Home loan rate hikes have delivered a boost for Bank of Queensland, but intense competition from rival lenders could limit the benefits flowing through to its bottom line.
Chief executive Jon Sutton says the recent rate hikes had boosted the bank's net interest margin, or the money it makes on loans, which should help lift earnings.
"However, other factors such as very competitive pricing for new business and the low interest rate environment will reduce the full effect of this margin increase," he told shareholders at BoQ's annual general meeting on Thursday.
BoQ and its rivals have lifted home loan rates to help cover the cost of new regulations requiring them to bolster their balance sheets to protect against future financial shocks.
Chairman Roger Davis said part of the reasoning behind increasing the capital levels of banks was related to concerns about a property market bubble, particularly in Sydney and Melbourne where prices have surged.
He said it was questionable whether there was a bubble, noting that while prices in both those capital cities were "toppish" Brisbane and Perth had more moderate growth.
He added that if regulators tightened home lending rules further, the housing cycle could moderate and have an adverse impact on the wider economy.
"This could potentially make the next growth cycle all that much harder to find for all banks, given the prevailing operating environment," Mr Davis said.
On the broader economy, Mr Davis said the below trend growth rate was unlikely to disappear any time soon.
"The good news amongst all the noise, is ... interest rates are expected to stay lower for longer, making debt financing for small business and Australians' housing aspirations ... all the more attractive," he said.
Shareholders also heard that the bank saw opportunities for growth in the small business and personal banking sectors.
But Mr Sutton said while some analysts were expecting a meaningful lift in BoQ's non-interest income this financial year, the bank expected "flat to low growth".
The bank's shares were 36 cents lower at $13.90.
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