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In the past month, shares of Bank of Queensland Ltd (ASX:BOQ) have edged up by 2%, currently trading at AU$6.36, an increase of less than 1% on the day. However, the bank is making headlines with its recent announcement of significant job cuts, which, while not directly impacting share prices, form a critical part of the bank's strategy to reduce operating costs.
The proposed layoffs, which could affect up to 600 employees, are a follow-up to the cost-reduction plans discussed during BOQ's interim results in April. These cuts are set to impact various departments, including marketing, human resources, and retail banking. Should these job reductions be fully realised, the bank’s workforce would decrease to approximately 5,500 employees.
The bank has acknowledged the impact of these changes on its employees, stating a commitment to support those affected through potential redeployment opportunities. BOQ is focused on executing its transformation strategy to streamline operations and position itself as a simpler, more specialist institution.
This move is not unprecedented for BOQ, which had already reduced its workforce by 250 jobs nearly a year ago. The recent announcement aligns with the bank's broader cost-cutting measures following a challenging period. In the first half of FY24, BOQ reported a 33% drop in cash earnings to AU$172 million and a 3 basis point decline in its net interest margin (NIM) to 1.55%, reflecting broader struggles within the organisation.
The reaction to these potential job cuts has been mixed. The Finance Sector Union has raised concerns about the impact on employees, labelling the potential 600 job cuts as a severe blow to the workforce. The union has criticised BOQ’s approach, suggesting that the bank's drive for simplification equates to significant job losses. They have called for greater transparency from BOQ regarding their plans, expressing frustration over perceived poor risk governance.
While the immediate effect of these job cuts on BOQ’s share price is not substantial, the long-term impact on the bank’s performance and employee morale remains to be seen. Investors and employees alike will be watching closely as BOQ implements these changes and navigates its transformation strategy.
