The Virgin Money brand will become a full service digital bank, once a heavy investment spend on digital solutions and a "simplification" of its core banking platform are complete at Bank of Queensland.Spending on digital is one drag on earnings, despite deft management of interest margins at BOQ, where net profit fell five per cent to A$336 million over the year to August 2018.Its return on equity declined to 8.9 per cent from 9.7 per cent. To keep shareholders sweet the bank lifted its dividend payout ratio to 89.3 per cent, from 84.1 per cent (with a full year dividend of 76 cents), unchanged from 2017.Jon Sutton, BOQ managing director, told an investor briefing yesterday that "over 2019, we are accelerating a series of targeted investments to fast track our digital strategy."He said this would include upgrading digital banking and customer engagement platforms and modernising call centre systems, "initiatives that will be leveraged across all of our brands."Of Virgin Money, a brand of BOQ's since 2013, Sutton said: "the proven success of Virgin Money in Australia across multiple products gives us great confidence in this brand's future."Both Virgin Money and the BOQ Specialist business finance division more than pulled their weight in driving loan growth over the year.New home loan business via the bank's main brand branch network "contracted as the impacts of lower branch numbers and more stringent credit practices relative to peers continued to be felt," Sutton said.Having resumed sourcing mortgage business from brokers, BOQ branch numbers are down 27 per cent over four years.In turn the bank's Queensland mortgage exposure reduced from 60 per cent in 2012 to 44 per cent in 2018. The broker channel supplied 30 per cent of home loan flows.The bank faced a decline in fee income but is offsetting funding cost pressures on its mortgage book in line with most of the sector."The cash to bills spread does appear to be structural, and if this is correct, it will remain a headwind in the period ahead," chief financial officer Anthony Rose told the briefing.BOQ's mortgage repricing took effect in July, and Rose said he "expected a benefit of around three basis points to flow through in the first half of the 2019 financial year."Regulatory and compliance costs, including the Royal Commission work, chewed up A$9 million.