Image source: TK Kurikawa @shutterstock

Highlights

  • Bank of Queensland is a regional bank that has more than 160 branches in Australia
  • BOQ has entered into an enforceable undertaking with AUSTRAC and APRA to uplift operational and financial resilience
  • For the first half of the financial year 2023, the company reported a 98% decline in statutory net profit after tax over the previous corresponding year

Bank of Queensland Limited (ASX: BOQ) is an Australian regional bank and has been in business since 1874. BOQ has over 160 branches in Australia, and most branches are managed by local owner-manager. Virgin Money Australia, BOQ Specialist, BOQ Finance and ME Bank are the companies through which BOQ operates.

Internal and external reviews by the banking company had identified deficiencies in risk culture and governance, operational resilience and anti-money laundering and counter-terrorism financing program. To address these issues, BOQ has entered into enforceable undertakings with AUSTRAC (Australian Transaction Reports and Analysis Centre) and APRA (Australian Prudential Regulation Authority).

APRA has asked the company to undertake an adjustment to its minimum capital requirements. The requirement is to add AUD 50 million to the operational risk capital requirement. BOQ shared that capital adjustment is expected to impact the Level 2 common equity tier 1 (CET1) ratio.

Financial metrics

In the first half of the financial year 2023 (1HFY23), the lender's net interest margin stood at 1.79%, compared to 1.74% in 1HFY22. Its efficiency ratio increased to 85.7%, and total income increased by 9% year-on-year. However, the company recorded a fall of 98% year-on-year in statutory net profit after tax over the previous corresponding period. Cash ROE fell by 80 basis points on 1HFY22 because of the decrease in cash earnings.

Dividend announced by BOQ

The banking group pays dividends twice a year. The last interim dividend of AUD 0.20 per share was paid in June 2023. The dividend ex-date was 10 May, and the pay date was 1 June 2023. It was 100% franked.

Company outlook

BOQ said it was concentrating its efforts on the execution of strategic priorities to become a lower-cost, scalable bank. Also, the bank intends to uplift its operational and financial resilience by simplifying its operating model, integrated risk program, adopting digitisation and optimising the organisation.

The bank expects a CET1 ratio of 10.25% - 10.75% in FY23. The targeted dividend payout ratio is 60 – 75%.

BOQ share price performance

BOQ share price increased by 1.056% to AUD 5.740 per share on 14 July 2023. In the last one month, the stock price has surged by 5.12%; however, in the last six months, it has dropped by 18.58%.

The stock clocked its 52-week high of AUD 7.79 on 14 October 2022 and 52-week low of AUD 5.32 on 26 June 2023. BOQ shares are closed below the mid-range of 52-week-high-low.

 

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 14 July 2023. The reference data in this report has been partly sourced from REFINITIV.