MENU

Here’s why Bank of Queensland Limited soared 2.6%

Credit: BOQ

What: The share price of Bank of Queensland Limited (ASX: BOQ) rallied 2.6% on Wednesday, making it the best performer compared with all of its major banking peer group – including National Australia Bank Ltd. (ASX: NAB) which gained 1.02% –  and also providing a better performance than the 0.3% gain which the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) attained.

Why: The cause of yesterday’s gain corresponded with the release of the bank’s 2015 Strategy Update. Amongst the key takeaways from the presentation were:

  • Bank of Queensland’s (BOQ) impressive “net promoter score” compared to the major banks – the score is essentially a measure of trust.
  • BOQ is positioned into the niche of being a specialised, high-return operator – the group has chosen specialisation rather than scale as management believes this will deliver higher growth, customer satisfaction and returns.
  • Amongst the niche segments that BOQ is targeting are healthcare, aged care, agribusiness, hospitality and tourism.
  • BOQ aims to provide its customers with a personal feel which is nimble and modern.
  • The group has set a priority to build a sustainable deposit base and diversify its lending portfolio as the bank currently lags the market averages.

Now What: In the 2015 financial year, BOQ grew cash earnings after tax by 19% to $357 million, cash earnings per share (EPS) increased to 98 cents per share (cps) and dividends increased to 74 cps.

According to data supplied by Morningstar, BOQ is forecast to grow EPS to 106 cps and its dividend to 76 cps in the current financial year. With the share price trading at $14, this implies a price-to-earnings ratio and fully franked dividend yield of 13.2 times and 5.4% respectively, which might explain buyer enthusiasm for the stock.

The Motley Fool's top dividend stock for 2015-2016 is NOT a bank!

Handpicked by our investment experts, this promising ASX stock boasts a fully franked yield that puts term deposits to shame! You can get the name and code FREE in our brand-new report, "The Motley Fool's Top Dividend Stock for 2015." Click here now for your free copy.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.