The Bank of Queensland Limited (ASX: BOQ) share price was out of form again last month.
During November the regional bank’s shares fell a disappointing 13.2%.
This is almost as bad as the performance of the Westpac Banking Corp (ASX: WBC) share price which fell 14% in November due to the AUSTRAC scandal.
Why did Bank of Queensland crash lower in November?
There were a number of catalysts for Bank of Queensland’s poor form in November.
The first was the sustained weakening of investor sentiment following the release of its disappointing full year results in mid-October.
In case you missed it, Bank of Queensland posted a 14% decline in cash earnings after tax of $320 million. This was well short of the market’s expectations.
This poor performance led to the bank’s board cutting its final dividend down to 31 cents per share. This brought its full year dividend to 65 cents per share, down 14.5% year on year.
Unfortunately, things are not expected to get any better in FY 2020. Management warned that earnings are likely to be lower again in the new financial year.
The bank’s CEO, George Frazis, explained: “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.”
This has sparked fears that Bank of Queensland may have to cut its dividend further next year.
Also weighing on its shares was a capital raising which completed successfully late in November.
Bank of Queensland raised $250 million through an institutional share placement at $7.78 per share. This placement price is just 3 cents higher than its multi-year low of $7.75 and a long way from its 52-week high of $10.77.
Mr Frazis explained that these funds will support its strategic transformation and strengthen its balance sheet.
He said: “We are pleased with the strong support we have received from investors. The funds raised will further increase BOQ’s buffer above APRA’s “unquestionably strong” benchmark and provide BOQ with additional capacity to support implementation of our strategic transformation.”
The bank is now aiming to raise a further $25 million via a non-underwritten share purchase plan. But given how far its shares have fallen, I’m not sure shareholders will be fighting to take part in the offering.
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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. 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.