There are a number of contradictory messages over the outlook for Bank of Queensland following release of its full year profit for the year to August 2008 yesterday.At one level the bank's profit, even though it fell, suggests that the prospects of a BBB-rated bank are a lot more viable that many assume, and that indeed the two A-rated banks that have hung out the white flag this year (St George and Suncorp) may have taken a very short-term view.Indeed, while BOQ's profit fell, measured by return on equity, the net interest margin actually increased in the second half (reflecting wider margins on lending products) even as the bank chased retail deposits aggressively. On the other hand management warned that the "war is not over" on margins.The bank also talked up the effectiveness of the management of its liabilities, including a couple of mortgage-backed securitisations and support from new bank investors in Europe and Asia for a recent syndicated term loan.On the other hand BOQ managing director David Liddy said the bank will be "at the front of the queue" for federal government investment in mortgage-backed securities. Liddy also predicted the government would increase the planned investment from $4 billion.BOQ has $28 billion in liabilities of which half are retail deposits and the remainder wholesale liabilities.BOQ reported an increase of 44 per cent in net profit to $155 million over the year on a "normalised" basis. This adjusts for some one-off items. The statutory net profit fell slightly to $126.8 million.The underlying profit, which ignores bad debt expenses, increased to $251 million from $169 million.The return on equity fell to 13.0 per cent in 2008 from 15.4 per cent in 2007 using the more favourable normalised profit. BOQ said it was ahead of budget in relation to the integration of Home Building Society, which it acquired in December 2007.BOQ declined to formally supply any guidance on this year's profit.Liddy said BOQ would continue to seek discrete takeover opportunities in retail banking and equipment finance.