#1Bank of Queensland Acquisition of Virgin Money Australia Stuart Grimshaw, Managing Director & CEO 10 April 2013 BOQ Your own personal bank#2Transaction details ▸ BOQ acquiring Virgin Money Australia (VMA) from the Virgin Group Total purchase price of $40m, including ~$30m in BOQ shares (1) (subject to a 12 month lock-up) Agreement with the Virgin Group for the exclusive use of the Virgin Money brand in Australia for up to 40 years in return for an ongoing royalty Virgin Group nominee to take up BOQ Board position and joint Advisory Committee established to oversee the business ▸ To operate as a standalone business within the BOQ Group, with highly experienced financial services executive Brian Bissaker appointed as CEO VMA ▸ Acquired business expected to become EPS accretive during the second full year of ownership ▸ Expected completion date 30 April 2013 2 (1) After the payout of VMA obligations, ~$30m in shares will be issued to a subsidiary of the Virgin Group soon after completion as part of the acquisition consideration. The final amount is subject to post-completion adjustments. The number of shares issued will be based upon the volume weighted average price of BOQ in the 30 trading days prior to the date of the agreement. Bank of Queensland Limited ABN 32 009 656 740 Virgin money BOQ Your own personal bank#33 A compelling transaction for BOQ shareholders 1 ▸ Established challenger brand opportunity in a market which lacks exciting alternatives Combining traditional banking management strength with a new world customer and distribution business VMA's proven online expertise removes execution risk of building capability 2 Consumer preferences shifting towards technology Accelerates BOQ's ability to acquire customers through alternative channels, including online Extends BOQ's reach into currently untapped, complementary market segments 3 Two-thirds of customer base is young affluent professionals/young growing families 4 5 Increased geographic diversification Gives BOQ the opportunity to manufacture banking products to be marketed under the VMA brand Opportunity to deliver savings products, mortgages, SME lending, etc Opportunity to significantly uplift VMA customer cross sell ▸ Provides a low risk, high potential growth avenue into the wealth space Bank of Queensland Limited ABN 32 009 656 740 Virgin money BOQ Your own personal bank#44 Transaction consistent with BOQ's Strategy BOQ's strategic focus 1. Multi-channel optimisation 2. Risk/Return balance 3. Operational excellence How does VMA deliver against strategy? VMA brings core competency in online customer acquisition BOQ brand predominantly branch based Broadens BOQ's exposure to different customers and segments Opportunity to further enhance geographic diversification Direct wealth offering ▸ Respective core competencies to be utilised ▸ Opportunity to leverage technology investments across brands 4. Talent, capability & culture ▸ Both BOQ and VMA cultures centred around outstanding customer service ▸ Access to the capability and expertise of the Virgin Group Virgin money Bank of Queensland Limited ABN 32 009 656 740 BOQ Your own personal bank#55 Financial impact ▸ Total purchase price of $40m, including ~$30m in BOQ shares (1) Ongoing royalty for use of Virgin Money brand VMA currently loss-making given still in start-up phase: Continuing existing customer acquisition and growth profile would deliver a positive and fast growing earnings profile during the second full year of ownership No material impact to BOQ's FY13 Cash NPAT ▸ Existing business profile and share issue will result in EPS dilution of 1-2% in the next financial year - becomes EPS accretive during the second full year of ownership Growth plans in BOQ manufactured banking product distribution offer potentially material upside ▸ Common equity tier 1 ratio to be maintained at sector leading levels, with minimal reduction of ~12bps (2) at completion (1) After the payout of VMA obligations, ~$30m in shares will be issued to a subsidiary of the Virgin Group soon after completion as part of the acquisition consideration. The final amount is subject to post-completion adjustments. The number of shares issued will be based upon the volume weighted average price of BOQ in the 30 trading days prior to the date of the agreement. (2) The present value of the minimum on-going royalty is incorporated in upfront capital impact. Virgin money Bank of Queensland Limited ABN 32 009 656 740 BOQ Your own personal bank#66 Summary ▸ BOQ has worked hard to successfully re-establish business fundamentals over last 18 months and is now acquiring a unique opportunity for future growth; creating a combination that is stronger than the sum of the parts: Customers ▸ VMA customers represent the strong new world distribution footprint that is fast growing ▸ Provides opportunity to acquire banking customers in profitable segments online through VMA Products Financials BOQ will add banking product manufacturing depth ▸ VMA brings existing capability where BOQ doesn't manufacture (eg. Wealth) ▸ Cross sell opportunities Significant upside for growth that would be more difficult to achieve organically ▸ The result will be an improvement in BOQ's long term EPS profile Rapid customer acquisition coupled with a focus on cross sell enhances return profiles Bank of Queensland Limited ABN 32 009 656 740 Virgin money BOQ Your own personal bank#7Appendices Additional Information BOQ Your own personal bank#88 About Virgin Money Australia Virgin brand universally recognised as a challenger in the global and Australian market, with growing awareness and consideration in financial services VMA established in Australia in 2003. Relaunched with new strategic partnerships and a new range of banking and insurance products commencing 2009 ▸ Partnership distribution model (ie. no product manufacturing) - working with leading financial services product manufacturing partners to bring simple products to market, leveraging brand and marketing, direct channel management and customer experience Currently servicing over 150,000 financial services customers, growing strongly at ~30% pa in the past 12 months with high customer satisfaction Product Credit Cards Super Alliance Partner/s Citigroup Start Year July 2010 The Trust Company (Trustee), Pillar Administration (Administrator), BNP Paribas (Custodian) June 2005 Life Insurance General Insurance TAL (formerly TOWER) Auto & General Insurance (part of the Budget Group), Allianz Global Assistance Feb 2011 May 2009 October 2012 Bank of Queensland Limited ABN 32 009 656 740 Virgin money BOQ Your own personal bank#9Important notices This presentation has been prepared by Bank of Queensland Limited (BOQ). This presentation may contain information (including information derived from publicly available sources) that has not been independently verified by BOQ. All dollar values are in Australian dollars ($A) and financial data is presented as at the date stated. Any forward looking information in this presentation has been prepared on the basis of a number of current assumptions which may ultimately prove to be materially incorrect. Therefore actual results, outcomes and achievements may be materially greater or less than estimated. This presentation should not be relied upon as a forecast by BOQ. Neither BOQ nor its directors, officers, employees or advisors make any representation or warranty and accordingly no reliance should be placed on the fairness, accuracy, completeness or reliability of the information contained in this presentation. To the maximum extent permitted by law, BOQ its directors, officers, employees or advisors do not accept any liability for any errors, omissions or loss (including because of negligence or otherwise) arising, directly or indirectly, from any use of this presentation or information contained in this presentation. This presentation is for information purposes only and does not constitute or form part of any offer for sale or issue for any securities or an offer or invitation to purchase or subscribe for any such securities. This presentation and its contents must not be distributed, transmitted or viewed by any person in any jurisdiction where the distribution, transmission or viewing of this presentation would be unlawful under the securities or other laws of that or any other jurisdiction. This presentation and its content is not intended to be relied upon as advice to investors or potential investors and does not take into account an individual investor's investment objectives or financial situation. Investors or potential investors should consider their individual circumstances and consult professional advisors where appropriate. 6 Bank of Queensland Limited ABN 32 009 656 740 Virgin money BOQ Your own personal bank#10BOQ Your own personal bank