The Bank of Queensland Limited (ASX: BOQ) share price is pushing higher on Tuesday morning.
In morning trade, the regional bank’s shares are up 1% to $8.86.
Why is the Bank of Queensland share price on the move?
The catalyst for the rise in the Bank of Queensland share price this morning has been the release of an announcement.
According to the release, the company’s imminent APRA Basel III Pillar 3 report for the period ending 31 May will include a decrease in its collective provision.
Bank of Queensland revealed that it expects to reduce its collective provision by a further total of $75 million. This is being driven primarily by Australia’s improved economic outlook, leading to improvements in data quality relating to collateral.
Pleasingly, the releases may not stop there. The bank advised that it continues to monitor the ongoing economic impacts resulting from COVID-19 and will assess its collective provision accordingly.
Bank of Queensland’s Managing Director and CEO, George Frazis, notes that business and consumer confidence continues to strengthen and drive Australia’s economic recovery.
He said: “Today, Australia is experiencing strengthening business and consumer confidence driving our economic recovery, supported by strong housing growth, lower unemployment rates and increasing business investment.”
“The reduction in the collective provision during the quarter reflects this improvement in the current economic environment. We continue to prudently manage our provisions to ensure we are well covered for any potential lifetime losses arising from COVID-19,” Mr Frazis added.
Are the company’s shares good value?
According to a recent note out of Goldman Sachs, which hasn’t taken into account today’s news, the broker has a buy rating and $9.83 price target on the company’s shares.
Based on today’s Bank of Queensland share price, this implies potential upside of 11% over the next 12 months. And if you include dividends, this stretches to over 15%.