Could the Bank of Queensland Limited (ASX: BOQ) share price be worth looking at right now?
BOQ is one the largest second tier ASX banks below Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).
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What has happened to the BOQ share price recently?
Today, the BOQ share price is down. The lockdowns are ongoing in Sydney and Melbourne. But the share prices of CBA, Westpac, ANZ and NAB are down a little more than BOQ at the time of writing.
BOQ shares are up almost 49% over the last 12 months. However, since March 2021, it hasn't moved much.
In April 2021, the bank announced its FY21 half-year result. The company revealed growth across a number of areas.
Half-year cash earnings after tax went up 9% to $165 million. Statutory net profit after tax (NPAT) grew by 66% to $154 million. The net interest margin improved by 3 basis points to 1.95%. BOQ's common equity tier 1 (CET1) capital ratio improved by 12 basis points to 10.03%.
Income-seekers may have noticed that the bank paid an interim dividend of 17 cents per share, which was an increase of 11 cents per share.
At the time of the HY21 result, BOQ said that the economic outlook appears more positive and is showing encouraging signs of improvement. The bank also said it remains committed to sustainable profitable growth, supporting returns to shareholders and a dividend payout ratio target range of 60% to 75% of cash earnings.
The ME Bank acquisition
BOQ recently completed the acquisition of ME Bank for a cash consideration of $1.325 billion.
When the regional bank first announced the deal, it said it would create a compelling alternative to the big banks.
The deal is expected to deliver material scale, broadly doubling the retail bank and providing diversification. Management believe there is a clear pathway to a scale, common, cloud based digital retail bank technology platform.
BOQ believes the deal is financially compelling. It's expected to be low double-digit to mid-teens accretive for cash earnings per share (EPS). It's expected to be cash return on equity (ROE) accretive by over 100 basis points including full run-rate synergies in the first year. Anticipated annualised pre-tax synergies are expected to be $70 million to $80 million.
The BOQ managing director and CEO George Frazis said:
The acquisition of ME Bank is strategically aligned and financially compelling. It further strengthens our multi-brand strategy, delivers material scale, provides portfolio diversification and enables the acceleration of the digital strategy towards a common digital retail bank technology platform.
Is the BOQ share price a buy for dividends?
The brokers at Macquarie Group Ltd (ASX: MQG) believe that BOQ shares are a buy, with a price target of $10. That suggests the BOQ share price could go up over 10% in the next 12 months, if it ends up being correct.
Macquarie believes that BOQ will pay an annual dividend of 37 cents in FY21 and 47 cents in FY22. That translates into a fully franked dividend yield of 4.2% and 5.3% respectively.
