Despite cutting its interim dividend and reporting a slump in earnings and surge in costs, shares in the Bank of Queensland (ASX:BOQ) still managed a solid 5.1% gain on the day in the wake of the release of its half-year report.

The shares ended at $6.10 after touching a high of $6.28, as investors seemed to be thankful there were no nasties in the result like there were a year ago when the bank made a statutory profit of just $4 million.

The Brisbane-based bank said the interim dividend for the six months to February 29 was set at 17 cents a share, down from 20 cents a year ago, with the dividend reinvestment plan continuing (which helps conserve cash outflows).

While statutory earnings of $151 million were up from a year ago (when the bank saw a big hit from a series of one-offs which cut the statutory result to just $4 million), the 39% slump in cash earnings was the true indicator of the sluggish performance by the bank in the latest half.

After-tax cash earnings totaled $172 million, down sharply from the $256 million reported for the first half of 2022-23 and helping explain the sliced dividend.

Bank of Queensland reported a nasty 12% slide in revenue for the half-year to $795 million. The bank said the fall was "driven by lower margins due to competitive pressures and a contraction in lending, while expenses increased 6% due to inflation and continued investment in risk, compliance, and technology."

The bank said the result included a one-off after-tax adjustment of $19 million relating to the sale of a non-core New Zealand asset portfolio, as announced to the market in February and April.

The bank's net interest margin slumped to 1.55% from 1.79% a year ago (which was worse than the comparison used in the results announcement of a 3-point dip from the second half of 2022-23).

The cost-to-income ratio rose (thanks to higher costs and the slump in revenue) to reach an unpalatable 65.9%, and return on equity fell to 5.8% from 8.4% a year ago and still well short of acceptable. Its bigger rivals have ROEs double that or more of Bank of Queensland.

Bank of Queensland said its CET1 ratio (its main measure of capital strength) was 10.76% "was above the management target range" but that is also the minimum from regulator APRA. Its bigger rivals have CET1 figures north of 11% to 12%.

"Asset quality remains sound with low loan impairment expense (LIE) and prudent provisioning. The continued focus on economic return resulted in a contraction of the housing portfolio, while growth in niche business banking segments, including novated leasing and lending to the health and agriculture sectors, was partially offset by a cautious approach to commercial real estate lending," the bank said in Wednesday's announcement.

And buried in the announcement was news of a change in strategy involving what the bank called an "Organizational shift to focus on return on equity (ROE) and improve shareholder returns."