Bank of Queensland has joined the ranks of lenders offloading life insurance after agreeing to sell its St Andrew’s unit for $65 million.
The regional lender on Tuesday said the sale of St Andrew’s Insurance to Freedom Insurance Group included a three-year distribution agreement for the provision of life insurance products to BOQ customers.
BOQ, which lifted first-half profit four per cent, expects the deal to result in a post-tax gain of about $8 million to be recorded in its full-year results.
The sale follows similar moves by ANZ, Commonwealth Bank and National Australia Bank to cut their exposure to wealth management.
Chief executive Jon Sutton said the transaction made “strategic sense” for both parties.
“St Andrew’s has made a strong contribution to the BOQ group since its acquisition in 2010, but industry and business dynamics have changed dramatically in recent years,” Mr Sutton said.
“These changing conditions now mean St Andrew’s is a better long-term strategic fit for Freedom.”
BOQ also announced a first-half cash profit of $182 million, driven by a return to lending growth.
Home lending grew three per cent in the six months to February 28, with volumes building through both specialist and broker channels.
BOQ said, while the industry is facing a number of headwinds including low interest rates, regulatory uncertainty and increased scrutiny of conduct and culture, the company remained well placed.
Mr Sutton said BOQ is building out its business banking in higher growth sectors of the economy and opening up new retail channels.
“Our very strong capital position provides us with flexibility to consider options that will deliver the best value to our shareholders,” he said.
BOQ H1 RESULTS AT A GLANCE:
* Cash profit up 4pct to $182m
* Net profit up 8pct to $174m
* Total income up 3pct to $550m
* Fully franked interim dividend of 38 cents, unchanged