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.
