Bank of Queensland boss Patrick Allaway has agreed with the board to remain at the helm for at least another 18 months to see through a radical digital transformation of the regional lender designed to arrest a shrinking mortgage book and improve returns amid intense competition.

Allaway has taken an axe to BoQ to reduce a bloated cost base and put it on a more sustainable foundation. Over the past year, it has terminated a model where franchisees operated branches, cut branch numbers, sliced hundreds of jobs, pulled back the number of products it offers, reduced the use of contractors and culled head office floor space.