The Bank of Queensland Limited (ASX: BOQ) share price has continued its poor run on Wednesday.
In fact, the regional bank’s shares have fallen so hard in recent weeks that they hit a 52-week low of $8.51 today.
When the bank’s shares hit this level, it meant they had lost 10.5% of their value in 2019.
This compares to a gain of almost 21% for the S&P/ASX 200 index since the start of the year.
Why is the Bank of Queensland share price at a 52-week low?
Investors have been heading to the exits in their droves this year due to the regional bank’s poor showing in FY 2019.
Last month the bank posted cash earnings after tax of $320 million. This was a 14% decline on the prior corresponding period and fell short of the market’s expectations.
On a statutory basis things were equally bad. Bank of Queensland reported an 11% decline in statutory net profit after tax to $298 million.
This ultimately led to the bank’s board cutting its final dividend down to 31 cents per share. Which brought its full year dividend to 65 cents per share, down 14.5% year on year.
Also causing concerns were the bank’s cost to income and CET1 capital ratios.
Bank of Queensland reported a 300 basis points increase in its cost to income ratio to 50.5% and a 27-basis point reduction in its CET1 ratio to 9.04%. Another disappointment was its loan impairment expense which lifted 7 basis points to $74 million.
FY 2020 outlook.
Unfortunately, any hopes that FY 2020 will be better for Bank of Queensland have been quashed by management.
The bank’s CEO, George Frazis, warned that earnings were likely to be lower again in the new financial year.
He said: “We expect lower year-on-year cash earnings in FY20 with revenue and impairment outcomes in line with FY19, higher post-Hayne regulatory and compliance costs, and increased operating expenses related to our investment in technology.”
Should you invest?
Whilst its shares look to be decent value at this level, I would suggest investors stay clear of the bank until it returns to growth.
In the meantime, if you’re looking for exposure to the banking sector then you might want to consider the VanEck Vectors Australian Banks ETF (ASX: MVB). This ETF provides investors with exposure to all the big four banks, the regionals, and Macquarie Group Ltd (ASX: MQG).
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Scott Phillips.