Bank of Queensland has completed a successful pilot program for the revamp of its Virgin Money Australia subsidiary and will start a full build and implementation next year. The bank has a lot riding on its VMA overhaul, which will lead the bank into a digital, cloud-based future.BOQ chief executive George Frazis told shareholders at the bank's annual general meeting yesterday that Virgin Money would have savings and transaction accounts on its new platform next year, with home loans and other products to follow.He warned that, while the bank's investment in this and other upgrades would deliver value, the benefit would not be in the short term. Shareholders should be prepared for significantly higher operating costs in the current financial year, leading to what may be a repeat of the "disappointing" 2018/19 result.Frazis and the board got through the AGM without suffering too many bumps and bruises. All resolutions were passed. The harshest criticism came from a shareholder who said not enough of the directors and executives were Queenslanders and the company was being run on a FIFO basis.Not even the mention of Austrac caused much of a stir. Frazis referred to a review of the bank Austrac did last year, which revealed potential contraventions.He said the bank had a program underway to improve its controls in the anti-money laundering and counter-terrorism financing area, and was working closely with Austrac to get it right.He said the bank was not aware of any instances of "non-reporting" of transactions to Austrac. The bank handles all its international payments through the SWIFT network, which has the appropriate reporting systems in place.The bank also has a productivity (cost cutting) review and a product simplification project underway. Again, Frazis cautioned that the benefits would come in the medium term rather than the short term.Last financial year, the bank suffered from slowing credit demand, higher regulatory costs and pressure on its margin from lower interest rates.It made a net profit of A$298 million in the year to August - down 11 per cent on the 2017/18 result. Cash earnings were down 14 per cent to $320 million. The net interest margin fell five basis points to 1.93 per cent. Return on equity fell 120 bps to 7.7 per cent (8.3 per cent on a cash basis).The common equity tier 1 capital ratio fell from 9.3 per cent to 9.04 per cent. The bank reduced the dividend by 9 per cent in the second half. Lending grew by $937 million, compared with growth of $1.5 billion in 2017/18.