Bank of Queensland Ltd (ASX: BOQ)

BOQ Details

Resilient Approach: While the financial services industry has been facing challenges over the past one year, Bank of Queensland stock is trading close to its 52-high levels. The group’s 2017 financial year performance has been attained for the fifth successive year with a decent statutory profit after tax growth of 4% to $352 million and 5% rise in cash earnings after tax to $378 million.The final dividend of 38 cents per ordinary share was declared along with a special dividend of 8 cents per ordinary share, that led to a full year dividend of 84 cents per ordinary share. Growth was witnessed in BOQ Specialist, BOQ Finance and niche commercial segments while Virgin Money business was seen to exceed growth expectations. The group’s loan impairment expense has also reduced to 11 basis points of gross loans and advances, and it has grown to be more resilient over the longer term. BOQ also benefitted from a $16 million profit on the disposal of a vendor finance entity. While concerns over interest rates scenario, wage growth, living expenses, APRA’s new regulations on investor mortgage growth, and competition for new customers are putting a pressure on margin; bank’s resilient approach is expected to help it sail through challenges. Improved digital experience, enhanced footprint for Virgin Money, enhanced broker presence and strategy to focus and gain value from niche segments are some of the key aspects that can benefit the bank amid the challenging environment. We maintain a “Hold” on the stock at the current price of $13.26
 

Strategic Pillars (Source: Company Reports)
 

Bendigo and Adelaide Bank Ltd (ASX: BEN)

BEN Details

Softness in Outlook: Bendigo and Adelaide Bank’s stock plunged 1.8% on November 01, 2017 post a 5.4% fall in last five days while the bank provided a soft market update. During the Annual General Meeting, BEN announced for a good performance in 2017 and there was growth in margin and balance sheet. The group pointed out that macroprudential actions from APRA have forced banks, including BEN to slam on the brakes in investor and interest only lending. This seems to bring a flat performance in the coming year. BEN also signalled for the impact from cost pressures at the back of removal of foreign ATM fees by the major banks. Overall, the tighter, more prescriptive rules on capital and risk that have been imposed around the world have been picked up by the bank and are expected to pose challenges in terms of performance for some time. The bank had otherwise reported for FY17 NPAT growth of 3.37% to $429.6m while revenue from ordinary activities were $3,014.6m, down 2.28% against FY16. Looking at the challenges, we maintain our “Expensive” recommendation at the current price of $11.17

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.