BOQ chief defends growth strategy 27 March 2015 4:43PM John Kavanagh Bank of Queensland chief executive Jon Sutton has defended a growth strategy that is heavily reliant on increasing mortgage sales through the broker distribution, which is becoming an increasingly cut-throat sales channel.Over the past year every underperforming home lender has turned to brokers with offers of lower rates, higher commissions and bigger discounts to win business. In many cases the increased sales have come at the cost of lower margins and higher expenses.BOQ reported a net profit of A$154 million for the six months to February, a 14 per cent increase on the previous corresponding period. After adjusting for $8 million of integration costs related to its acquisition of Investec Bank Australia's assets, as well as other one-off items, the bank reported a cash profit of $167 million. This was an increase of 19 per cent over the previous corresponding period.Net interest income rose 24 per cent to $448 million and non-interest income rose two per cent to $84 million. The net interest margin rose 20 basis points over the previous corresponding period to 1.97 per cent.Operating expenses rose 31 per cent to $256 million. The cost-to-income ratio rose from 43.8 per cent to 48.1 per cent. The bad debt charge fell 22 per cent to $36 million. Return on equity was unchanged at 10.3 per cent.The big development for the bank last year was its $440 million purchase of Investec's professional finance, asset finance and leasing businesses in April.That business, now called BOQ Specialist, contributed $61 million to the group's interest income and $19 million to cash earnings. Eleven bps of the bank's 20 bps increase in margin came from BOQ Specialist.Leaving BOQ Specialist out of the equation, a like-for-like comparison of the bank's results with the previous corresponding period shows a seven per cent increase in net interest income, a four per cent fall in non-interest income, a 13 per cent increase in expenses and a six per cent increase in cash profit.