The Bank of Queensland Limited (ASX: BOQ) share price will be on watch this morning after the regional bank released its half-year results.
According to the release, the bank achieved cash earnings after tax of $182 million during the first half, up 4% on the prior corresponding period. Statutory net profit after tax increased by 8% to $174 million.
Bank of Queensland finished the period with a Common Equity Tier 1 ratio of 9.42%, up 3 basis points from its full year results. Its net interest margin improved 1 basis point to 1.97%.
This ultimately led to the bank reporting a 2% increase in basic earnings per share of 46.5 cents for the first-half. Despite this increase the board elected to only maintain its fully franked interim dividend at 38 cents per share and didn't declare a special dividend as some had predicted.
In addition to announcing its half-year results, the regional bank also announced the sale of its St Andrew's Insurance business to Freedom Insurance Group Ltd (ASX: FIG) this morning for a total consideration of $65 million.
CEO Jon Sutton stated that the deal has been made due to changes in industry and business dynamics, believing that St Andrew's is a better long-term strategic fit for Freedom now.
According to the release, the transaction is expected to result in an indicative post-tax gain on sale of approximately $8 million and increase the bank's Common Equity Tier 1 ratio by around 20 basis points.
Should you invest?
I felt this was a solid but unspectacular result from Bank of Queensland.
Although management expects to face headwinds from low credit growth, low interest rates, regulatory uncertainty, increasing consumer expectations, and increased scrutiny of conduct and culture, it remains confident that it is well placed to grow.
This could make it a decent option for investors with little exposure to the banking sector. Especially given that its shares now offer a trailing fully franked 7% dividend.
I would still pick banking giants Westpac Banking Corp (ASX: WBC) and Commonwealth Bank of Australia (ASX: CBA) ahead of it, but it isn't far behind.
