The Bank of Queensland (ASX: BOQ) share price and the Bendigo and Adelaide Bank Ltd (ASX: BEN) share price have plummeted 4.17% and 5.56%, respectively, in afternoon trade.
These declines come as the Big Four banks have pulled the S&P/ASX200 Index (ASX: XJO) lower on Monday. The benchmark index has fallen 0.31% to 6,052.4 points this afternoon as the market continues to adjust following last week's Royal Commission final report.
A key factor behind the share price falls today was the release of the Bendigo and Adelaide Bank's first-half results, with profit falling 2.4% to $219.8 million for the half. Bendigo's results were hit by the usual suspects including tighter lending standards and net interest margin compression following APRA's regulatory crackdown in calendar year 2018.
Bendigo is the first non-major bank to release earnings in the February reporting season with AMP Limited (ASX: AMP), Suncorp Group Ltd (ASX: SUN) still to come. BOQ is scheduled to release its results in early April, prior to the Big Four (excluding CBA) in May 2019.
The BOQ share price had its biggest fall since October 2018 this morning, with expectations of earnings deterioration as a fellow regional bank. As with the other banks, BOQ has underperformed the broader ASX market with a 19.89% decline since the start of 2017 versus a 1.29% decline for the S&P/ASX200 over the same period.
Foolish Takeaway
The Financials sector remains a tough one to pick at the moment. Whilst the banks saw their share prices rise the most since the GFC last week on the back of the weaker than expected Royal Commission report, the headwinds remain unchanged. Tighter lending conditions and increased competition in the sector look set to drive profitability down whilst parliamentary and/or regulatory changes could see future growth opportunities reduced.
With plenty more reporting to be done ahead of June 2019, I'd be sitting tight and waiting for the dust to settle before getting a better idea of fundamental valuations. In the meantime, I'd be considering a stability stock such as Wesfarmers Ltd (ASX: WES) to ride out the current wave of volatility before considering my options in 2H19.
