• Statutory net profit after tax $136m, cash earnings after tax $176m
• Continued digital migration, 75% of home lending via digital platform
• Whole-of-loan sale and forward flow arrangement with Challenger

BOQ reported statutory net profit after tax of $136 million and cash earnings after tax of $176 million for the half year ended 28 February 2026 (1H26). Key milestones achieved include further migration of ME customers to the digital bank, with 72% of active retail customers now on the digital platform, and 75% of home lending originations through the digital mortgage. The Group also entered into a capital partnership with Challenger Limited for a $3.7 billion whole-of-loan sale of equipment finance assets and a forward flow arrangement. This transaction is expected to facilitate a return of capital to shareholders. Disciplined expense management delivered flat total operating expenses, with continued progress on productivity partially offsetting inflation. The Group maintained strong financial resilience with a CET1 ratio of 11.18%, above the management target range, and a Liquidity Coverage Ratio of 141%. The Board has determined to pay an interim fully franked dividend of 20 cents per share. Looking ahead, the Group expects moderation in economic growth in the second half of FY26, with elevated inflation, increasing cash rates, and uncertainty from the Middle East conflict weighing on consumer and business confidence. However, asset quality remains strong, and the Group is well-positioned to navigate the current conditions. The Group intends to continue at or above system growth for commercial lending, while positioning for home lending growth from FY27 as the digital mortgage is expanded. Cost growth from FY25 to FY26 is expected to be below the rate of inflation.

The Group's CET1 management target range remains unchanged at 10.25 - 10.75%, and the dividend payout ratio target range also remains at 60 - 75% of cash earnings. The whole-of-loan sale with Challenger is expected to reduce funding by ~$3.4 billion and facilitate a return to shareholders of ~$300 million, subject to regulatory approval.

The Group expects moderation in economic growth in the second half of FY26, with elevated inflation, increasing cash rates, and uncertainty from the Middle East conflict weighing on consumer and business confidence. However, asset quality remains strong, and the Group is well-positioned to navigate the current conditions. The Group intends to continue at or above system growth for commercial lending, while positioning for home lending growth from FY27 as the digital mortgage is expanded. Cost growth from FY25 to FY26 is expected to be below the rate of inflation.