
s
t
h
g
i
r
r
o
f
d
o
i
r
e
p
n
o
i
t
a
s
i
t
r
o
m
a
e
h
T
.
,
7
0
2
0
2
$
f
o
e
s
a
e
r
c
e
d
a
n
i
l
g
n
i
t
l
u
s
e
r
d
e
t
a
t
s
e
r
n
e
e
b
e
v
a
h
s
e
u
a
v
r
o
r
r
e
d
o
i
r
e
p
r
o
i
r
p
a
f
o
n
o
i
t
c
e
r
r
o
c
g
n
w
o
i
l
l
o
F
.
r
a
e
y
l
i
a
c
n
a
n
i
f
e
h
t
g
n
i
r
u
d
d
e
s
i
l
i
t
u
r
o
d
e
u
r
c
c
a
e
v
a
e
l
i
e
c
v
r
e
s
g
n
o
l
s
e
s
i
r
p
m
o
C
s
t
i
f
e
n
e
b
n
o
i
t
a
u
n
n
a
r
e
p
u
s
s
e
d
u
c
n
l
I
.
l
l
e
v
a
r
t
d
n
a
n
o
i
t
a
c
o
e
r
r
o
n
o
i
t
a
d
o
m
m
o
c
c
a
,
i
i
g
n
k
r
a
p
r
a
c
s
a
h
c
u
s
)
T
B
F
d
e
t
a
c
o
s
s
a
d
n
a
(
s
t
i
f
e
n
e
b
d
e
d
n
u
f
-
y
n
a
p
m
o
C
s
e
c
n
a
w
o
l
l
a
s
a
h
c
u
s
s
t
i
f
e
n
e
B
o
t
d
e
r
a
p
m
o
c
)
r
e
b
m
e
t
p
e
S
1
m
o
r
f
s
e
c
n
a
t
s
n
i
t
s
o
m
n
i
(
r
e
i
i
i
l
r
a
e
d
e
s
n
g
o
c
e
r
g
n
e
b
e
s
n
e
p
x
e
n
o
i
t
a
s
i
t
r
o
m
a
n
i
d
e
t
l
u
s
e
r
s
a
h
s
h
T
i
.
e
t
a
d
t
n
a
r
g
e
h
t
m
o
r
f
d
e
c
n
e
m
m
o
c
y
l
t
c
e
r
r
o
c
n
i
d
o
i
r
e
p
n
o
i
t
a
s
i
t
r
o
m
a
e
h
t
,
s
r
a
e
y
r
o
i
r
p
n
I
.
d
e
d
r
a
w
a
s
t
h
g
i
r
f
o
y
t
i
t
n
a
u
q
r
o
f
d
o
h
t
e
m
n
o
i
t
a
u
a
v
e
h
t
l
,
r
a
e
y
e
h
t
g
n
i
r
u
D
.
i
d
e
s
n
g
o
c
e
r
e
s
n
e
p
x
e
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
s
e
h
t
n
i
,
4
7
3
6
$
f
o
e
s
a
e
r
c
n
i
l
a
t
o
t
a
h
t
i
,
l
i
w
y
g
n
d
r
o
c
c
a
d
e
t
a
t
s
e
r
n
e
e
b
s
a
h
d
o
i
r
e
p
e
v
i
t
a
r
a
p
m
o
c
e
h
T
.
e
t
a
d
t
n
a
r
g
e
h
t
o
t
d
e
r
e
f
f
i
d
h
c
h
w
e
t
a
d
n
o
i
t
a
c
o
i
l
l
a
e
h
t
l
l
t
a
d
e
t
a
u
c
a
c
n
e
e
b
d
a
h
e
u
a
v
r
i
a
f
e
h
t
y
s
u
o
v
e
r
P
l
i
l
.
l
l
e
d
o
m
n
o
i
t
a
u
a
v
d
e
t
p
e
c
c
a
-
y
r
t
s
u
d
n
i
i
n
a
g
n
s
u
e
t
a
d
t
n
a
r
g
e
h
t
l
l
t
a
d
e
t
a
u
c
a
c
n
e
e
b
s
a
h
s
e
r
a
h
s
f
o
e
u
a
v
r
i
a
f
e
h
T
l
.
d
e
t
a
t
s
e
r
n
e
e
b
s
a
h
e
s
n
e
p
x
e
d
o
i
r
e
p
r
o
i
r
p
e
h
t
,
s
e
r
a
h
s
d
e
t
c
i
r
t
s
e
r
r
o
f
e
s
n
e
p
x
e
l
l
n
o
i
t
a
s
i
t
r
o
m
a
e
h
t
e
t
a
u
c
a
c
o
t
d
e
s
u
e
u
a
v
r
i
a
f
e
h
t
l
f
o
t
n
e
m
s
s
e
s
s
a
e
r
a
g
n
w
o
i
l
l
o
F
.
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
e
h
t
r
o
f
s
e
r
a
h
s
e
c
n
a
m
r
o
f
r
e
p
d
e
t
r
e
v
n
o
c
r
o
s
t
n
e
m
y
a
p
I
T
S
d
e
r
r
e
f
e
d
h
g
u
o
r
h
t
d
e
d
r
a
w
a
s
e
r
a
h
s
d
e
t
c
i
r
t
s
e
r
f
o
n
o
i
t
a
s
i
t
r
o
m
a
e
h
t
s
t
n
e
s
e
r
p
e
R
)
7
(
e
e
F
D
E
N
1
2
Y
F
e
h
t
n
i
i
d
e
t
a
p
c
i
t
r
a
p
e
s
o
r
n
e
P
n
e
r
a
K
d
n
a
s
u
g
e
N
k
c
w
r
a
W
i
,
r
e
t
r
a
C
e
c
u
r
B
,
y
a
w
a
l
l
A
k
c
i
r
t
a
P
.
l
i
n
a
P
s
t
h
g
R
e
c
i
f
i
r
c
a
S
e
e
F
D
E
N
2
2
Y
F
e
h
t
n
i
i
d
e
t
a
p
c
i
t
r
a
p
e
s
o
r
n
e
P
n
e
r
a
K
d
n
a
s
u
g
e
N
k
c
w
r
a
W
s
r
e
K
h
a
r
o
b
e
D
,
r
e
t
r
a
C
e
c
u
r
B
i
i
,
:
e
t
o
N
.
i
l
n
a
P
s
t
h
g
R
e
c
i
f
i
r
c
a
S
.
d
o
i
r
e
p
r
o
i
r
p
e
h
t
r
o
f
,
0
2
7
7
0
1
$
f
o
e
s
n
e
p
x
e
n
o
i
t
a
s
i
t
r
o
m
a
n
i
e
s
a
e
r
c
e
d
l
l
a
r
e
v
o
n
a
n
i
d
e
t
l
u
s
e
r
s
h
T
i
.
e
t
a
d
t
n
a
r
g
t
a
e
u
a
v
r
i
a
f
e
h
t
h
t
i
l
w
n
g
i
l
l
a
o
t
d
e
d
n
e
m
a
n
e
e
b
s
a
h
n
a
P
D
E
N
e
h
t
r
e
d
n
u
d
e
r
i
u
q
c
a
s
e
r
a
h
s
e
h
t
.
1
2
0
2
r
e
b
o
t
c
O
3
1
n
o
P
M
K
a
s
a
d
e
c
n
e
m
m
o
c
g
g
a
F
y
n
n
e
J
.
1
2
0
2
r
e
b
m
e
c
e
D
7
n
o
P
M
K
a
s
a
d
e
s
a
e
c
r
e
m
i
r
o
L
n
h
o
J
)
8
(
)
9
(
.
i
d
e
s
n
g
o
c
e
r
e
s
n
e
p
x
e
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
s
e
h
t
n
i
,
2
7
4
0
4
1
$
f
o
e
s
a
e
r
c
n
i
l
a
t
o
t
a
h
t
i
,
l
i
w
y
g
n
d
r
o
c
c
a
d
e
t
a
t
s
e
r
n
e
e
b
s
a
h
d
o
i
r
e
p
e
v
i
t
a
r
a
p
m
o
c
e
h
T
.
s
d
o
i
r
e
p
r
o
i
r
p
)
1
(
)
2
(
)
3
(
)
4
(
)
5
(
)
6
(
s
t
n
e
m
y
a
P
d
e
s
a
B
e
r
a
h
S
m
r
e
T
-
g
n
o
L
m
r
e
T
-
t
r
o
h
S
:
l
l
w
o
e
b
e
b
a
t
e
h
t
n
i
d
e
n
i
l
t
u
o
s
a
e
r
a
p
u
o
r
G
e
h
t
f
o
r
o
t
c
e
r
i
D
h
c
a
e
f
o
n
o
i
t
a
r
e
n
u
m
e
r
e
h
t
j
l
f
o
t
n
e
m
e
e
r
o
a
m
h
c
a
e
f
o
t
n
u
o
m
a
d
n
a
e
r
u
t
a
n
e
h
t
f
o
s
l
i
a
t
e
D
)
d
e
u
n
i
t
n
o
c
(
s
e
r
u
s
o
c
s
i
D
y
r
o
t
u
t
a
t
S
l
1
.
7
92
n
o
i
t
a
r
e
n
u
m
e
R
’
s
r
o
t
c
e
r
i
D
-
l
1
1
e
b
a
T
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities
d
e
t
a
l
e
r
f
o
n
o
i
t
r
o
p
o
r
P
e
c
n
a
m
r
o
f
r
e
p
%
$
n
o
i
t
a
r
e
n
u
m
e
r
l
a
t
o
T
s
e
r
a
h
S
) $
7
(
s
t
i
n
u
d
n
a
) $
6
(
s
t
h
g
R
i
s
t
i
f
e
n
e
B
) $
5
(
m
r
e
t
g
n
o
l
$
$
)
4
(
t
n
e
m
y
o
p
m
e
l
s
t
i
f
e
n
e
b
n
o
i
t
a
n
m
r
e
T
i
r
e
h
t
O
t
s
o
P
l
a
t
o
T
m
r
e
t
t
r
o
h
s
%
7
4
%
2
4
%
1
3
%
4
1
%
9
2
%
3
3
%
9
3
%
7
2
%
4
3
%
4
1
%
7
4
%
0
4
%
5
3
%
9
2
0
3
0
9
0
2
,
,
1
6
2
8
7
9
1
,
8
9
0
7
6
3
,
,
9
2
5
6
0
3
-
,
6
6
8
3
0
0
,
1
8
4
2
7
9
,
0
4
1
,
6
3
0
,
1
8
9
4
7
7
,
2
9
7
0
4
1
,
4
5
7
8
,
,
9
1
0
4
6
2
0
9
7
7
5
,
0
7
4
2
5
2
,
,
1
7
9
9
,
1
8
1
,
8
0
2
5
3
0
,
1
3
0
8
5
1
,
,
5
5
7
5
6
9
0
9
7
7
4
,
,
6
8
0
4
6
0
,
1
-
3
9
3
4
2
3
,
,
4
2
7
3
4
2
7
9
1
,
4
4
7
8
3
,
1
3
7
3
6
4
4
,
8
4
1
,
4
0
3
,
7
6
8
4
6
2
,
7
7
2
4
8
2
7
2
4
7
0
7
,
0
3
7
,
1
0
2
,
1
6
1
2
7
1
1
,
,
1
3
5
8
4
6
9
4
6
7
2
1
,
3
4
5
7
7
1
,
6
3
1
,
0
6
3
$
-
-
-
-
-
-
-
-
-
-
-
-
7
6
5
6
1
,
0
3
2
0
1
,
7
0
4
4
1
,
1
8
3
4
,
5
6
2
0
1
,
8
7
7
5
,
9
1
1
,
5
1
3
8
8
2
1
,
8
0
3
8
1
,
5
3
9
6
,
9
9
9
3
2
,
3
6
1
,
2
2
9
9
9
3
2
,
6
1
3
,
1
1
3
2
3
6
,
3
2
3
6
,
9
9
9
3
2
,
3
6
1
,
2
2
9
9
9
3
2
,
5
8
6
6
1
,
7
7
9
6
,
5
9
6
2
1
,
0
9
2
4
1
,
3
6
1
,
2
2
,
1
4
5
3
0
6
,
2
3
8
9
4
5
,
2
1
5
6
7
6
5
3
6
6
4
2
,
3
6
0
4
8
,
1
9
4
9
4
1
,
7
0
2
7
2
7
,
2
9
4
9
1
7
,
1
8
3
,
1
9
5
9
3
0
3
3
3
,
,
2
7
0
2
2
3
,
0
2
5
9
8
6
3
0
5
3
6
,
,
4
9
8
6
0
6
1
0
3
9
5
,
1
1
1
,
0
5
1
0
0
0
0
5
3
,
)
1
2
0
6
1
(
,
-
%
6
3
)
%
4
8
(
0
1
2
,
5
5
3
7
7
0
4
0
1
,
)
1
9
1
,
3
0
4
(
,
2
2
0
2
3
2
,
1
1
0
3
9
0
1
,
4
3
9
3
3
3
,
,
5
5
3
8
0
0
,
1
8
8
3
0
3
,
,
7
6
8
4
6
2
-
-
-
5
8
8
2
1
,
3
6
1
,
2
2
,
2
5
0
8
7
6
)
7
8
6
6
2
(
,
9
8
9
7
1
,
1
3
3
6
1
,
3
6
1
,
2
2
,
1
2
0
3
6
6
3
9
2
0
5
7
,
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
9
5
5
9
1
,
1
r
e
h
t
O
m
r
e
t
t
r
o
h
s
)
3
(
s
t
i
f
e
n
e
b
y
r
a
t
e
n
o
m
-
n
o
N
y
r
a
l
a
S
) $
2
(
s
t
i
f
e
n
e
b
)
1
(
$
s
e
e
f
d
n
a
-
8
9
5
5
,
8
3
5
8
,
1
7
9
2
,
6
0
7
6
,
3
8
1
,
3
4
5
3
3
1
,
0
4
8
5
1
,
6
5
2
,
2
1
2
2
6
6
,
0
8
7
2
,
2
3
3
5
,
2
0
3
,
1
3
4
9
7
9
5
,
,
2
3
8
9
4
5
4
7
9
7
6
6
,
4
6
6
3
4
2
,
7
5
3
7
7
,
8
0
3
6
4
1
,
3
5
8
3
1
7
,
,
2
5
6
3
0
7
5
2
1
,
9
7
5
,
7
1
4
6
2
3
3
9
6
8
1
3
,
3
9
9
2
8
6
,
1
0
2
,
2
6
0
4
8
5
1
,
,
2
1
2
2
6
6
9
0
9
,
2
2
2
1
1
,
0
4
6
4
0
0
7
4
,
9
8
2
3
0
7
,
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
2
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
2
2
0
2
1
2
0
2
s
e
v
i
i
t
u
c
e
x
E
r
o
n
e
S
t
n
e
r
r
u
C
l
y
e
s
r
e
k
c
E
a
r
b
e
D
s
e
v
i
i
t
u
c
e
x
E
r
o
n
e
S
r
e
m
r
o
F
)
2
1
(
l
n
e
a
n
A
c
M
m
a
d
A
)
0
1
(
n
e
e
r
c
S
s
i
r
h
C
)
1
1
(
s
t
t
a
W
d
v
a
D
i
)
5
1
(
)
3
1
(
n
o
t
r
o
M
a
m
m
a
F
i
)
5
1
(
)
4
1
(
d
r
o
f
f
a
t
S
n
e
w
E
)
8
(
y
a
w
a
l
l
e
K
l
a
e
h
c
a
R
)
9
(
m
a
h
w
e
N
l
u
a
P
n
a
m
y
R
g
a
r
C
i
r
e
g
a
J
e
n
i
t
r
a
M
s
t
n
e
m
y
a
P
d
e
s
a
B
e
r
a
h
S
:
l
l
w
o
e
b
e
b
a
t
e
h
t
n
i
m
r
e
T
-
g
n
o
L
m
r
e
T
-
t
r
o
h
S
d
e
n
i
l
t
u
o
s
a
e
r
a
p
u
o
r
G
e
h
t
i
f
o
e
v
i
t
u
c
e
x
E
r
o
n
e
S
h
c
a
e
f
o
n
o
i
t
a
r
e
n
u
m
e
r
e
h
t
l
j
f
o
t
n
e
m
e
e
r
o
a
m
h
c
a
e
f
o
t
n
u
o
m
a
d
n
a
e
r
u
t
a
n
e
h
t
f
o
s
l
i
a
t
e
D
)
d
e
u
n
i
t
n
o
c
(
s
e
r
u
s
o
c
s
i
D
y
r
o
t
u
t
a
t
S
l
1
.
7
n
o
i
t
a
r
e
n
u
m
e
r
e
v
i
t
u
c
e
x
E
r
o
n
e
S
-
2
1
e
b
a
T
l
i
r
o
s
m
r
e
t
e
h
t
o
t
e
d
a
m
n
e
e
b
s
a
h
e
g
n
a
h
c
o
n
-
s
n
o
i
t
i
d
n
o
c
g
n
i
t
s
e
v
e
h
t
y
f
s
i
t
a
s
o
t
s
e
c
v
r
e
s
g
n
d
v
o
r
p
n
g
e
b
s
e
e
y
o
p
m
e
e
h
t
n
e
h
w
e
t
a
d
e
h
t
i
l
i
i
i
t
a
e
c
n
e
m
m
o
c
o
t
d
e
d
n
e
m
a
n
e
e
b
s
a
h
r
a
e
y
e
h
t
t
u
o
h
g
u
o
r
h
t
d
e
t
n
a
r
g
s
t
h
g
i
r
r
o
f
d
o
i
r
e
p
n
o
i
t
a
s
i
t
r
o
m
a
e
h
T
.
,
7
0
9
3
2
$
f
o
e
s
a
e
r
c
e
d
a
n
i
l
g
n
i
t
l
u
s
e
r
d
e
t
a
t
s
e
r
n
e
e
b
e
v
a
h
s
e
u
a
v
r
o
r
r
e
d
o
i
r
e
p
r
o
i
r
p
a
f
o
n
o
i
t
c
e
r
r
o
c
g
n
w
o
i
l
l
o
F
.
r
a
e
y
l
i
a
c
n
a
n
i
f
e
h
t
g
n
i
r
u
d
d
e
s
i
l
i
t
u
r
o
d
e
u
r
c
c
a
e
v
a
e
l
i
e
c
v
r
e
s
g
n
o
l
s
e
s
i
r
p
m
o
C
.
s
t
i
f
e
n
e
b
n
o
i
t
a
u
n
n
a
r
e
p
u
s
s
e
d
u
c
n
l
I
.
l
l
e
v
a
r
t
d
n
a
n
o
i
t
a
c
o
e
r
r
o
n
o
i
t
a
d
o
m
m
o
c
c
a
,
i
i
g
n
k
r
a
p
r
a
c
s
a
h
c
u
s
)
T
B
F
d
e
t
a
c
o
s
s
a
d
n
a
(
s
t
i
f
e
n
e
b
d
e
d
n
u
f
-
y
n
a
p
m
o
C
.
s
e
c
n
a
w
o
l
l
a
s
a
h
c
u
s
s
t
i
f
e
n
e
B
.
r
a
e
y
e
h
t
g
n
i
r
u
d
d
e
u
r
c
c
a
e
v
a
e
l
l
a
u
n
n
a
g
n
d
u
c
n
l
i
i
,
l
y
r
a
a
s
e
s
a
b
s
e
d
u
c
n
l
i
s
e
e
f
d
n
a
y
r
a
a
S
l
)
1
(
)
2
(
)
3
(
)
4
(
)
5
(
)
6
(
o
t
d
e
r
a
p
m
o
c
)
r
e
b
m
e
t
p
e
S
1
m
o
r
f
s
e
c
n
a
t
s
n
i
t
s
o
m
n
i
(
r
e
i
i
i
l
r
a
e
d
e
s
n
g
o
c
e
r
g
n
e
b
e
s
n
e
p
x
e
n
o
i
t
a
s
i
t
r
o
m
a
n
i
d
e
t
l
u
s
e
r
s
a
h
s
h
T
i
.
e
t
a
d
t
n
a
r
g
e
h
t
m
o
r
f
d
e
c
n
e
m
m
o
c
y
l
t
c
e
r
r
o
c
n
i
d
o
i
r
e
p
n
o
i
t
a
s
i
t
r
o
m
a
e
h
t
,
s
r
a
e
y
r
o
i
r
p
n
I
.
d
e
d
r
a
w
a
s
t
h
g
i
r
f
o
y
t
i
t
n
a
u
q
l
l
t
a
d
e
t
a
u
c
a
c
n
e
e
b
d
a
h
e
u
a
v
r
i
a
f
e
h
t
y
s
u
o
v
e
r
P
l
i
l
.
l
l
e
d
o
m
n
o
i
t
a
u
a
v
d
e
t
p
e
c
c
a
-
y
r
t
s
u
d
n
i
i
n
a
g
n
s
u
e
t
a
d
t
n
a
r
g
e
h
t
l
l
t
a
d
e
t
a
u
c
a
c
n
e
e
b
s
a
h
s
e
r
a
h
s
f
o
e
u
a
v
r
i
a
f
e
h
T
l
.
d
e
t
a
t
s
e
r
n
e
e
b
s
a
h
e
s
n
e
p
x
e
d
o
i
r
e
p
r
o
i
r
p
e
h
t
,
s
e
r
a
h
s
d
e
t
c
i
r
t
s
e
r
r
o
f
e
s
n
e
p
x
e
l
l
n
o
i
t
a
s
i
t
r
o
m
a
e
h
t
e
t
a
u
c
a
c
o
t
d
e
s
u
e
u
a
v
r
i
a
f
e
h
t
l
f
o
t
n
e
m
s
s
e
s
s
a
e
r
a
g
n
w
o
i
l
l
o
F
.
r
o
t
c
e
r
i
D
e
v
i
t
u
c
e
x
E
e
h
t
r
o
f
s
e
r
a
h
s
e
c
n
a
m
r
o
f
r
e
p
d
e
t
r
e
v
n
o
c
r
o
s
t
n
e
m
y
a
p
I
T
S
d
e
r
r
e
f
e
d
h
g
u
o
r
h
t
d
e
d
r
a
w
a
s
e
r
a
h
s
d
e
t
c
i
r
t
s
e
r
f
o
n
o
i
t
a
s
i
t
r
o
m
a
e
h
t
s
t
n
e
s
e
r
p
e
R
)
7
(
.
i
d
e
s
n
g
o
c
e
r
e
s
n
e
p
x
e
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
s
e
h
t
n
i
,
8
4
4
0
1
$
f
o
e
s
a
e
r
c
n
i
l
a
t
o
t
a
h
t
i
,
i
l
w
y
g
n
d
r
o
c
c
a
d
e
t
a
t
s
e
r
n
e
e
b
s
a
h
d
o
i
r
e
p
e
v
i
t
a
r
a
p
m
o
c
e
h
T
.
e
t
a
d
t
n
a
r
g
e
h
t
o
t
d
e
r
e
f
f
i
d
h
c
h
w
e
t
a
d
n
o
i
t
a
c
o
i
l
l
a
e
h
t
.
l
2
2
0
2
y
u
J
1
n
o
r
e
c
i
f
f
O
l
i
i
i
a
c
n
a
n
F
f
e
h
C
s
a
d
e
c
n
e
m
m
o
c
y
a
w
a
l
l
e
K
l
a
e
h
c
a
R
.
1
2
0
2
r
e
b
o
t
c
O
1
n
o
,
i
g
n
k
n
a
B
s
s
e
n
s
u
B
e
v
i
i
t
u
c
e
x
E
p
u
o
r
G
s
a
d
e
c
n
e
m
m
o
c
n
e
e
r
c
S
s
i
r
h
C
)
8
(
)
9
(
.
2
2
0
2
e
n
u
J
6
n
o
r
e
c
i
f
f
O
s
n
o
i
t
a
r
e
p
O
i
f
e
h
C
s
a
d
e
c
n
e
m
m
o
c
m
a
h
w
e
N
l
u
a
P
)
0
1
(
.
2
2
0
2
h
c
r
a
M
3
n
o
r
e
c
i
f
f
O
k
s
R
i
i
f
e
h
C
p
u
o
r
G
p
u
o
r
G
s
a
d
e
c
n
e
m
m
o
c
s
t
t
a
W
d
v
a
D
i
)
1
1
(
.
1
2
0
2
r
e
b
m
e
t
p
e
S
0
3
n
o
P
M
K
a
s
a
d
e
s
a
e
c
n
o
t
r
o
M
a
m
m
a
F
i
)
3
1
(
.
2
2
0
2
h
c
r
a
M
2
n
o
P
M
K
a
s
a
d
e
s
a
e
c
n
e
a
n
A
c
M
m
a
d
A
l
)
2
1
(
.
l
2
2
0
2
y
u
J
1
n
o
P
M
K
a
s
a
t
n
e
m
y
o
p
m
e
d
e
s
a
e
c
d
r
o
f
f
a
t
S
n
e
w
E
l
)
4
1
(
.
s
d
r
a
w
a
d
e
s
p
a
l
l
o
t
d
e
t
a
e
r
s
e
s
n
e
p
x
e
f
o
l
i
a
s
r
e
v
e
r
e
h
t
d
n
a
d
o
i
r
e
p
e
c
v
r
e
s
h
c
a
e
f
o
d
n
e
e
h
t
o
t
p
u
d
r
a
w
a
h
c
a
e
r
o
f
e
s
n
e
p
x
e
e
h
t
s
t
c
e
l
f
e
r
d
r
o
f
f
a
t
S
n
e
w
E
d
n
a
n
o
t
r
o
M
a
m
m
a
F
r
o
f
e
u
a
v
s
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
s
e
h
T
)
5
1
(
l
i
93
.
i
d
e
s
n
g
o
c
e
r
e
s
n
e
p
x
e
t
n
e
m
y
a
p
d
e
s
a
b
e
r
a
h
s
e
h
t
n
i
,
7
5
6
7
6
3
$
f
o
e
s
a
e
r
c
n
i
l
a
t
o
t
a
h
t
i
,
l
i
w
y
g
n
d
r
o
c
c
a
d
e
t
a
t
s
e
r
n
e
e
b
s
a
h
d
o
i
r
e
p
e
v
i
t
a
r
a
p
m
o
c
e
h
T
.
s
d
o
i
r
e
p
r
o
i
r
p
Remuneration Report For the year ended 31 August 20222022 Annual Report
7.2
Equity held by Senior Executives
Table 13 - Movement in equity awards held by Senior Executives during the Financial Year 2022
Movements during the
2022 Financial Year
Grant
Date
Balance
at 1 Sep
2021 Other (3) Granted (4)
Vested /
Exercised (5)
Forfeited /
Lapsed (6)
Balance
at 31 Aug
2022 (4) (7)
Vested
during the
Year (8)
(%)
19/12/2019
6/01/2021
6/01/2021
143,215
146,566
1,628,456
-
-
-
-
-
-
-
-
-
143,215
-
146,566
-
- 1,628,456
Senior (1)
Executive
Current
George
Frazis
Debra
Eckersley
Martine
Jager
Racheal
Kellaway
Paul
Newham
Grant (2)
2019 PARs
2021 Performance Shares
2021 Premium Priced
Options
Restricted Shares
2022 Performance Shares
2022 Premium Priced
Options
2018 PARS
2019 PARs
2021 Performance Shares
2021 Premium Priced
Options
Restricted Shares
2022 Performance Shares
2022 Premium Priced
Options
2021 Performance Shares
2021 Premium Priced
Options
2022 Performance Shares
2022 Premium Priced
Options
2019 DARs
2019 PARs
2021 Premium Priced
Options
Restricted Shares
2022 Performance Shares
2022 Premium Priced
Options
Transformation Award
Rights
2021 Performance Shares
2021 Premium Priced
Options
Restricted Shares
Restricted Shares
2022 Performance Shares
2022 Premium Priced
Options
6/01/2021
25/01/2022
25/01/2022
11/12/2018
19/12/2019
6/01/2021
6/01/2021
6/01/2021
25/01/2022
25/01/2022
30/06/2021
30/06/2021
25/01/2022
25/01/2022
19/12/2019
19/12/2019
9/4/2021
14/12/2021
22/07/2022
25/01/2022
19/12/2019
30/06/2021
30/06/2021
30/06/2021
22/07/2022
25/01/2022
25/01/2022
85,443
-
-
49,450
57,397
56,158
623,956
36,807
-
-
20,493
151,792
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,554
16,399
453,182
17,543
240,697
10,933
17,520
129,774
-
-
66,885
405,372
-
-
-
-
13,419
-
-
-
-
18,744
-
-
-
52,727
- 319,563
-
13,245
-
-
-
-
-
164,489
- 996,928
34,177
-
-
-
41,122
-
51,266
123,367
996,928
-
-
-
-
-
-
-
-
-
-
-
-
49,450
57,397
56,158
623,956
-
62,491
378,742
14,723
-
-
-
6,249
-
22,084
56,242
378,742
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,493
151,792
6,688
-
60,197
405,372
-
-
-
3,554
16,399
453,182
-
1,342
-
17,543
12,077
240,697
-
-
-
-
5,273
-
10,933
17,520
129,774
18,744
13,245
47,454
319,563
0%
0%
0%
40%
0%
0%
0%
0%
0%
0%
40%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
(1) Senior Executives with nil shareholding movements while KMP have been excluded from the table above.
(2) Based on Board assessment 100% of the 2021 Performance shares converted to Restricted Shares on completion of the performance period (1 September 2020 to 31 August 2021). These will vest in
3 tranches, 33 per cent in December 2022, 33 per cent in December 2023 and 34 per cent in December 2024, subject to Board assessment of risk prior to vesting date.
(3) Opening balance is the balance at the date an executive became KMP. Racheal Kellaway was appointed as KMP on 1 July 2022, Paul Newham was appointed as KMP on 6 June 2022 and Chris Screen
was appointed as KMP on 1 October 2021.
(4) This represents the maximum number of award rights that may vest to each Executive. The minimum total value which may vest is zero.
(5) 2021 Restricted shares vested on 6 December 2021, 2019 DARS vested on 6 December 2021 but are not yet exercised. All other awards are shown at exercise date being 6 December 2021 for 2018
DARS and 12 July 2022 for 2022 DARs.
(6) The portion of 2022 Performance Shares that did not convert to Restricted Shares.
(7) Balance amounts as at 31 August 2022 are unvested and not yet exercisable.
(8) Percentage of initial rights granted.
94
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities
7.2
Equity held by Senior Executives (continued)
Table 13 - Movement in equity awards held by Senior Executives during the Financial Year 2022 (continued)
Movements during the
2022 Financial Year
Senior (1)
Executive
Craig
Ryman
Chris
Screen
David
Watts
Former
Adam
McAnalen(9)
Fiamma
Morton (10)
Ewen
Stafford (11)
Grant (2)
2021 Performance Shares
2021 Premium Priced
Options
Restricted Shares
2022 Performance Shares
2022 Premium Priced
Options
2019 DARs
2019 PARs
2021 Premium Priced
Options
Restricted Shares
2022 Performance Shares
2022 Premium Priced
Options
2022 DARs
2022 Performance Shares
2022 Premium Priced
Options
2018 PARS
2018 DARs
2019 PARs
2021 Performance Shares
2021 Premium Priced
Options
Restricted Shares
2022 Performance Shares
2022 Premium Priced
Options
2021 Performance Shares
2021 Premium Priced
Options
Restricted Shares
2019 PARs
2021 Performance Shares
2021 Premium Priced
Options
Restricted Shares
2022 Performance Shares
2022 Premium Priced
Options
Grant
Date
6/01/2021
6/01/2021
6/01/2021
25/01/2022
25/01/2022
19/12/2019
19/12/2019
9/4/2021
14/12/2021
25/01/2022
25/01/2022
18/03/2022
18/03/2022
18/03/2022
11/12/2018
11/12/2018
19/12/2019
6/01/2021
6/01/2021
6/01/2021
25/01/2022
25/01/2022
6/01/2021
6/01/2021
6/01/2021
19/12/2019
6/01/2021
6/01/2021
6/01/2021
25/01/2022
25/01/2022
-
-
-
-
-
-
-
-
-
10,361
1,884
65,597
67,691
752,090
44,365
-
-
70,198
779,945
11,502
76,529
70,198
779,945
41,369
-
-
Balance
at 1 Sep
2021 Other (3) Granted (4)
-
-
70,198
779,945
-
-
Vested /
Exercised (5)
-
-
Forfeited /
Lapsed (6)
-
-
Balance
at 31 Aug
2022 (4) (7)
70,198
779,945
Vested
during the
Year (8)
(%)
0%
0%
5,981
-
-
-
-
-
73,232
- 443,838
4,374
13,119
453,182
-
-
-
2,393
-
-
1,640
-
-
-
7,323
-
3,588
65,909
443,838
-
-
-
2,734
13,119
453,182
40%
0%
0%
30%
0%
0%
0%
0%
0%
37%
0%
0%
0%
50%
0%
0%
0%
40%
0%
0%
0%
0%
40%
0%
0%
0%
40%
0%
0%
-
-
-
17,543
64,444
390,577
-
-
-
-
6,444
-
17,543
58,000
390,577
128,312
-
73,232
-
- 443,838
47,109
-
-
-
7,323
-
81,203
65,909
443,838
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
65,909
399,454
-
1,884
-
-
-
17,745
-
-
-
-
-
-
-
10,361
-
65,597
67,691
752,090
-
6,591
-
26,620
59,318
399,454
-
-
-
-
-
-
-
-
24,568
649,189
45,630
130,756
4,600
-
-
-
-
76,529
70,198
779,945
6,902
-
-
-
-
78,114
473,427
16,547
-
-
78,114
24,822
-
-
473,427
-
(1) Senior Executives with nil shareholding movements while KMP have been excluded from the table above.
(2) Based on Board assessment 100% of the 2021 Performance shares converted to Restricted Shares on completion of the performance period (1 September 2020 to 31 August 2021). These will vest in
3 tranches, 33 per cent in December 2022, 33 per cent in December 2023 and 34 per cent in December 2024, subject to Board assessment of risk prior to vesting date.
(3) Opening balance is the balance at the date an executive became KMP. Racheal Kellaway was appointed as KMP on 1 July 2022, Paul Newham was appointed as KMP on 6 June 2022 and Chris Screen
was appointed as KMP on 1 October 2021.
(4) This represents the maximum number of award rights that may vest to each Executive. The minimum total value which may vest is zero.
(5) 2021 Restricted shares vested on 6 December 2021, 2019 DARS vested on 6 December 2021 but are not yet exercised. All other awards are shown at exercise date being 6 December 2021 for 2018
DARS and 12 July 2022 for 2022 DARs.
(6) The portion of 2022 Performance Shares that did not convert to Restricted Shares.
(7) Balance amounts as at 31 August 2022 are unvested and not yet exercisable.
(8) Percentage of initial rights granted.
(9) Adam McAnalen ceased as a KMP on 2 March 2022.
(10) Fiamma Morton ceased as a KMP on 30 September 2022. 35% of 2021 Performance Shares and 83% of 2021 Options lapsed.
(11) Ewen Stafford ceased as a KMP on 1 July 2022. 100% of 2019 PARs, 2021 and 2022 Performance Shares and 2021 and 2022 Options lapsed.
95
Remuneration Report For the year ended 31 August 20222022 Annual Report
7.2
Equity held by Senior Executives (continued)
The table below shows the total value of any rights that were granted, exercised or lapsed to Senior Executives.
Table 14 - Value of equity awards held by Senior Executives during the Financial Year 2022
Senior
Executive
Current
George
Frazis
Grant
Grant Date
Fair Value
per Right
at Grant
Date (1)
$
Value at
Grant Date (2)
$
Vesting/
Exercise
Date (3)
Share
Price at
Exercise
Date (4)
$
Value at
Exercise
Date (5)
$
Expiry /
Lapsing
Date
2019 PARs
19/12/2019
3.61
517,006
2021 Performance Shares
6/01/2021
7.49
1,097,779
2021 Premium Priced
Options
6/01/2021
0.57
928,220
-
-
-
-
-
-
-
-
-
19/12/2026
-
6/01/2028
Restricted Shares
6/01/2021
7.80
666,455
6/12/2021
7.60 259,745
2022 Performance Shares
25/01/2022
7.25
1,192,545
2022 Premium Priced
Options
25/01/2022
0.59
588,188
Debra
Eckersley
2018 PARS
2019 PARs
11/12/2018
19/12/2019
2021 Performance Shares
6/01/2021
2021 Premium Priced
Options
6/01/2021
Restricted Shares
6/01/2021
2022 Performance Shares
25/01/2022
2022 Premium Priced
Options
25/01/2022
2021 Performance Shares
30/06/2021
2021 Premium Priced
Options
30/06/2021
2022 Performance Shares
25/01/2022
Martine
Jager
2022 Premium Priced
Options
Racheal
Kellaway
2019 DARs
2019 PARs
2021 Premium Priced
Options
25/01/2022
19/12/2019
19/12/2019
9/4/2021
Restricted Shares
14/12/2021
2022 Performance Shares
22/07/2022
4.91
3.61
7.49
0.56
7.80
7.25
0.59
8.86
0.99
7.25
0.59
6.09
3.61
0.86
7.98
7.26
0.59
242,800
207,203
420,623
349,415
453,060
223,458
181,568
150,274
484,916
239,169
43,282
59,200
389,737
139,993
97,422
142,011
2022 Premium Priced
Options
Transformation Award
Rights
25/01/2022
19/12/2019
6.12
66,910
287,095
6/12/2021
7.60
111,895
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31/01/2029
11/12/2025
19/12/2026
-
6/01/2028
-
-
31/01/2029
-
6/01/2028
-
31/01/2029
19/12/2026
19/12/2026
6/01/2028
-
-
31/01/2029
19/12/2026
(1) The fair value of rights granted is measured using industry accepted pricing methodologies, taking into account the terms and conditions upon which the rights are granted.
Following reassessment of the methodology used to calculate the fair value for restricted shares the fair value for Restricted Shares granted on 6 January 2021 and 30 June 2021 has
been updated.
(2) Represent total value of initial awards granted.
(3) 2021 Restricted shares vested on 6 December 2021, all other awards are shown at exercise date being 6 December 2021 for 2018 DARS and 2019 DARs and 12 July 2022
for 2022 DARs.
(4) Closing share price on exercise date of rights that have a nil exercise price.
(5) Closing share price on exercise date multiplied by the number of rights exercised during the year.
96
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 7.2
Equity held by Senior Executives (continued)
The table below shows the total value of any rights that were granted, exercised or lapsed to Senior Executives.
Table 14 - Value of equity awards held by Senior Executives during the Financial Year 2022 (continued)
Senior
Executive
Paul
Newham
Craig
Ryman
Grant
Grant Date
2021 Performance Shares
30/06/2021
2021 Premium Priced
Options
Restricted Shares
Restricted Shares
30/06/2021
30/06/2021
22/07/2022
2022 Performance Shares
25/01/2022
2022 Premium Priced
Options
25/01/2022
2021 Performance Shares
6/01/2021
2021 Premium Priced
Options
6/01/2021
Restricted Shares
6/01/2021
2022 Performance Shares
25/01/2022
2022 Premium Priced
Options
Chris
Screen
2019 DARs
2019 PARs
2021 Premium Priced
Options
25/01/2022
19/12/2019
19/12/2019
9/4/2021
Restricted Shares
14/12/2021
2022 Performance Shares
25/01/2022
Fair Value
per Right
at Grant
Date (1)
$
8.86
0.99
9.03
7.44
7.25
0.59
7.49
0.56
7.80
7.25
0.59
6.09
3.61
0.86
7.98
7.25
Value at
Grant Date (2)
$
155,227
128,476
253,878
98,543
382,271
188,542
525,783
436,769
Share
Price at
Exercise
Date (4)
$
Value at
Exercise
Date (5)
$
Vesting/
Exercise
Date (3)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
46,652
6/12/2021
7.60
18,187
530,932
261,864
-
-
-
-
-
-
Expiry /
Lapsing
Date
-
30/6/2028
-
-
-
31/1/2029
-
6/01/2028
-
-
31/1/2029
33,294
6/12/2021
7.60
12,464
19/12/2026
47,360
389,737
139,993
467,219
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19/12/2026
6/01/2028
-
-
31/01/2029
2022 Premium Priced
Options
25/01/2022
0.59
230,440
(1) The fair value of rights granted is measured using industry accepted pricing methodologies, taking into account the terms and conditions upon which the rights are granted.
Following reassessment of the methodology used to calculate the fair value for restricted shares the fair value for Restricted Shares granted on 6 January 2021 and 30 June 2021 has
been updated.
(2) Represent total value of initial awards granted.
(3) 2021 Restricted shares vested on 6 December 2021, all other awards are shown at exercise date being 6 December 2021 for 2018 DARS and 2019 DARs and 12 July 2022
for 2022 DARs.
(4) Closing share price on exercise date of rights that have a nil exercise price.
(5) Closing share price on exercise date multiplied by the number of rights exercised during the year.
97
Remuneration Report For the year ended 31 August 20222022 Annual Report 7.2
Equity held by Senior Executives (continued)
The table below shows the total value of any rights that were granted, exercised or lapsed to Senior Executives.
Table 14 - Value of equity awards held by Senior Executives during the Financial Year 2022 (continued)
Senior
Executive
Grant
David Watts
2022 DARs
Grant Date
18/03/2022
2022 Performance Shares
18/03/2022
Fair Value
per Right
at Grant
Date (1)
$
7.65
8.01
Value at
Grant Date (2)
$
Vesting/
Exercise
Date (3)
Share
Price at
Exercise
Date (4)
$
Value at
Exercise
Date (5)
$
Expiry /
Lapsing
Date
981,587
12/07/2022
6.98 328,821 21/03/2037
586,588
Restricted Shares
6/01/2021
2022 Performance Shares
25/01/2022
7.80
7.25
477,840
346,047
6/12/2021
7.60
134,862
2022 Premium Priced
Options
18/03/2022
0.88
390,577
Former
Adam McAnalen (6)
2018 PARS
2018 DARs
2019 PARs
11/12/2018
11/12/2018
19/12/2019
2021 Performance Shares
6/01/2021
4.91
8.21
3.61
7.49
50,873
236,805
507,006
2021 Premium Priced
Options
6/01/2021
0.56
421,170
2022 Premium Priced
Options
25/01/2022
0.59
235,678
Fiamma Morton (7)
2021 Performance Shares
6/01/2021
7.49
525,783
2021 Premium Priced
Options
Restricted Shares
Ewen Stafford (8)
2019 PARs
6/01/2021
0.56
436,769
6/01/2021
19/12/2019
7.80
3.61
7.49
276,270
525,783
2021 Performance Shares
6/01/2021
2021 Premium Priced
Options
6/01/2021
0.56
436,769
Restricted Shares
6/01/2021
2022 Performance Shares
25/01/2022
7.80
7.25
566,327
2022 Premium Priced
Options
25/01/2022
0.59
279,322
-
-
-
-
-
-
-
-
-
-
21/03/2029
11/12/2025
-
-
-
-
-
-
-
-
-
19/12/2026
-
6/01/2028
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31/01/2029
-
6/01/2028
-
-
-
-
-
-
-
-
-
19/12/2026
-
6/01/2028
-
-
-
-
-
-
-
31/01/2029
89,716
6/12/2021
7.60
34,960
-
322,678
6/12/2021
7.60
125,757
30,935
13/12/2021
7.96
14,997
11/12/2025
(1) The fair value of rights granted is measured using industry accepted pricing methodologies, taking into account the terms and conditions upon which the rights are granted.
Following reassessment of the methodology used to calculate the fair value for restricted shares the fair value for Restricted Shares granted on 6 January 2021 and 30 June 2021 has
been updated.
(2) Represent total value of initial awards granted and the maximum total value that will vest.
(3) 2021 Restricted shares vested on 6 December 2021, all other awards are shown at exercise date being 6 December 2021 for 2018 DARS and 2019 DARs and 12 July 2022
for 2022 DARs.
(4) Closing share price on exercise date of rights that have a nil exercise price.
(5) Closing share price on exercise date multiplied by the number of rights exercised during the year.
(6) Adam McAnalen ceased as a KMP on 2 March 2022.
(7) Fiamma Morton ceased as a KMP on 30 September 2022. 35% of 2021 Performance Shares and 83% of 2021 Options lapsed.
(8) Ewen Stafford ceased as a KMP on 1 July 2022. 100% of 2019 PARs, 2021 and 2022 Performance Shares and 2021 and 2022 Options lapsed.
98
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities 7.3
Other Equity Instruments - Holdings and Movements
The number of other equity instruments held directly, indirectly or beneficially by each Director, Senior Executive or related party is set out in
Table 15. All shares were acquired by NEDs under normal terms and conditions or through the NED Fee Sacrifice Rights Plan.
Table 15 - Number of other equity instruments held directly, indirectly or beneficially
Ordinary shares (1)
Directors - Current
Patrick Allaway
Bruce Carter
George Frazis
Deborah Kiers
Warwick Negus
Karen Penrose
Mickie Rosen
Directors - Former
John Lorimer
Executives - Current
Debra Eckersley
Racheal Kellaway (2)
Paul Newham (3)
Craig Ryman
David Watts
Executives - Former
Adam McAnalen
Ewen Stafford
Held at
31 August
2021
197,742
138,427
90,552
-
107,568
30,511
Purchases/
(Sales)
45,000
-
14,750
-
-
-
-
20,000
27,454
14,879
47,453
9,371
-
-
83,444
-
-
-
-
-
-
-
-
Rights granted
under NED Fee
Sacrifice Rights
Plan
Received on
Exercise of Rights
/ Vesting of
Restricted Shares
-
34,006
-
-
-
34,177
11,444
34,006
3,401
-
-
-
-
-
-
-
-
-
-
-
-
-
14,723
-
-
2,393
47,109
19,629
16,547
(1) Directors and Senior executives with nil shareholding balances as at 31 August 2022 have been excluded from the table above.
(2) Represents opening balance as at 1 July 2022.
(3) Represents opening balance as at 6 June 2022.
Held at
31 August
2022
242,742
172,433
139,479
11,444
141,574
33,912
20,000
n/a
29,602
47,453
9,371
2,393
47,109
n/a
n/a
99
Remuneration Report For the year ended 31 August 20222022 Annual Report 7.4
Transactions with Key Management Personnel (Directors and Senior Executives)
Loan transactions
Loans to KMP and their related parties (including close family members and entities over which the KMP and/or their close family members
have control, joint control or significant influence) are provided in the ordinary course of business. Normal commercial terms and conditions
are applied to all loans. Any discounts provided to KMP are the same as those available to all employees of the Group. There have been no
write-downs or amounts recorded as provisions during FY22.
Details of loans held by KMP and their related parties during the financial year, where the individual’s aggregate loan balance exceeded
$100,000 at any time in this period, are as follows:
Table 16 - Individual Loan transactions with KMP (over $100,000)
Executives
Debra Eckersley
Other Related Parties
Balance at
1 September 2021
$
Interest charged
during the year
$
Balance at
31 August 2022
$
Highest balance
during the year
$
350,000
47,616
2,016,969
2,053,811
George Frazis related parties
743,279
40,965
1,484,323
1,508,565
Details regarding the aggregate value of loans made, guaranteed or secured by any entity in the economic entity to all Senior Executives and
their related parties and the number of individuals in each group are as follows:
Table 17 - Aggregated Loan transactions with KMP
Executives
Other Related Parties
Balance at
1 September 2021
$
350,000
743,279
Interest charged
during the year
$
47,616
40,965
Balance at
31 August 2022
$
2,016,969
1,484,323
Number in group at
31 August 2022
#
1
1
100
Remuneration Report For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Indemnification of officers
The Bank’s Constitution, supported by a Deed of Indemnity, Insurance
and Access, provides an indemnity in favour of all directors and
officers of the Bank against liabilities incurred by them in the capacity
as officer to the maximum extent permitted by law.
Insurance of officers
Since the end of the previous financial year, the Bank has paid
insurance premiums in respect of a Directors’ and Officers’ liability
insurance contract. The contract insures each person who is or
has been a director or officer (as defined in the relevant policy)
of the Bank against certain liabilities arising in the course of their
duties to the Bank and its subsidiaries, as defined in the relevant
policy. The Directors have not included details of the nature of the
liabilities covered or the amount of the premium paid in respect of
the insurance contract as such disclosure is prohibited under the
terms of the contract.
Directors’ interests
Directors’ interests as at the date of this report were as follows:
Patrick Allaway
George Frazis
Bruce Carter
Jennifer Fagg (1)
Deborah Kiers
Warwick Negus
Karen Penrose
Miyuki (Mickie) Rosen
Ordinary shares
242,742
139,479
172,433
-
11,444
141,574
33,912
20,000
(1) Jennifer Fagg was appointed as a Director of the Board on 13 October 2021.
Audit and non-audit services
During the year, PricewaterhouseCoopers (PwC), the Bank’s auditor, has performed certain other services in addition to their statutory
duties. The Board has considered the non-audit services provided during the year by the auditor are compatible with, and did not
compromise, the auditor’s independence requirements of the Corporations Act 2001 (Cth) for the following reasons:
• all non-audit services were subject to the corporate governance procedures adopted by the Bank and have been reviewed by the Audit
•
Committee to ensure they do not impact the integrity and objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor’s independence as set out in APES 110 Code
of Ethics for Professional Accountants, as they did not involve reviewing or auditing the auditor’s own work, acting in a management or
decision making capacity for the Bank or acting as an advocate for the Bank or jointly sharing risks and rewards.
Details of the amounts paid to the auditor of the Bank, PwC and its related practices, for audit and non-audit services provided during the
year are set out below and in Note 5.7 Auditor Remuneration:
Audit services
- Statutory audits and reviews of the financial reports
- Regulatory audits and reviews as required by regulatory authorities
Total audit services
Audit related services
- Other assurance services
Total audit related services
Non-audit services
- Taxation services
- Other
Total non-audit services
Consolidated
2022
$000
2,290
654
2,944
166
166
10
573
583
2021 (1)
$000
2,172
704
2,876
373
373
116
250
366
Bank
2022
$000
2,000
630
2,630
100
100
10
330
340
2021 (1)
$000
1,826
611
2,437
154
154
116
250
366
(1) Fees for the prior financial year audit were paid to KPMG Australia.
Details of the amounts paid to other auditors for audit services provided during the prior year in respect of Members Equity Bank Limited
(ME Bank) acquisition are set out below and in Note 5.7 Auditor Remuneration:
Deloitte
Audit services
- Statutory audits and reviews of the financial reports
Total audit services
Consolidated
2022
$000
-
-
2021
$000
202
202
Bank
2022
$000
2021
$000
-
-
-
-
101
Directors' reportFor the year ended 31 August 20222022 Annual Report Subsequent events
Dividends have been determined after 31 August 2022. The
financial effect of the dividends has not been brought to account in
the financial statements for the year ended 31 August 2022. Further
details with respect to the dividend amounts per share, payment
date and dividend reinvestment plan can be obtained from Note 2.4
Dividends of the consolidated financial statements.
No matters or circumstances have arisen since the end of
the financial year and up until the date of this report which
significantly affect the operations of the Bank, the results of those
operations, or the state of affairs of the Bank in subsequent years.
Rounding
The amounts in this report have been rounded to the nearest one
million dollars in accordance with ASIC Corporations Instrument
2016/191 dated 24 March 2016, unless otherwise stated. Any
discrepancies between total and sums of components in tables
contained in this report are due to rounding.
Operating and Financial Review
Our Operating and Financial Review is contained in
pages 12 – 70 of this report
Signed in accordance with a resolution of the Directors:
Patrick Allaway
Chairman
11 October 2022
George Frazis
Managing Director & CEO
11 October 2022
Lead auditor’s independence declaration
The lead auditor’s independence declaration is set out on
page 103 and forms part of the Directors’ report for the year
ended 31 August 2022.
Director and management changes
Director changes during the year:
• Jennifer Fagg was appointed as a Director of the Board
on 13 October 2021.
• John Lorimer retired as a Director of the Board
on 7 December 2021.
Management changes during the year:
• Chris Screen commenced as Group Executive, Business
Banking on 1 October 2021, replacing former Group Executive,
Business Banking Fiamma Morton.
• David Watts commenced as Chief Risk Officer on 3 March 2022,
replacing former Chief Risk Officer Adam McAnalen.
• Paul Newham commenced as Chief Operations Officer
on 6 June 2022 and Racheal Kellaway commenced in the role
of Chief Financial Officer on 1 July 2022, replacing former Chief
Financial Officer & Chief Operating Officer Ewen Stafford.
Management attestation
The Board has been provided with a joint written statement
from the Group’s Managing Director & CEO and Chief Financial
Officer confirming that, in their opinion, the financial records of
the Bank and the Group have been properly maintained and the
accompanying financial statements and notes in accordance
with the Corporations Act 2001 (Cth) comply with accounting
standards and present a true and fair view in all material respects
of the Bank’s and Group’s financial position and performance as at
and for the year ended 31 August 2022.
The Directors’ Declaration can be found on page 180 of the
financial statements.
Environmental regulation
We are not required to report under the National Greenhouse and
Energy Reporting Act 2007 (Cth) because our business operations
are below the threshold at which those requirements apply.
The Group does not believe its operations are subject to
other significant environmental regulation under a law of the
Commonwealth or a State or Territory. The Group may become
subject to environmental regulation as a result of its lending
activities in the ordinary course of business and has processes in
place designed to ensure any potential risk is addressed. We are
not aware of the Group incurring any material liability under any
environmental legislation.
102
Directors' reportFor the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Lead Auditor’s Independence Declaration under Section 307C
of the Corporations Act 2001
Auditor’s Independence Declaration
As lead auditor for the audit of Bank of Queensland Limited for the year ended 31 August 2022, I
declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Bank of Queensland Limited and the entities it controlled during the
year.
Matthew Lunn
Partner
PricewaterhouseCoopers
Sydney
11 October 2022
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
103
2022 Annual Report
2
0
2
2
R
E
P
O
R
T
.
I
F
N
A
N
C
A
L
I
Income statements
For the year ended 31 August 2022
Interest income:
Effective interest income
Other
Interest expense
Net interest income
Other operating income
Net banking operating income
Net insurance operating income
Net operating income before impairment
and operating expenses
Expenses
Impairment gain/ (loss) on loans and advances
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to:
Equity holders of the parent
Non-controlling interests
Profit for the year
Earnings per share (EPS)
Basic EPS - Ordinary shares (cents)
Diluted EPS - Ordinary shares (cents)
Consolidated
Bank
Note
2.1
2.1
2.1
2.1
2.1
2.1
2.1
2.2
3.3
2.3
2.6
2.6
2022 (1)
$m
2,167
149
(776)
1,540
141
1,681
1
1,682
(1,058)
1
625
(199)
426
426
-
426
65.7
60.1
2021
$m
1,576
112
(560)
1,128
118
1,246
7
1,253
(736)
21
538
(169)
369
368
1
369
67.0
62.6
2022 (1)
$m
2,190
152
(1,231)
1,111
522
1,633
-
1,633
(1,020)
(13)
600
(183)
417
417
-
417
2021
$m
1,367
117
(705)
779
228
1,007
-
1,007
(641)
13
379
(115)
264
264
-
264
(1) On 28 February 2022, ME Bank surrendered its ADI licence and the assets, liabilities and reserves of ME Bank were transferred to the Bank. The current year results of the
Bank above include a full year of ME Bank results from 1 September 2021. The prior year results include the results of ME Bank since acquisition in the Group result only.
The Income Statements should be read in conjunction with the accompanying notes.
106
Bank of Queensland Limited and its Controlled Entities Statements of comprehensive income
For the year ended 31 August 2022
Profit for the year
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss
Cash flow hedges:
Net movement taken to equity
Net movement transferred to profit or loss
Debt instruments at fair value through other comprehensive income (FVOCI):
Net change in fair value
Net movement transferred to profit or loss
Other comprehensive income, net of income tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Equity holders of the parent
Non-controlling interests
Total comprehensive income for the year
Consolidated
Bank
2022 (1)
$m
426
2021
$m
369
2022 (1)
$m
417
2021
$m
264
344
17
(17)
(13)
331
757
757
-
757
53
19
35
(12)
95
464
463
1
464
324
17
(17)
(13)
311
728
728
-
728
53
19
35
(12)
95
359
359
-
359
(1) On 28 February 2022, ME Bank surrendered its ADI licence and the assets, liabilities and reserves of ME Bank were transferred to the Bank. The current year results of the
Bank above include a full year of ME Bank results from 1 September 2021. The prior year results include the results of ME Bank since acquisition in the Group result only.
The Statements of Comprehensive Income should be read in conjunction with the accompanying notes.
107
2022 Annual Report Balance sheets
As at 31 August 2022
Assets
Cash and cash equivalents
Due from other financial institutions
Derivative financial assets
Financial assets at fair value through profit or loss (FVTPL)
Debt instruments at FVOCI
Equity instruments at FVOCI
Debt instruments at amortised cost
Loans and advances
Other assets (2)
Current tax assets
Property, plant and equipment
Assets held for sale
Shares in controlled entities
Deferred tax assets
Intangible assets
Investments in joint arrangements and associates
Amounts due from controlled entities (2)
Total assets
Liabilities
Due to other financial institutions - at call (2)
Deposits (2)
Derivative financial liabilities
Accounts payable and other liabilities
Current tax liabilities
Deferred tax liabilities
Liabilities held for sale
Provisions
Amounts due to controlled entities (2)
Borrowings
Total liabilities
Net assets
Equity
Issued capital
Other equity instruments
3.10
Reserves
Retained profits
Total equity
(1) Comparative information has been restated to reflect the prior period adjustments detailed in Note 5.5(C).
(2) Comparative information has been restated to reflect the adjustments detailed in Note 1.6.
The Balance Sheets should be read in conjunction with the accompanying notes.
108
Consolidated
2022
$m
2021 (1)
$m
Bank
2022
$m
2021
$m
Note
3.1
3.8
3.2
3.2
3.2
3.2
3.3
5.5
5.5
2.3
4.1
5.6
3.4
3.8
5.5
4.2
3.5
2,448
347
1,073
4
13,304
6
-
2,556
827
137
1,087
9,701
9
-
80,955
75,437
250
14
264
-
-
-
1,257
8
-
99,930
190
-
198
43
-
38
1,206
10
-
91,439
1,222
269
1,019
4
13,304
6
13,050
75,335
443
14
256
-
522
-
1,189
-
8,499
115,132
1,821
70,684
586
65,589
1,821
70,852
630
716
-
141
-
66
-
653
575
31
-
17
68
-
19,187
93,245
17,723
85,242
482
621
-
66
-
64
23,177
11,647
108,730
1,373
708
86
1,087
5,548
6
7,699
44,827
269
-
120
30
1,910
85
915
-
7,002
71,665
586
43,256
620
360
24
-
-
43
12,358
8,806
66,053
6,685
6,197
6,402
5,612
5,258
305
841
281
6,685
5,213
314
376
294
6,197
5,274
305
834
(11)
6,402
5,224
-
383
5
5,612
Bank of Queensland Limited and its Controlled Entities
Statements of changes in equity
For the year ended 31 August 2022
Issued
capital
$m
Other equity
instruments
$m
Employee
benefits
reserve
$m
Share
Revaluation
Reserve
$m
Equity
reserve
for
credit
losses
$m
Cash
flow
hedge
reserve
$m
FVOCI
reserve
$m
Profit
reserve
$m
Retained
profits
$m
Total
equity
$m
Consolidated
Year ended 31 August 2022
Balance as at 31 August 2021
5,213
Change on revision of
accounting policy (1)
Restated balance as at
1 September 2021
Total comprehensive income
for the year
Profit for the year
Transfers to profit reserve
Other comprehensive income,
net of income tax:
Cash flow hedges:
Net movement to equity
Net movement transferred to
profit or loss
Debt instruments at FVOCI:
Net change in fair value
Net movement transferred to
profit or loss
Transfer to equity reserve for
credit losses
Total other comprehensive
income / (expense)
Total comprehensive income /
(expense) for the year
Transactions with owners,
recorded directly in equity /
contributions by and
distributions to owners
Dividend reinvestment plan
Dividends to shareholders
Equity settled transactions
Treasury shares (2)
Share plan revaluation (2)
Other equity instruments
distributions
Amortisation of premium
Total contributions by and
distributions to owners
-
5,213
-
-
-
-
-
-
-
-
-
50
-
-
(5)
-
-
-
45
314
-
314
12
-
-
-
-
-
-
-
12
-
-
-
-
-
(12)
(9)
(21)
Balance at the end of the year
5,258
305
35
-
35
-
-
-
-
-
-
-
-
-
-
-
11
-
-
-
-
11
46
3
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
(6)
-
-
(6)
(3)
52
(70)
56
300
294
6,197
-
-
-
-
(25)
(25)
52
(70)
56
300
269
6,172
-
-
-
-
-
-
6
6
6
-
-
-
-
-
-
-
-
58
-
-
344
17
-
-
-
-
-
-
-
(17)
(13)
-
361
(30)
-
414
426
405
(405)
-
-
-
-
-
-
-
-
-
-
-
(6)
(6)
344
17
(17)
(13)
-
331
361
(30)
405
3
757
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(282)
-
-
-
-
-
(282)
-
-
-
-
-
-
9
9
50
(282)
11
(5)
(6)
(12)
-
(244)
291
26
423
281
6,685
(1) Opening balance has been restated to reflect the adjustments detailed in Note 1.4.
(2) Treasury shares represents the value of shares held by a subsidiary that the Bank is required to include in the Consolidated Entity’s financial statements. The revaluation of treasury
shares is included in equity.
The Statements of Changes in Equity should be read in conjunction with the accompanying notes.
109
2022 Annual Report
Statements of changes in equity
For the year ended 31 August 2022
Issued
capital
$m
Other equity
instruments
$m
Employee
benefits
reserve
$m
Share
Revaluation
Reserve
$m
Consolidated
Year ended 31 August 2021
Balance as at 1 September 2020
3,869
Acquisition of ME Bank
Total comprehensive income
for the year
Profit for the year
Transfers to profit reserve
Other comprehensive income,
net of income tax:
Cash flow hedges:
Net movement to equity
Net movement transferred to
profit or loss
Debt instruments at FVOCI:
Net change in fair value
Net movement transferred to
profit or loss
Transfer to equity reserve for
credit losses
Total other comprehensive
income / (expense)
Total comprehensive income /
(expense) for the year
Transactions with owners,
recorded directly in equity /
contributions by and
distributions to owners
Institutional share placement (1)
Institutional entitlement offer (2)
Retail entitlement offer (3)
Issues of ordinary shares (4)
Dividend reinvestment plan
Dividends to shareholders
Cost of capital issuance
Equity settled transactions
Treasury shares (5)
Other equity instruments
distributions
Total contributions by and
distributions to owners
-
-
-
-
-
-
-
-
-
-
350
321
681
1
19
-
(23)
-
(5)
-
1,344
-
315
30
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1)
(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
-
-
5
Balance at the end of the year
5,213
314
35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
3
3
Equity
reserve
for
credit
losses
$m
63
-
-
-
-
-
-
-
(11)
(11)
(11)
-
-
-
-
-
-
-
-
-
-
-
Cash
flow
hedge
reserve
$m
(142)
-
-
-
53
19
-
-
-
FVOCI
reserve
$m
Profit
reserve
$m
Retained
profits
$m
Total
equity
$m
33
-
200
-
178
4,231
-
315
-
-
-
-
35
(12)
-
-
264
369
(264)
369
-
-
-
-
-
-
-
-
-
-
-
11
11
53
19
35
(12)
-
95
72
23
72
23
264
116
464
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(164)
-
-
-
-
(164)
-
-
-
-
-
-
-
-
-
-
-
350
321
681
1
19
(164)
(23)
5
(2)
(1)
1,187
52
(70)
56
300
294
6,197
(1) On 23 February 2021, the Bank completed an institutional placement of new fully paid ordinary shares at the offer price of $7.35 per share. The shares were issued on 3 March 2021.
(2) On 23 February 2021, the Bank completed an underwritten 1 for 3.34 accelerated pro-rata non-renounceable institutional entitlement offer at the offer price of $7.35 per share.
The shares were issued on 3 March 2021.
(3) On 15 March 2021, the Bank completed an underwritten 1 for 3.34 accelerated pro-rata non-renounceable retail entitlement offer at the offer price of $7.35 per share. The shares were
issued on 17 March 2021.
(4) On 9 November 2020, 130,000 ordinary shares were issued at $6.37 to the trustee of the Bank of Queensland Limited Employee Share Plans Trust to satisfy the issue of shares under
the BOQ Employee ThankQ Plan.
(5) Treasury shares represents the value of shares held by a subsidiary that the Bank is required to include in the Consolidated Entity’s financial statements. The revaluation of treasury
shares is netted off in equity.
The Statements of Changes in Equity should be read in conjunction with the accompanying notes.
110
Bank of Queensland Limited and its Controlled Entities Statements of changes in equity
For the year ended 31 August 2022
Issued
capital
$m
Other
equity
instruments
$m
Employee
benefits
reserve
$m
Equity
reserve
for
credit
losses
$m
Cash flow
hedge
reserve
$m
FVOCI
reserve
$m
Profit
reserve
$m
Retained
profits
$m
Total
equity
$m
Bank
Year ended 31 August 2022
Balance as at 31 August 2021
5,224
Change on revision of
accounting policy (1)
Restated balance as at
1 September 2021
Transfer from ME Bank (2)
Total comprehensive income
for the year
Profit for the year
Transfers to profit reserve
Other comprehensive income
net of income tax:
Cash flow hedges:
Net movement to equity
Net movement transferred to
profit or loss
Debt instruments at FVOCI:
Net change in fair value
Net movement transferred to
profit or loss
Transfer to equity reserve for
credit losses
Total other comprehensive
income / (expense)
Total comprehensive income /
(expense) for the year
Transactions with owners,
recorded directly in equity /
contributions by and
distributions to owners
Dividend reinvestment plan
Dividends to shareholders
Equity settled transactions
Other equity instruments
distributions
Amortisation of premium
Total contributions by and
distributions to owners
-
5,224
-
-
-
-
-
-
-
-
-
-
50
-
-
-
-
50
Balance at the end of the year
5,274
-
-
-
314
12
-
-
-
-
-
-
-
12
-
-
-
(12)
(9)
(21)
305
35
-
35
-
-
-
-
-
-
-
-
-
-
-
-
11
-
-
11
53
-
53
-
-
-
-
-
-
-
6
6
6
-
-
-
-
-
-
(61)
-
(61)
-
-
-
324
17
-
-
-
341
341
-
-
-
-
-
-
56
-
56
-
-
-
-
-
(17)
(13)
-
(30)
-
-
-
-
-
-
(30)
405
-
-
-
-
-
-
-
(282)
-
-
-
(282)
300
5
5,612
-
(25)
(25)
300
(20)
5,587
-
-
405
6
320
405
(405)
417
-
-
-
-
-
(6)
(6)
(6)
-
-
-
-
9
9
324
17
(17)
(13)
-
311
728
50
(282)
11
(12)
-
(233)
46
59
280
26
423
(11)
6,402
(1) Opening balance has been restated to reflect the adjustments detailed in Note 1.4.
(2) ME Bank other equity instruments and retained profits transferred to the Bank upon ME Bank’s ADI licence surrender on 28 February 2022.
The Statements of Changes in Equity should be read in conjunction with the accompanying notes.
111
2022 Annual Report Statements of changes in equity
Issued
capital
$m
Employee
benefits
reserve
$m
Equity
reserve
for
credit
losses
$m
Cash flow
hedge
reserve
$m
FVOCI
reserve
$m
Profit
reserve
$m
Retained
profits
$m
Total
equity
$m
Bank
Year ended 31 August 2021
Balance as at 1 September 2020
3,875
30
64
(133)
33
200
(6)
4,063
Total comprehensive income
for the year
Profit for the year
Transfers to profit reserve
Other comprehensive income
net of income tax:
Cash flow hedges:
Net movement to equity
Net movement transferred to
profit or loss
Debt instruments at FVOCI:
Net change in fair value
Net movement transferred to
profit or loss
Transfer to equity reserve for
credit losses
Total other comprehensive
income / (expense)
Total comprehensive income /
(expense) for the year
Transactions with owners,
recorded directly in equity /
contributions by and
distributions to owners
Institutional share placement (1)
Institutional entitlement offer (2)
Retail entitlement offer (3)
Issues of ordinary shares (4)
Dividend reinvestment plan
Dividends to shareholders
Cost of capital issue
Equity settled transactions
Total contributions by and
distributions to owners
Balance at the end of the year
-
-
-
-
-
-
-
-
-
350
321
681
1
19
-
(23)
-
1,349
5,224
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
5
-
-
-
-
-
-
(11)
(11)
(11)
-
-
-
-
-
-
-
-
-
-
-
53
19
-
-
-
72
72
-
-
-
-
-
-
-
-
-
-
-
-
-
35
(12)
-
23
23
-
-
-
-
-
-
-
-
-
35
53
(61)
56
-
264
264
(264)
-
-
-
-
-
-
264
-
-
-
-
-
(164)
-
-
(164)
300
-
-
-
-
11
11
11
-
-
-
-
-
-
-
-
-
5
264
-
53
19
35
(12)
-
95
359
350
321
681
1
19
(164)
(23)
5
1,190
5,612
(1) On 23 February 2021, the Bank completed an institutional placement offer at the offer price of $7.35 per share. The shares were issued on 3 March 2021.
(2) On 23 February 2021, the Bank completed an underwritten 1 for 3.34 accelerated pro-rata non-renounceable institutional entitlement offer at the offer price of $7.35 per share.
The shares were issued on 3 March 2021.
(3) On 15 March 2021, the Bank completed an underwritten 1 for 3.34 accelerated pro-rata non-renounceable retail entitlement offer at the offer price of $7.35 per share.
The shares were issued on 17 March 2021.
(4) On 9 November 2020, 130,000 ordinary shares were issued at $6.37 to the trustee of the Bank of Queensland Limited Employee Share Plans Trust to satisfy the issue of shares
under the BOQ Employee ThankQ Plan.
The Statements of Changes in Equity should be read in conjunction with the accompanying notes.
112
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Statements of cash flows
Note
3.1
5.5
4.1
3.5
3.5
Cash flows from operating activities
Interest received
Fees and other income received
Interest paid
Cash paid to suppliers and employees
Income tax paid
(Increase) / decrease in operating assets:
Loans and advances at amortised cost
Other financial assets
Increase in operating liabilities:
Deposits
Net cash inflow / (outflow) from operating activities
Cash flows from investing activities
Acquisition of ME Bank, net of cash acquired
Disposal of a subsidiary, net of cash disposed of
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for intangible assets
Proceeds / (payments) for investments in joint arrangements
Dividends received from controlled entities
Net cash inflow / (outflow) from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayments of borrowings
Net movement in other financing activities
Proceeds for issue of ordinary shares
Payments for treasury shares
Other equity instruments distribution paid
Dividends paid
Payment of lease liabilities
Net cash inflow / (outflow) from financing activities
Net increase / (decrease) in cash and cash equivalents
Transfer from ME Bank (2)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
3.1
Cash and cash equivalents included in assets held for sale
Cash and cash equivalents as presented in the
Balance Sheets
Consolidated
2022
$m
2,374
181
(849)
(896)
(195)
615
(5,539)
(2,676)
6,363
(1,237)
-
15
(42)
6
(173)
2
-
2021 (1)
$m
1,663
127
(569)
(622)
(100)
499
(3,070)
(1,001)
3,953
381
(753)
-
(9)
6
(119)
2
-
(192)
(873)
6,653
(5,025)
-
-
(17)
(12)
(232)
(46)
1,321
(108)
-
2,556
2,448
-
2,448
3,628
(3,063)
-
1,329
(7)
(1)
(145)
(42)
1,699
1,207
-
1,353
2,560
(4)
2,556
Bank
2022
$m
2,347
503
(1,276)
(838)
(192)
544
(5,219)
(3,155)
6,635
(1,195)
-
23
(37)
-
(172)
-
14
(172)
4,201
(2,467)
(879)
-
(17)
(12)
(232)
(46)
548
(819)
668
1,373
1,222
-
1,222
(1) Comparative information has been restated to reflect the prior period adjustments detailed in Note 5.5(C).
(2) ME Bank cash transferred to the Bank upon ME Bank’s ADI licence surrender on 28 February 2022.
The Statements of Cash Flows should be read in conjunction with the accompanying notes.
2021
$m
1,387
205
(712)
(531)
(91)
258
(3,443)
(173)
3,738
380
(1,388)
-
(9)
-
(115)
-
4
(1,508)
1,844
(937)
(378)
1,329
(7)
-
(145)
(40)
1,666
538
-
835
1,373
-
1,373
113
For the year ended 31 August 20222022 Annual Report
Notes to the financial statements
Note 1
Basis of preparation
1.1
1.2
1.3
1.4
1.5
1.6
Reporting entity
Basis of preparation
Use of estimates and judgements
Changes in accounting policies
New Australian Accounting Standards
Prior period adjustments
Note 2
Financial performance
2.1
2.2
2.3
2.4
2.5
2.6
Operating income
Expenses
Income tax expense and deferred tax
Dividends
Operating segments
Earnings per share
Note 3
Capital and balance sheet management
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
Cash and cash equivalents
Financial assets and liabilities
Loans and advances
Deposits
Borrowings
Financial risk management
Fair value of financial instruments
Derivative financial instruments and hedge accounting
Capital management
3.10
Capital and reserves
Note 4
Other assets and liabilities
4.1
4.2
Intangible assets
Provisions
Note 5
Other notes
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
Employee benefits
Commitments
Contingent liabilities
Related parties information
Controlled entities
Investments in joint arrangements
Auditor’s remuneration
Events subsequent to balance date
Significant accounting policies
114
Page
115
115
115
115
116
116
116
117
117
118
119
122
123
125
126
126
127
128
138
139
141
150
153
159
159
161
161
163
164
164
167
167
168
170
173
174
174
175
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
1.3
Use of estimates and
judgements
The preparation of a financial report in conformity with Australian
Accounting Standards requires management to make judgements,
estimates and assumptions that affect the application of accounting
policies and reported amounts of assets, liabilities, income and
expenses. These estimates and associated assumptions are based
on historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates. These accounting
policies have been consistently applied throughout the Group.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised if the revision only
affects that period, or in the period of the revision and future periods
if the revision affects both current and future periods.
Information about significant areas of estimation uncertainty and
critical judgements in applying accounting policies that have the
most significant effect on the amounts recognised in the financial
statements are described below:
• Software as a Service arrangements - Note 1.4;
• Loans and advances - Expected credit losses (ECL) - Note 3.3;
• Financial instruments – Notes 3.2, 3.7 and 3.8;
• Carrying value of goodwill – Note 4.1;
• Provisions - Note 4.2; and
• Business combinations - Note 5.5.
Note 1. Basis of preparation
Reporting entity
1.1
The Bank of Queensland Limited (the Bank or BOQ) is a for-profit
company domiciled in Australia. Its registered office is
Level 6, 100 Skyring Terrace, Newstead, QLD 4006.
The consolidated financial statements of the Bank for the financial
year ended 31 August 2022 comprise the Consolidated Entity
(or the Group), being the Bank and its controlled entities, and the
Consolidated Entity’s interest in equity accounting investments.
The principal activity of the Group is the provision of financial
services to the community.
1.2 Basis of preparation
a) Statement of compliance
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards and
interpretations issued by the Australian Accounting Standards
Board (AASB) and the Corporations Act 2001 (Cth). The
consolidated financial statements and notes thereto also comply
with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB). The
consolidated financial statements were authorised for issue by
the Directors on 11 October 2022. The Directors have the power to
amend and reissue the financial statements.
b) Basis of measurement
The consolidated financial statements are prepared on a historical
cost basis, with the exception of the following assets and liabilities
which are stated at their fair value:
• Derivative financial instruments;
• Financial instruments at FVTPL; and
• Financial instruments at FVOCI.
c) Functional and presentation currency
The consolidated financial statements are presented in Australian
dollars, which is the Bank’s functional currency.
d) Rounding
The Group and the Bank are of a kind referred to in ASIC
Corporations Instrument 2016/191 dated 24 March 2016 and
in accordance with that instrument, amounts in the financial
statements have been rounded to the nearest million dollars, unless
otherwise stated.
e) Significant accounting policies
Significant accounting policies are included within each of the
relevant notes throughout the financial statements with the
exception of policies listed in Note 5.9.
115
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
1.4 Changes in accounting policies
1.5
International Financial Reporting Standards
Interpretations Committee final agenda decisions on
Software as a Service arrangements
In April 2021, the IFRS Interpretations Committee (IFRIC) published
its second agenda decision in relation to Software as a Service
(SaaS) cloud computing arrangements. The decision discusses
whether configuration or customisation expenditure relating to
SaaS arrangements is able to be recognised as an intangible asset
and if not, over what time period the expenditure is expensed.
Specifically, IFRIC stated that in most instances, configuration and
customisation costs incurred in implementing SaaS solutions will be
treated as an operating expense.
The Group’s accounting policy has historically been to capitalise
costs incurred in configuring or customising SaaS arrangements as
intangible assets, as the Group considered it would benefit from those
services over the expected renewable term of the arrangements.
Based on the updated IFRIC guidance, the Group revised its
accounting policy and adopted the accounting treatment set
out in the IFRIC agenda decision, which is to only recognise
those costs as intangible assets if the implementation activities
create an asset that the entity controls and the asset meets the
recognition criteria. Costs that do not result in intangible assets are
expensed as incurred, unless they are paid to the suppliers of the
SaaS arrangement to significantly customise the software for the
Group, in which case the costs are recorded as a prepayment for
services and amortised over the expected renewable term of the
arrangement.
In applying the revised accounting policy at the reporting date
and in an ongoing application of the SaaS policy, the Group makes
significant judgements in:
•
•
Determining whether implementation activities create an
intangible asset that the entity controls; and
Determining whether costs paid to the suppliers of the SaaS
arrangements relate to significant customisation of the software.
Due to a lack of historical information on which to determine the
nature of capitalised software, as set out above, it is not practicable
to determine the cumulative effect on the amounts in both opening
and closing statements of financial position for prior years.
Accordingly, amounts relating to prior years have been adjusted
through opening retained earnings and comparatives have not
been restated.
The impact to the consolidated financial statements of the Group to
reflect amendments to previously capitalised costs at 1 September
2021 was as follows:
• A decrease in intangible assets of $47 million;
• An increase in prepaid assets of $11 million;
• An increase in deferred tax assets of $11 million; and
• A decrease in retained earnings of $25 million.
The impact to the financial statements of the Bank is the same as
the impact to the consolidated financial statements of the Group.
116
New Australian
accounting standards
Standards, amendments to standards and interpretations issued
by the AASB and the IASB, including those that are not yet effective,
are not expected to result in significant changes to the Group.
AASB 2020-8 Amendments to Australian Accounting Standards –
Interest Rate Benchmark Reform – Phase 2.
The amendments introduce practical expedients in relation to
accounting for modification of financial instruments resulting
directly from the Interbank Offered Rates (IBOR) reform. The
amendments also allow a series of exemptions from the
regular hedge accounting rules and introduce additional
disclosures requirements.
The Group assessed the changes required by the IBOR reform and
the resulting amendments and determined there are no significant
impacts to the Group or the Bank.
1.6 Prior period adjustments
During the financial year ended 31 August 2022, the Group and
the Bank implemented the following changes that were applied
retrospectively and impacted the prior periods’ financial statements:
The Group and Bank reclassified balances relating to securities sold
under an agreement to repurchase, from Deposits to Due to other
financial institutions - at call, consistent with the accounting policy
in Note 5.9 i).
The Bank changed its presentation for certain financial
arrangements with controlled entities. Amounts due to controlled
entities and Amounts due from controlled entities had previously
been offset in the Bank’s balance sheet and reported as a net
Amount due to controlled entities. These balances are no longer
offset unless there is a legal right and intention to settle net. As a
result the Bank now presents Amounts due from controlled entities
and Amounts due to controlled entities separately. In performing
this change, the Bank also reclassified an amount due from a wholly
owned covered bond trust from Other assets to Amounts due from
controlled entities.
The impacts of these changes on the prior period financial
statements of the Group and Bank were as follows:
•
•
an increase in the Group’s and the Bank's amounts Due to other
financial institutions - at call and a decrease in Deposits of
$313m for the year ended 31 August 2021 (Bank: $313m);
an increase in the Bank’s amounts due from controlled Entities
and an increase in amounts to controlled entities of $7,002m for
the year ended 31 August 2021;
• a decrease in the Bank’s Other assets and an increase in
Amounts due from controlled entities of $885m for the year
ended 31 August 2021.
The above restatements impacted total assets (Bank), total
liabilities (Bank) and identified balance sheet line items above only.
The Group adjustment was a reclass solely between liability line
items with no impact on total liabilities. There was no impact to the
previously reported Consolidated or Bank earnings per share, profit,
comprehensive income or statement of changes in equity.
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
Note 2. Financial performance
2.1 Operating income
Consolidated
Bank
Interest income
Effective interest income
Other: Securities at fair value
Total interest income
Interest expense
Retail deposits
Wholesale deposits and borrowings
Lease liabilities
Total interest expense
Net interest income
Income from operating activities
Customer fees and charges (2)
Share of fee revenue paid to owner-managed branches
Commissions
Foreign exchange income – customer based
Net profit on sale of property, plant and equipment
Net loss from financial instruments and derivatives
at fair value
Securitisation income
Dividend income
Management fees – controlled entities
Other income
Other operating income
Income from insurance activities (3)
Premiums from insurance contracts
Claims and policyholder liability expense from insurance contracts
Net insurance operating income
Total
2022 (1)
$m
2,167
149
2,316
(277)
(494)
(5)
(776)
1,540
64
(6)
40
15
6
(6)
-
-
-
28
141
7
(6)
1
1,682
2021
$m
1,576
112
1,688
(206)
(351)
(3)
(560)
1,128
62
(6)
31
13
5
(4)
-
-
-
17
118
42
(35)
7
1,253
2022 (1)
$m
2,190
152
2,342
(278)
(948)
(5)
(1,231)
1,111
64
(6)
13
15
-
(4)
339
14
63
24
522
-
-
-
2021
$m
1,367
117
1,484
(192)
(510)
(3)
(705)
779
62
(6)
12
13
-
(5)
111
4
29
8
228
-
-
-
1,633
1,007
(1) On 28 February 2022, ME Bank surrendered its ADI licence and the assets, liabilities and reserves of ME Bank were transferred to the Bank. The current year results of the
Bank above include a full year of ME Bank results from 1 September 2021. The prior year results include the results of ME Bank since acquisition in the Group result only.
(2) Customer charges on lending, banking and leasing products.
(3) Income up to the sale completion date of 28 October 2021 for the St Andrew’s Insurance Group.
Interest income and expense
Interest income and expense for all interest bearing financial instruments are recognised in the profit or loss using the effective interest rates
of the financial assets or financial liabilities to which they relate. The effective interest rate is the rate that discounts estimated future cash
flows through the expected life of the financial instrument or, where appropriate, a shorter period, to the net carrying amount of the financial
instrument. When calculating the effective interest rate, the Company estimates cash flows considering all contractual terms of the financial
instrument but not future credit losses. Other operating income and expenses that are considered an integral part of the effective interest
rate on a financial instrument are included in the measurement of the effective interest rate.
Interest income on finance lease receivables is recognised progressively over the life of the lease, reflecting a constant periodic rate of return
in the lease.
Interest income on financial instruments that are classified at fair value through the Income Statement is accounted for on a contractual rate
basis, and includes amortisation of premium or discounts.
Other operating income
Other lending, banking and leasing fees revenue is recognised over the contract period in line with the performance obligation delivered to
the customers. Customer service fees that represent the recoupment of the costs of providing the service are recognised when the service
is provided.
Commissions are recognised as income when performance obligations in respect of those commissions have been satisfied.
Dividends are recognised when control of a right to receive consideration is established.
117
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
2.2 Expenses
Operating expenses
Advertising
Commissions to owner-managed branches
Communications and postage
Printing and stationery
Processing costs
Other
Administrative expenses
Professional fees
Directors’ fees
Other
IT expenses
Technology services
Amortisation – computer software
Depreciation – IT equipment
Occupancy expenses
Depreciation of ROU assets and lease expenses
Depreciation – property, plant and equipment
Other
Employee expenses
Salaries, wages and superannuation contributions
Payroll tax
Equity settled transactions
Other
Other
Loss on sale of St Andrew’s Group
Amortisation – acquired intangibles
Consolidated
Bank
Note
2022 (1)
$m
2021
$m
2022 (1)
$m
2021
$m
49
4
22
5
14
55
149
33
2
17
52
197
66
5
268
39
11
4
54
451
23
16
11
501
25
9
34
4.1
5.5
4.1
33
4
20
4
14
36
111
38
2
17
57
121
47
1
169
29
9
3
41
313
16
8
17
354
-
4
4
736
40
4
22
5
14
56
141
31
2
26
59
194
64
5
263
38
10
4
52
438
23
15
11
487
9
9
18
1,020
19
4
16
3
14
32
88
32
2
23
57
112
36
1
149
26
9
3
38
272
14
7
14
307
-
2
2
641
Total expenses
1,058
(1) On 28 February 2022, ME Bank surrendered its ADI licence and the assets, liabilities and reserves of ME Bank were transferred to the Bank. The current year results of the
Bank above include a full year of ME Bank results from 1 September 2021. The prior year results include the results of ME Bank since acquisition in the Group result only.
118
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
2.3
Income tax expense and deferred tax
Income tax expense
The major components of income tax expense along with a reconciliation between pre-tax profit and tax expense are detailed below:
Consolidated
2022
$m
2021
$m
Bank
2022
$m
2021
$m
Current tax expense
Current year
Adjustments for prior years
Deferred tax expense
Origination and reversal of temporary differences
Total income tax expense
Deferred tax recognised in equity
Cash flow hedge reserve
Retained profits
Other
Transfer of deferred tax balances from ME Bank (1)
Numerical reconciliations between tax expense
and pre-tax profit
Profit before tax
Income tax using the Australian corporate tax rate of 30% (2021: 30%)
Increase in income tax expense due to:
Non-deductible expenses
Loss on sale of St Andrew’s
Decrease in income tax expense due to:
Other (2)
Income tax expense on pre-tax net profit (3)
156
(4)
152
47
199
150
(11)
(10)
129
-
625
188
6
7
(2)
199
123
(2)
121
48
169
20
-
10
30
-
538
161
10
-
(2)
169
159
(1)
158
25
183
145
(11)
(13)
121
5
600
180
6
2
(5)
183
(1) ME Bank deferred tax balances transferred to the Bank upon ME Bank’s ADI licence surrender on 28 February 2022.
(2) In the Bank, this includes the impact of dividends received from subsidiary members in the tax consolidated group which are eliminated at the Group level.
(3) The Group’s effective tax rate for the year ended 31 August 2022 was 31.8 per cent (2021: 31.4 per cent). This is above the corporate tax rate of 30 per cent, which is primarily
attributable to the loss on the sale of St. Andrew’s Group (refer to Note 5.5(d) for details) and interest payable on Capital Notes, which are both non-deductible for tax purposes.
113
(7)
106
9
115
19
-
10
29
-
379
114
9
-
(8)
115
119
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
2.3
Income tax expense and deferred tax (continued)
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
Consolidated
Accruals
Capitalised expenditure
Provisions for impairment
Other provisions
Equity reserves
ROU Asset and Lease Liability
Lease financing relating to
lessor activities
Intangibles
Consolidation - Taxation of Financial
Arrangements (TOFA) (2)
Other
Total tax assets / (liabilities)
Bank
Accruals
Capitalised expenditure
Provisions for impairment
Other provisions
Equity reserves
ROU Asset and Lease Liability
Lease financing relating to
lessor activities
Intangibles
Consolidation - Taxation of Financial
Arrangements (TOFA) (2)
Other
Total tax assets / (liabilities)
Unrecognised deferred tax assets
2022
$m
2021 (1)
$m
5
-
87
24
-
79
-
2
-
12
209
4
-
70
22
-
79
-
2
-
10
187
8
-
94
31
6
41
-
2
-
15
197
3
-
66
19
2
41
-
-
-
8
139
2022
$m
-
(8)
-
-
(134)
(66)
(115)
(15)
(9)
(3)
(350)
-
(3)
-
-
(130)
(66)
(15)
(15)
(10)
(14)
(253)
2021 (1)
$m
-
(5)
-
-
-
(32)
(87)
(18)
(14)
(3)
(159)
-
(1)
-
-
-
(32)
(18)
-
-
(3)
(54)
2022
$m
5
(8)
87
24
(134)
13
(115)
(13)
(9)
9
(141)
4
(3)
70
22
(130)
13
(15)
(13)
(10)
(4)
(66)
2021 (1)
$m
8
(5)
94
31
6
9
(87)
(16)
(14)
12
38
3
(1)
66
19
2
9
(18)
-
-
5
85
Deferred tax assets have not been brought to account for the following items as realisation of the benefit is not regarded as probable:
Gross income tax losses
Gross capital gains tax losses
2022
$m
22
73
2021
$m
23
50
(1) Comparative information has been restated to reflect the prior period adjustments detailed in Note 5.5(c).
(2) The business combination balances relating to the acquisition of ME Bank include a transitional deferred tax liability that will continue to unwind equally across the next two years.
120
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
2.3
Income tax expense and deferred tax (continued)
Accounting for income tax
Nature of tax funding and tax sharing arrangements
The Bank, in conjunction with other members of the
tax-consolidated group, has entered into a TFA which sets
out the funding obligations of members of the tax-consolidated
group in respect of tax amounts. The TFA requires payments
to / from the head entity equal to the current tax liability / asset
assumed by the head entity and any tax-loss deferred tax asset
assumed by the head entity, resulting in the Bank recognising an
inter-entity payable / receivable equal in amount to the tax liability /
asset assumed.
Contributions to fund the current tax liabilities are payable as per
the TFA and reflect the timing of the head entity’s obligation to make
payments for tax liabilities to the relevant tax authorities.
The Bank, in conjunction with other members of the tax-
consolidated group, has also entered into a Tax Sharing Agreement
(TSA). The TSA provides for the determination of the allocation of
income tax liabilities between the entities should the head entity
default on its tax payment obligations. No amounts have been
recognised in the financial statements in respect of this agreement
as payment of any amounts under the TSA is considered remote.
Income tax expense comprises current and deferred tax. Income
tax is recognised in profit or loss in the Income Statement except
to the extent that it relates to items recognised directly in equity, or
other comprehensive income.
Current tax is the expected tax payable / receivable on the
taxable income / loss for the year and any adjustment to the tax
payable / receivable in respect of previous years. It is measured
using tax rates enacted or substantially enacted at the
reporting date.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax assets are recognised for unused tax losses and
deductible temporary differences to the extent that it is probable
that future taxable profits will be available against which they can
be utilised. Deferred tax assets are reviewed at each reporting date
and are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using
tax rates enacted or substantially enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences
that would follow the manner in which the Group expects, at the
reporting date, to recover or settle the carrying amount of its assets
and liabilities.
Tax consolidation
The Bank is the head entity in the tax-consolidated group
comprising all the Australian wholly-owned subsidiaries.
The implementation date for the tax-consolidated group was
1 September 2003.
Current tax expense (income), deferred tax liabilities and deferred
tax assets arising from temporary differences of the members of
the tax-consolidated group are recognised in the separate financial
statements of the members of the tax-consolidated group using a
‘group allocation’ approach by reference to the carrying amounts in
the separate financial statements of each entity and the tax values
applying under tax consolidation.
Any current tax liabilities (or assets) and deferred tax assets
arising from unused tax losses of the subsidiaries are assumed by
the head entity in the tax-consolidated group and are recognised
as amounts payable (receivable) to (from) other entities in the
tax-consolidated group in conjunction with any Tax Funding
Agreement (TFA) amounts. Any difference between these amounts
is recognised by the Bank as an equity contribution, or distribution
from the subsidiary.
Any subsequent period amendments to deferred tax
assets arising from unused tax losses as a result of a revised
assessment of the probability of recoverability is recognised
by the head entity only.
121
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
2.4 Dividends
Ordinary shares
Final 2021 dividend paid 18 November 2021 (2020: 25 November 2020)
Interim 2022 dividend paid 26 May 2022 (2021: 26 May 2021)
Bank
2022
2021
Cents per
share
22
22
Cents per
share
12
17
$m
141
141
282
All dividends paid on ordinary shares have been fully franked. Since the end of the financial year, the Directors have determined the
following dividends:
Final ordinary share dividend
Cents per
share
24
$m
55
109
164
$m
155
The final ordinary share dividend will be paid on 17 November 2022 to owners of ordinary shares at the close of business on 28 October 2022
(record date). Shares will be quoted ex-dividend on 27 October 2022.
30% franking credits available to shareholders of the Bank for subsequent financial years
Bank
2022
$m
583
2021
$m
507
The ability to utilise the franking credits is dependent upon there being sufficient available profits to pay dividends. The profits accumulated
in the profit reserve are available for dividend payments in future years. All dividends paid by the Bank since the end of the previous financial
year were franked at the tax rate of 30 per cent.
The balance of the Bank’s dividend franking account at the date of this report, after adjusting for franking credits and debits that will arise on
payment of income tax and proposed dividends relating to the year ended 31 August 2022, is $516 million calculated at the 30 per cent tax
rate (2021: $446 million). It is anticipated, based on these franking account balances that the Bank will continue to pay fully franked
dividends in the foreseeable future.
Dividend reinvestment plan
The dividend reinvestment plan (DRP) provides ordinary shareholders with the opportunity to reinvest all or part of their
entitlement to a dividend into new ordinary shares.
The price for shares issued or transferred under the DRP is the Market Price less such discount (if any) as the directors may determine from
time to time and notify to the ASX (rounded to the nearest cent).
Market price is the arithmetic average, rounded to four decimal places, of the daily volume weighted average price of:
•
•
all shares sold in the ordinary course of trading on the ASX automated trading system; and
where shares are sold on trading platforms of Australian licensed financial markets operated by persons other than ASX, all shares sold
in the ordinary course of trading on such of those trading platforms determined by the Board, from time to time, during the 10 trading day
period commencing on the second trading day after the record date in respect of the relevant dividend.
The calculation of the daily volume weighted average price shall not include certain transactions, as outlined in the DRP terms and
conditions. If, after this calculation, there is a residual balance, that balance will be carried forward (without interest) and added to the next
dividend for the purpose of calculating the number of shares secured under the DRP at that time.
Shares issued or transferred under the DRP will be fully-paid and rank equally in all respects with existing shares.
The last date for election to participate in the DRP for the 2022 full year dividend is 31 October 2022.
122
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
2.5 Operating segments
Segment information
Major customers
The Group determines and presents operating segments based on
the information that is provided internally to the Managing Director
and CEO, the Group’s and the Bank’s chief operating decision maker.
No revenue from transactions with a single external customer
or counterparty amounted to 10 per cent or more of the Group’s
total revenue in 2022 or 2021.
Geographic information
While the Group does have some operations in New Zealand,
the business segments operate principally in Australia.
Goodwill
For goodwill allocation between segments, refer to Note 4.1.
Presentation
The following table presents income, profit and certain asset and
liability information regarding the Group’s operating segments.
Inter-segment revenue and expenses and transfer pricing
adjustments are reflected in the performance of each
operating segment.
All inter-segment profits are eliminated on consolidation.
Other column includes Treasury and Group Head Office operations.
This is not reported internally to the Group’s and the Bank’s chief
operating decision maker as an operating segment.
An operating segment is a component of the Group that engages
in business activities from which it may earn revenues and
incur expenses, including revenues and expenses that relate
to transactions with any of the Group’s other components. All
operating segments’ operating results are regularly reviewed by
the Group’s Managing Director and CEO to make decisions about
resources to be allocated to each segment and assess performance
for which discrete financial information is available.
Segment results that are reported to the Managing Director and
CEO include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis.
The Group’s operating segments comprise the following:
Retail Banking - retail banking solutions provided to
customers through our Owner-managed and Corporate branch
network, ME Bank and Virgin Money distribution channels, and
third-party intermediaries;
BOQ Business - includes the BOQ branded commercial lending
activity, BOQ Finance and BOQ Specialist businesses. The division
provides tailored business banking solutions including commercial
lending, equipment finance and leasing, cashflow finance, foreign
exchange, interest rate hedging, transaction banking and deposit
solutions for commercial customers.
Management monitors the operating results of its business units
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance
is evaluated based on operating profit or loss which in certain
respects is measured differently from operating profit or loss in
the consolidated financial statements. Income taxes are managed
within the individual operating segments and thus disclosed
this way.
Transfer prices between operating segments are on an arm’s length
basis, reflecting the Bank’s external cost of funds, in a manner
similar to transactions with third parties.
123
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
2.5 Operating segments (continued)
Retail Banking
BOQ Business
Other (1)
Segment Total
2022
$m
2021
$m
2022
$m
Income
Net interest income (3)
Non-interest income
Total income
Operating expenses
Underlying profit / (loss)
Loan impairment gain/ (loss)
Cash profit / (loss) before tax
Income tax (expense) / benefit
Segment cash profit / (loss) after tax (4)
Statutory basis adjustments:
Integration costs (5)
St Andrew's (6)
Amortisation of acquisition fair value
adjustments
Hedge ineffectiveness
Intangible asset review and restructure (7)
Transaction costs (5)
Employee pay and entitlements review
Statutory net profit after tax
Included in the results:
Depreciation and amortisation
Segment assets (8)
Segment liabilities (8) (9)
2022 (2)
$m
943
98
1,041
(642)
399
(41)
358
(109)
249
-
-
-
-
-
-
-
2021
$m
570
74
644
2022
$m
593
50
643
(407)
(295)
237
21
258
(80)
178
-
-
-
-
-
-
-
348
28
376
(115)
261
-
-
-
-
-
-
-
2021
$m
555
48
603
(262)
341
-
341
(106)
235
-
-
-
-
-
-
-
2021
$m
1,128
130
1,258
(684)
574
21
595
(183)
412
(9)
-
(3)
(3)
(3)
(19)
(6)
369
1,529
153
1,682
(937)
745
(13)
732
(224)
508
(57)
(24)
7
(8)
-
-
-
426
(7)
5
(2)
-
(2)
-
(2)
-
(2)
-
-
-
-
-
-
-
3
8
11
(15)
(4)
-
(4)
3
(1)
-
-
-
-
-
-
-
(1)
(8)
13,449
44,426
249
178
261
235
(2)
(82)
58,280
33,319
(54)
54,077
29,978
(29)
25,861
11,668
(22)
23,913
10,838
(10)
15,789
48,258
(121)
99,930
93,245
(84)
91,439
85,242
(1) This is not reported internally to the Group’s and the Bank’s chief operating decision maker as an operating segment.
(2) On 28 February 2022, ME Bank surrendered its ADI licence and the assets, liabilities and reserves of ME Bank were transferred to the Bank. The current year results of the
Bank above include a full year of ME Bank results from 1 September 2021. The prior year results include the results of ME Bank since acquisition in the Group result only.
(3) Interest income and interest expenses are disclosed in this note on a net interest income basis. This is in line with the information provided internally to the Managing Director
and CEO.
(4) This excludes a number of items that introduce volatility and/or one-off distortions of the Group’s performance.
(5) Integration and transaction costs from ME acquisition completed on 1 July 2021.
(6) Includes the loss on sale of the St Andrew’s Group of $25 million and net earnings of the St Andrew’s Group for the period ended 28 October 2021 of $1 million.
(7) The August 2021 financial results included a non-recurring adjustment due to a change in the ME minimum threshold for the capitalisation of intangible assets to align with BOQ.
(8) Comparative information has been restated to reflect the adjustments detailed in Note 5.5(C).
(9) ME Bank treasury deposits have been removed from Retail customer deposits and included in Other. Comparative information has been restated.
124
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
2.6 Earnings per share
Basic earnings per share (EPS) is calculated by dividing the relevant earnings attributable to ordinary shareholders by the average weighted
number of shares on issue. Diluted EPS takes into account the dilutive effect of all outstanding share rights vesting as ordinary shares.
Earnings reconciliation
Profit for the year
Returns to holders of other equity instruments (1)
Amortisation of premium on other equity instruments
Profit available for ordinary shareholders
Basic earnings
Effect of Capital Notes
Effect of Capital Notes 2
Diluted earnings
Consolidated
2022
$m
426
(12)
9
423
10
8
441
2021
$m
369
(1)
-
368
9
5
382
Weighted average number of shares used as the denominator
2022 Number
2021 Number
Number for basic earnings per share
Ordinary shares
Number for diluted earnings per share
Ordinary shares
Effect of award rights
Effect of Capital Notes
Effect of Capital Notes 2
Earnings per share
Basic earnings per share - Ordinary shares (cents)
Diluted earnings per share - Ordinary shares (cents)
(1) Other equity instruments assumed on the acquisition of ME Bank. Refer to Note 3.10(B) for further information.
642,839,759
549,628,512
642,839,759
549,628,512
4,400,556
49,229,237
36,570,886
3,248,973
37,717,103
21,033,327
733,040,438
611,627,915
65.7
60.1
67.0
62.6
125
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
Note 3. Capital and Balance Sheet management
3.1 Cash and cash equivalents
Components of cash and cash equivalents
Cash and cash equivalents comprise cash at branches, cash on deposit and balances with the RBA. Cash flows from the following activities
are presented on a net basis in the Statements of Cash Flows:
• Sales and purchases of trading securities;
• Customer deposits and withdrawals from deposit accounts; and
• Loan drawdowns and repayments.
Notes, coins and cash at bank
Remittances in transit
Reverse repurchase agreements maturing in less than three months
Cash and cash equivalents as presented in the Balance Sheets
Cash and cash equivalents included in assets held for sale
Total
Consolidated
Bank
2022
$m
2,048
400
-
2,448
-
2,448
2021 (1)
$m
2,059
296
201
2,556
4
2,560
2022
$m
852
370
-
1,222
-
1,222
(1) Comparative information has been restated to reflect the prior period adjustments detailed in Note 5.5(C) and to comply with current year presentation.
Notes to the Statements of Cash Flows
Reconciliation of profit for the year to net cash provided by operating activities:
Profit from ordinary activities after income tax
426
369
Add / (less) non-cash items or items classified as investing / financing:
Depreciation
Amortisation - acquired intangibles
Software amortisation and impairment
Loss on sale of subsidiary
Profit on sale of property, plant and equipment
Equity settled transactions
Salary sacrifice arrangements
Dividends received from controlled entities
Add / (less) changes in operating assets and liabilities:
Decrease in due from other financial institutions
(Increase) in financial assets
(Increase) in loans and advances
Increase / (decrease) in provision for impairment
(Increase) / decrease in derivatives
(Increase) / decrease in deferred tax asset
(Increase) in amounts due from controlled entities
(Increase) in other assets
Increase in due to other financial institutions
Increase in deposits
Increase in accounts payable and other liabilities
Increase / (decrease) in current tax liabilities
Increase / (decrease) in provisions
Increase / (decrease) in deferred tax liabilities
Net cash (inflow) / outflow from operating activities
126
48
9
66
25
(9)
16
(1)
-
480
(3,145)
(5,502)
(17)
25
40
-
(55)
1,235
5,121
37
(43)
(2)
9
(1,237)
39
4
47
-
(5)
8
(3)
-
119
(1,120)
(3,052)
(58)
(19)
17
-
(18)
289
3,669
33
34
5
23
381
417
47
9
64
9
-
15
(1)
(11)
444
(3,598)
(5,101)
13
37
30
(123)
(111)
1,235
5,436
46
(36)
-
(16)
(1,195)
2021
$m
1,135
238
-
1,373
-
1,373
264
36
2
36
-
-
7
(3)
(4)
118
(292)
(3,439)
(35)
(9)
(1)
(850)
743
289
3,420
67
26
4
1
380
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities
Notes to the financial statements
3.2 Financial assets and liabilities
Financial instruments measured at amortised cost
Regular way purchases and sales of financial assets are recognised on
trade date, being the date on which the Group commits to purchase or
sell the asset.
Financial assets that are held to collect the contractual cash flows and
that contain contractual terms that give rise on specified dates to cash
flows that are solely payments of principal and interest, are measured
at amortised cost. In addition, most financial liabilities are measured
at amortised cost. Financial assets or financial liabilities are initially
recognised at fair value, inclusive of any directly attributable
costs. They are subsequently measured at each reporting date
at amortised cost using the effective interest method. This is a
method of calculating the amortised cost of a financial asset and
allocating the interest income over the relevant period using the
rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying amount of
the financial asset.
The Bank invests in debt securities at amortised cost that are
issued by 100 per cent owned securitisation vehicles within the
Consolidated Group. The programs’ underlying pool of financial
instruments are recorded within the Bank’s Loans and advances.
Also included in this category are loans and advances at amortised
cost (refer to Note 3.3 Loans and advances) and receivables
due from other financial institutions recognised and measured
at amortised cost.
For financial liabilities at amortised cost, refer to Note 3.4 for
further information on Deposits and Note 3.5 for further information
on Borrowings.
Financial assets measured at fair value through other
comprehensive income (FVOCI)
Financial assets held in a business model with the objective of
collecting contractual cash flows or realising the asset through sale
and having contractual cash flows considered to be solely payments of
principal and interest are measured at FVOCI. Gains or losses arising
from changes in the fair value of these financial instruments are
recognised in other comprehensive income. Interest income and
foreign exchange gains and losses are recognised in profit or loss in
the Income Statement, as are cumulative gains or losses previously
recognised in other comprehensive income upon derecognition of
the financial instruments.
Equity instruments that are not held for trading are measured
at FVOCI, where an irrevocable election has been made by
management. Amounts presented in other comprehensive income
are not subsequently transferred to profit or loss, but can be
reclassified to retained profits. Dividends on such investments are
recognised in profit or loss unless the dividend clearly represents a
recovery of part of the cost of the investment.
Financial instruments and derivatives at fair value
through profit or loss (FVTPL)
Financial assets that do not meet the criteria to be measured at
amortised cost or FVOCI are measured at FVTPL, with all changes
in fair value recognised in the Income Statement. Financial assets
in this category are those that are held for trading and have
been designated by management upon initial recognition or are
mandatorily required to be measured at fair value under AASB 9
Financial Instruments (AASB 9).
Where a financial liability is designated at fair value through profit or
loss, the movement in fair value is recognised in profit or loss
in the Income Statement. Changes in fair value relating to the
Group’s own credit risk in relation to liabilities designated at fair
value through the Income Statement on origination are recognised
in Other Comprehensive Income. Interest incurred is recognised
within Net interest income on a contractual rate basis, including
amortisation of any premium or discount.
Modification of financial instruments
A financial instrument is modified when its original contractual
cash flows are modified. A financial instrument that is modified
is derecognised if the existing agreement is cancelled and a new
agreement is made on substantially different terms or if the existing
terms of the financial instrument are substantially modified. Where
the modification results in derecognition of the original financial
instrument, a new financial instrument is recorded initially at fair
value and the difference is recorded in profit or loss in the
Income Statement.
When the modification does not result in derecognition, the
difference between the financial instrument’s original contractual
cash flows and the modified cash flows, discounted at the
original effective interest rate, is recognised as a gain or
loss in the Income Statement.
Reclassification of financial instruments
The Group reclassifies financial assets when, and only when,
it changes its business model for managing those assets.
Reclassified financial assets are subsequently measured based
on the new measurement category.
The Group does not reclassify financial liabilities.
Derecognition of financial instruments
Financial assets are derecognised when the contractual rights to
receive cash flows from the assets have expired, or where the Group
has transferred its contractual rights to receive the cash flows of
the financial assets or substantially all the risks and rewards of
ownership, or upon substantial modification.
Financial liabilities are derecognised when they are extinguished, i.e.
when the obligation is discharged, cancelled or expired.
127
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
3.2 Financial assets and liabilities (continued)
Financial assets recognised and measured at fair value and debt instruments at amortised cost are listed below. For other financial assets
and liabilities refer to Note 3.1 for Cash and cash equivalents, Note 3.3 for Loans and advances, Note 3.4 for Deposits, Note 3.5 for Borrowings
and Note 3.8 for Derivative financial instruments and hedge accounting.
Consolidated
Bank
Derivative financial assets
Current
Non-current
Total derivative financial assets
Financial assets at FVTPL
Floating rate notes and bonds
Negotiable certificates of deposit
Promissory notes
Reverse repurchase agreements
Equity instruments
Total financial assets at FVTPL (1)
Current
Financial assets at FVOCI
Debt instruments
Equity instruments
Total financial assets at FVOCI
Current
Non-current
Debt instruments at amortised cost
Current
Non-current
Total debt instruments at amortised cost
2022
$m
126
947
1,073
-
-
-
-
4
4
4
13,304
6
13,310
6,365
6,945
-
-
-
2021
$m
82
55
137
664
180
200
43
-
1,087
1,087
9,701
9
9,710
3,232
6,478
-
-
-
2022
$m
115
904
1,019
-
-
-
-
4
4
4
13,304
6
13,310
6,365
6,945
176
12,874
13,050
2021
$m
19
67
86
664
180
200
43
-
1,087
1,087
5,548
6
5,554
607
4,947
168
7,531
7,699
(1) Trading book assets have been sold, as these assets formed part of the assets held for CLF purpose. On 10 September 2021, APRA announced that the CLF will be phased out to zero
by the end of 2022 subject to financial market conditions. The Group has been selling down assets which are held as part of the CLF in line with the scheduled reduction.
128
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
3.3 Loans and advances
Loans and advances at amortised cost
Loans and advances are originated by the Group and are recognised upon cash being advanced to the borrower. Loans and advances
are initially recognised at fair value, plus incremental directly attributable transaction costs. They are subsequently measured at each
reporting date at amortised cost using the effective interest method. The method used to determine the appropriate period to amortise any
upfront payments or receipts on origination of loan contracts is the weighted average life (WAL) of the loan category. The WAL for the loan
categories is assessed at each reporting period. A revision to the WAL is made where there are material consecutive changes to the WAL
over a minimum of three half yearly reporting periods.
Finance lease receivables
Loans and advances include finance lease receivables. Finance leases are those products where substantially all the risks and rewards
of the leased asset have been transferred to the lessee. Finance lease receivables are initially recognised at amounts equal to the lower
of fair value of the leased asset or the present value of the minimum lease repayments plus the present value of a guaranteed residual
value expected to accrue at the end of the lease term. Subsequently, lease repayments are apportioned between interest income and
the reduction of the lease receivable over the term of the lease in order to reflect a constant periodic rate of return on the net investment
outstanding in respect of the lease.
Residential property loans
Personal loans
Overdrafts
Commercial loans
Credit cards
Asset finance and leasing
Gross loans and advances
Less:
Unearned finance lease income
Specific provision for impairment
Collective provision for impairment
Total loans and advances
Consolidated
Bank
2022
$m
63,444
127
205
10,934
183
6,440
81,333
(83)
(78)
(217)
80,955
2021
$m
59,053
182
164
9,900
178
6,347
75,824
(76)
(107)
(204)
75,437
2022
$m
63,444
127
205
10,738
183
863
2021
$m
34,101
95
164
9,715
57
928
75,560
45,060
(11)
(58)
(156)
(14)
(83)
(136)
75,335
44,827
a) Loans and advances - Expected Credit Losses (ECL)
In accordance with AASB 9, the Group utilises a forward-looking ECL approach. The ECL allowance is based on the credit losses expected
to arise over the next 12 months of the financial asset, unless there has been a significant increase in credit risk (SICR) since origination. In
this case, the allowance is based on the ECL for the life of the financial asset. The 12 month ECL is the portion of lifetime ECLs resulting from
default events on a financial asset that are possible within the 12 months after the reporting date.
At the end of each reporting period, the Group performs an assessment of whether a financial asset’s credit risk has increased significantly
since initial recognition. This is done by considering the change in the risk of default occurring over the remaining life of the financial asset.
The Group applies a three stage approach to measuring the ECL, as described below:
• Stage 1 – For financial assets where there has not been a SICR since initial recognition and that are not credit impaired upon origination,
the portion of the lifetime ECL associated with the probability of default (PD) occurring within the next 12 months is recognised as the 12
month ECL, adjusted for forward-looking information. Stage 1 includes facilities where the credit risk has improved and the loan has been
reclassified from Stage 2 or Stage 3.
• Stage 2 – When there has been a SICR, the lifetime ECL is determined with reference to the financial asset’s lifetime PD and the lifetime
losses associated with that PD, adjusted for forward-looking information. The Group assesses whether there has been a SICR since initial
recognition based on qualitative, quantitative, and reasonable and supportable forward-looking information that includes significant
management judgement. Use of alternative criteria could result in significant changes to the timing and amount of ECL to be recognised.
Lifetime ECL considers the expected behaviour of the asset as well as forward looking macro-economic forecasts. Stage 2 also includes
facilities where the credit risk has improved and the loan has been reclassified from Stage 3.
129
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
3.3 Loans and advances (continued)
a) Loans and advances - Expected Credit Losses (ECL) (continued)
• Stage 3 - This includes financial assets that are deemed to
be credit impaired, which generally correspond to the APRA
definition of default, and include exposures that are at least 90
days past due. The provision is also equivalent to the lifetime
ECL. Financial assets in Stage 3 will have a collective provision
determined by the ECL model, although some loans are
individually covered by a specific provision. A specific provision
is calculated based on estimated future cash flows discounted
to their present value, net of any collateral held against that
financial asset.
• Purchased or originated credit-impaired (POCI) - POCI assets are
financial assets that are purchased or originated as being credit
impaired. The ECL for POCI assets is measured at an amount
equal to the lifetime ECL. However, the amount recognised as a
loss allowance for these assets is not the total amount of lifetime
ECLs, but instead the changes in lifetime ECLs since initial
recognition of the asset.
Write-offs
Financial assets are written off, either partially or in full, against
the related provision when the Group concludes that there is no
reasonable expectation of recovery and all possible collateral has
been realised. Recoveries of financial assets previously written off
are recognised in profit or loss based on the cash received.
Definition of default
A default is considered to have occurred when the borrower is unlikely
to pay its credit obligations in full without recourse by the Group to the
realisation of available security and/or the borrower is at least 90 days
past due on their credit obligations. This definition is in line with the
regulatory definition of default and also aligned to the definition used for
internal credit risk management purposes across all portfolios.
Significant increase in credit risk
SICR for financial assets is assessed by comparing the risk of a
default occurring over the expected life of a financial asset at the
reporting date compared to the corresponding risk of default at
origination. In determining what constitutes a significant increase
in credit risk, the Group considers qualitative and quantitative
information. For the majority of BOQ’s portfolios, SICR is assessed
using PD based triggers, by comparing the PD at the reporting
date to the PD at origination. PD’s are primarily assigned through
either a Customer Risk Rating or statistical models, utilising account
behaviours. For all loan portfolios, the primary indicator is in addition
to the secondary SICR indicator, which is based on 30 days past due
arrears information and other qualitative criteria.
Calculation of ECL
ECLs for financial assets in Stage 1 and 2 are assessed for
impairment on a collective basis whilst those in Stage 3 are
subjected to either collective or individual assessment. Where ECL
is modelled collectively for portfolios of exposures, it is modelled
primarily as the product of the PD, the loss given default (LGD) and
the exposure at default (EAD).
These parameters are generally derived from internally developed
statistical models combined with historical, current and forward-
looking information, including macro-economic data:
130
• The 12-month and lifetime PD, for accounting purposes, represent
the estimation of the point-in-time probability of a default over the
next 12 months and remaining lifetime of the financial instrument,
respectively, based on conditions existing at the balance sheet date
and future economic conditions that affect credit risk;
• The EAD represents the expected exposure at default, taking
into account the repayment of principal and interest from
the balance sheet date to the default event together with any
expected drawdown of a facility; and
• The LGD represents the expected loss conditional on default,
taking into account the mitigating effect of collateral, its
expected value when realised, and the time value of money.
Incorporation of forward-looking information
The credit risk factors described above are point in time estimates
based on the probability weighted forward-looking economic
scenarios. The inclusion of a forward-looking component in the
model anticipates changes in the economic outlook, and is an
important component of the provisioning process. The Group
considers four forward-looking macro-economic scenarios (base,
upside, downside and severe downside) over the next three years.
The scenarios are then probability weighted based on the likelihood
of the scenario occurring to ensure ECL appropriately captures
forward looking effects and considers the range of possible
economic outcomes.
The scenarios, including their underlying indicators, are
developed using a combination of publicly available data and
internal forecasts to form the initial baseline. The scenarios
are refined through consultation with internal specialists and
benchmarking to external data from reputable sources, which
includes forecasts published from a range of market economists
and official data sources, including major central banks.
Economic outlook factors that are taken into consideration
include unemployment, interest rates, gross domestic product,
commercial and residential property price indexes, and require
an evaluation of both the current and forecast direction of the
macro-economic cycle.
Incorporating forward looking information, including macro-
economic forecasts, increases the degree of judgement
required to assess how changes in these data points will affect
ECLs. The methodologies and assumptions, including any
forecasts of future economic conditions, are reviewed regularly.
• Base case scenario: This scenario reflects BOQ’s forward looking
economic assumptions where inflation remains high from supply
chain effects causing further increases in cash rates. Base case
assumptions are supported by RBA forecasts where available.
Unemployment remains low for the short term, with modest
increases occurring in later years as a result of higher cash rates
having a slowing effect on the broader economy. Lower GDP
growth is seen in late 2023 and 2024 due to the interest rate
effects. Property prices declines are experienced aligning to
rising interest rates.
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
3.3 Loans and advances (continued)
a) Loans and advances - Expected Credit Losses (ECL) (continued)
Incorporation of forward-looking information (continued)
• Upside scenario: This scenario represents a slight improvement on the economic conditions from the Base case.
•
Downside scenario: This scenario represents stagflation effects, with rises in interest rates, no GDP growth and rising unemployment.
Compared to the base case scenario, interest rate rises are not able to constrain inflation as early and therefore reach a higher peak.
Other economic variables experience more stressed outcomes as a result.
Severe downside scenario: This scenario also represents stagflationary economic outcomes and accounts for the potential impact of
lower likelihood but higher severity macroeconomic conditions.
•
The table below provides a summary of macro-economic assumptions used in the Base and Downside scenarios as at 31 August 2022.
Macro-economic assumption
GDP (YoY)
Unemployment
Residential property prices (YoY)
Commercial property prices (YoY)
Cash Rate (1)
Base
Downside
2022
(%)
3.25
3.25
(5.00)
(3.00)
2.90
2023
(%)
1.75
3.50
(10.00)
(5.00)
2.95
2024
(%)
1.75
4.00
(5.00)
(5.00)
2.90
2022
(%)
0.25
5.00
(14.50)
(17.25)
3.50
2023
(%)
-
7.00
(14.50)
(11.25)
3.75
2024
(%)
0.75
7.50
(6.50)
(5.25)
3.50
(1) The forecasts in the table reflect calendar year end numbers. The peak cash rate forecast in the base case occurs in 2023 and is projected to reach 3.1%. Due to further changes in
market sentiment since 31 August 2022, the market implied cash rate peak has increased beyond the numbers provided in the table. Analysis has shown that updating the cash rate
forecast to incorporate these changes would not have a material impact on the expected credit losses.
In determining the reported ECL of $295 million, the Group has taken into account the facts, circumstances and forecasts of future economic
conditions and supportable information available at the reporting date. Provisioning assumption updates have been made during FY22
which include a complete review of overlays and adjustments, which are held for external factors not captured in the core models, including
specific industry or portfolio stresses and uncertainties related to model precision, as well as updated scenarios and scenario weightings
to cater for economic uncertainties. Management overlays have been refined based on industry data observed over the period and
management judgement. Key emerging risks have been considered, including:
• Construction industry stress, primarily related to cost increases and fixed price contracts impacting builders’ profitability;
•
•
• Potential stress in fixed rate loans within the home loans portfolio caused by interest rate rises.
Forecast commercial property price declines and reductions in capitalisation rates impacting the commercial property sector;
Inflationary / supply chain pressures impacting retail trade, transport, hospitality, arts and recreation; and
The final ECL reflects an unbiased and probability-weighted amount, determined by the evaluation of a range of possible forward looking
economic outcomes, rather than being based on a best or worst case scenario. The table below shows weightings applied to derive the
probability weighted ECL, utilising the most up to date macro-economic information available as at reporting date.
Weighting
Upside
Base
Downside
Severe
2022
5%
2021
5%
2022
50%
2021
43%
2022
30%
2021
30%
2022
15%
2021
22%
Sensitivity of provisions for impairment to changes to forward looking assumptions
The following table compares the reported ECL to approximate levels of ECL under each scenario assuming a 100 per cent weighting was
applied to each scenario with all other assumptions held constant.
Reported probability weighted ECL
100% Upside scenario
100% Base case scenario
100% Downside scenario
100% Severe Downside scenario
Consolidated
2022
$m
295
214
225
331
482
2021
$m
311
288
289
331
340
Bank
2022
$m
214
147
158
256
405
2021
$m
219
199
199
234
241
Sensitivity of provisions for impairment to SICR assessments
If 1% of Stage 1 credit exposures as at 31 August 2022 was included in Stage 2, provisions for impairment would increase by approximately
$15 million for the Group and $14 million for the Bank (2021: $7million for the Group and $6 million for the Bank) based on using coverage
ratios by stage to the movement in the gross exposure by stage.
131
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
3.3 Loans and advances (continued)
a) Loans and advances - Expected Credit Losses (ECL) (continued)
Governance
The Executive Credit Committee has the delegation for reviewing and approving the determination of ECL, including any judgements and
assumptions. Where applicable, management adjustments or overlays may be made to account for situations where known or expected
risks and information have not been considered in the modelling process. The Group’s provision for impairment on loans and advances, and
key areas of judgement are reported to the Group’s Audit Committee and Board at each reporting period.
The following table discloses the breakdown of the Group’s ECL by component for the year ended 31 August 2022.
Consolidated
Balance as at 1 September 2021
Transfers during the year to:
Stage 1
Stage 2
Stage 3
New/increased provisions
Write-back of provisions no longer required
Amounts written off, previously provided for
Balance as at 31 August 2022
Collective Provision
Stage 1 –
12 month ECL
$m
Stage 2 –
Lifetime ECL
$m
Stage 3 –
Lifetime ECL
$m
88
29
(4)
(1)
43
(90)
-
65
50
(13)
13
(4)
57
(27)
-
76
66
(10)
(8)
3
52
(27)
-
76
Stage 3 –
Specific
provision
$m
107
(6)
(1)
2
22
(24)
(22)
78
Total
$m
311
-
-
-
174
(168)
(22)
295
The table below discloses the effect of movements in the gross carrying value of loans and advances in the different stages of the ECL model
of the Group during the year ended 31 August 2022.
Consolidated
Gross carrying amount as at
1 September 2021
Transfers during the year to:
Stage 1
Stage 2
Stage 3
New loans and advances originated or
purchased
Loans and advances derecognised or repaid
during the year including write-offs
Balance as at 31 August 2022
Provision for impairment
Net carrying amount as at 31 August 2022
Stage 1 –
12 month ECL
$m
Stage 2 –
Lifetime ECL
$m
Stage 3 –
Lifetime ECL
$m
Stage 3 –
Specific
provision
$m
Stage 3 -
POCI Loans
$m
Total (1)
$m
70,688
4,010
543
221
286
75,748
1,042
(2,076)
(249)
24,859
(997)
2,202
(132)
340
(18,193)
(1,229)
76,071
(65)
76,006
4,194
(76)
4,118
(39)
(120)
351
37
(174)
598
(76)
522
(6)
(6)
30
4
(81)
162
(78)
84
-
-
-
-
(61)
225
-
225
-
-
-
25,240
(19,738)
81,250
(295)
80,955
(1) The amounts presented above are inclusive of unearned finance lease income.
The loss allowance associated with the POCI loans for the Group reduced by $14 million for the year ended 31 August 2022, from an opening
balance of $22 million, and was taken directly to the balance of the gross carrying value of loans and advances. No new POCI loans were
recognised in the year ended 31 August 2022.
132
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
3.3 Loans and advances (continued)
a) Loans and advances - Expected Credit Losses (ECL) (continued)
The following table discloses the breakdown of the Group’s ECL by component for the year ended 31 August 2021.
Consolidated
Balance as at 1 September 2020
Transfers during the year to:
Stage 1
Stage 2
Stage 3
New/increased provisions
Write-back of provisions no longer required
Amounts written off, previously provided for
Balance as at 31 August 2021
Collective Provision
Stage 1 –
12 month ECL
$m
Stage 2 –
Lifetime ECL
$m
Stage 3 –
Lifetime ECL
$m
95
19
(5)
(1)
36
(56)
-
88
115
(10)
10
(5)
31
(91)
-
50
65
(1)
(2)
3
53
(52)
-
66
Stage 3 –
Specific
provision
$m
94
(8)
(3)
3
55
(1)
(33)
107
Total
$m
369
-
-
-
175
(200)
(33)
311
The table below discloses the effect of movements in the gross carrying value of loans and advances in the different stages of the ECL model
of the Group during the year ended 31 August 2021.
Stage 3 –
Specific
provision
$m
Stage 3 -
POCI Loans
$m
Consolidated
Gross carrying amount as at
1 September 2020
Transfers during the year to:
Stage 1
Stage 2
Stage 3
New loans and advances originated or
purchased
Loans and advances derecognised or repaid
during the year including write-offs
Balance as at 31 August 2021
Provision for impairment
Net carrying amount as at 31 August 2021
Stage 1 –
12 month ECL
$m
Stage 2 –
Lifetime ECL
$m
Stage 3 –
Lifetime ECL
$m
42,831
3,605
408
1,307
(2,373)
(235)
40,232
(11,074)
70,688
(88)
70,600
(1,282)
2,436
(182)
342
(909)
4,010
(50)
3,960
(23)
(35)
321
7
(135)
543
(66)
477
(1) The amounts presented above are inclusive of unearned finance lease income.
199
(2)
(28)
96
8
(52)
221
(107)
114
Total (1)
$m
47,043
-
-
-
-
-
-
-
286
40,875
-
(12,170)
286
-
286
75,748
(311)
75,437
133
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
3.3 Loans and advances (continued)
a) Loans and advances - Expected Credit Losses (ECL) (continued)
The following table discloses the breakdown of the Bank’s ECL by component for the year ended 31 August 2022.
Bank
Balance as at 1 September 2021
Transfers during the year to:
Stage 1
Stage 2
Stage 3
New/increased provisions
Transfer from ME Bank (1)
Write-back of provisions no longer required
Amounts written off, previously provided for
Balance as at 31 August 2022
Collective Provision
Stage 1 –
12 month ECL
$m
Stage 2 –
Lifetime ECL
$m
Stage 3 –
Lifetime ECL
$m
51
14
(1)
-
20
10
(63)
-
31
39
(8)
8
(3)
40
11
(22)
-
65
46
(4)
(6)
3
37
3
(19)
-
60
Stage 3 –
Specific
provision
$m
83
(2)
(1)
-
11
4
(24)
(13)
58
Total
$m
219
-
-
-
108
28
(128)
(13)
214
The table below discloses the effect of movements in the gross carrying value of loans and advances in the different stages of the ECL model
of the Bank during the year ended 31 August 2022.
Bank
Gross carrying amount as at 1 September
2021
Transfers during the year to:
Stage 1
Stage 2
Stage 3
New loans and advances originated or
purchased
Transfer from ME Bank (1)
Loans and advances derecognised or repaid
during the year including write-offs
Balance as at 31 August 2022
Provision for impairment
Net carrying amount as at 31 August 2022
Stage 1 –
12 month ECL
$m
Stage 2 –
Lifetime ECL
$m
Stage 3 –
Lifetime ECL
$m
Stage 3 –
Specific
provision
$m
Stage 3 -
POCI Loans
$m
40,736
3,617
499
194
928
(1,192)
(109)
16,009
24,747
(10,210)
70,909
(31)
70,878
(892)
1,316
(120)
537
326
(1,051)
3,733
(65)
3,668
(30)
(118)
213
96
42
(154)
548
(60)
488
(6)
(6)
16
1
-
(65)
134
(58)
76
-
-
-
-
-
260
(35)
225
-
225
Total (2)
$m
45,046
-
-
-
16,643
25,375
(11,515)
75,549
(214)
75,335
(1) ME Bank balances transferred to the Bank upon ME Bank’s ADI licence surrender on 28 February 2022.
(2) The amounts presented above are inclusive of unearned finance lease income.
The loss allowance associated with the POCI loans for the Bank amounted to a reduction of $9 million for the year ended 31 August 2022,
from an opening balance of $17 million, and was taken directly to the balance of the gross carrying value of loans and advances. No new POCI
loans were recognised in the year ended 31 August 2022.
134
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
3.3 Loans and advances (continued)
a) Loans and advances - Expected Credit Losses (ECL) (continued)
The following table discloses the breakdown of the Bank’s ECL by component for the year ended 31 August 2021.
Bank
Balance as at 1 September 2020
Transfers during the year to:
Stage 1
Stage 2
Stage 3
New/increased provisions
Write-back of provisions no longer required
Amounts written off, previously provided for
Unwind discount
Balance as at 31 August 2021
Collective Provision
Stage 1 –
12 month ECL
$m
Stage 2 –
Lifetime ECL
$m
Stage 3 –
Lifetime ECL
$m
57
5
(3)
(1)
18
(25)
-
-
51
78
(4)
7
(3)
25
(64)
-
-
39
51
(1)
(1)
2
35
(40)
-
-
46
Stage 3 –
Specific
provision
$m
68
-
(3)
2
40
(8)
(13)
(3)
83
Total
$m
254
-
-
-
118
(137)
(13)
(3)
219
The table below discloses the effect of movements in the gross carrying value of loans and advances in the different stages of the ECL model
of the Bank during the year ended 31 August 2021.
Bank
Stage 1 –
12 month ECL
$m
Stage 2 –
Lifetime ECL
$m
Stage 3 –
Lifetime ECL
$m
Gross carrying amount as at 1 September 2020
38,270
2,934
Transfers during the year to:
Stage 1
Stage 2
Stage 3
New loans and advances originated or purchased
Loans and advances derecognised or repaid during
the year including write-offs
Balance as at 31 August 2021
Provision for impairment
Net carrying amount as at 31 August 2021
997
(2,133)
(203)
13,008
(9,203)
40,736
(51)
40,685
(973)
2,195
(168)
263
(634)
3,617
(39)
3,578
(1) The amounts presented above are inclusive of unearned finance lease income.
399
(22)
(34)
289
14
(147)
499
(46)
453
Stage 3 –
Specific
provision
$m
171
(2)
(28)
82
4
(33)
194
(83)
111
Total (1)
$m
41,774
-
-
-
13,289
(10,017)
45,046
(219)
44,827
135
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
3.3 Loans and advances (continued)
b) Lease receivables
Asset finance and leasing include the following finance lease receivables for leases where the Group is the lessor.
Gross investment in finance lease receivables:
Less than one year
Between one and five years
More than five years
Unearned finance lease income
Net investment in finance leases
The net investment in finance leases:
Less than one year
Between one and five years
More than five years
Net investment in finance leases
Consolidated
2022
$m
344
620
21
985
(83)
902
310
573
19
902
2021
$m
334
611
34
979
(76)
903
303
570
30
903
Bank
2022
$m
14
91
19
124
(11)
113
13
84
16
113
2021
$m
14
108
31
153
(14)
139
15
97
27
139
136
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
3.3 Loans and advances (continued)
c) Transfer of financial assets
Securitisation program
Through its REDS Securitisation (RMBS Trusts), REDS EHP Securitisation (REDS EHP Trusts), Impala, MHP Trust and SMHL Securitisation (SMHL
Trusts) programs, the Group packages loans and advances through a series of securitisation vehicles from which debt securities are issued to
investors. The Group is entitled to any residual income from the vehicles after all payments to investors and costs of the programs have been met.
The securitised loans and advances are included in Loans and advances and the securitisation liabilities are included in Borrowings on the Group’s
Balance Sheet. The note holders have recourse only to the loan pool of assets. Refer to Note 5.9 (A)(ii) for further information.
Under internal securitisation arrangements, the Bank also holds debt securities issued by securitisation vehicles that are backed by the Bank's
loans and advances. These are recognised as Debt Instruments at Amortised Cost in the Bank with a corresponding liability in Amounts Due to
Controlled Entities representing the related obligations to the securitisation vehicles.
Covered bond program
The Bank issues covered bonds for funding and liquidity purposes. The bonds are issued to external investors and are secured against a
pool of the Bank’s housing loans. Housing loans are assigned to a bankruptcy remote structured entity to provide security for all obligations
payable on the covered bonds issued by the Bank. The covered bond holders have dual recourse to the Bank and the cover pool of assets.
The Bank is required to maintain the cover pool at a level sufficient to cover the obligations of the bonds. The Bank is entitled to any residual
income of the covered bond structured entity after all payments due to the covered bond holders and any costs related to the program have
been met. The housing loans are included in Loans and advances and the covered bonds issued are included in Borrowings on the Group’s
and the Bank’s Balance Sheet. Refer to Note 5.9 (A)(iii) for further information.
The following table sets out the transferred financial assets and associated liabilities of the securitisation and covered bond programs that
did not qualify for derecognition under AASB 9 and typically result in the transferred assets continuing to be recognised in full.
Transferred financial assets
Securitisation - Loans and advances
Covered bonds - Loans and advances
Associated financial liabilities
Securitisation liabilities - external investors
Covered bonds - external investors
Amounts due to controlled entities
For those liabilities that have recourse
only to transferred assets (2)
Fair value of transferred assets
Fair value of associated liabilities
Net position
Consolidated
Bank
2022
$m
6,844
4,340
11,184
7,546
2,549
-
10,095
2021
$m
6,952
3,078
10,030
7,653
2,362
-
10,015
2022 (1)
$m
18,815
4,340
23,155
-
2,549
19,452
22,001
2021
$m
9,115
3,078
12,193
-
2,362
9,324
11,686
11,087
(10,095)
992
10,042
(10,015)
27
23,041
(22,001)
1,040
12,202
(11,686)
516
(1) ME Bank’s ADI licence surrender occured on 28 February 2022. At this time the securitisation trusts and the associated assets and liabilities transferred to being under control of the
Bank, as such these have been included within the transfer of financial assets note for the Bank in the current financial year.
(2) The fair values of transferred assets and liabilities that reprice within 6 months are assumed to equate to the amortised cost. All other fair values are calculated using a discounted
cash flow model.
137
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
3.4 Deposits
Deposits are initially recognised at fair value, net of any directly attributable transaction costs. Subsequent to initial measurement, they are
measured at amortised cost using the effective interest method.
Deposits at call
Term deposits
Certificates of deposit
Total deposits
Concentration of deposits
Customer deposits
Wholesale deposits
(1) Comparative information has been restated to reflect the adjustments detailed in Note 1.6.
Consolidated
Bank
2022
$m
36,243
29,103
5,338
70,684
60,489
10,195
70,684
2021 (1)
$m
34,179
26,427
4,743
65,589
56,469
9,120
65,589
2022
$m
36,411
29,103
5,338
70,852
60,657
10,195
70,852
2021 (1)
$m
23,189
16,744
3,323
43,256
38,180
5,076
43,256
138
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
3.5 Borrowings
Borrowings are initially recognised at fair value, net of any directly attributable transaction costs. Subsequent to initial measurement, they are
measured at amortised cost using the effective interest method.
The Group recorded the following movements on borrowings:
Consolidated
Year ended 31 August 2022
Balance at beginning of year
Proceeds from issues /
new funding
Repayments
Deferred establishment costs
Amortisation of deferred costs (5)
Foreign exchange translation (5)
Balance at end of year
Consolidated
Year ended 31 August 2021
Balance at beginning of year
Acquisition of ME Bank
Proceeds from issues / new funding
Repayments
Deferred establishment costs
Amortisation of deferred costs (5)
Foreign exchange translation (5)
Balance at end of year
Securitisation
liabilities (1)
$m
Covered bonds
liabilities (2)(6)
$m
EMTN
program (6)
$m
ECP
Program (6)
$m
Term
funding
facility (3)
$m
Subordinated
notes
$m
Senior
unsecured
notes
$m
Capital
Notes (4)
$m
Total
$m
7,645
2,452
(2,558)
(2)
3
-
7,540
2,359
1,095
(744)
(3)
1
(164)
2,544
81
-
-
-
3
71
(13)
(175)
253
-
-
2
-
3,026
449
400
-
(2)
1
-
3,561
602
17,723
2,453
(1,535)
(5)
-
-
-
-
-
2
-
6,653
(5,025)
(12)
7
(159)
-
-
-
-
-
80
3,026
848
4,474
604
19,187
Securitisation
liabilities (1)
$m
Covered bonds
liabilities (2)(6)
$m
EMTN
program (6)
$m
Term
funding
facility (3)
$m
Subordinated
notes
$m
Senior
unsecured
notes
$m
Capital
Notes (4)
$m
Total
$m
3,429
4,558
1,134
(1,476)
(2)
2
-
7,645
2,367
-
-
-
-
1
(9)
2,359
194
-
-
(112)
-
-
(1)
81
820
872
1,334
-
-
-
-
350
-
250
(150)
(1)
-
-
3,833
346
11,339
403
650
(1,325)
(1)
1
-
-
260
5,833
3,628
-
(3,063)
(5)
1
-
(9)
5
(10)
3,026
449
3,561
602
17,723
(1) Securitisation liabilities are secured by a floating charge over securitised assets for amounts owing to note holders and any other secured creditors of the securitisation vehicles.
(2) Covered bonds liabilities are secured by a charge over a pool of loans and advances and guaranteed by the covered bond guarantor.
(3) The TFF provides funding at a fixed interest rate of 25 basis points, for a maximum of 3 years and is accounted for as borrowings. From 4 November 2020 the interest rate of new
borrowings was lowered to 10 basis points. The funding is a below market interest loan from a Government entity and, accordingly, classified as a Government Grant.The Group reflects
an interest expense net of the benefit of the below market interest loan in the Income Statement. There are no terms and conditions associated with the TFF other than pledging eligible
collateral that meets the RBA’s eligibility criteria. At 31 August 2022, the Group has pledged $3.7 billion of self-securitised residential mortgage-backed securities as collateral.
(4) Capital Notes
On 28 December 2017, the Bank issued 3,500,000 Capital Notes at a price of $100 per note. Capital Notes are perpetual and convertible notes issued by BOQ, with preferred,
discretionary, non-cumulative distributions. They are not guaranteed or secured. As at 31 August 2022, 3,500,000 Capital Notes were outstanding.
Capital Notes must convert into ordinary shares on 15 August 2026 if certain mandatory conversion conditions are satisfied, unless they are converted or redeemed earlier. Where
the mandatory conversion conditions are satisfied, a holder will receive a number of ordinary shares per Capital Note based on the volume weighted average price of ordinary
shares during a specified period. The Capital Notes must also convert to ordinary shares of the Bank with the occurrence of a loss absorption event or an acquisition event. BOQ
may elect to convert, redeem or resell Capital Notes on 15 August 2024 or following a regulatory or tax event. BOQ may also elect to convert all Capital Notes following a potential
acquisition event. These options are subject to APRA’s prior written approval and certain conditions being satisfied. In a winding up of the Bank, Capital Notes will rank for payment
of capital ahead of ordinary shares, equally with Capital Notes 2 and other equal ranking instruments, but behind the claims of all senior ranking creditors, including depositors and
unsubordinated and subordinated creditors.
Capital Notes 2
On 30 November 2020, the Bank issued 2,600,000 Capital Notes 2 at a price of $100 per note. Capital Notes 2 are perpetual and convertible notes issued by BOQ, with preferred,
discretionary, non-cumulative distributions. They are not guaranteed or secured. As at 31 August 2022, 2,600,000 Capital Notes 2 were outstanding. Capital Notes 2 must convert
into ordinary shares on 15 May 2029 if certain mandatory conversion conditions are satisfied, unless they are converted or redeemed earlier. Where the mandatory conversion
conditions are satisfied, a holder will receive a number of ordinary shares per Capital Note 2 based on the volume weighted average price of ordinary shares during a specified
period. Capital Notes 2 must also convert to ordinary shares of the Bank with the occurrence of a loss absorption event or an acquisition event. BOQ may elect to convert, redeem or
resell Capital Notes 2 on 14 May 2027 or following a regulatory or tax event. BOQ may also elect to convert all Capital Notes 2 following a potential acquisition event. These options
are subject to APRA’s prior written approval and certain conditions being satisfied. In a winding up of the Bank, Capital Notes 2 will rank for payment of capital ahead of ordinary
shares, equally with Capital Notes (issued 28 December 2017) and other equal ranking instruments, but behind the claims of all senior ranking creditors, including depositors and
unsubordinated and subordinated creditors.
(5) Amortisation of deferred costs and foreign exchange translation are non-cash movements. Foreign exchange translation movements are 100 per cent hedged.
(6) At the end of the year the BOQ Group held borrowings in the following currencies, Covered Bonds EUR €1.1bn (2021: EUR €1bn), EMTN Program USD $35m (2021: USD $35m),
ECP Program USD $40m & EUR €15m (2021: Nil). All other balances are denominated in Australian dollars.
139
For the year ended 31 August 20222022 Annual Report Total
$m
8,806
1,269
4,201
(2,467)
(6)
3
(159)
11,647
Total
$m
7,914
1,844
(937)
(8)
3
(10)
Notes to the financial statements
For the year ended 31 August 2022
3.5 Borrowings (continued)
The Bank recorded the following movements on borrowings:
Bank
Year ended 31 August 2022
Balance at beginning of year
Transfer of ME Bank borrowings (5)
Proceeds from issues / new
funding
Repayments
Deferred establishment costs
Amortisation of deferred costs (4)
Foreign exchange translation (4)
Balance at end of year
Covered
bonds
liabilities (6)
$m
EMTN
Program (6)
$m
ECP
Program (6)
$m
2,362
-
1,095
(744)
-
-
(164)
2,549
81
-
-
(13)
-
-
3
71
-
-
253
(175)
-
-
2
80
Term
funding
facility
$m
2,154
872
-
-
-
-
-
Subordinated
notes
$m
Senior
Unsecured
Notes
$m
449
-
400
-
(2)
1
-
3,158
397
2,453
(1,535)
(4)
-
-
Capital
notes
$m
602
-
-
-
-
2
-
3,026
848
4,469
604
Bank
Year ended 31 August 2021
Balance at beginning of year
Proceeds from issues / new funding
Repayments
Deferred establishment costs
Amortisation of deferred costs (4)
Foreign exchange translation (4)
Balance at end of year
Covered
bonds
liabilities (1)(6)
$m
EMTN
program (6)
$m
Term
funding
facility (2)
$m
Subordinated
notes
$m
Senior
unsecured
notes
$m
Capital
Notes (3)
$m
2,371
-
-
-
-
(9)
2,362
194
-
(112)
-
-
(1)
81
820
1,334
-
-
-
-
350
250
(150)
(1)
-
-
3,833
-
(675)
(1)
1
-
346
260
-
(6)
2
-
2,154
449
3,158
602
8,806
(1) Covered bonds liabilities are secured by a charge over a pool of loans and advances and guaranteed by the covered bond guarantor.
(2) The TFF provides funding at a fixed interest rate of 25 basis points, for a maximum of 3 years and is accounted for as borrowings. From 4 November 2020 the interest rate of new
borrowings was lowered to 10 basis points. The funding is a below market interest loan from a Government entity and, accordingly, classified as a Government Grant. The Bank
reflects a net interest expense in the Income Statement. There are no terms and conditions associated with the TFF other than pledging eligible collateral that meets the RBAs
eligibility criteria. At 31 August 2022, the Bank has pledged $3.7 billion of self-securitised residential mortgage-backed securities as collateral.
(3) Capital Notes
On 28 December 2017, the Bank issued 3,500,000 Capital Notes at a price of $100 per note. Capital Notes are perpetual and convertible notes issued by BOQ, with preferred, discretionary,
non-cumulative distributions. They are not guaranteed or secured. As at 31 August 2022, 3,500,000 Capital Notes were outstanding. Capital Notes must convert into ordinary shares on 15
August 2026 if certain mandatory conversion conditions are satisfied, unless they are converted or redeemed earlier. Where the mandatory conversion conditions are satisfied, a holder will
receive a number of ordinary shares per Capital Note based on the value weighted average price of ordinary shares during a specified period. The Capital Notes must also convert to ordinary
shares of the Bank with the occurrence of a loss absorption event or an acquisition event. BOQ may elect to convert, redeem or resell Capital Notes on 15 August 2024 or following a regulatory
or tax event. BOQ may also elect to convert all Capital Notes following a potential acquisition event. These options are subject to APRA’s prior written approval and certain conditions being
satisfied. In a winding up of the Bank, Capital Notes will rank for payment of capital ahead of ordinary shares, equally with Capital Notes 2 and other equal ranking instruments, but behind the
claims of all senior ranking creditors, including depositors and unsubordinated and subordinated creditors.
Capital Notes 2
On 30 November 2020, the Bank issued 2,600,000 Capital Notes 2 at a price of $100 per note. Capital Notes 2 are perpetual and convertible notes issued by BOQ, with preferred,
discretionary, non-cumulative distributions. They are not guaranteed or secured. As at 31 August 2022, 2,600,000 Capital Notes 2 were outstanding. Capital Notes 2 must convert
into ordinary shares on 15 May 2029 if certain mandatory conversion conditions are satisfied, unless they are converted or redeemed earlier. Where the mandatory conversion
conditions are satisfied, a holder will receive a number of ordinary shares per Capital Note 2 based on the volume weighted average price of ordinary shares during a specified
period. Capital Notes 2 must also convert to ordinary shares of the Bank with the occurrence of a loss absorption event or an acquisition event. BOQ may elect to convert, redeem or
resell Capital Notes 2 on 14 May 2027 or following a regulatory or tax event. BOQ may also elect to convert all Capital Notes 2 following a potential acquisition event. These options
are subject to APRA’s prior written approval and certain conditions being satisfied. In a winding up of the Bank, Capital Notes 2 will rank for payment of capital ahead of ordinary
shares, equally with Capital Notes (issued 28 December 2017) and other equal ranking instruments, but behind the claims of all senior ranking creditors, including depositors and
unsubordinated and subordinated creditors.
(4) Amortisation of deferred costs and foreign exchange translation are non-cash movements. Foreign exchange translation movements are 100 per cent hedged.
(5) ME Bank borrowings transferred to the Bank upon ME Bank’s ADI licence surrender on 28 February 2022.
(6) At the end of the year the BOQ Group held borrowings in the following currencies, Covered Bonds EUR €1.1bn (2021: EUR €1bn), EMTN Program USD $35m (2021: USD $35m),
ECP Program USD $40m & EUR €15m (2021: Nil). All other balances are denominated in Australian dollars.
140
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
3.6 Financial risk management
The use of financial instruments is fundamental to the Group’s business of providing banking services to our customers. The associated
financial risks (primarily credit, market and liquidity risks) are a significant portion of the Group’s key material risks.
The Group and the Bank adopts a “managed risk” approach to its banking activities in which the articulation of a risk aware culture is
prevalent throughout the Group’s credit, market and liquidity risk policies and procedures. The Board has adopted policies in relation to the
assessment, management and monitoring of these risks and ownership of the frameworks within which these risks are managed reside with
the Group Chief Risk Officer.
The Group Chief Risk Officer contributes towards the achievement of the Group’s corporate objectives through the operationalisation and
progressive development of the Group’s risk management function. The continued improvement of the Group’s risk management function
focusses on a number of key areas, with particular emphasis on:
1. the efficiency and effectiveness of the Group’s credit, market and liquidity risk management process, controls and policies to support
the Bank’s customer proposition in line with its risk appetite;
2. providing management and the Board with risk reporting that contributes to the further development of sound corporate
governance standards;
3. partnering with the Compliance function to support maintaining regulatory compliance in line with regulators’ expectations; and
4. contributing to the Group achieving risk based performance management.
Group Risk is an independent function and is responsible for providing the framework, policies and procedures needed for managing credit,
market and liquidity risk throughout the Group. Policies are set in line with the governing strategy and risk guidelines set by the Board.
Monitoring
The Group’s enterprise risk management framework incorporates active management and monitoring of a range of risks including
(but not limited to):
1. Market;
2. Credit; and
3. Liquidity.
a) Market risk
Market risk is the risk that movements in market rates and prices will result in profits or losses to the Group. The objective of market risk
management is to manage and control market risk and to minimise its impact on the Group.
(i)
Interest rate risk management
The operations of the Group are subject to the risk of interest rate fluctuations as a result of mismatches in the timing of the repricing of
interest rates on the Group’s assets and liabilities.
The figures in the table below indicate the potential increase / (decrease) in net interest income for an ensuing 12 month period of a
one per cent parallel shock increase to the yield curve.
Consolidated
Exposure at the end of the year
Average monthly exposure during the year
High month exposure during the year
Low month exposure during the year
(ii) Foreign exchange risk
2022
$m
(1)
(2)
20
(19)
2021
$m
23
6
23
(6)
It is the Bank’s policy not to carry material foreign exchange rate exposures, net of associated hedging instruments, in the banking book.
At balance date, there are no net material foreign exchange rate exposures in the banking book.
The Bank uses cross currency swaps and forward foreign exchange contracts to hedge its exchange rate exposures arising from
borrowing off-shore in foreign currencies. The Bank uses forward foreign exchange contracts to hedge potential exchange rate
exposures created by customer-originated foreign currency transactions.
The Bank’s investment in its New Zealand subsidiary is hedged by forward foreign exchange contracts which mitigate the currency risk
arising from the subsidiary’s net assets.
141
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
3.6 Financial risk management (continued)
a) Market risk (continued)
(iii) Traded market risk
Market risks attributable to trading activities are primarily measured using a historical simulation Value-at-Risk (VaR) model based
on historical data. VaR is a statistical technique used to quantify the potential loss in earnings from adverse market movements and is
calculated over a one-day time horizon to a 99 per cent confidence level using two-years of historical data. As an additional overlay to
VaR, the individual market risks of interest rate, foreign exchange, credit and equity are managed using a framework that includes stress
testing, scenario analysis, sensitivity analysis and stop losses. Risks are monitored and measured against limits delegated by the Asset-
Liability Committee (ALCO) and approved by the Board’s Risk Committee.
The portfolio (interest rate, foreign exchange, credit and equity) VaR for the Bank’s trading portfolio for the year was as follows:
Trading VaR
Average
Maximum
Minimum
b) Credit risk
2022
$m
0.24
0.35
0.13
2021
$m
0.45
1.13
0.20
Credit risk arises in the business from lending activities, the provision of guarantees including letters of credit and commitments to lend,
investment in bonds and notes, financial market transactions and other associated activities. Credit risk is the potential loss arising from
the possibility that customers or counterparties fail to meet contractual payment obligations to the Group as they fall due.
The Board has implemented a structured framework of policies, systems and controls to monitor and manage credit risk comprising:
• documented credit risk management principles which are disseminated to all staff involved with the lending process;
• documented Credit policies, lending standards and procedures;
• a process for approving risk, based on tiered delegated approval authorities, whereby the largest exposures are assessed by the
Executive Credit Committee consisting of senior executives and senior risk managers, chaired by the Group Chief Risk Officer;
risk grading the Bank’s commercial exposures based on items inclusive of financial performance and stability, organisational
structure, industry segment and security support. Exposures within this segment of the portfolio are generally subject to annual
review which may include reassessment of the assigned risk grade;
•
• an automated scorecard and decision strategy model for the Bank’s retail portfolio inclusive of home loan and personal loan lending.
This model is supported by experienced risk assessment managers and a credit hindsight framework; and
• a series of management reports detailing industry concentrations, counterparty concentrations, loan grades
and security strength ratings.
The Group uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating,
financing and investing activities. In accordance with its treasury and financial markets risk policies, the Group can hold derivative
financial instruments for trading purposes. Credit risk on derivative contracts used for these purposes is minimised as counterparties
are either qualifying central counterparties or recognised financial intermediaries with acceptable credit ratings determined by a
recognised rating agency.
142
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
3.6 Financial risk management (continued)
b) Credit risk (continued)
(i) Maximum exposure to credit risk
The amounts disclosed are the maximum exposure to credit risk, before taking account of any collateral held or other credit
enhancements. For financial assets recognised on the Balance Sheet, the exposure to credit risk equals their carrying amount. For
customer commitments, the maximum exposure to credit risk is the full amount of the committed facilities as at reporting date.
The carrying amount of financial assets represents the maximum credit exposure.
The maximum exposure to credit risk at the reporting date was:
Consolidated
Cash and cash equivalents
Due from other financial institutions
Other financial assets (including accrued interest)
Derivative financial instruments
Financial assets other than loans and advances
Gross loans and advances
Total financial assets
Customer commitments (1) (2)
Total potential exposure to credit risk
Bank
Cash and cash equivalents
Due from other financial institutions
Other financial assets (including accrued interest)
Derivative financial instruments
Financial assets other than loans and advances
Gross loans and advances
Total financial assets
Customer commitments (1) (2)
Total potential exposure to credit risk
Stage 1
$m
2,448
347
13,426
1,073
17,294
76,071
93,365
6,144
99,509
Stage 1
$m
1,222
269
26,474
1,019
28,984
70,909
99,893
5,170
105,063
2022
2021
Stage 2
$m
Stage 3
$m
-
-
-
-
-
4,194
4,194
-
4,194
-
-
-
-
-
985
985
-
985
Total
$m
2,448
347
13,426
1,073
17,294
81,250
98,544
6,144
104,688
Total
$m
2,556
827
10,847
137
14,367
75,748
90,115
6,656
96,771
2022
2021
Stage 2
$m
Stage 3
$m
-
-
-
-
-
3,733
3,733
-
3,733
-
-
-
-
-
907
907
-
907
Total
$m
1,222
269
26,474
1,019
28,984
75,549
104,533
5,170
109,703
Total
$m
1,373
708
14,385
86
16,552
45,046
61,598
2,875
64,473
(1) Refer to Note 5.2 for details of customer commitments.
(2) Comparatives have been restated pertaining to a subset of ME Bank's portfolio following a realignment to BOQ Group's methodology.
143
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
3.6 Financial risk management (continued)
(ii) Credit quality
The credit quality categories of financial assets have been determined based on Standard & Poor’s credit ratings, APRA risk
weightings and the Bank’s standard risk grading. The categories are classified as below:
• High grade – generally corresponds to Standard & Poor’s credit ratings AAA+ to BBB-;
Satisfactory – generally corresponds to Standard & Poor’s credit rating BB+ to B;
•
• Weak – generally corresponds to Standard & Poor’s credit ratings up to B; and
• Unrated – Loans and advances which have been classified as unrated are not secured, however these are not deemed to be weak.
The table below presents an analysis of the credit quality of financial assets:
Consolidated
2022
$m
2021 (1)
$m
Gross loans & advances
Gross loans & advances
Retail Commercial
59,578
57,035
2,543
-
2,474
2,171
303
-
1,365
601
62
702
336
309
27
-
5,099
5,005
94
-
9,951
9,271
680
-
2,023
1,256
484
283
424
423
1
-
Gross
loans &
advances
64,677
62,040
2,637
-
12,425
11,442
983
-
3,388
1,857
546
985
760
732
28
-
Other
financial
assets
17,284
17,284
-
-
-
-
-
-
10
10
-
-
-
-
-
-
Retail Commercial
50,239
48,145
2,094
-
7,551
7,221
330
-
1,467
659
105
703
155
155
-
-
4,589
4,505
84
-
9,365
8,635
730
-
2,154
1,140
667
347
228
228
-
-
Gross
loans &
advances
54,828
52,650
2,178
-
16,916
15,856
1,060
-
3,621
1,799
772
1,050
383
383
-
-
Other
financial
assets
14,365
14,365
-
-
-
-
-
-
9
9
-
-
-
-
-
-
63,753
17,497
81,250
17,294
59,412
16,336
75,748
14,374
High Grade
Stage 1
Stage 2
Stage 3
Satisfactory
Stage 1
Stage 2
Stage 3
Weak
Stage 1
Stage 2
Stage 3
Unrated
Stage 1
Stage 2
Stage 3
(1) Comparative Stage 3 balances have all been reclassed into the Weak category.
144
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
3.6 Financial risk management (continued)
b) Credit risk (continued)
(ii) Credit quality (continued)
Bank
2022
$m
2021 (1)
$m
Gross loans & advances
Gross loans & advances
Retail Commercial
59,578
57,035
2,543
-
2,474
2,171
303
-
1,366
601
63
702
336
309
27
-
4,462
4,399
63
-
6,869
6,339
530
-
464
55
204
205
-
-
-
-
Gross
loans &
advances
64,040
61,434
2,606
-
9,343
8,510
833
-
1,830
656
267
907
336
309
27
-
Other
financial
assets
27,502
27,502
-
-
-
-
-
-
10
10
-
-
1,472
1,472
-
-
Retail Commercial
30,572
28,478
2,094
-
2,553
2,223
330
-
1,093
571
105
417
34
34
-
-
4,054
4,003
51
-
5,906
5,318
588
-
834
109
449
276
-
-
-
-
Gross
loans &
advances
34,626
32,481
2,145
-
8,459
7,541
918
-
1,927
680
554
693
34
34
-
-
Other
financial
assets
15,449
15,449
-
-
-
-
-
-
6
6
-
-
1,097
1,097
-
-
63,754
11,795
75,549
28,984
34,252
10,794
45,046
16,552
High Grade
Stage 1
Stage 2
Stage 3
Satisfactory
Stage 1
Stage 2
Stage 3
Weak
Stage 1
Stage 2
Stage 3
Unrated
Stage 1
Stage 2
Stage 3
(1) Comparative Stage 3 balances have all been reclassed into the Weak category.
145
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
3.6 Financial risk management (continued)
b) Credit risk (continued)
(iii) Concentration of exposure for gross loans and advances
Concentration of credit risk exists when a number of counterparties are engaged in similar activities, operate in the same geographical
areas or industry sectors and have similar economic characteristics, so that their ability to meet contractual obligations is similarly
affected by changes in economic, political or other conditions. The Group monitors concentrations of credit risk by geographical
location for loans and advances. An analysis of these concentrations of credit risk at the reporting date is shown below:
Geographical concentration of credit risk for loans and advances
(before provisions and unearned income)
2022
$m
2021
$m
Consolidated
Bank
2022
$m
Queensland
New South Wales
Victoria
Northern Territory
Australian Capital Territory
Western Australia
South Australia
Tasmania
International (New Zealand)
25,216
24,258
23,437
25,959
23,058
24,553
16,041
14,924
14,849
461
2,026
7,459
2,623
1,240
308
449
1,877
7,477
2,226
1,170
385
400
1,976
6,938
2,266
1,141
-
2021
$m
18,697
15,076
5,951
237
329
3,735
808
227
-
81,333
75,824
75,560
45,060
146
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
3.6 Financial risk management (continued)
c) Liquidity and funding risk
Liquidity risk arises from the possibility that the Group is unable to meet its financial obligations as they fall due or incurs a loss on
converting a position or selling an asset for cash to meet such obligations. These obligations include the repayment of deposits on
demand or at their contractual maturity, the repayment of wholesale borrowings and capital notes as they mature and the payment of
interest on borrowings.
These risks are governed by the Group’s prescribed risk appetite, which is set by the Board, and managed by Group Treasury. Market
Risk reviews the effectiveness of risk management and oversight is provided by the Group Asset and Liability Committee.
The Board is ultimately responsible for the prudent management of liquidity risk across the Group and to ensure compliance with
risk appetite.
Key controls and risk mitigation strategies include:
• Daily monitoring of liquidity risk exposures, including LCR and NSFR.
•
Maintaining adequate liquidity buffers and short-term funding capacity to withstand periods of disruption in long-term wholesale
funding markets.
• Operating a prudent funding strategy which ensures appropriate diversification and limits maturity concentrations and imposing
internal limits that are in addition to regulatory requirements.
• Maintaining a contingent funding plan designed to address liquidity shortfalls in a crisis situation.
• Managing a robust limit framework including stress testing and scenario analysis.
• On 10 September 2021, APRA announced that the CLF will be phased out to zero by the end of 2022 subject to financial market
conditions. The CLF reduction is expected to be offset by ADIs increasing holdings of HQLA.
The liquid asset portfolio held as part of these principles aims to be well diversified by tenor, counterparty and product type. The
composition of the portfolio mainly includes cash, commonwealth government and semi government securities. In addition, the Group
holds internal RMBS as a source of contingent liquidity.
Funding mix
The Group’s funding is comprised of a mix of deposits, including retail transaction accounts, savings accounts and term deposits,
together with term wholesale funding, short-term wholesale funding and equity. The Group manages this within risk appetite settings to
ensure suitable funding of its asset base and to enable it to respond to changing market conditions and regulatory requirements.
The Group is focused on developing a stable customer deposit base and maintaining access to diversified wholesale funding markets
via its term funding programmes. In addition, during the 2022 financial year, the Group continued to access domestic and to a lesser
extent international short-term wholesale markets.
On 19 March 2020, the RBA announced the establishment of the TFF for the Australian banking system to support ADIs in providing
credit into the Australian economy. The TFF provided access to three-year secured funding, supported lending to the Group's
customers, and reduced wholesale funding refinancing risks. (Refer to Note 3.5)
147
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
3.6 Financial risk management (continued)
c) Liquidity risk (continued)
Consolidated
2022
Financial liabilities
Due to other financial institutions
Deposits
Derivative financial instruments (1)
Accounts payable and other
liabilities
Securitisation liabilities (2)
Borrowings (3)
Liabilities held for sale
Total financial liabilities
Derivative financial instruments
(hedging relationship)
Contractual amounts payable
Contractual amounts receivable
Off balance sheet positions
Guarantees, indemnities and
letters of credit
Customer funding commitments
Carrying
amount
$m
1,821
70,684
41
716
7,542
11,645
-
92,449
(442)
At Call
$m
1,821
37,576
-
3 months
or less
$m
Total contractual cashflows
3 to 12
months
$m
1 to 5
years
$m
Over
5 years
$m
-
15,233
2
-
17,044
20
-
462
31
-
-
-
39,397
503
158
-
16,358
839
2,637
-
20,571
-
1,275
19
141
6,476
9,647
-
17,558
-
-
1
82
496
-
-
579
-
-
-
1,214
(1,194)
20
1,143
(1,385)
(242)
4,060
(4,138)
(78)
252
(305)
(53)
-
-
-
285
5,859
6,144
-
-
-
-
-
-
-
-
-
-
-
-
Policy
holder
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$m
1,821
71,128
42
716
8,314
12,442
-
94,463
6,669
(7,022)
(353)
285
5,859
6,144
(1) Derivative financial instruments other than those designated in hedge relationships.
(2) Repayment of securitisation bonds is forecast based on the expected repayment profile of the underlying assets of the Trusts.
(3) Borrowings include the $3 billion TFF.
Consolidated
2021
Financial liabilities
Due to other financial institutions
Deposits
Derivative financial instruments (1)
Accounts payable and other
liabilities
Securitisation liabilities (2)
Borrowings (3)
Insurance policy liabilities
Total financial liabilities
Derivative financial instruments
(hedging relationship)
Contractual amounts payable
Contractual amounts receivable
Off balance sheet positions
Guarantees, indemnities and letters
of credit
Customer funding commitments (4)
Carrying
amount
$m
At Call
$m
3 months
or less
$m
3 to 12
months
$m
1 to 5
years
$m
Over
5 years
$m
Policy
holder
$m
Total
$m
Total contractual cashflows
586
65,589
28
575
7,645
10,078
17
84,518
519
-
-
-
586
34,732
-
-
-
-
-
35,318
-
-
-
259
6,397
6,656
-
16,661
5
384
1,702
622
-
19,374
880
(809)
71
-
-
-
-
13,346
13
27
1,234
1,807
-
16,427
1,196
(1,079)
117
-
-
-
-
988
11
114
2,807
7,620
-
11,540
1,913
(1,574)
339
-
-
-
-
-
-
50
2,258
265
-
2,573
168
(131)
37
-
-
-
-
-
-
-
-
-
17
17
-
-
-
-
-
-
586
65,727
29
575
8,001
10,314
17
85,249
4,157
(3,593)
564
259
6,397
6,656
(1) Derivative financial instruments other than those designated in hedge relationships.
(2) Repayment of securitisation bonds is forecast based on the expected repayment profile of the underlying assets of the Trusts.
(3) Borrowings include the $3 billion TFF.
(4) Comparatives have been restated pertaining to a subset of ME Bank's portfolio following a realignment to BOQ Group's methodology.
148
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
3.6 Financial risk management (continued)
c) Liquidity risk (continued)
Bank
2022
Financial liabilities
Due to other financial institutions
Deposits
Derivative financial instruments (1)
Accounts payable and other liabilities
Borrowings (2)
Amounts due to controlled entities
Total financial liabilities
Derivative financial instruments
(hedging relationship)
Contractual amounts payable
Contractual amounts receivable
Off balance sheet positions
Guarantees, indemnities and letters of credit
Customer funding commitments
Bank
2021
Due to other financial institutions
Deposits
Derivative financial instruments (1)
Accounts payable and other liabilities
Borrowings (3)
Amounts due to controlled entities
Total financial liabilities
Derivative financial instruments
(hedging relationship)
Contractual amounts payable
Contractual amounts receivable
Off balance sheet positions
Guarantees, indemnities and letters of credit
Customer funding commitments (4)
Total contractual cash flows
3 months
or less
$m
3 to 12
months
$m
1 to 5
years
$m
Over
5 years
$m
-
-
-
15,233
17,044
1,275
2
367
158
-
20
31
19
141
2,637
9,647
-
-
-
-
1
82
-
-
Total
$m
1,821
71,296
42
621
12,442
23,177
15,760
19,732
11,082
83
109,399
At Call
$m
1,821
37,744
-
-
-
23,177
62,742
Carrying
amount
$m
1,821
70,852
41
621
11,647
23,177
108,159
(536)
-
-
-
1,209
(1,192)
17
1,030
(1,266)
(236)
2,169
(2,469)
(300)
252
(305)
(53)
-
-
-
285
4,885
5,170
-
-
-
-
-
-
-
-
-
-
-
-
Total contractual cash flows
Carrying
amount
$m
586
At Call
$m
586
3 months
or less
$m
-
3 to 12
months
$m
-
43,256
23,502
10,658
8,369
28
360
8,806
12,358
65,394
537
-
-
-
-
-
-
12,358
36,446
-
-
-
259
2,616
2,875
5
212
621
-
11,496
877
(822)
55
-
-
-
13
28
1,404
-
9,814
451
(299)
152
-
-
-
1 to 5
years
$m
-
806
11
98
6,745
-
7,660
1,095
(796)
299
-
-
-
Over
5 years
$m
-
-
-
29
265
-
294
168
(131)
37
-
-
-
(1) Derivative financial instruments other than those designated in hedge relationships.
(2) Borrowings include the $3 billion TFF.
(3) Borrowings include the $2.2 billion TFF.
(4) Comparatives have been restated pertaining to a subset of ME Bank's portfolio following a realignment to BOQ Group's methodology.
4,660
(5,232)
(572)
285
4,885
5,170
Total
$m
586
43,335
29
367
9,035
12,358
65,710
2,591
(2,048)
543
259
2,616
2,875
149
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
3.7 Fair value of financial instruments
a) Fair value of financial instruments
The financial assets and liabilities listed below are recognised and measured at fair value and therefore their carrying
value equates to their fair value:
• Derivatives;
• Financial instruments designated at FVTPL; and
• Financial instruments designated at FVOCI.
The fair value estimates for instruments carried at amortised cost have, materially, equated to their carrying value and are based on
the methodologies and assumptions below. Although, in an environment of rising interest rates, there is an opportunity for divergence
between carrying value and fair value this is not expected to be significant as at the reporting date.
Cash and cash equivalents, due from and to other financial institutions, accounts payable and other liabilities
The fair value approximates to their carrying value as they are short term in nature or are receivable or payable on demand.
Loans and advances
Loans and advances are net of specific and collective provisions for impairment and unearned income. The fair values of loans and
advances that reprice within six months of year ending 31 August 2022 are assumed to equate to the carrying value. The fair values of all
other loans and advances are calculated using discounted cash flow models based on the maturity of the loans and advances.
The discount rates applied are based on the current interest rates at the reporting date for similar types of loans and advances, if the
loans and advances were performing at the reporting date. The differences between estimated fair values and carrying values reflect
changes in interest rates and creditworthiness of borrowers since loan or advance origination.
Deposits
The fair value of non-interest bearing, at call and variable rate deposits and fixed rate deposits repricing within six months is the
carrying value. The fair value of other term deposits is calculated using discounted cash flow models based on the deposit type and
its related maturity.
Borrowings
The fair values are calculated based on a discounted cash flow model using a yield curve appropriate to the remaining maturity of
the instruments.
150
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
3.7 Fair value of financial instruments (continued)
b) Fair value hierarchy
The Group measures fair values using the following fair value hierarchy and valuation techniques, which reflect the significance of the
inputs used in making the measurements:
• Level 1: This category includes assets and liabilities for which the valuation is determined from inputs based on unadjusted quoted
market prices in active markets for identical instruments;
• Level 2: This category includes assets and liabilities for which the valuation is determined from inputs other than quoted prices
included within level 1, which are observable either directly or indirectly. This includes the use of discounted cash flow analysis,
option pricing models and other market accepted valuation models; and
• Level 3: This category includes assets and liabilities for which the valuation includes inputs that are not based on observable market
data. This includes equity instruments where there are no quoted market prices.
The fair value hierarchy classification of instruments held at amortised cost:
• Debt instruments at amortised cost – Level 2.
• Loans and advances – Level 3.
• Deposits and borrowings – Level 2.
There was no movement between levels during the year.
The carrying values for instruments at amortised cost approximate their fair values.
The table below analyses financial instruments carried at fair value, by the valuation method:
Consolidated
Financial instruments measured at fair value
Derivative financial assets
Financial assets at FVTPL
Debt instruments at FVOCI
Equity instruments at FVOCI
Derivative financial liabilities
Consolidated
Financial instruments measured at fair value
Derivative financial assets
Financial assets at FVTPL
Debt instruments at FVOCI
Equity instruments at FVOCI
Derivative financial liabilities
2022
Level 1
$m
Level 2
$m
Level 3
$m
-
-
6,335
-
6,335
-
6,335
Level 1
$m
-
43
6,309
-
6,352
-
6,352
1,073
-
6,969
-
8,042
(630)
7,412
-
4
-
6
10
-
10
2021
Level 2
$m
Level 3
$m
137
1,044
3,392
-
4,573
(653)
3,920
-
-
-
9
9
-
9
Total
$m
1,073
4
13,304
6
14,387
(630)
13,757
Total
$m
137
1,087
9,701
9
10,934
(653)
10,281
151
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
3.7 Fair value of financial instruments (continued)
b) Fair value hierarchy (continued)
Bank
Financial instruments measured at fair value
Derivative financial assets
Financial assets at FVTPL
Debt instruments at FVOCI
Equity instruments at FVOCI
Derivative financial liabilities
Bank
Financial instruments measured at fair value
Derivative financial assets
Financial assets at FVTPL
Debt instruments at FVOCI
Equity instruments at FVOCI
Derivative financial liabilities
Level 1
$m
-
-
6,335
-
6,335
-
6,335
2022
Level 2
$m
Level 3
$m
1,019
-
6,969
-
7,988
(482)
7,506
2021
-
4
-
6
10
-
10
Level 1
$m
Level 2
$m
Level 3
$m
-
43
5,061
-
5,104
-
5,104
86
1,044
487
-
1,617
(620)
997
-
-
-
6
6
-
6
Total
$m
1,019
4
13,304
6
14,333
(482)
13,851
Total
$m
86
1,087
5,548
6
6,727
(620)
6,107
152
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
3.8 Derivative financial instruments and hedge accounting
a) Fair value of derivatives
The following tables summarise the notional and fair value of the Group’s and Bank’s commitments to derivative financial instruments at
reporting date. Fair value in relation to derivative financial instruments is estimated using net present value techniques. The tables below
set out the fair values of the derivative financial instruments.
Consolidated
2022
2021
Notional
Amount
Fair Value
Notional
Amount
$m
Asset
$m
Liability
$m
Derivatives at fair value through profit or loss
Interest rate swaps
Foreign exchange forwards
Futures
Derivatives held as cash flow hedges
Interest rate swaps
Cross currency swaps
Foreign exchange forwards
Derivatives designated as fair value hedges
Interest rate swaps
Derivatives designated as net investment hedges
Foreign exchange forwards
22,185
139
194
22,518
48,172
2,674
969
51,815
5,444
26
40
2
-
42
782
56
15
853
178
-
$m
10,232
51
57
10,340
29,971
2,185
755
32,911
(40)
(1)
-
(41)
(285)
(202)
(7)
(494)
(95)
4,491
-
27
Fair Value
Asset
$m
Liability
$m
30
1
-
31
23
70
11
104
2
-
(27)
(1)
-
(28)
(103)
(22)
(4)
(129)
(496)
-
79,803
1,073
(630)
47,769
137
(653)
153
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
3.8 Derivative financial instruments and hedge accounting (continued)
a) Fair value of derivatives (continued)
Bank
2022
2021
Notional
Amount
Fair Value
Notional
Amount
$m
Asset
$m
Liability
$m
Derivatives at fair value through profit or loss
Interest rate swaps
Foreign exchange forwards
Futures
Derivatives held as cash flow hedges
Interest rate swaps
Cross currency swaps
Foreign exchange forwards
Derivatives designated as fair value hedges
Interest rate swaps
22,185
165
194
22,544
46,840
967
969
48,776
5,444
40
2
-
42
728
56
15
799
178
$m
8,032
77
57
8,166
22,415
631
755
23,801
(40)
(1)
-
(41)
(313)
(26)
(7)
(346)
(95)
4,491
76,764
1,019
(482)
36,458
Fair Value
Asset
$m
Liability
$m
30
1
-
31
35
7
11
53
2
86
(27)
(1)
-
(28)
(82)
(10)
(4)
(96)
(496)
(620)
b) Hedging strategy
The Group and Bank used derivative financial instruments for both hedging and trading purposes in the current year and prior year.
Refer to Note 3.6 (a) for an explanation of the Group’s and Bank’s risk management framework. The Group uses derivative financial
instruments to hedge its exposure to foreign exchange and interest rate risks arising from operating, financing and investing activities.
The Group’s hedging strategy is to protect net interest income from variability in interest rates in Australian dollars. This requires the
Group to enter into interest rate swaps allowing for the reduction in interest rate risk.
Foreign currency exposures are swapped to Australian dollars using cross currency interest rate swaps. These cross currency swaps will
be matched to the underlying interest rate exposure of fixed or floating, respectively.
The majority of exposures are managed under the above strategy. Where a risk is within agreed limits, the Group may decide not to
apply hedge accounting to that risk. Instead, the Group will manage its exposure under broader risk management processes.
c) Accounting for derivatives
In accordance with its treasury risk policies, the Group can hold derivative financial instruments for trading purposes. Derivatives that do
not qualify for hedge accounting are accounted for as trading instruments.
Derivative financial instruments are initially measured at fair value. Subsequent to initial recognition, gains or losses on derivatives are
recognised in the Income Statement, unless they are entered into for hedging purposes.
The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the reporting
date, taking into account current interest rates and current creditworthiness of the swap counterparties.
The fair value of forward exchange contracts is their quoted market price at the reporting date, being the present value of the quoted
forward price. The fair value of futures contracts is their quoted market price.
154
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
3.8 Derivative financial instruments and hedge accounting (continued)
c) Accounting for derivatives (continued)
The following table shows the maturity profile of hedging derivatives based on their notional amounts.
2022
0 to 12
months
$m
26,361
995
164
1 to 5
years
$m
24,389
-
2,475
Over
5 years
$m
2,866
-
35
Total
$m
53,616
995
2,674
0 to 12
months
$m
16,647
782
831
2021 (1)
1 to 5
years
$m
15,783
-
1,314
Over
5 years
$m
2,032
-
40
Total
$m
34,462
782
2,185
Consolidated
Interest rate swaps
Foreign exchange forwards
Cross currency swaps
(1) Comparatives have been restated.
d) Hedging relationships
Cash flow hedges
Cash flow hedges are used by the Group to manage exposure to variability in future cash flows, which may result from fluctuations in interest
and exchange rates. The Group principally uses interest rate swaps and cross currency swaps to protect against such fluctuations.
Where a derivative financial instrument is designated as a hedge of the variability of the cash flows of a recognised asset or liability,
or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognised
directly in other comprehensive income and accumulated in reserves in equity. The ineffective portion of any gain or loss is recognised
immediately in profit or loss in the Income Statement. If a hedge of a forecast transaction subsequently results in the recognition of a
financial asset or a financial liability, then the associated gains and losses previously recognised directly in other comprehensive income
are reclassified to profit or loss in the Income Statement in the same period or periods in which the asset acquired or liability assumed
affects the Income Statement (i.e. when interest income or expense is recognised).
When a hedging instrument expires or is sold, terminated or exercised, or the Group revokes designation of the hedge relationship and
the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in other comprehensive
income and is recognised in profit or loss in the Income Statement when the transaction occurs. If the hedged transaction is no longer
expected to take place, then the cumulative unrealised gain or loss is recognised immediately in profit or loss in the Income Statement.
Net investment hedge
The Group holds investments in New Zealand operations. Revaluation of net assets held in foreign currency results in gain or loss in the
foreign currency translation reserve and volatility in shareholders’ equity. To protect against this foreign currency risk, the Group enters
into foreign currency forwards that are designated as hedging instruments in net investment hedges.
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any foreign currency gain or loss on the
hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income. To the extent the hedge
is ineffective, a portion is recognised immediately in the Income Statement within other income or other expenses.
The following table shows the executed rates for the most significant hedging instruments that have been designated in cash flow
hedges and net investment hedges that are in place at the balance date.
Cash flow hedges
Cash flow hedges
Hedging Instruments
Currency
Interest rate swaps
AUD
Cross currency swaps
AUD/USD
Net Investment hedges
Foreign exchange
forwards
AUD/EUR
NZD/AUD
AUD/NZD
Consolidated
2022
2021
0.068% - 4.253%
0.010% - 3.890%
0.780 - 0.793
0.617 - 0.670
1.032 - 1.119
0.761 - 0.793
0.617 - 0.672
1.036 - 1.119
1.111
1.049
155
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
3.8 Derivative financial instruments and hedge accounting (continued)
d) Hedging relationships (continued)
Fair value hedges
Fair value hedges are used by the Group to manage exposure to changes in the fair value of an asset. Changes in fair values arise from
fluctuations in interest rates. The Group principally uses interest rate swaps to protect against such fluctuations.
Changes in the value of fair value hedges are recognised in the Income Statement, together with changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk.
All gains and losses associated with the ineffective portion of fair value hedge relationships are recognised immediately in the
Income Statement.
If the hedge relationship no longer meets the criteria for hedge accounting, it is discontinued. The fair value adjustment to the hedged
item is amortised to the Income Statement from the date of discontinuation over the period to maturity of the previously designated
hedge relationship using the effective interest method. If the hedged item is sold or repaid, the unamortised fair value adjustment is
recognised immediately in the Income Statement.
The following table shows the carrying value of hedged items designated in fair value hedge accounting relationships and the
cumulative fair value hedge accounting adjustment that has been recognised as part of that carrying value. These balances are being
amortised to the Income Statement on an effective yield basis. The Group does not hedge its entire exposure to a class of financial
instruments, nor does it apply hedge accounting in all instances, therefore the carrying amounts below will not equal the total carrying
amounts disclosed in other notes to these financial statements. As noted in the Group’s accounting policies, since the hedged item
is adjusted only for the hedged risk, the hedged item’s carrying value disclosed in the table will not be equivalent to its fair value as
disclosed in other notes to these financial statements. The accumulated amount of fair value hedge adjustments remaining in the
Balance Sheet for hedged items that have ceased to be adjusted for hedging gains and losses is nil (2021: nil) for the Group.
Consolidated
2022
2021
Carrying value (1)
$m
Fair value hedge
adjustments
Debit/(Credit)
$m
Carrying value (1)
$m
Fair value hedge
adjustments
Debit/(Credit)
$m
Assets
Debt instruments at FVOCI
5,531
282
5,041
(194)
(1) The carrying amounts in the table above exclude accrued interest from the carrying amount of hedged items.
Derivatives that do not qualify for hedge accounting
Certain derivative instruments not held for trading do not qualify for hedge accounting. Changes in the fair value of any derivative instrument
that does not qualify for hedge accounting are recognised immediately in the Income Statement and are included in other income.
156
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
3.8 Derivative financial instruments and hedge accounting (continued)
e) Hedge ineffectiveness
Hedge ineffectiveness, in the case of a fair value hedge, is the extent to which the changes in the fair value of the hedging instrument
differ to that of the hedged item and, in the case of cash flow and net investment hedge relationships, the extent to which the change
in the hedging instrument exceeds that of the hedged item. Sources of hedge ineffectiveness primarily arise from basis and timing
differences between the hedged items and hedging instruments.
The following table contains the hedge ineffectiveness associated with cash flow hedge and fair value hedge relationships during the
period, as recognised in Other operating income in the Income Statement:
Consolidated
2022
2021
Gains/(losses)
on hedging
instruments
$m
Gains/(losses)
on hedged
items
$m
Hedge
ineffectiveness
$m
Gains/(losses)
on hedging
instruments
$m
Gains/(losses)
on hedged
items
$m
Hedge
ineffectiveness
$m
Interest rate risk
Fair value hedges
Interest rate swaps
Cash flow hedges
Interest rate swaps
Interest rate and foreign
exchange risk
Cash flow hedges
Cross currency swaps
Net investment hedge
Foreign exchange forwards
474
540
(163)
2
(474)
(545)
163
(2)
-
(5)
-
-
109
70
(9)
(1)
(109)
(67)
9
1
-
3
-
-
157
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
3.8 Derivative financial instruments and hedge accounting (continued)
f) Master netting or similar arrangements
The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting agreements.
Amounts owed by each counterparty are aggregated into a single net amount that is payable by one party to another.
The Group also receives and gives collateral in the form of cash in respect of derivatives and such collateral is subject to standard
industry terms. The Group has not offset these amounts in the Balance Sheet as their ISDA agreements do not meet the criteria to do
so. The Group has no current legally enforceable right to offset recognised amounts as the right to offset is only enforceable on the
occurrence of future events. The Group normally settles on a net basis or realises the derivative assets and liabilities simultaneously.
The following tables set out the effect of netting arrangements on derivative financial assets and derivative financial liabilities if they
were to be applied.
Gross amounts as
presented in the
Balance Sheet
$m
Net amounts of
recognised assets
and liabilities
available for offset
$m
1,073
(630)
(411)
411
Gross amounts as
presented in the
Balance Sheet
$m
Net amounts of
recognised assets
and liabilities
available for offset
$m
137
(653)
(51)
51
Gross amounts as
presented in the
Balance Sheet
$m
Net amounts of
recognised assets
and liabilities
available for offset
$m
1,019
(482)
(411)
411
Gross amounts as
presented in the
Balance Sheet
$m
Net amounts of
recognised assets
and liabilities
available for offset
$m
86
(620)
(51)
51
2022
Calculated
balance
$m
662
(219)
2021
Calculated
balance
$m
86
(602)
2022
Calculated
balance
$m
608
(71)
2021
Calculated
balance
$m
35
(569)
Net amounts if
offsetting applied
in the
Balance Sheet
$m
21
(194)
Cash
collateral
$m
(641)
25
Net amounts if
offsetting applied
in the
Balance Sheet
$m
86
(23)
Cash
collateral
$m
-
579
Net amounts if
offsetting applied
in the
Balance Sheet
$m
(33)
(46)
Cash
collateral
$m
(641)
25
Net amounts if
offsetting applied
in the
Balance Sheet
$m
35
(4)
Cash
collateral
$m
-
565
Consolidated
Derivative financial assets
Derivative financial liabilities
Consolidated
Derivative financial assets
Derivative financial liabilities
Bank
Derivative financial assets
Derivative financial liabilities
Bank
Derivative financial assets
Derivative financial liabilities
158
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
3.9 Capital management
The Group and the Bank’s capital management strategy aims to ensure adequate capital levels are maintained to protect deposit holders.
The Bank’s capital is measured and managed in line with Prudential Standards issued by APRA. The capital management plan is updated
annually and submitted to the Board for approval. The approval process is designed to ensure the plan is consistent with the overall business
plan and for managing capital levels on an ongoing basis.
During the year, BOQ operated above its interim CET1 target of 9.0 to 9.5 per cent. The target is deemed appropriate until APRA’s new capital
framework comes into effect on 1 January 2023.
3.10 Capital and reserves
a) Ordinary shares
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share rights are
recognised as a deduction from equity, net of any tax effects.
Treasury shares
Ordinary shares of the Bank may be purchased from time to time by a controlled entity of the Bank, pursuant to the Awards Rights Plan,
Equity Incentive Plan, Restricted Shares, Non-Executive Director Fee Sacrifice Rights Plan and the BOQ Employee ThankQ Plan. Where
these shares remain unvested to employees they are treated as treasury shares and deducted from capital as required by AASB 132
Financial Instruments: Presentation. No profit or loss is recorded on purchase, sale, issue or cancellation of these shares.
Terms and conditions
Holders of ordinary shares are entitled to receive dividends as determined by the Bank and are entitled to one vote per share at
shareholders’ meetings. In the event of a winding up of the Bank, ordinary shareholders rank after capital note holders and creditors and
are fully entitled to any residual proceeds of liquidation.
Consolidated
Bank
2022
No of shares
2021
No of shares
2022
No of shares
2021
No of shares
Movements during the year
Balance at the beginning of the year – fully paid
640,889,563
454,335,413
640,889,563
454,335,413
Dividend reinvestment plan (1)
Issues of ordinary shares (2)
Institutional share placement (3)
Institutional entitlement offer (4)
Retail entitlement offer (5)
6,467,916
2,386,974
6,467,916
-
-
-
-
130,000
47,619,048
43,684,531
92,733,597
-
-
-
-
2,386,974
130,000
47,619,048
43,684,531
92,733,597
Balance at the end of the year – fully paid
647,357,479
640,889,563
647,357,479
640,889,563
Treasury shares (included in ordinary shares above):
Balance at the beginning of the year
Net acquisitions and disposals during the year
Balance at the end of the year
1,128,671
1,115,048
2,243,719
633,187
495,484
1,128,671
-
-
-
-
-
-
(1) 24 per cent of the dividend paid on 26 May 2022 and 11 per cent of the dividend paid on 18 November 2021 were reinvested by shareholders as part of the dividend reinvestment
plan. 11 per cent of the dividend paid on 26 May 2021 and 13 per cent of the dividend paid on 25 November 2020 were reinvested by shareholders as part of the dividend
reinvestment plan in prior year.
(2) On 9 November 2020, 130,000 ordinary shares were issued at $6.37 to the trustee of the Bank of Queensland Limited Employee Share Plans Trust to satisfy the issue
of shares under the BOQ Employee ThankQ Plan.
(3) On 23 February 2021, the Bank completed an institutional placement of new fully paid ordinary shares at the offer price of $7.35 per share. The shares were issued on
3 March 2021. On 26 November 2019, the Bank completed an institutional share placement of new fully paid ordinary shares at an issue price of $7.78 per share. The shares were
issued on 29 November 2019.
(4) On 23 February 2021, the Bank completed an underwritten 1 for 3.34 accelerated pro-rata non-renounceable institutional entitlement offer at the offer price of
$7.35 per share. The shares were issued on 3 March 2021.
(5) On 15 March 2021, the Bank completed an underwritten 1 for 3.34 accelerated pro-rata non-renounceable retail entitlement offer at the offer price of $7.35 per share.
The shares were issued on 17 March 2021.
159
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
3.10 Capital and reserves (continued)
b) Other equity instruments
Other equity instruments consist of Additional Tier 1 (AT1) securities assumed on the acquisition of ME Bank. The securities are
perpetual, non-cumulative, subordinated and unsecured notes (AT1 Capital Notes). The AT1 Capital Notes were recognised at fair value
on acquisition, the face value of the AT1 Capital Notes on issue was $300 million at a price of $10,000 per note. There have been no
issuances and redemptions in the twelve months to 31 August 2022.
AT1 equity instruments
AT1 Capital Notes
AT1 Capital Notes
Total AT1 equity instruments
Earliest
redemption date
2022
No of Capital Notes
2021
No of Capital Notes
28/11/2022
5/12/2023
20,000
10,000
30,000
20,000
10,000
30,000
The AT1 Capital Notes were transferred to BOQ on 28 February 2022 as part of a total transfer of all assets and liabilities of ME Bank to
BOQ undertaken pursuant to the Financial Sector (Transfer and Restructure) Act 1999 (Cth). Upon transfer, the AT1 Capital Notes formed
part of the Group’s capital adequacy. The AT1 Capital Notes continue to be presented in Other equity instruments in the Consolidated
Balance Sheet and the Consolidated Statement of Changes in Equity.
The principal terms of the AT1 Capital Notes are as follows:
• Rank for payment:
• Ahead of common equity;
• Equally without any preference amongst themselves for each series and with the holders of equal ranking instrument; and
• Behind the claims of subordinated tier 2 instruments and the senior creditors.
• AT1 Capital Notes are undated and, unless a tax event or regulatory event occurs, are only redeemable, at the option of BOQ, on or
after the fifth anniversary of the date of issue, subject to regulatory approval;
• AT1 Capital Notes pay quarterly floating rate non-cumulative distributions. The payment of distributions is at the discretion of BOQ
and subject to no payment condition existing at the payment date; and
• Some or all of the AT1 Capital Notes must be written-off if a non-viability trigger event, as determined by APRA, occurs.
c) Nature and purpose of reserves
Employee benefits reserve
The employee benefits reserve is used to record the value of share based payments provided to employees, including key management
personnel, as part of their remuneration. Refer to Note 5.1 for further details of these plans.
Profit reserve
The profit reserve represents accumulated profits available for distribution as a dividend.
Equity reserve for credit losses
The Equity reserve for credit losses (ERCL) has previously been held in accordance with APRA Prudential Standard, APS 220 Credit
Quality, which required a reserve to cover future credit losses which may arise over the life of the portfolio. With the release of APS 220
Credit Risk Management, from 1 January 2022, the requirement to hold an ERCL was removed. BOQ has prudently maintained this
reserve, reflecting the current uncertain economic outlook, to cover potential unexpected losses that are not incorporated into the
Expected Credit Losses held in accordance with AASB 9 accounting standard.
FVOCI reserve
Changes in the fair value of financial assets classified as debt and equity instruments at FVOCI are recognised in other comprehensive
income as described in Note 3.2 and accumulated in a separate reserve within equity. For debt instruments at FVOCI, amounts are
reclassified to Other operating income in the Income Statement when the associated assets are sold or impaired. For equity instruments
at FVOCI, amounts are not subsequently transferred to the Income Statement when the associated assets are sold or impaired, but can
be reclassified to retained profits.
Cash flow hedge reserve
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are recognised in other
comprehensive income, as described in Note 3.8 (d).
Share revaluation reserve
The share revaluation reserve represents the gain or loss on revaluation of the shares held within the employee share plan trust.
The revaluation of treasury shares is netted off in equity.
160
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
Note 4. Other assets and liabilities
4.1
Intangible assets
Consolidated
Balance as at 1 September 2020
Acquisition of ME Bank
Additions
Transfers to asset
Amortisation charge
Accelerated amortisation charge (1)
Balance as at 31 August 2021 (2)
Balance as at 1 September 2021
Change on revision of accounting policy (3)
Restated balance as at 1 September 2021
Additions
Transfers to asset
Amortisation charge
Balance as at 31 August 2022
Bank
Balance as at 1 September 2020
Additions
Transfers to asset
Amortisation charge
Accelerated amortisation charge
Balance as at 31 August 2021
Balance as at 1 September 2021
Change on revision of accounting policy (3)
Restated balance as at 1 September 2021
Additions
Transfer of ME Bank assets (4)
Transfers to asset
Other transfers (5)
Amortisation charge
Balance as at 31 August 2022
Goodwill
$m
685
82
-
-
-
-
767
767
-
767
-
-
-
767
Goodwill
$m
622
-
-
-
-
622
622
-
622
-
82
-
-
-
704
Customer related
intangibles and brands
$m
7
57
-
-
(4)
-
60
60
-
60
-
-
(9)
51
Customer related
intangibles and brands
$m
6
-
-
(2)
-
4
4
-
4
-
56
-
-
(9)
51
Computer
software
$m
95
58
6
134
(43)
(4)
246
246
(35)
211
-
118
(66)
263
Computer
software
$m
89
6
132
(35)
(1)
191
191
(35)
156
-
52
118
(4)
(64)
258
Assets under
construction
$m
121
33
113
(134)
-
-
133
133
(12)
121
173
(118)
-
176
Assets under
construction
$m
121
109
(132)
-
-
98
98
(12)
86
172
36
(118)
-
-
176
Total
$m
908
230
119
-
(47)
(4)
1,206
1,206
(47)
1,159
173
-
(75)
1,257
Total
$m
838
115
-
(37)
(1)
915
915
(47)
868
172
226
-
(4)
(73)
1,189
(1) The August 2021 financial results include a non-recurring adjustment due to a change in the ME Bank minimum threshold for the capitalisation of intangible assets to align with BOQ.
(2) Comparative information has been restated to reflect the prior period adjustments detailed in Note 5.5(C).
(3) Opening balances have been restated to reflect the adjustments detailed in Note 1.4.
(4) ME Bank intangible assets transferred to the Bank upon ME Bank’s ADI licence surrender on 28 February 2022.
(5) Transfer of an asset from the Bank to a subsidiary in the Group.
Recognition and measurement
(i) Goodwill
Goodwill is measured as described in note 5.5 (c). Goodwill on
acquisitions of subsidiaries is included in intangible assets.
Goodwill is not amortised but it is tested for impairment annually,
or more frequently if events or changes in circumstances indicate
that it might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose. The units or groups of units are identified at the
lowest level at which goodwill is monitored for internal management
purposes, being the operating segments. Please refer to Note 5.9(f)
for further details.
(ii) Customer relationships
Customer relationships acquired in a business combination are
recognised at fair value at the acquisition date. They have a finite
useful life and are subsequently carried at cost less accumulated
amortisation and impairment losses.
(iii) Software
Costs associated with maintaining software programmes are
recognised as an expense as incurred. Development costs that are
directly attributable to the design and testing of identifiable and
unique software products controlled by the group are recognised as
intangible assets where the following criteria are met:
•
it is technically feasible to complete the software so that it will be
available for use
• management intends to complete the software and use or sell it
•
there is an ability to use or sell the software
161
2022 Annual Report Notes to the financial statements
Intangible assets (continued)
4.1
(iii) Software (continued)
•
it can be demonstrated how the software will generate probable
future economic benefits
• adequate technical, financial and other resources to complete the
development and to use or sell the software are available, and
the expenditure attributable to the software during its
development can be reliably measured.
•
Directly attributable costs that are capitalised as part of the software
include employee costs and an appropriate portion of relevant
overheads. Capitalised development costs are recorded as intangible
assets and amortised from the point at which the asset is ready for use.
(iv) Research and development
Research expenditure and development expenditure that do not
meet the criteria in (iii) above are recognised as an expense as
incurred. Development costs previously recognised as an expense
are not recognised as an asset in a subsequent period.
(v) Software as a service
Software as a service (Saas) costs are only recognised as intangible
assets if the implementation activities create an asset that the entity
controls and the asset meets the recognition criteria. Costs that do
not result in intangible assets are expensed as incurred, unless they
are paid to the suppliers of the SaaS arrangement to significantly
customise the software for the Group, in which case the costs are
recorded as a prepayment for services and amortised over the
expected renewable term of the arrangement.
Amortisation
Except for goodwill, amortisation is charged to profit or loss in the
Income Statement on a straight-line basis over the estimated useful
life of the intangible asset unless the life of the intangible asset is
indefinite. Where applicable, intangible assets are amortised from
the date they are available for use. The amortisation period and
method are reviewed on an annual basis. The amortisation rates
used in the current and comparative periods are as follows:
Computer software
Customer related intangibles ad brands
Years
3-10
3-10
Impairment testing of the Cash-Generating Units
containing goodwill
For the purpose of the impairment test that is performed at least
annually, goodwill is allocated to Cash-Generating Units (CGUs) which
represent the Controlled Entity’s operating segments - Retail Banking
and BOQ Business (refer Note 2.5). The carrying amount of each CGU is
compared to its recoverable amount. For the 2022 and 2021 reporting
periods, the recoverable amount of the CGUs was determined based
on value in use calculations which require the use of assumptions.
Value in use is determined by discounting the future cash flows
generated from the continued operation of the CGU. The key
assumptions represent management’s assessments of future
trends in retail and business banking and are based on both
external and internal sources. The following key assumptions were
used in the value in use models:
162
Impairment testing of the Cash-Generating Units
containing goodwill (continued)
• Post-tax cash flow projections based on Medium Term Financial
Forecast (three year) which is developed annually and approved
by management and the Board. Cash flows beyond the three-year
forecast are extrapolated to a five year forecast. A long term growth
rate is applied to extrapolate cash flows beyond the initial five-year
period for each CGU. These forecasts utilise information about current
and future economic conditions, observable historical performance
and management expectations of future business performance.
Post-tax discount rate applied to the cash flow projections reflecting
the specific risks and conditions relating to the relevant CGUs.
Common Equity Tier 1 Holdback Rate refers to the level of capital
the regulator requires ADIs to hold as a percentage of total risk-
weighted assets.
Long term growth rate is used to extrapolate cash flows beyond
the forecast period and reflects the upper end of the RBA’s
target long-term inflation rate band.
•
•
•
The following table sets out the key assumptions used for both
Retail Bank and BOQ Business:
Post-tax discount rate
Common Equity Tier 1 Holdback Rate
Long term growth rate
FY22
9.60%
9.65%
3.00%
FY21
9.40%
9.00%
3.00%
The directors and management have considered and assessed
reasonably possible changes for other key assumptions.
The aggregate carrying amounts of goodwill for Retail Banking and
BOQ Business CGUs are:
Retail Banking
BOQ Business
Total
2022
$m
370
397
767
2021
$m
288
394
682 (1)
(1) Prior year Goodwill related to the acquisition of ME Bank was not included for the
purpose of the annual impairment testing. The Goodwill was assessed by applying the
acquisition method in business combination accounting on 1 July 2021
Sensitivity to changes in assumptions
The calculated headroom for each CGU, under the value in use
model described above is:
Retail Banking
BOQ Business
2022
49
7
2021
182
286
The table below shows a sensitivity analysis for both Retail Bank
and BOQ Business CGUs. There is no impairment of goodwill in
either CGU but a reasonable possible change in assumptions would
result in impairment. This sensitivity analysis assumes the specific
assumption moves in isolation while all other assumptions are
held constant. The below are reasonably possible changes in key
assumptions that would erode headroom to nil.
Retail Banking
BOQ Business
Post-tax discount rate
Increase to 9.70% Increase to 9.62%
Long term growth rate
Decrease to 2.87% Decrease to 2.97%
Common Equity Tier 1
Holdback Rate
Increase to 9.98% Increase to 9.71%
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
4.2 Provisions
A provision is recognised in the Balance Sheet when the Group has a present legal or constructive obligation as a result of a past event and it
is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, when
appropriate, the risks specific to the liability. The carrying amounts of the provisions recognised are:
Employee benefits (2)
Provision for non-lending loss
Other (3)
Total provisions
Pay and entitlements review
Consolidated
2022
$m
42
1
23
66
2021 (1)
$m
47
3
18
68
Bank
2022
$m
40
1
23
64
2021
$m
27
3
13
43
In 2020 BOQ commenced a review of payments to employees covering Superannuation guarantee compliance and whether correct
payments have been made to employees under successive BOQ Enterprise Agreements, being 2010, 2014 and 2018. During the year, BOQ
made remediation payments for base wage, lump-sum entitlement, superannuation and interest for active and former employees. As at 31
August 2022, the remaining provision balance was $8 million (2021: $11 million). The provision balance is based on financial modelling that
has reconstructed BOQ’s payroll obligations, covering Enterprise Agreement remediation, on-costs and interest and associated professional
costs based on management’s assessment of the facts and circumstances existing as at the reporting date. It is reasonably possible that the
final outcomes may differ to those reported, the impact of which will be reflected in future reporting periods.
Movements in provisions
Movements in each class of provision during the year, other than employee benefits, are as follows:
2022
Carrying amount at beginning of year
Transfer of ME Bank Provisions
Additional provision recognised
Amounts utilised during the year
Release of provision
Carrying amount at end of year
Current
Non-current
2021 (1)
Carrying amount at beginning of year
Additional provision recognised
Amounts utilised during the year
Release of provision
Reclassification from non-lending loss provision (4)
Carrying amount at end of year
Current
Non-current
Consolidated
Bank
Non-lending
loss
$m
3
-
-
-
(2)
1
1
-
Other
$m
18
-
13
(7)
(1)
23
23
-
Non-lending
loss
$m
3
-
-
-
(2)
1
1
-
Consolidated
Bank
Non-lending
loss
$m
13
1
(1)
(1)
(9)
3
3
-
Other
$m
11
15
(8)
(9)
9
18
18
-
Non-lending
loss
$m
13
1
(1)
(1)
(9)
3
3
-
Other
$m
13
5
10
(4)
(1)
23
23
-
Other
$m
5
14
(7)
(8)
9
13
13
-
(1) Comparative information has been restated to reflect the prior period adjustments detailed in Note 5.5(C).
(2) Employee benefits provision consists of annual leave (represents present obligations resulting from employees’ services provided up to the reporting date, calculated based on remuneration
wage and salary rates that the Group expects to pay as at reporting date including related on-costs) and long service leave entitlements for employees (represents the present value of the
estimated future cash outflows to be made resulting from employees’ services provided to reporting date). The long-service leave provision is calculated using expected future increases in
wage and salary rates including related on-costs and expected settlement dates based on turnover history and is discounted using the rates attached to Australian 10 year corporate bonds
at reporting date which most closely match the terms of maturity of the related liabilities. $36 million (2021: $32 million) of this provision balance is classified as current.
(3) Other provisions include amounts relating to the Group’s employee pay and leave entitlements review ($8 million), restructuring ($6 million) and others including an amount relating
to alleged contraventions of financial services law by ME Bank prior to its acquisition by the BOQ Group.
(4) During the financial year ended 31 August 2021, the employee pay and leave entitlements review provision has been reclassified from Non-lending loss to Other.
163
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
Note 5. Other notes
5.1
Employee benefits
a) Superannuation commitments
Equity Incentive Plan
Superannuation plan
The Group contributes to a number of superannuation plans
which comply with the Superannuation Industry (Supervision)
Act 1993. Contributions are charged to profit or loss in the
Income Statement as they are made.
Basis of contributions
The Group is required to meet the minimum legal obligations
under the relevant superannuation guarantee legislation and
the industrial instrument provisions.
b) Share based payments
The Group currently operates the Equity Incentive Plan
(previously the Awards Right Plan) for equity-settled
compensation. The plan allows the Group’s employees to
acquire shares in the Bank. The fair value of rights granted is
recognised as an employee expense with a corresponding
increase to the Employee Benefits Reserve. The fair value is
measured at grant date and expensed over the service period.
The fair value of the rights granted is measured using industry
accepted pricing methodologies, taking into account the terms
and conditions upon which the rights are granted. Where rights
do not vest due to failure to meet a non-market condition (e.g.
employee service period), the expense is reversed. Where
rights do not vest due to failure to meet a market condition (e.g.
total shareholder return test), the expense is not reversed.
(i) Description of share based payments
The Award Rights Plan was first introduced and approved
by shareholders on 11 December 2008, with the subsequent
changes to the Award Rights Plan approved by shareholders on
30 November 2017. It is an equity based program under which
Award Rights were granted as long-term incentives. Types
of award rights granted to employees under this plan were
Deferred Award Rights (DARs), Performance Award Rights
(PARs), BOQ Group Transformation Award (BTAs), BOQ Group
Transformation Award - Virgin (VTAs) and Restricted Shares.
The Award Rights Plan was replaced by the Equity Incentive
Plan for new awards from 1 September 2020. Types of award
rights granted to employees under the new plan are DARs,
Premium Priced Options, Performance Shares, Restricted
Shares and CEO and Chair Award Rights.
No amount is payable by employees for the grant or exercise of
the award rights.
164
Effective 1 September 2020, the Group made changes to
the way it delivers variable remuneration, including the
discontinuation of the PARs plan and the introduction of
Premium Priced Options and Performance Shares.
Performance Shares
Performance Shares are delivered in rights that convert to
restricted shares at the end of the financial year based on
the Board’s assessment of performance against the Group
Scorecard, risk and conduct. Once converted, the restricted
shares vest after a further one, two and three years.
Premium Priced Options
Premium Priced Options vest in two tranches with 50 per
cent vesting at the end of year four and 50 per cent at the
end of year five. The exercise price is set at 120 per cent of
the share price based on a volume weighted average price
over the five trading days following the Annual General
Meeting (AGM). On exercise, the options can be settled in
cash or an allocation of shares.
DARs
There are no market performance hurdles or other
performance based vesting conditions for DARs but the
holder must remain an employee of the Bank. DARs granted in
December 2019 were issued under the Award Rights Plan and
vest over three years in the ratio of 20 per cent at the end of
year one, 30 per cent at the end of year two and 50 per cent at
the end of year three.
Subsequent DARs issuances are under the Equity Incentive
Plan and the vesting period is dependent on if a person
is an Accountable Person under the Banking Executive
Accountability Regime (BEAR).
New DARs issued to Accountable Persons under the BEAR were
extended to vest over four years in a ratio of 20 per cent at the
end of year one, 10 per cent at the end of year two, 10 per cent at
the end of year three and 60 per cent at the end of year four.
Other DARs continue to vest over a three year period.
DARs granted in January 2021 vest over three years in the ratio
of 20 per cent at the end of year one, 30 per cent at the end of
year two and 50 per cent at the end of year three.
DARs granted in December 2021 vest over three years in the
ratio of 35 per cent at the end of year one, 35 per cent at the end
of year two and 30 per cent at the end of year three.
DARs may be exercised by the employee once they
have vested.
Bank of Queensland Limited and its Controlled Entities
Notes to the financial statements
For the year ended 31 August 2022
5.1
Employee benefits (continued)
b) Share based payments (continued)
Restricted Shares
The Group has used shares with restrictions on disposal as a
non-cash, share based component of both short term and long
term incentive awards. On occasion, restricted shares are also
used as make-good awards.
CEO and Chair Award Rights
There are no market performance hurdles or other performance
based vesting conditions for CARs but the holder must remain
an employee of the Bank. The CARs will vest in three tranches,
with 35 per cent vesting at the end of year one, 35 per cent at the
end of year two and 30 per cent at the end of year three.
CARs may be exercised by the employee once they
have vested.
Award Rights Plan
PARs
For PARs granted in December 2018 and December 2019 the
vesting framework is based on the relative Total Shareholder
Return (rTSR) and relative EPS. The rTSR component makes
up 80 per cent of the employee’s PARs and is measured
against a peer group over a four year period. That peer
group consists of companies included in the S&P / ASX
200 index, excluding selected entities in resources, real
estate investment trusts, telecommunications (offshore
headquartered), energy and utilities and such other
inclusions and exclusions the Board considers appropriate.
TSR is a measure of the entire return a shareholder would
obtain from holding an entity’s securities over a period,
taking into account factors such as changes in the market
value of the securities and dividends paid over the period.
The TSR component of the PARs vests in accordance with rTSR
performance as follows:
rTSR
performance
TSR component
of PARs vesting
At or above 75th percentile
All
50th to 75th percentile
Relative proportion between
50 and 100 per cent
Below 50th percentile
None
The remaining 20 per cent of PARs vest based on the Bank’s
EPS performance measured against a financial services
peer group over a four year period:
The Bank’s cash EPS
Compound Annual Growth
Rate (CAGR) performance
PARs vesting
At or above 90th percentile
All
60th to 90th percentile
Relative proportion between
50 and 100 per cent
Below 60th percentile
None
PARs may be exercised by the employee once
they have vested.
BTAs
The performance hurdles or vesting conditions for BTAs are
linked to BOQ Group meeting cash earnings excluding loan
impairment expense and income tax targets. BTAs vest in two
tranches in the ratio of 50 per cent in year one and 50 per cent
in year two if BOQ Group meets the respective cash earnings
targets. There is an opportunity for retest in year two and
three. There are no market performance hurdles. BTAs may be
exercised by the employee once they have vested.
VTAs
The performance hurdles or vesting conditions for VTAs
are linked to the delivery of a next generation core banking
platform through Virgin Money Australia (Project de Novo) and
BOQ Group meeting cash earnings excluding loan impairment
expense and income tax targets. VTAs vest in two tranches
in the ratio of 50 per cent subject to the delivery of Project
de Novo and 50 per cent if BOQ Group meet cash earnings
targets in year two. There is an opportunity for retest in year
three. There are no market performance hurdles. VTAs may be
exercised by the employee once they have vested.
165
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
5.1
Employee benefits (continued)
b) Share based payments (continued)
(ii) Award rights on issue
The number of rights and restricted shares on issue for the Bank is as follows:
Deferred Award
Rights
Performance
Award
Rights
Premium
Priced
Options
BOQ
Transformation
Award Rights
BOQ
Transformation
Award Rights -
Virgin
Performance
Shares
Restricted
Shares
CEO & Chair
Awards Rights
2022
’000
2021
’000
2022
’000
2021
’000
2022
’000
2021
’000
2022
’000
2021
’000
2022
’000
2021
’000
2022
’000
2021
’000
2022
’000
2021
’000
2022
’000
2021
’000
Balance at
beginning of
the year
Granted
Forfeited /
expired
Exercised
Outstanding
at the end of
the year
2,142
1,606
1,197
1,792
8,034
-
248
431
40
66
661
-
300
73
-
1,605
1,156
-
-
5,896
8,034
-
-
875
661
104
295
404
(328)
(170)
(231)
(593)
(2,358)
(662)
(450)
-
(2)
-
-
-
(36)
(63)
(214)
(32)
(120)
(7)
(26)
-
-
-
-
(65)
(22)
(125)
(3)
-
-
-
-
-
2,757
2,142
966
1,197
11,572
8,034
180
248
33
40
1,322
661
279
300
382
-
-
-
-
-
(iii) Measurement of fair values
The Premium Priced Options have been valued using a four step methodology that uses a simulation approach to project future share
prices and then the Binomial model to value the options on vesting. The fair value of PARs has been measured using a Monte Carlo
simulation approach.
The fair value of DARs, BTAs, VTAs, Performance Shares and CEO and Chair Award Rights have been measured using a formula based
approach discounted by the assumed dividend yield.
The value of Restricted Shares is equal to the Share Price as at the grant date.
The weighted average of the inputs used in the measurement of the long term incentive award rights grants during the year was as follows:
Deferred
Award
Rights
Performance
Award
Rights
Premium
Priced
Options
BOQ
Transformation
Award Rights
BOQ
Transformation
Award Rights -
Virgin
Performance
Shares
Restricted
Shares
CEO & Chair
Awards Rights
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Fair value at grant date
($)
7.28
6.97
Share price at grant date ($)
8.05
7.73
Expected volatility
Risk free interest rate
Dividend yield
(%)
(%)
(%)
25.0
1.2
5.0
25.1
0.2
5.0
-
-
-
-
-
-
-
-
-
-
0.62
7.54
25.0
2.0
5.0
0.67
8.02
25.0
0.4
5.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7.31
7.79
9.19
7.04
6.92
7.68
7.98
8.01
7.83
7.64
25.0
26.4
25.0
25.6
25.0
0.2
5.0
0.2
5.0
0.2
5.0
0.2
5.0
0.2
5.0
-
-
-
-
-
(iv) Salary sacrifice arrangements
The Non-Executive Director Fee (NEDs) Sacrifice Rights Plan (NED Plan) allows NEDs to sacrifice a portion of their Board fees to acquire
BOQ shares. The equity under this plan is not subject to any conditions apart from a disposal restriction for a minimum of three years.
The shares acquired as part of the NED plan have been valued using the fair value at grant date using an industry-accepted valuation
model. Inputs into the fair value calculation are in line with those shown in the table above.
(v) Other employee awards
BOQ ThankQ Plan
The ThankQ Plan replaces the previously offered salary sacrifice Employee Share Plan and is a gift of shares up to a maximum of $1,000
per eligible employee. During the year the Group granted 317,125 shares under this plan (2021: 235,498). The shares under this plan are
restricted from sale until the earlier of three years or until an employee ceases employment with the Group.
166
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
5.2 Commitments
a)
Customer funding commitments
Guarantees, indemnities and letters of credit
Customer funding commitments
Consolidated
Bank
2022
$m
285
5,859
6,144
2021 (1)
$m
259
6,397
6,656
2022
$m
285
4,885
5,170
2021 (1)
$m
259
2,616
2,875
(1) Comparatives have been restated pertaining to a subset of ME Bank's portfolio following a realignment to BOQ Group's methodology.
In the normal course of business the Group makes commitments to extend credit to its customers. Most commitments either expire if
not taken up within a specified time or can be cancelled by the Group within one year. Credit risk is significantly less than the notional
amount and does not crystallise until a commitment is funded. Guarantees are provided to third parties on behalf of customers. The
credit risks of such facilities are similar to the credit risks of loans and advances.
b) Other commitments
The Group has lease commitments of $1 million (2021: $103 million) which have not been recognised as lease liabilities on the Balance
Sheets as the lease commencement dates are after the end of the financial year. Expenditure on software assets and other expenditure
contracted for but not provided on the Balance Sheets is $6 million (2021: $34 million).
St Andrew’s
As part of the St Andrew’s sale agreement, BOQ provided a capped indemnity of $8.5 million to the buyer, Farmcove Investment
Holdings, for a period limited to three years until 2024. No claims on the indemnity have been made up to the date of this report.
5.3 Contingent liabilities
Legal claims, remediation, compensation claims and regulatory enforcement
The Group could be engaged in a range of litigation at any point in time. Where relevant, expert legal advice has been obtained and, in
the light of such advice, provisions or disclosures as deemed appropriate are made.
There is a risk that from time to time, the Group does not comply with its legal or regulatory obligations. In some cases where the
Group does not comply, it must undertake remediation programs. The Group also undertakes ongoing compliance activities, including
to review products, advice, conduct and services provided to its customers, for example in relation to the interest and fees the Group
has charged. Some of these investigations and reviews also result in remediation programs. Where relevant, the Group consults with
the respective regulator on these matters.
There is a risk that regulators may impose fines or sanctions or take other enforcement action against a company in the Group in
relation to these matters.
The Group’s regulators, including ASIC, APRA and AUSTRAC also engage with the Group. For example, our regulators may request
certain information from us or perform reviews of our compliance arrangements. Throughout the year the Group has had numerous
engagements with its regulators and been subject to reviews, including by AUSTRAC. There is a risk that, following such engagement,
regulators impose fines, sanctions or take other enforcement actions in relation to the Group’s compliance with relevant laws
and regulations. There is also the risk that the Group incurs increased costs in people, processes and systems in order to meet
regulators’ requirements or expectations.
The outcomes and total costs associated with such reviews and possible exposures remain uncertain.
167
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
5.3 Contingent liabilities (continued)
The Bank’s compliance with the Consumer Data Rights regime (Open Banking)
While BOQ (excluding ME Bank) did not initially meet the Phase 1, 2 or 3 compliance dates, on 30 June 2022 BOQ confirmed to the Australian
Competition and Consumer Commission (ACCC) that all three phases had been successfully delivered. Separately, ME Bank received an
exemption from the ACCC for the CDR requirements until 30 June 2022. ME Bank successfully commenced data sharing on 28 June 2022.
There are a number of further compliance requirements under the CDR regime that are due throughout 2022. This includes requirements to
deliver joint account functionality by 1 October 2022, as well as secondary user capability and non-individual accounts by 1 November 2022.
While BOQ is largely on track to deliver these requirements, it is likely there will be some delay, although BOQ expects to still deliver each
of these requirements by the end of October and November 2022 respectively. The Group also continues to progress implementation of
several other CDR requirements, including improvements to ensure that the Group’s products have commensurate latency between digital
channels and CDR APIs.
BOQ has a Rectification Schedule in place with the ACCC, which sets out the status of its implementation of CDR requirements. The
Rectification Schedule is publicly available.
On 23 June 2022, the ACCC issued BOQ with an infringement notice in relation to non-compliance with the CDR rules. The notice includes a
monetary penalty of $133,200. It is uncertain what other actions (if any) will result following the delay in meeting other CDR requirements as
set out in the Rectification Schedule. No provisions have been made in relation to any events that may arise, as any potential future liability of
that kind cannot be reliably estimated at this time.
5.4 Related parties information
a) Controlled entities
Details of interests in materially controlled entities are set out in Note 5.5.
During the year there have been transactions between the Bank and its controlled entities. The Bank conducted normal banking
business with its operating controlled entities. Amounts owing to or from controlled entities generally attract interest on normal terms
and conditions, except in respect of ME Bank, Virgin Money (Australia) Pty Limited, Virgin Money Financial Services Pty Ltd, BOQ
Specialist Pty Ltd, BOQ Home Pty Limited, Home Credit Management Pty Ltd, covered bond and securitisation trusts and dormant
entities as set out in Note 5.5(A). The Bank receives management fees from its operating controlled entities except ME Bank, Virgin
Money Financial Services Pty Ltd, BOQ Specialist Pty Ltd, BOQ Home Pty Limited, Home Credit Management Pty Ltd, covered bond and
securitisation trusts and dormant entities as set out in Note 5.5(A).
The Bank has a related party relationship with equity accounted joint ventures, refer to Note 5.6.
b) Key management personnel compensation
KMP have authority and responsibility for planning, directing and controlling the activities of the Bank and the Group, including Directors
and other Senior Executives.
KMP compensation included in ‘administrative expenses’ and ‘employee expenses’ (refer to Note 2.2) is as follows:
Short term employee benefits
Long term employee benefits
Post employment benefits
Share based employment benefits
Termination benefits
2022
$
7,225,245
87,996
294,097
4,688,638
350,000
12,645,976
2021 (1)
$
6,667,311
93,773
264,703
3,462,943
-
10,488,730
(1) Comparative information has been restated in relation to long service leave and to reflect changes to the service period over which the share based employment benefits are
expensed for all award types as well as revision to the fair value for shares following reassessment of the grant date. As a result of the restatement, long term employee benefits
have decreased by $44,114 and share based employment benefits have increased by $417,232 in the comparative period.
Individual Directors and Senior Executives compensation disclosures
Information regarding individual Directors and Senior Executives’ compensation and some equity instruments disclosures, as permitted
by Regulation 2M.3.03 of the Corporations Regulations 2001, is provided in the Remuneration Report section of the Directors’ Report.
Apart from the details disclosed in the Remuneration Report, no Director has entered into a material contract with the Bank since the
end of the previous financial year and there were no material contracts involving Directors’ interests existing at year end.
168
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
5.4 Related parties information (continued)
c)
Other financial instrument transactions with key management personnel and their related parties
A number of KMP and their close family members hold positions in other entities that result in them having control or significant
influence over the financial or operating policies of those entities. These entities, as well as the KMP and their close family members, are
related parties to the Group. Financial instrument transactions with KMP and their related parties during the financial year arise out of
the provision of banking services, the acceptance of funds on deposit, the granting of loans and other associated financial activities.
The terms and conditions of the transactions entered into with KMP and their related parties were no more favourable than those
available, or which might reasonably be expected to be available on similar transactions to non-related entities, on an arm’s length basis.
No amounts have been written down or recorded as impaired during the year (2021: nil).
The loans between the Group and KMP or their related parties up to 31 August 2022 are:
Term products (loans / advances)
KMP
Other related parties
Total
Term products (loans / advances)
KMP
Other related parties
Total
Balance as at
For the period (1)
1 September
2021
$
31 August
2022
$
Total loan
drawdowns /
(repayments)
$
Total loan /
overdraft
interest
$
Total fees
on loans /
overdraft
$
350,000
2,016,969
1,619,353
743,279
1,484,323
699,769
1,093,279
3,501,292
2,319,122
47,616
40,965
88,581
99
310
409
Balance as at
For the period
1 September
2020
$
31 August
2021
$
Total loan
drawdowns /
(repayments)
$
Total loan /
overdraft
interest
$
Total fees
on loans /
overdraft
$
350,000
760,430
1,110,430
350,000
743,279
1,093,279
(11,508)
(52,449)
(63,957)
11,508
34,998
46,506
-
300
300
(1) Amounts are included only for the period that the Director / Executive is classified as a member of the KMP.
169
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
5.5 Controlled entities
a) Particulars in relation to materially controlled entities
The Group’s controlled entities at 31 August 2022 are set out below. The country of incorporation or registration is also the principal
place of business.
Place of
business/
country of
incorporation
Controlled entities:
Alliance Premium Funding Pty Ltd
New Zealand
Parent entity’s
interest
2022
%
100%
2021
%
100%
Bank of Queensland Limited
Employee Share Plans Trust
BOQ Asset Finance and Leasing Pty Ltd
BOQ Covered Bond Trust
BOQ Credit Pty Limited
BOQ Equipment Finance Limited
BOQF Cashflow Finance Pty Ltd
BOQ Finance (Aust) Limited
BOQ Finance (NZ) Limited
BOQ Funding Pty Limited
BOQ Home Pty Ltd
BOQ Share Plans Nominee Pty Ltd
Australia
100%
100%
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
BOQ Specialist (Aust) Pty Ltd (1)
Australia
100%
100%
BOQ Specialist Pty Ltd
B.Q.L. Management Pty Ltd
Home Credit Management Pty Ltd
Home Financial Planning Pty Ltd
Impala Trust No. 2 - Sub-Series 2
Members Equity Proprietary Limited (2)
ME Portfolio Management Limited (3)
SMHL Series Private Placement 2014-2
SMHL Series Securitisation Fund 2015-1
SMHL Series Securitisation Fund 2016-1
SMHL Series Securitisation Fund 2017-1
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
SMHL Series Private Placement Trust 2017-2
Australia
SMHL Series 2018-1 Fund
SMHL Series Securitisation Fund 2018-2
Australia
Australia
SMHL Series Private Placement Trust 2019-1
Australia
SMHL Series Securitisation Fund 2019-1
SMHL Series Private Placement 2019-2
SMHL Securitisation Trust 2020-1
Pioneer Permanent Pty Ltd
Series 2008-1 REDS Trust
Series 2012-1E REDS Trust
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
-
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Amount of
investment
2022
$m
2021
$m
Principal activities
-
-
-
-
-
15
-
230
22
-
157
-
13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32
-
-
-
-
-
-
-
15
-
Dormant
Trust
Asset finance & leasing
Issue of covered bonds
Asset finance & leasing
Asset finance & leasing
Professional finance
230
Asset finance & leasing
22
-
Asset finance & leasing
Dormant
157
Investment holding entity
-
13
-
-
-
-
-
Dormant
Professional finance and
asset finance & leasing
Professional finance
Trust management
Investment holding entity
Dormant
Securitisation
1,388
Dormant
-
-
-
-
-
-
-
-
-
-
-
-
32
-
-
Deregistered
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Dormant
Securitisation
Securitisation
(1) The company changed type from a public company to a proprietary company on 14 December 2021 .
(2) The company changed type from a public company to a proprietary company on 22 July 2022 and was, effectively, dormant following the surrender of its ADI licence and
transfer of assets and liabilities to BOQ. Refer to Note 5.5(c) for further information.
(3) ME Portfolio Management Limited was deregistered with ASIC on 27 February 2022.
170
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
5.5 Controlled entities (continued)
a) Particulars in relation to materially controlled entities (continued)
Place of
business/
country of
incorporation
Parent entity’s
interest
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
2022
%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
100%
100%
100%
100%
2021
%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
Amount of investment
Principal activities
2022
$m
2021
$m
-
-
-
-
-
-
-
-
-
-
-
-
53
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53
-
-
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Securitisation
Insurance holding entity
General insurance
Life insurance
Dormant
Financial services
Financial services
Dormant
522
1,910
Controlled entities:
Series 2013-1 REDS Trust
Series 2015-1 REDS Trust
Series 2017-1 REDS Trust
Series 2018-1 REDS Trust
Series 2018-1 REDS EHP Trust
Series 2019-1 REDS Trust
Series 2021-1 REDS EHP Trust
Series 2022-1 REDS MHP Trust
St Andrew’s Australia Services Pty Ltd
St Andrew’s Insurance (Australia) Pty Ltd
St Andrew’s Life Insurance Pty Ltd
Statewest Financial Planning Pty Ltd
Virgin Money (Australia) Pty Limited
Virgin Money Financial Services Pty Ltd
Virgin Money Home Loans Pty Limited
b) Significant restrictions
In accordance with APS 222 Associations with related entities, the Bank and its subsidiaries that form part of the Extended Licensed
Entity have various restrictions. This includes not having unlimited exposures to related entities, including general guarantees.
c) Acquisition of controlled entities
(i) Accounting for business combinations
All business combinations occurring on or after 1 July 2009 are accounted for by applying the acquisition method. For every business
combination, the Group identifies the acquirer, which is the combining entity that obtains control of the other combining entities or
businesses. The Group controls an entity if it is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the investee.
The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any
goodwill that arises is tested annually for impairment.
Contingent Liabilities
A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and
arises from a past event and its fair value can be measured reliably.
Transaction Costs
Transaction costs that the Group incurs in connection with a business combination, such as a finder’s fee, legal fees, due diligence
fees and other professional and consulting fees are expensed as incurred. Transaction costs related to the issue of ordinary shares are
recognised as a deduction from equity.
(ii) Business combinations
On 1 July 2021, the Group acquired 100 per cent of the shares and voting interests in Members Equity Bank Limited (ME Bank) for
cash consideration of $1.395 billion.
ME Bank engages in the provision of banking services including funding, management and servicing of residential and consumer
lending portfolios.
On 28 February 2022, ME Bank surrendered its ADI licence and ME Bank’s assets and liabilities were transferred to BOQ.
ME Bank’s net assets recognised in the 2021 Annual Report were based on a provisional assessment of their fair value, while the
Group continued to finalise various matters impacting the acquisition accounting entries. All matters have been finalised in the
current period and resulted in the following adjustments:
171
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
5.5 Controlled entities (continued)
c) Acquisition of controlled entities (continued)
Assets
Cash and cash equivalents
Due from other financial institutions
Debt instruments at FVOCI
Equity instruments at FVOCI (1)
Property, plant and equipment
Software intangibles
Brand intangibles
Customer relationship intangibles
Loans and advances
Other assets
Total Assets
Liabilities
Deposits
Derivatives financial liabilities
Accounts payable and other liabilities
Provisions
Current tax liabilities
Borrowings
Deferred tax liabilities
Total Liabilities
Net identifiable assets and liabilities
Other equity instruments
Goodwill arising on acquisition
Total Purchase consideration transferred
Cash acquired
Net cash outflow
Fair value on
acquisition 1 July 2021
$m
Adjustments
$m
Final fair value on
1 July 2021
$m
642
124
3,320
3
73
112
26
31
25,669
19
30,019
22,302
26
161
18
9
5,833
2
28,351
1,668
(315)
35
1,388
642
746
-
-
-
-
-
(21)
-
-
-
-
(21)
-
-
-
-
4
3
-
12
19
(40)
-
47
7
-
7
642
124
3,320
3
73
91
26
31
25,669
19
29,998
22,302
26
161
22
12
5,833
14
28,370
1,628
(315)
82
1,395
642
753
(1) Reclassified to financial assets at FVTPL in the current year.
The goodwill recognised of $82 million represents the fair value of expected future synergies arising from the acquisition.
The adjustments primarily relate to the impact of the SaaS accounting policy change, software intangible asset write-offs and updates to
the deferred tax balances based on the revised tax consolidation outcomes.
(i) Entities established during the year
The following entities were established during the financial year:
• Series 2022-1 REDS MHP Trust was opened on 24 March 2022.
172
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
5.5 Controlled entities (continued)
d) Disposal of controlled entities
On 13 October 2020, the Bank entered into an agreement to sell 100 per cent of its controlled entities - St Andrew’s Australia Services
Pty Ltd and its subsidiaries, St Andrew’s Insurance (Australia) Pty Ltd and St Andrew’s Life Insurance Pty Ltd (the St Andrew’s Insurance
Group) to Farmcove Investment Holdings.
The sale completed on 28 October 2021, with direct management and control of St Andrew’s Insurance Group business transferred to
Farmcove Investment Holdings. As a result, the St Andrew’s Insurance Group was deconsolidated and derecognised on 28 October 2021
from the BOQ Group.
The sale resulted in a pre-tax loss of $25 million for the Group for the year ended 31 August 2022.
(i) Entities closed during the year
The following entities were closed during the financial year:
• SMHL Series Securitisation Fund 2015-1 was closed on 26 July 2022.
Investments in joint arrangements
5.6
The Group holds interests in a number of collectively and individually immaterial joint ventures that are accounted for
using the equity method.
a) Accounting for joint arrangements
b) Details of joint ventures
The Group’s investment in joint venture entities is accounted
for under the equity method of accounting in the consolidated
financial statements. Joint ventures are entities in which the
Group has joint control over all operational
decisions and activities.
Set out below are the joint ventures of the Group as at 31 August
2022 which, in the opinion of the Directors, are immaterial to the
Group. Australia is the place of business and also the country of
incorporation for all joint ventures.
Joint arrangements (1)
Ocean Springs Pty Ltd (Brighton)
Dalyellup Beach Pty Ltd (Dalyellup)
East Busselton Estate Pty Ltd (Provence)
Coastview Nominees Pty Ltd (Margaret River)
Provence 2 Pty Ltd (Provence 2)
Total equity accounted investments
Ownership Interest
Carrying amount
2022
(%)
9.31
17.08
25.00
5.81
25.00
2021
(%)
9.31
17.08
25.00
5.81
25.00
2022
$m
2021
$m
1
7
-
-
-
8
3
7
-
-
-
10
(1) The principal activity of the joint venture entities is land subdivision, development and sale. These investments were acquired as part of the Home Building Society acquisition in 2007.
Share of profit for equity accounted joint ventures, adjusted for the share of ownership held by the Group, is contained below:
Profit from continuing operations
Total comprehensive profit
2022
$m
2
2
2021
$m
1
1
173
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
5.7 Auditor’s remuneration
Audit services
- Statutory audits and reviews of the financial reports
- Regulatory audits and reviews as required by regulatory authorities
Total audit services
Audit related services
- Other assurance services
Total audit related services
Non-audit services
- Taxation services
- Other
Total non-audit services
Consolidated
Bank
2022
$000
2,290
654
2,944
166
166
10
596
606
2021 (1)
$000
2,172
704
2,876
373
373
116
250
366
2022
$000
2,000
630
2,630
100
100
10
387
397
(1) Fees for the prior financial year audit were paid to KPMG Australia.
Non-audit services, other, primarily relate to business specific assurance and reviews.
Details of the amounts paid to other auditors for audit services provided in respect of ME Bank acquisition:
Deloitte
Audit services
- Statutory audits and reviews of the financial reports
Total audit services
Consolidated
2022
$000
-
-
2021
$000
202
202
Bank
2022
$000
-
-
2021 (1)
$000
1,826
611
2,437
154
154
116
250
366
2021
$000
-
-
5.8 Events subsequent to balance date
Dividends have been determined after 31 August 2022. The financial effect of the dividends has not been brought to account in the financial
statements for the year ended 31 August 2022. Further details with respect to the dividend amounts per share, payment date and dividend
reinvestment plan can be obtained from Note 2.4 Dividends.
Except for the matters listed above, the Directors are not aware of any matters or circumstances that have arisen in the interval between the
end of the financial year and the date of this report, or any item, event or transaction which significantly affects, or may significantly affect the
operations of the Group in future financial years.
174
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
For the year ended 31 August 2022
5.9 Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in the consolidated financial statements and
have been applied consistently across the Group.
a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Bank. Control exists
when the Bank has the power, directly or indirectly, to govern the
financial and operating policies of an entity so as to benefit from its
activities. In assessing control, potential voting rights that presently
are exercisable or convertible are taken into account. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until
the date that control ceases. In the Bank’s financial statements,
investments in subsidiaries are carried at cost.
(ii) Securitisation
The Group's securitisation programs consist of:
• REDS RMBS Trusts - securitisation of mortgage loans;
• REDS EHP Trusts - securitisation of hire purchase, chattel
•
mortgages and finance leases;
Impala and MHP Trusts - securitisation of medical
equipment financed through the BOQ Specialist
channel; and
• SMHL Trusts acquired as part of the ME Bank acquisition
in 2021.
The Group
The Group receives the residual income distributed by its
consolidated Trusts - REDS, Impala, MHP and SMHL - after all
payments due to investors and associated costs of the program
have been met. As a result, the Group is considered to retain
the risks and rewards of the Trusts and they do not meet the
derecognition criteria of AASB 9.
The Trusts fund their purchase of the loans by issuing floating-rate
debt securities. The securities are represented as borrowings of
the Group, however, the Group does not stand behind the capital
value or the performance of the securities or the assets of the
Trusts. The Group does not guarantee the payment of interest or
the repayment of principal due on the securities. The loans subject
to the securitisation program have been pledged as security for
the securities issued by the Trusts. The Group is not obliged to
support any losses that may be suffered by investors and does not
intend to provide such support.
The Bank provides the securitisation programs with arm’s
length services and facilities, including the management and
servicing of the loans and leases securitised.
The Bank has no right to repurchase any of the securitised
assets and no obligation to do so, other than in certain
circumstances where there is a breach of warranty within
120 days of the sale or when certain criteria are met under the
clean up provision per the Trust Deed Supplement.
The transferred assets are equitably assigned to the Trusts.
The investors in the securities issued by the Trusts have full
recourse to the assets transferred to the Trusts.
Bank
Interest rate risk from the Trusts is transferred back to the Bank by
way of interest rate and basis swaps. Accordingly, under AASB 9
the original transfer of the mortgages from the Bank to the Trusts
does not meet the derecognition criteria set out in AASB 9. The
Bank continues to reflect the securitised loans in their entirety
and also recognises a financial liability to the Trusts. The interest
payable on the intercompany financial asset / liability represents
the return on an imputed loan between the Bank and the Trusts
and is based on the interest income under the mortgages, the
fees payable by the Trusts and the interest income or expense not
separately recognised under the interest rate and basis swaps
transactions between the Bank and the Trusts.
All transactions between the Bank and the Trusts are eliminated
on consolidation.
(iii) Covered bond program
The Bank issues covered bonds for funding and liquidity
purposes. Certain housing loans have been assigned to a
bankruptcy remote structured entity to provide security for all
obligations payable on the covered bonds issued by the Bank.
Similar to the securitisation programs, the Bank is entitled to
any residual income after all payments due to covered bond
investors have been met. As the Bank retains substantially all
of the risks and rewards associated with the housing loans,
the Bank continues to recognise the housing loans on Balance
Sheet. Investors have dual recourse to the Bank and the
covered pool assets.
(iv) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or
income and expenses arising from intra-group transactions, are
eliminated in preparing the consolidated financial statements.
Unrealised losses are eliminated in the same way as
unrealised gains, but only to the extent that there is no
evidence of impairment.
175
2022 Annual Report Notes to the financial statements
For the year ended 31 August 2022
5.9 Significant accounting policies (continued)
b) Foreign currency
e) Property, plant and equipment
(i) Foreign currency transactions
(i) Recognition and initial measurement
Transactions in foreign currencies are, initially, translated at
the foreign exchange rate ruling at the date of the transaction.
Subsequently, at reporting date, monetary assets and liabilities
denominated in foreign currencies are translated into Australian
dollars at the foreign exchange rate ruling at that date. Non-
monetary items in a foreign currency that are measured at historical
cost remain translated using the original exchange rate at the date of
the transaction. Foreign exchange differences arising on translation
are recognised in profit or loss. Where a foreign currency transaction
is part of a hedge relationship it is accounted for as above, subject to
the hedge accounting rules set out in Note 3.8.
Items of property, plant and equipment are measured at cost
on recognition.
(ii) Subsequent costs
Subsequent additional costs are only capitalised when it is probable
that future economic benefits in excess of the originally assessed
performance of the assets will flow to the Group in future years.
Where these costs represent separate components, they are
accounted for as separate assets and are separately depreciated
over their useful lives. Costs that do not meet the criteria for
subsequent capitalisation are expensed as incurred.
(ii) Foreign operations
(iii) Subsequent measurement
The Group carries out its foreign operations in New Zealand
through the wholly controlled subsidiary, BOQ Finance (NZ)
Limited and through the non-incorporated branch of BOQ
Equipment Finance Limited.
The Group has elected to use the cost model to measure
property, plant and equipment after recognition. The carrying
value is the initial cost less accumulated depreciation and any
accumulated impairment losses.
c) Operating leases
(iv) Depreciation
Depreciation is charged to the profit or loss in the Income
Statement on a straight-line basis over the estimated useful
lives of each part of an item of property, plant and equipment.
The estimated useful lives are as follows:
IT equipment
Plant, furniture and equipment
Leasehold improvements (1)
(1) Or term of lease if less.
The useful lives are reassessed annually.
Years
3 - 10
3 - 20
6 - 12
Operating leases, in which the Group is the lessor, are measured
at cost less accumulated depreciation and accumulated
impairment losses. Depreciation is calculated to write off the
cost of operating lease assets less their estimated residual
values using the straight-line basis over the term of the lease.
This is recognised in profit or loss. Depreciation methods
and residual values are reviewed at each reporting date and
adjusted if appropriate.
d) Goods and services tax
Revenues, expenses and assets are recognised net of the amount
of goods and services tax (GST), except where the amount of GST
incurred is not recoverable from the Australian Taxation Office
(ATO). In these circumstances the GST is recognised as part of the
cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the
amount of GST included.
The net amount of GST recoverable from or payable to the
ATO is included as a current asset or current liability in the
Balance Sheet.
Cash flows are included in the Statements of Cash Flows on a
gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from or
payable to the ATO are classified as operating cash flows.
176
Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
5.9 Significant accounting policies (continued)
f)
Impairment of non-financial assets
(ii) As a lessee
Non-financial assets, other than deferred tax assets, are reviewed
for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. For
goodwill, intangible assets with an indefinite life and assets under
construction yet to commence amortisation the recoverable
amount is estimated at the same time each year.
The Group conducts an annual internal review of non-financial
asset values to assess for any indicators of impairment. If any
indication of impairment exists, an estimate of the asset’s
recoverable amount is calculated.
For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable
cash inflows that are largely independent of the cash inflows
from other assets or groups of assets – a CGU.
An impairment loss is recognised in profit or loss in the Income
Statement for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount of
an asset or CGU is the greater of its value in use or its fair value
less costs to sell. Value in use is based on the estimated future
cash flows, discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset or CGU.
Impairment losses recognised in respect of CGUs are allocated
first to reduce the carrying amount of goodwill allocated to
the units and then to reduce the carrying amounts of the other
assets in the unit on a pro-rata basis.
This grouping is subject to an operating segment ceiling
test. Non-financial assets, other than goodwill, that suffered
impairment are tested for possible reversal of the impairment
whenever events or changes in circumstances indicate that the
impairment may have reversed. An impairment loss in respect
of goodwill is not reversed.
g) Leases
(i)
Identification of a lease
A contract is, or contains, a lease if it conveys the right to control
the use of an identified asset for a period of time in exchange for
consideration.
The Group has identified 3 types of leases: property leases,
vehicle leases and equipment leases. Where practical
the Group separates consideration in a contract between
lease and non-lease components, only accounting for the
lease component under AASB 16 Leases and the non-lease
component under other relevant accounting standards. For
property leases it has been possible to separate lease and non-
lease components but for some equipment leases the Group
has elected not to separate the consideration.
The Group has further elected not to recognise right-of-use
(ROU) assets and lease liabilities for leases of low value assets
(mainly IT equipment). The Group recognises these lease
payments as an expense on a straight-line basis.
The Group recognises a ROU asset and a lease liability at the
lease commencement date. The ROU asset is initially measured
at cost and subsequently at cost less any accumulated
depreciation and impairment losses. Lease incentives received
at commencement reduce the ROU asset value. ROU assets are
generally depreciated over the shorter of the asset's useful life
and the lease term on a straight-line basis.
The lease liability is measured as the present value of
the lease payment outstanding at commencement date,
discounted using the Group’s incremental borrowing rate
applied to the lease term. The lease liability is then increased
by the interest expense on the lease liability and decreased
by lease payments made.
The determination of the lease term in calculation of the lease
liability relies on judgement as to whether any extension
options or termination options are likely to be exercised. These
judgements would be assessed 6-18 months prior to the lease
expiry. When the lease liability is remeasured, a corresponding
adjustment is made to the carrying value of the ROU asset, or,
in the income statement, where the carrying value of the ROU
asset has been fully written down.
177
For the year ended 31 August 20222022 Annual Report Notes to the financial statements
5.9 Significant accounting policies (continued)
g) Leases (continued)
(iii) As a lessor
(v) Finance leases
At inception or on modification of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component on the basis of their relative
stand-alone prices.
The Group determines at lease inception whether each lease is
a finance lease or an operating lease.
To classify the lease, the Group makes an overall assessment
of whether the lease transfers substantially all of the risks and
rewards incidental to ownership of the underlying asset. If
this is the case, then the lease is a finance lease ; if not, then
it is an operating lease. As part of the assessment, the Group
considers certain indicators such as whether the lease is for the
major part of the economic life of the asset.
The Group provides both finance and operating leases as part
of its Asset Leasing subsidiaries.
(iv) Operating leases
Operating leases, in which the Group is the lessor, are measured
at cost less accumulated depreciation and accumulated
impairment losses. Depreciation is calculated to write off the
cost of operating lease assets less their estimated residual
values using the straight-line basis over the term of the lease.
This is generally recognised in profit or loss. Depreciation
methods and residual values are reviewed at each reporting
date and adjusted if appropriate.
The Group leases business equipment to commercial
customers. These leases typically run for a period of 1-5 years,
with an option to renew the lease after that date or repurchase.
There are no products offered by the Group that contain
variable lease payments.
Finance leases are those products where substantially all the
risks and rewards of the leased asset have been transferred to
the lessee.
Finance leases – unearned income
Finance lease receivables are initially recognised at amounts
equal to the lower of fair value of the leased asset or the present
value of the minimum lease repayments plus the present
value of a guaranteed residual value expected to accrue at
the end of the lease term. Subsequently, lease repayments
are apportioned between interest income and the reduction
of the lease receivable over the term of the lease in order to
reflect a constant periodic rate of return on the net investment
outstanding in respect of the lease. Assets leased under
finance leases are classified and presented as finance
lease receivables.
Lease receivables include finance charges. These finance
charges are recognised as income over the term of the
lease, reflecting a constant periodic rate of return on the net
investment. The amount of unearned income deducted from
gross finance receivables represents income allocable to
future periods. The remaining gross finance lease receivables
represent the principal in the carrying amount.
Finance leases – residual values
Finance leases are recorded at the aggregated future minimum
lease repayments plus estimated residual values. Residual
values are assessed for impairment and in the event of a
shortfall, an impairment charge is recognised in the current
period. Data regarding equipment values, including appraisals,
and historical residual realisation experience are among the
factors considered in evaluating estimated residual values.
178
For the year ended 31 August 2022Bank of Queensland Limited and its Controlled Entities Notes to the financial statements
5.9 Significant accounting policies (continued)
h) Non-current assets held for sale
j) Other assets
Other Assets include accrued interest receivable, GST
recoverable (see 5.9 d) and prepayments. Interest receivable
is recognised on an accruals basis while prepayments are
amortised over the period in which the economic benefits from
the underlying goods or services are received.
k) Accounts payable and other liabilities
Accounts payable and other liabilities included accrued interest
on borrowings, salary and other expense accruals and short-
term creditor liabilities. This balance also includes the AASB 16
lease liability reflecting the discounted future lease payment for
property and equipment leases. Accounts payable and other
liabilities are measured at the contractual amount payable. As
most payables are short-term in nature, the contract amount
payable approximates fair value.
Non-current assets are classified as held for sale if their
carrying amount will be recovered principally through a sale
transaction rather than through continuing use and a sale is
considered highly probable. They are measured at the lower
of their carrying amount and fair value less costs to sell, except
for assets such as deferred tax assets, assets arising from
employee benefits, financial assets and investment property
that are carried at fair value and contractual rights under
insurance contracts, which are specifically exempt from
this requirement.
An impairment loss is recognised for any initial or subsequent
write-down of the asset to fair value less costs to sell. A gain
is recognised for any subsequent increases in fair value less
costs to sell of an asset , but not in excess of any cumulative
impairment loss previously recognised. A gain or loss not
previously recognised by the date of the sale of the non-current
asset is recognised at the date of derecognition.
Non-current assets are not depreciated or amortised while they
are classified as held for sale.
Non-current assets classified as held for sale are presented
separately from the other assets in the balance sheet.
i) Due from/to other financial institutions
Amounts due from/to other financial institutions include
cash collateral, short term deposits and other balances. Cash
collateral includes initial and variation margins in relation
to derivative transactions. Amounts due from/to other
financial institutions are initially recognised at fair value and
subsequently measured at amortised cost.
179
For the year ended 31 August 20222022 Annual Report Director's declaration
The Directors of Bank of Queensland Limited declare that:
1.
In the opinion of the Directors:
a) the consolidated financial statements and notes (and the remuneration report included within the Directors’ Report) set out on
pages 71 to 179, are in accordance with the Corporations Act 2001 (Cth), including:
i) complying with the Australian Accounting Standards and any further requirements in the Corporations Regulations 2001;
and
ii) giving a true and fair view of the financial position of the Bank and Group as at 31 August 2022 and their performance for
the year ended 31 August 2022; and
b) there are reasonable grounds to believe that the Bank and Group will be able to pay its debts as and when they become due
and payable.
2. The Directors have been given the declarations required by section 295A of the Corporations Act 2001 (Cth) from the Managing Director
& CEO and the Chief Financial Officer, for the year ended 31 August 2022.
3. Section 1.2(a) to the financial statements includes a statement of compliance with International Financial Reporting Standards.
This declaration is made in accordance with a resolution of the Directors.
Patrick Allaway
Chairman
11 October 2022
George Frazis
Managing Director & CEO
11 October 2022
180
Bank of Queensland Limited and its Controlled Entities Independent auditor's report
Independent auditor’s report
To the members of Bank of Queensland Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Bank of Queensland Limited (the Bank) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Bank's and Group's financial positions as at 31 August 2022 and
of their financial performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Bank and Group financial report (the financial report) comprises:
•
•
•
•
•
•
•
the Consolidated and Bank Balance sheets as at 31 August 2022
the Consolidated and Bank Income statements for the year then ended
the Consolidated and Bank Statements of comprehensive income for the year then ended
the Consolidated and Bank Statements of changes in equity for the year then ended
the Consolidated and Bank Statements of cash flows for the year then ended
the notes to the financial statements, which include significant accounting policies and other
explanatory information
the declaration of the Directors.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial report
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Bank and the Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional &
Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including
Independence Standards) (the Code) that are relevant to our audit of the Financial report in Australia. We
have also fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
181
2022 Annual Report
Independent auditor's report
Our audit approach
Bank and Group audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion
on the financial report as a whole, taking into account the geographic and legal structure of the Bank and
the Group, their accounting processes and controls and the industry in which they operate.
Our audit focused on where the Bank or the Group made subjective judgements; for example, significant
accounting estimates involving assumptions and inherently uncertain future events.
In designing the scope of our audit, we considered the structure of the Group, which includes a number of
subsidiary entities across Australia and New Zealand, carrying on varying financial services businesses.
These subsidiary entities are considered to be components as the Group prepares financial information
for each component for inclusion in the financial report.
The nature, timing and extent of audit work performed for each component was determined by each
components’ risk characteristics and financial significance to the Group, and consideration as to whether
sufficient evidence had been obtained for our opinion on the financial report as a whole. This
determination resulted in either:
• an audit of the financial information of a component (full scope); or
• analytical procedures performed at the Group level and/or audit procedures performed at a Group
level, including over the consolidation of the Group’s components and the preparation of the
financial report (other procedures).
Applying this methodology, seven of the individual components (including the Bank) were considered to
require a full scope audit. This work was also performed for the purposes of the standalone legal entities’
statutory financial reports.
182
Bank of Queensland Limited and its Controlled Entities
Independent auditor's report
Bank and Group audit materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to provide
reasonable assurance about whether the financial report is free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the financial report.
Based on our professional judgement, we determined certain qualitative thresholds for materiality,
including the overall Bank and Group materiality for the financial report, which we have set out in the table
below:
Overall Bank and Group Materiality
$29.9 million
How we determined it
Rationale for the materiality benchmark
applied
Approximately 5% of the 2022 financial year net
profit before income tax (PBT). We perform this
calculation for both the Bank and the Group, and
apply the lower of the outcomes in order to avoid
duplication of work. For the 2022 financial year,
this meant that we used the Bank’s PBT.
We applied this threshold, together with
qualitative considerations, to determine the scope
of our audit and the nature, timing and extent of
our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
We chose net profit before income tax because,
in our view, it is the metric against which the
performance of the Bank and the Group is most
commonly measured, and it is a generally
accepted benchmark.
We utilised a 5% threshold based on our
professional judgement, noting that it is within the
range of commonly acceptable thresholds.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report for the current period. In the table below we describe each key audit matter
and include a summary of the principal audit procedures we performed to address those matters.
The key audit matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. Further, any
commentary on the outcomes of a particular audit procedure is made in that context. The key audit
matters identified below relate to both the Bank and the Group audit, unless otherwise stated. We have
communicated the key audit matters to the Audit Committee.
183
2022 Annual Report
Independent auditor's report
Key audit matter
How our audit addressed the key audit matter
Recoverability of Goodwill
(Refer to note 4.1)
The Bank and Group performed an impairment test
over the goodwill balance by calculating the value in
use for each cash generating unit (CGU) and
comparing this value to the net assets of each CGU
including goodwill.
We considered the impairment test of goodwill to be a
key audit matter as the goodwill balance is significant to
the Bank’s and Group’s balance sheets, and significant
judgement is required in calculating value in use with
respect to determining appropriate:
We performed the following procedures, amongst others:
• Evaluated whether the Bank’s and the Group’s
identification of CGUs, which are the smallest
identifiable groups of assets that can generate largely
independent cash inflows, was consistent with our
knowledge of the Bank’s and the Group’s operations
and the internal organisational structure.
• Evaluated whether the methods applied in calculating
and allocating value in use to the identified CGUs
were in line with the requirements of Australian
Accounting Standards.
• Tested the mathematical accuracy of the value in use
and impairment model calculations.
• Discount rates.
• Compared cash flow forecasts to Board approved
• Common Equity Tier 1 holdback rate.
•
Five-year cash flow projections, including
annual growth rates.
• Earnings growth rates applied beyond the
short-term cash flow forecasts (long term
growth rate).
business plans.
• Compared previous cash flow forecasts to actual
results to assess the historical accuracy of
forecasting.
• Together with PwC valuation experts, assessed the
appropriateness of discount rates contained in the
models by comparing these to relevant external data.
• Tested whether cash flow forecasts, including annual
growth rates, and long term growth rates used in the
models are consistent with our knowledge of current
business conditions, externally derived data (where
possible) and our understanding of the business.
• Considered the reasonableness of the related
disclosures in the financial report in light of the
requirements of Australian Accounting Standards.
This included assessing the Bank’s and the Group’s
sensitivity analyses for each CGU, and their
assessment of reasonably possible changes to key
assumptions.
184
Bank of Queensland Limited and its Controlled Entities
Independent auditor's report
Key audit matter
How our audit addressed the key audit matter
Provisioning for Expected Credit Losses
(Refer to note 3.3a))
AASB 9 Financial Instruments requires a Provision for
Expected Credit Losses (ECL) to be recognised, the
measurement of which is required to be a probability
weighted estimate of the cash shortfalls expected to
result from defaults over the relevant timeframe
determined by evaluating a range of possible outcomes
and taking into account the time value of money, past
events, current conditions and forecasts of future
economic conditions.
Our procedures included developing an understanding of
processes and controls relevant to our audit of the Bank’s
and the Group’s provision for ECL and assessing whether
they were appropriately designed and were operating
effectively, including:
•
•
Testing the reliability and accuracy of select inputs
to the ECL calculations; and
Review and approval of the macroeconomic
scenarios and their associated weights, overlays,
and the ECL provision by the Group and Bank’s
Executive Credit Committee (ECC).
The Bank and the Group utilised collective provision
models and performed individual assessments for
certain impaired exposures to estimate the provision for
ECL.
In addition to control testing we, along with PwC credit
modelling experts and PwC economics experts,
performed the following substantive procedures, amongst
others:
We considered the provision for ECL a key audit matter
due to the inherent estimation uncertainty in its
determination, specifically due to the inherent
subjectivity and extent of judgement used by the Bank
and the Group in the measurement of the provision for
ECL, including:
• Models used to calculate ECL are inherently
complex, and judgement is applied in determining
the appropriate construct of each model;
• Multiple assumptions are made concerning the
inputs to the ECL models and how inputs
correlate with one another, including defining
when a Significant Increase in Credit Risk (SICR)
has occurred, the estimation and use of forward-
looking macroeconomic scenarios (MES) and
application of associated weightings;
•
Identifying and calculating adjustments to the ECL
model output (overlays); and
• Determining the valuation of individually assessed
provisions for impaired commercial borrowers.
Additionally, economic uncertainty has increased the
subjectivity, judgement, and complexity of the
measurement of the Bank’s and the Group’s provision
for ECL, specifically in relation to forward looking
assumptions impacting internal credit ratings, MES and
associated weightings, and overlays applied to the ECL
model output.
•
•
•
•
•
•
•
Assessed the appropriateness of the ECL model
methodology applied by the Bank and the Group for
a selection of loan portfolios, this included
assessing key model components such as SICR
and testing the accuracy of the results of certain
model monitoring tests;
Assessed the appropriateness of macroeconomic
scenarios developed, underlying forecasts and the
weightings assigned;
Tested the completeness and accuracy of a
selection of data elements used as inputs to the
ECL models;
Assessed a selection of overlays identified by the
Group and Bank, including assessing the
appropriateness of the methodology utilised and
testing the underlying dataset used for the
calculations;
Tested a selection of credit impaired loan provisions
to assess the reasonableness of the provisions
recognised;
Considered the reasonableness of the related
disclosures in the financial report in light of the
requirements of Australian Accounting Standards;
and
Considered the impact of events occurring
subsequent to the balance date on the provision for
ECL.
185
2022 Annual Report
Independent auditor's report
Key audit matter
How our audit addressed the key audit matter
Operation of financial reporting IT General Controls
The Bank’s and Group’s operations and financial
reporting processes are heavily dependent on IT
systems for the processing and recording of a
significant volume of transactions. Due to this, we
consider the operation of financial reporting IT systems
and controls to be a key audit matter. In particular, in
common with all banks, access rights to technology are
important because they are intended to ensure that
changes to applications and data are appropriately
authorised. Ensuring that only appropriate staff have
access to IT systems, that the level of access itself is
appropriate, and that access is periodically monitored,
are key controls in mitigating the potential for fraud or
error as a result of a change to an application or
underlying data.
The Bank and Group have an ongoing multi-year
strategic program to uplift systems and technology
platforms relevant for financial reporting.
For material financial report balances, we developed an
understanding of the business processes used to generate
and support those balances, and the IT systems and
associated IT application controls supporting those
processes. Our procedures included evaluating and testing
the design and operating effectiveness of certain control
activities over the continued integrity of the IT systems
relevant to financial reporting. This involved assessing,
where relevant to the audit:
• Change management: The processes and
controls used to develop, test and authorise
changes to the functionality and configurations
within systems;
• System development: The project disciplines
which ensure that significant developments or
implementation are appropriately tested before
implementation and that data is converted and
transferred completely and accurately;
• Security: The access controls designed to enforce
segregation of duties, govern the use of generic
and privileged accounts or ensure that data is only
changed through authorised means; and
•
IT operations: The controls over operations are
used to ensure that any issues that arise are
managed appropriately.
Within the scope of our audit where technology services
are provided by a third party, we considered assurance
reports from the third party’s auditor on the design and
operating effectiveness of controls.
We also carried out tests, on a sample basis, of IT
application controls that were key to our audit testing in
order to assess the accuracy of certain system calculations
and the operation of certain system enforced access
controls.
Where we identified design and operating effectiveness
matters relating to IT systems or application controls
relevant to our audit, we performed alternative audit
procedures. We also considered mitigating controls and
procedures in order to respond to the impact on our overall
audit approach.
186
Bank of Queensland Limited and its Controlled Entities
Independent auditor's report
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 71 to 100 of the Directors’ report for the year
ended 31 August 2022.
In our opinion, the remuneration report of Bank of Queensland Limited for the year ended 31 August 2022
complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors are responsible for the preparation and presentation of the remuneration report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.
PricewaterhouseCoopers
Matthew Lunn
Partner
Sydney
11 October 2022
187
2022 Annual Report
Independent auditor's report
Other information
The Directors are responsible for the other information. The other information comprises the information
included in the Annual Report for the year ended 31 August 2022, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors are responsible for the preparation of the Financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the Directors determine is necessary to enable the preparation of the Financial report that gives
a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the Financial report, the Directors are responsible for assessing the ability of the Bank and
the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Bank or the
Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
188
Bank of Queensland Limited and its Controlled Entities
Shareholding details
1. Twenty largest ordinary shareholders
As at Tuesday 20 September 2022, the following shareholding details applied:
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
GOLDEN LINEAGE PTY LTD
CITICORP NOMINEES PTY LIMITED
PACIFIC CUSTODIANS PTY LIMITED
GLENN HARGRAVES INVESTMENTS PTY LTD
MR KIE CHIE WONG
BNP PARIBAS NOMINEES PTY LTD
EMICHROME PTY LIMITED
CARLTON HOTEL LIMITED
THE MANLY HOTELS PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
EMICHROME PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BNP PARIBAS NOMINEES PTY LTD
NATIONAL EXCHANGE PTY LTD
Total
Number of
ordinary shares
101,159,874
65,728,927
38,453,122
26,072,304
12,948,009
3,110,131
2,376,174
1,971,622
1,250,000
1,233,000
1,161,801
1,100,594
1,084,037
1,045,301
1,029,958
950,463
900,000
790,144
776,522
760,000
%
15.63
10.15
5.94
4.03
2.00
0.48
0.37
0.30
0.19
0.19
0.18
0.17
0.17
0.16
0.16
0.15
0.14
0.12
0.12
0.12
263,901,983
40.77
The above table includes shareholders that may hold shares for the benefit of third parties.
Voting rights
On a poll every person who is a holder of ordinary shares or a duly appointed representative of a holder of ordinary shares has one vote.
189
2022 Annual Report Shareholding details
2. Twenty largest capital note holders
As at Tuesday 20 September 2022, the following holding details applied:
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MUTUAL TRUST PTY LTD
DIOCESE DEVELOPMENT FUND - CATHOLIC DIOCESE OF PARRAMATTA
JOHN E GILL TRADING PTY LTD
NATIONAL NOMINEES LIMITED
NETWEALTH INVESTMENTS LIMITED
BOND STREET CUSTODIANS LIMITED
BNP PARIBAS NOMINEES PTY LTD
TRUSTEES OF CHURCH PROPERTY FOR THE DIOCESE OF NEWCASTLE
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BERNE NO 132 NOMINEES PTY LTD
FEDERATION UNIVERSITY AUSTRALIA
BNP PARIBAS NOMINEES PTY LTD
INVIA CUSTODIAN PTY LIMITED
HAVENFLASH PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
NAVIGATOR AUSTRALIA LTD
NETWEALTH INVESTMENTS LIMITED
Total
Number of
capital notes
155,040
148,599
109,327
61,941
56,238
54,593
39,985
35,473
32,200
31,219
27,499
24,387
23,705
21,935
21,811
21,310
21,000
17,584
16,832
15,885
%
4.43
4.25
3.12
1.77
1.61
1.56
1.14
1.01
0.92
0.89
0.79
0.70
0.68
0.63
0.62
0.61
0.60
0.50
0.48
0.45
936,563
26.76
The above table includes security holders that may hold securities for the benefit of third parties.
Voting rights
Capital Notes do not give the holders any voting rights at any general shareholders meetings, except in certain circumstances.
190
Bank of Queensland Limited and its Controlled Entities Shareholding details
3. Twenty largest capital note 2 holders
As at Tuesday 20 September 2022, the following holding details applied:
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
DIMBULU PTY LTD
DIOCESE DEVELOPMENT FUND – CATHOLIC DIOCESE OF PARRAMATTA
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
NATIONAL NOMINEES LIMITED
MUTUAL TRUST PTY LTD
BERNE NO 132 NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD
NETWEALTH INVESTMENTS LIMITED
BNP PARIBAS NOMINEES PTY LTD
BERNE NO 132 NOMINEES PTY LTD
QM FINANCIAL SERVICES PTY LTD
NETWEALTH INVESTMENTS LIMITED
SANDHURST TRUSTEES LTD
G HARVEY INVESTMENTS PTY LIMITED
NULIS NOMINEES (AUSTRALIA) LIMITED
COOLAN TRADING PTY LTD
SKUA INVESTMENTS PTY LTD
MCLEAN CARE LTD
Total
Number of
capital notes
124,938
123,760
117,519
75,000
58,000
52,194
49,027
43,062
37,436
24,616
22,156
20,584
20,000
12,000
10,676
10,000
10,000
9,979
8,513
8,075
8,036
%
4.81
4.76
4.52
2.88
2.23
2.01
1.89
1.66
1.44
0.95
0.85
0.79
0.77
0.46
0.41
0.38
0.38
0.38
0.33
0.31
0.31
845,571
32.52
The above table includes security holders that may hold securities for the benefit of third parties.
Voting rights
Capital Notes 2 do not give the holders any voting rights at any general shareholders meetings, except in certain circumstances.
191
2022 Annual Report Shareholding details
4. Distribution of security holders
Distribution of fully paid ordinary shares as at Tuesday 20 September 2022:
Category
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Total
Less than marketable parcel (1)
Distribution of capital notes as at Tuesday 20 September 2022:
Number of
shareholders
% of
shareholders
Number of
shares
23,224,630
91,659,469
72,332,497
161,110,802
299,030,081
53.69
31.26
8.55
6.34
0.16
100.00
647,357,479
4.19
167,598
63,273
36,845
10,071
7,468
192
117,849
4,943
Category
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Total
Less than marketable parcel (2)
Number of
security holders
% of
security holders
4,655
381
25
28
3
5,092
44
91.42
7.48
0.49
0.55
0.06
100.00
0.86
Number of
securities
1,487,939
754,377
172,033
672,685
412,966
3,500,000
131
% of issued
capital
3.59
14.16
11.17
24.89
46.19
100.00
0.03
% of issued
capital
42.51
21.55
4.92
19.22
11.80
100.00
0.00
Distribution of capital notes 2 as at Tuesday 20 September 2022:
Category
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Total
Less than marketable parcel (3)
(1) Based on a closing price of $6.88 on 20 September 2022.
(2) Based on a closing price of $102.91 on 20 September 2022.
(3) Based on a closing price of $102.60 on 20 September 2022.
Number of
security holders
% of
security holders
Number of
securities
% of issued
capital
2,685
323
27
12
3
3,050
3
88.03
10.59
0.89
0.39
0.10
948,884
671,814
188,334
424,751
366,217
100.00
2,600,000
0.10
6
36.50
25.84
7.24
16.34
14.09
100.00
0.00
192
Bank of Queensland Limited and its Controlled Entities Shareholding details
5. Partly paid shares
There are no partly paid shares.
6. Substantial shareholders
The names of substantial shareholders in the Bank, per the meaning within the Corporations Act 2001 (Cth), and the number of shares in
which each has an interest as disclosed in substantial shareholder notices given to the Bank were:
The Vanguard Group Inc.
State Street Corporation
Number of ordinary shares
in which interest is held
(at date of notification)
32,417,919
39,013,553
Date of notification
6 July 2022
6 September 2022
7. Securities exchange listing
The shares of Bank of Queensland Limited (BOQ), Capital Notes (BOQPE) and Capital Notes 2 (BOQPF) are quoted on the Australian
Stock Exchange.
Notes issued under BOQ’s Euro Medium Term Note Programme and covered bonds issued under BOQ’s Covered Bond Programme
may be listed on the London Stock Exchange.
8. Unquoted securities
As at 30 September 2022, the following unquoted securities were on issue:
Unquoted securities (1)
CEO & Chair Awards
Deferred Award Rights
Performance Award Rights
Premium Priced Options
Performance Shares
Transformation Award Rights
9. On market buy-back
There is no current on market buy-back.
Number of
holders in the plan
Number of
unquoted securities
76
521
89
19
13
37
371,749
2,741,161
947,152
10,765,064
796,248
212,386
10. Securities purchased on market
During the year ended 31 August 2022, 2,082,857 shares were purchased on market under the employee incentive scheme (2).
The average price per security was $8.64.
11. Other information
BOQ is a publicly listed company limited by shares and is incorporated and domiciled in Australia.
(1) Unquoted securities are issued under the Award Rights Plan and the Equity Incentive Plan.
(2) Inclusive of shares purchased under the NED Plan.
193
2022 Annual Report Shareholder information
Share Registry
Company Details
Link Market Services Limited
Bank of Queensland Limited
Level 21, 10 Eagle Street
Brisbane Qld 4000
ABN 32 009 656 740
ACN 009 656 740
Australia: 1800 779 639
International: +61 1800 779 639
Email: boq@linkmarketservices.com.au
Registered office:
Level 6, 100 Skyring Terrace
Newstead Qld 4006
Customer Service
Australia: 1300 55 72 72
International: +61 7 3336 2420
Postal address:
GPO Box 898
Brisbane Qld 4001
linkmarketservices.com.au
Telephone: +61 7 3212 3844
Investor Relations:
InvestorRelations@boq.com.au
boq.com.au
twitter.com/boq
facebook.com.au/BOQOnline
Key Shareholder Dates
Dividend dates for ordinary shares only are:
2022
Financial full year end
Full year results and dividend announcement
Full year ex-dividend date
Full year dividend record date
Full year dividend payment date
Annual General Meeting
31 August 2022
12 October 2022
27 October 2022
28 October 2022
17 November 2022
6 December 2022
194
Bank of Queensland Limited and its Controlled Entities Glossary
Term
Description
Alternative liquid assets (ALA)
Alternative liquid assets are alternative treatments for holdings in the stock of HQLA. These treatments
are made available in jurisdictions where there is insufficient supply of HQLA1 (or both HQLA1 and
HQLA2) in the domestic currency to meet the aggregate demand of banks with significant exposures
in the domestic currency in the LCR framework. Within Australia, a locally-incorporated ADI subject
to LCR requirements is able to establish a CLF with the Reserve Bank of Australia, sufficient in size to
cover any shortfall in Australian dollars between the ADI’s holdings of HQLA and net cash outflows.
APRA Prudential Standard (APS)
Prudential standards issued by APRA which are applicable to ADIs.
Asset backed securities (ABS)
A financial security which is pledged by a pool of assets such as but not limited to loans, leases and
credit card debt.
Asset-Liability Committee
(ALCO)
A supervisory group that coordinates the management of assets and liabilities with a goal of earning
adequate returns.
Australian Accounting Standards
Board (AASB)
The AASB produces a series of technical pronouncements that set out the measurement and
recognition requirements when accounting for particular types of transactions and events, along with
the preparation and presentation requirements of an entity’s financial statements.
Australian Banking Association
(ABA)
The trade association for the Australian banking industry.
Australian Competition and
Consumer (ACCC)
Australia’s competition regulator and national consumer law champion.
Australian Finance Industry
Association (AFIA)
AFIA is the national association for the equipment leasing and financing industry. Formerly Australian
Equipment Lessors Association.
Australian Prudential Regulation
Authority (APRA)
APRA is the prudential regulator of the Australian financial services industry. APRA is an independent
statutory authority that supervises institutions across banking, insurance and superannuation and
promotes financial system stability in Australia.
Australian Securities and
Investments Commission (ASIC)
ASIC is Australia’s corporate, markets and financial services regulator.
Australian Securities Exchange
(ASX)
Australian Securities Exchange or ASX Limited (ABN 98 008 624 691) and the market activities
operated by ASX Limited.
195
2022 Annual Report Glossary
Term
Description
Australian Transaction Reports
and Analysis Center (AUSTRAC)
Australia’s financial intelligence unit and anti-money laundering and counter-terrorism financing
regulator.
Authorised deposit-taking
institution (ADI)
A corporation which is authorised under the Banking Act 1959 and includes banks, building societies
and credit unions.
Available stable funding (ASF)
ASF is the portion of capital and liabilities expected to be reliable over the time horizon considered by
the NSFR, which extends to one year.
Average interest earning assets
Average balance over the period for a bank’s assets that accrue interest income.
Bank of Queensland Limited
(the Bank or BOQ)
The Bank is a for-profit entity primarily involved in providing retail and business banking, leasing
finance and insurance products to its customers.
Banking Executive
Accountability Regime (BEAR)
The Banking Executive Accountability Regime (BEAR), set out in Part IIAA of the Banking Act 1959,
establishes accountability obligations for authorised deposit-taking institutions (ADIs) and their
senior executives and directors.
Banking Relief Package (BRP)
A form of Government assistance that gives eligible clients the option of deferring loan repayments for
a period of time.
Basel II and III
A global regulatory framework to improve the regulation, supervision and risk management within the
banking system developed by the Basel Committee on Banking Supervision.
Basis points (bps)
One per cent of one per cent (0.01 per cent).
Bonus Interest savings Account
(BISA)
BOQ’s Bonus Interest Savings Account is a savings account with a variable base interest rate and a
bonus interest rate calculated on a tiered basis.
BOQ Blue
BOQ Blue refers to the original BOQ brand and excludes new brands such as Virgin Money, BOQ
Specialist and BOQ Finance. It is predominantly represented as transactions and products serviced
through our branch network, business bank relationship managers and financial markets.
BOQ Group Transformation
Award (BTA)
BOQ Group Transformation Award is a type of incentive award granted to select employees. BTAs vest
subject to the achievement of a core earnings hurdle.
196
Bank of Queensland Limited and its Controlled Entities Glossary
Term
Description
Capital Notes (BOQPE) &
Capital Notes 2 (BOQPF)
Capital Notes are perpetual, convertible, unguaranteed and unsecured notes issued by BOQ, with
preferred, discretionary, non-cumulative distributions. Capital Notes may convert into common shares
in certain circumstances as described in the offer documentation of the notes.
Cash-Generating Unit (CGU)
A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or groups of assets. The CGUs represent the
Controlled Entity’s operating segments – Retail Banking and BOQ Business.
Collective Provision (CP)
An allowance for impairment loss of financial assets that are collectively assessed for impairment in
accordance with AASB 9 Financial Instruments.
Committed liquidity facility (CLF)
The RBA provides a CLF to certain ADIs as part of Australia’s implementation of the Basel III liquidity
standards. The facility is designed to ensure that participating ADIs have enough access to liquidity to
respond to an acute stress scenario, as specified under the relevant APS.
Common equity tier 1 (CET1)
Capital that is recognised as the highest quality component of capital under APS.
Common equity tier 1 ratio
(CET1 ratio)
CET1 capital divided by total RWA calculated in accordance with relevant APS.
Compound Annual Growth Rate
(CAGR)
Measurement of the annual return of an investment over a period of time, inclusive of the effect of
compounding.
Consolidated Entity (the Group)
BOQ and its subsidiaries.
Corporation Regulations 2001
The Corporations Regulations 2001 made under the Corporations Act 2001 (Cth).
Corporations Act 2001
The Corporations Act 2001 (Cth).
Cost to income ratio (CTI)
Operating expenses divided by net operating income.
Counter Terrorism Financing
(CTF)
A set of government laws, regulations, and other practices that are intended to restrict access to
funding and financial services for those whom the government designates as terrorists.
197
2022 Annual Report Glossary
Term
Description
Covered bond guarantor
Perpetual Corporate Trust Limited ABN 99 000 341 533, incorporated with limited liability in the
Commonwealth of Australia and having its registered office at Level 18, 123 Pitt Street, Sydney,
NSW 2000, as trustee of the BOQ Covered Bond Trust (the Trustee).
Days past due (dpd)
A loan or lease payment that has not been made by a customer by the due date.
Deferred Award Rights (DARs)
A type of long-term incentive award rights granted to employees below Senior Executive Level.
DARs vest subject to service conditions and a risk assessment.
Design and Distribution
Obligations and Product
Intervention Powers (DDO)
A mandatory government legislation that introduces targeted and principles-based design and
distribution obligations in relation to financial products.
Dividend payout ratio
Dividends paid on ordinary shares divided by earnings.
Dividend reinvestment plan
(DRP)
A plan which provides shareholders with the opportunity to convert all or part of their entitlement to a
dividend into new shares.
Dividend yield
Dividend shown as a percentage of the share price.
Earnings per share (EPS)
Measure of earnings attributed to each equivalent ordinary share over a twelve month period. This is
calculated by dividing the company’s earnings by the weighted average number of shares on issue in
accordance with AASB 133 Earnings per share.
Effective tax rate
Income tax expense divided by profit before tax.
Equipment hire purchase trust
(EHP trust)
EHP trust under the REDS securitisation program, issuing asset backed securities to the term market.
Euro Medium Term Note (EMTN)
EMTN is an offshore medium term note program.
Expected Credit Loss (ECL)
Estimated credit losses using a forward looking impairment methodology accounted for in
accordance with AASB 9 Financial Instruments.
198
Bank of Queensland Limited and its Controlled Entities Glossary
Term
Description
Financial Accountability Regime
(FAR)
Financial Accountability Regime Bill 2022 will replace the Banking Executive Accountability Regime
(BEAR) and impose core sets of obligations on authorised deposit-taking institutions, insurance
companies, and superannuation funds.
Full time equivalent (FTE)
A calculation based on number of hours worked by full and part time employees as part of their
normal duties.
General reserve for credit losses
(GRCL)
An additional reserve for future unidentified credit losses, in line with APS 220 Credit Risk
Management, not reflected as part of existing Expected Credit Loss provisions.
Gross Domestic Product (GDP)
Monetary measure of the market value of all the final goods and services produced in a specific
time period.
Gross loans and advances (GLA)
Gross loans and advances is the principal amount of loans and advances provided, gross of provisions
and deferred fee income and including any accrued interest.
High Quality Liquid Assets
(HQLA1)
Comprise the Bank’s notes and coins and marketable securities representing claims on or guaranteed
by the Australian Government or Semi-Government authorities.
Impaired assets
Exposures that have deteriorated to the point where full collection of principal and interest is in doubt.
Interbank Offered Rates (IBOR)
Globally recognised interest rate benchmarks at which banks borrow in the interbank market.
Interest bearing liabilities
The Bank’s liabilities that accrue interest expense.
International Accounting
Standards Board (IASB)
Independent, private-sector body that develops and approves International Financial Reports
Standards.
International Financial Reporting
Interpretations Committee
(IFRIC)
The interpretative body of the International Accounting Standards Board (IASB).
International Financial Reporting
Standards (IFRS)
A series of globally accepted accounting standards for accounting for particular types of transactions
and events.
International Panel on Climate
Change (IPCC)
IPCC is the United Nations body charged with overseeing climate change and publishing the global
climate models’ (including RCP’s).
199
2022 Annual Report Glossary
Term
Description
International Swaps and
Derivatives Agreement (ISDA)
An agreement published by the International Swaps and Derivatives Association (ISDA), outlines the
terms to be applied to a derivatives transaction between two parties, typically a derivatives dealer and
a counterparty.
Issued capital
Value of securities allotted in a company to its shareholders.
Know Your Client (KYC)
Regulatory compliance costs
The KYC guidelines in financial services require professionals to verify the identity, suitability, and
risks involved with maintaining a business relationship. The procedures fit within the broader scope of
the Bank’s anti-money laundering (AML) policy.
Line of credit (LOC)
A flexible facility that allows a customer to draw down on their approved available credit at any time, as
long as the customer does not exceed the approved credit limit.
Liquid assets
All unencumbered RBA repurchase eligible liquid assets including HQLA1 and assets able to be
pledged as collateral to the RBA under the CLF.
Liquidity Coverage Ratio (LCR)
The ratio of HQLA1 that can be converted into cash easily and immediately in private markets, to
total net cash flows required to meet the Group’s liquidity needs for a 30 day calendar liquidity stress
scenario as determined in accordance with APS.
Members Equity Bank Limited
(ME Bank or ME)
ME Bank is a for profit entity that operates in the retail segment of the domestic market offering
primarily home loan products and everyday transaction and online savings accounts.
Mortgage Net Promoter Score
(NPS)
The Net Promoter Score is an index that measures the willingness of customers to recommend a
company’s products or services to others. It is used as a proxy for gauging the customer’s overall
satisfaction with a company’s product or service and the customer’s loyalty to the brand.
Net capitalised investment
(CAPEX)
Net capitalised investment is the amount spent on purchasing or improving capital assets less their
cost of the depreciation and amortisation.
Net interest margin (NIM)
Net interest income divided by average interest-earning assets.
Net stable funding ratio (NSFR)
The NSFR is defined as the amount of ASF relative to the amount of required stable funding. This ratio
should be equal to at least 100% on an on-going basis. The amount of such stable funding required of
a specific institution is a function of the liquidity characteristics and residual maturities of the various
assets held by that institution as well as those of its off-balance sheet exposures.
Net tangible assets (NTA)
Net tangible assets are calculated as the total assets of a company minus any intangible assets such
as goodwill, less all liabilities and the par value of preferred stock.
200
Bank of Queensland Limited and its Controlled Entities Glossary
Term
Description
Non-Executive Director Fee
Sacrifice Rights Plan (NED Plan)
The Non-Executive Director Fee (NEDs) Sacrifice Rights Plan (NED Plan) allows NEDs to sacrifice a
portion of their Board fees to acquire BOQ shares.
Non-interest earning assets
The Bank’s assets that do not accrue interest income.
Novel Coronavirus disease
(COVID-19)
The Novel Coronavirus disease that was declared as a global pandemic on 11 March 2020.
Owner-managed Branch (OMB)
A branch which is run by a franchisee.
Performance Award Rights
(PARs)
A type of long-term incentive award rights which were granted to senior employees, including
executives, until 2019. PARs vest subject to two performance hurdles; relative total shareholder return
(rTSR) and relative earnings per share (rEPS).
Probability of Default (PD)
The likelihood that a borrower will be unable to meet debt obligations.
Purchase Price Allocation (PPA)
The amount BOQ allocates to the purchase of assets and liabilities for the ME Bank acquisition.
Purchased or originated credit
impaired (POCI) assets
Financial assets that are purchased or originated as being credit impaired.
REDS
Term to describe the BOQ securitisation programmes.
Representative Concentration
Pathway (RCP)
RCP are physical climate scenarios set by the IPCC (with the assistance of the global scientific
community).
Required stable funding (RSF)
An input to the calculation of the NSFR for bank prudential management purposes. A bank’s RSF is
calculated from its assets, weighted according to their maturity, credit quality and liquidity, together
with an amount in relation to off balance sheet commitments.
Reserve Bank of Australia (RBA)
Australia’s central bank and drives its functions and powers from the Reserve Bank Act 1959.
Residential mortgage backed
securities (RMBS)
BOQ’s securitisation program which enables the trustee to issue debt securities backed by assets
originated by the Group such as mortgages.
201
2022 Annual Report Glossary
Term
Description
Return on average equity (ROE)
Net profit attributable to the owners of the Bank divided by average ordinary equity.
Return on average tangible
equity (ROTE)
Net profit attributable to the owners of the Bank divided by average ordinary equity less goodwill and
identifiable intangible assets.
Right-of-use (ROU) asset
The right-of-use asset is a lessee’s right to use an asset over the life of a lease.
Risk weighted assets (RWA)
A quantitative measure of various risks including credit, operational, market and securitisation as
defined by APS.
Significant Increase in Credit Risk
(SICR)
A significant change in the estimated risk of default over the remaining expected life of the financial
asset. SICR is assessed by comparing the risk of a default occurring over the expected life of a
financial asset at the reporting date compared to the corresponding risk of default at origination.
Small and Medium Enterprises
(SME)
Businesses whose personnel numbers fall below certain limits.
Software-as-a-Service (SaaS)
Software delivery and licensing in which software is accessed online via a subscription, rather than
bought and installed on individual computers.
Tax Funding Arrangement (TFA)
An agreement entered into between members of the BOQ income tax consolidated Group for the
funding of the Australian income tax liability.
Tax Sharing Arrangement (TSA)
An arrangement entered into between members of the BOQ income tax consolidated group for the
apportionment of the Australian income tax liability.
Taxation of Financial
Arrangements (TOFA)
The TOFA rules provide for the tax treatment of gains and losses on financial arrangements.
Term Funding Facility (TFF)
Funding Facility for authorised deposit-taking institutions established by the RBA to support the
Australian economy.
Tier 1 capital
Tier 1 capital is the aggregate of Common Equity Tier 1 (CET1) capital and instruments that meet
the criteria for inclusion as Additional Tier 1 (AT1) capital set out in APS 111 Capital Adequacy:
Measurement of Capital.
202
Bank of Queensland Limited and its Controlled Entities Glossary
Term
Description
Tier 2 capital
Tier 2 capital comprises other components of capital that, to varying degrees, do not meet the
requirements as Tier 1 capital but nonetheless contribute to the overall strength of an ADI.
Total capital adequacy ratio
Total capital divided by total RWA calculated in accordance with relevant APS.
Total Shareholder Return (TSR)
A measure of the entire return a shareholder would obtain from holding an entity’s securities over a
period, taking into account factors such as changes in the market value of the securities and dividends
paid over the period.
Treasury shares
Shares that the Bank has issued but are held by a trust included within the Bank’s consolidated
results. Treasury shares are not considered shares outstanding and are not included in ‘per share’
calculations.
Virgin BOQ Group
Transformation Award (VTA)
A type of incentive award granted to select employees. VTAs vest subject to the achievement of two
hurdles: core earnings and the delivery of the Virgin Money digital bank.
Virgin Money Australia
(VMA or Virgin Money)
Virgin Money (Australia) Pty Ltd and its subsidiaries. The VMA entities are subsidiaries of the Group
that engage in the provision of financial services on behalf of business partners, including BOQ.
Weighted average life (WAL)
Is the average length of time for the principal on a loan to be paid in full.
Weighted average number of
shares (WANOS)
Calculated in accordance with AASB 133 Earnings per share.
Wholesale Capital Notes (WCN)
Notes that may convert into common shares in certain circumstances as described in the offer
documentation of the notes.
203
2022 Annual Report