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Bank of Queensland’s (BOQ) commercial lending balances increased by $2.1 billion, or 16 per cent, to $15.2 billion in FY2025–26.
The growth came as BOQ Business cash earnings after tax, excluding notable items, fell 4 per cent to $269 million in the year ended 31 August 2026.
The bank said commercial lending delivered “strong growth while maintaining disciplined risk-adjusted returns”, with lending spread across a diverse range of industries and businesses and “well secured by property”.
Commercial lending was the standout performer, with balances climbing 16 per cent year on year to $15.2 billion, up from $13.2 billion in FY24–25.
Asset finance, by contrast, fell 47 per cent to $3.7 billion, reflecting the sale of a $3.6 billion equipment finance portfolio to investment management firm Challenger.
Banks such as the CBA, ANZ, NAB and Judo Bank have also recorded strong growth in their business lending books.
Specialist sectors drive commercial lending
BOQ’s commercial lending book grew by $2.1 billion, or 16 per cent, in FY25–26, building on the $1.6 billion increase recorded in the previous financial year.
The bank attributed the latest growth to investment in and expansion of its banker footprint, alongside a continued focus on key growth corridors. Lending growth was spread across a diverse range of industries and businesses, with the portfolio “well secured by property”, according to BOQ.
Healthcare, agribusiness and diversified industries remain key areas of focus, with the bank supporting both family-owned businesses and larger commercial clients.
The focus on specialist sectors builds on growth in healthcare lending in FY24–25, when BOQ highlighted retirement living facilities and specialist medical services, as well as lending to larger commercial real estate clients.
In an ASX release, the bank said: “BOQ’s business banking proposition is underpinned by its strong position in Queensland and deep industry expertise in key segments.
“The Business Bank delivered 16 per cent commercial lending growth, with an ongoing focus on health, agriculture and diversified industries, primarily to small to medium businesses, in line with the Business Bank’s strategic focus.”
Equipment finance falls amid restructure
While commercial lending grew, BOQ’s asset finance balances contracted by $3.3 billion, or 47 per cent, during FY25–26.
The decline reflected BOQ’s $3.6 billion whole-loan sale of equipment finance assets to Challenger, alongside a forward-flow arrangement that allows the bank to continue originating and servicing equipment finance facilities.
Excluding the sale, asset finance balances grew by $321 million, or 5 per cent, over the year.
BOQ added: “This partnership allows BOQ to scale its equipment finance lending in the forward flow, generating capital light earnings, without capital or funding requirements, and with no direct credit exposure.”
The bank also said growth in its on-balance-sheet asset finance portfolio was driven by a $262 million increase in structured finance, reflecting “strong relationships across the novated leasing sector and continued demand for electric vehicles”.
Commercial arrears remain relatively stable
The bank’s commercial lending arrears rates were broadly stable over the year, although the proportion of loans 90 days past due increased slightly.
Loans 30 days past due accounted for 1.14 per cent of commercial gross lending assets in August 2026, down from 1.34 per cent a year earlier.
Loans 90 days past due accounted for 0.79 per cent, compared with 0.74 per cent in August 2025.
Asset finance arrears increased over the same period. Loans 30 days past due rose to 2.81 per cent of asset finance gross lending assets, from 1.55 per cent, while loans 90 days past due increased to 1.71 per cent from 0.90 per cent.
BOQ said it expected credit quality to remain strong in FY26–27, with loan impairment expense expected to remain relatively stable.
Home lending faces a longer road back to growth
BOQ’s housing portfolio contracted by $4.6 billion, or 8 per cent, in FY25–26, with lower settlements and higher run-off outweighing growth through ME Bank.
As reported by Broker Daily’s sister brand, The Adviser, BOQ is also looking to reduce its reliance on brokers as its proprietary channels expand, although brokers remained central to its mortgage business, originating 72 per cent of FY25–26 lending and accounting for 58 per cent of its existing portfolio.
ME remains the group’s dedicated retail broker brand, while BOQ and Virgin Money are developing their own digital mortgage offerings. BOQ said mortgage origination costs had fallen 22 per cent, with a 50 per cent reduction targeted at scale.
Despite the annual contraction, the bank said housing application volumes and portfolio run-off improved in the second half, providing a stronger foundation for a planned return to home lending growth in FY26–27.
[Related: BOQ announces new CEO]
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