Bank of Queensland (BOQ) says it has turned a corner after posting a full year loss of $17.1 million, the first full year loss by an Australian bank in 20 years.
The loss for the year to August 31 compares to a net profit of $158.7 million in the previous 12 months.
BOQ had forecast the result, which was caused by its exposure to the struggling southeast Queensland property market and other one-off items.
Chief executive Stuart Grimshaw said the bank was profitable in the second half of its fiscal year, and the next 12 months should be more positive.
"We've addressed the basics to become operationally fit and are focused on delivering better services for our customers and profitable growth for shareholders," he said in a statement.
"I believe we have reached a crucial turnaround point and I'm looking forward to the next 12 months."
BOQ shares were down 11 cents, or 1.4 per cent, at $7.25 at 1050 AEDT.
Mr Grimshaw said the bank's asset quality and risk management had been addressed.
"We have seen a fall in mortgage arrears over the past few months. However, we continue to be prudently provided for, hence the top-up of our collective provisions," he said.
BOQ raised its provisions for bad debt expenses in the second half of its fiscal year, which contributed to the full year loss.
"We are seeing stabilisation in the commercial portfolio with no new large impaired exposures in the second half," Mr Grimshaw said.
There are also some early signs of consumers returning to the housing market, he said.
However, the wider economic conditions remained challenging, with consumers still cautious and demand for loans subdued, Mr Grimshaw said.
BOQ's normalised cash profit in the year to August, which excludes one-off items, was $30.6 million, down from $176.6 million in the previous year.
BOQ declared a fully-franked final dividend of 26 cents per share, taking the full year dividend to 52 cents per share, down from 54 cents in the previous year.