Bank of Queensland yesterday joined the industry-wide exodus from wealth management activities, after sealing a A$65 million deal to sell its life insurance arm to Freedom Insurance Group.The announcement of the asset sale preceded the release of the bank's interim profit result, which slightly disappointed investors concerned about rising costs, lower fee income and the absence of a special dividend.BoQ scrip fell 2.38 per cent to close at a 12 month low of $10.66 on almost four times the average daily turnover.BoQ's bottom line profit of $174 million was 8 per cent up on the first half last year and was mostly driven by improvements in interest revenue and loan impairments.Managing director Jon Sutton attributed the slight improvement in net interest margin to repricing of investment mortgages triggered by the Australian Prudential Regulation Authority's macro-prudential measures.Sutton also highlighted the $671 million expansion of the bank's loan book as evidence that his niche banking strategy was working.BoQ rattled investors at its first half earnings announcement last year when it reported that its loan base had contracted by $157 million."I am pleased to report that lending growth has improved," he said."This was supported by our commercial niche segments, as well as home loan growth through the Virgin Money, BoQ Specialist and BoQ Broker channels."Sutton provided little commentary on the bank's cost management challenges, which saw the cost to income ratio rise from 45.9 per cent to 47.6 per cent over the six months.Loan impairment expense fell 19 per cent to $22 million and accounted for only 0.1 per cent of gross loans.Sutton attributed the improvement in credit quality to the bank's decisions to adopt responsible lending practices and more prudent risk policies earlier than rivals."We moved to adopt enhanced servicing, validation and responsible lending practices much earlier than many of our peers," he said."Although this has hampered our growth in prior periods, we think it was the most prudent approach to take for the long term."Several institutional investors said they were somewhat surprised that the bank had not sweetened returns to shareholders with another special dividend.However, Sutton sent a strong signal that fresh capital management initiatives were in the offing, given the bank's solid core Tier One ratio of 9.42 per cent."Although not announcing any specific initiative today, we are activity considering a range of options to enhance shareholder returns," he said.The BoQ chief said the banking industry was facing a number of headwinds, including the challenge of low credit growth and heightened scrutiny of conduct and culture.The bank has not been investigated for any misconduct in the hearings held so far by the Hayne Royal Commission.BoQ directors declared a fully franked interim dividend of 38 cents per share - in line with the first half distribution in 2017.