Shares in Bank of Queensland Limited (ASX: BOQ) inched higher on Wednesday and closed the session less than 2% higher at $7.69 apiece.
It's been a difficult year for the bank's share price and its projected outlook for 2022 and beyond, even following its widely announced digital transformation strategy from last year.
Sector-wide headwinds, saturation in the mortgage market and compressed net interest margins (NIMs) have plagued the ASX banks so far this year, and BOQ is no exception.
But could this turnaround for the bank yet? Let's take a closer look.
How's BOQ faring in 2022?
It's been a terrible start to the year for BOQ shareholder who've seen their holdings erase 5% in value since trading recommenced in January.
Two attempted snap-back rallies attempted in December and then again in February were unsuccessful and failed to breach the $8.50 mark. On both occasions, shares sunk to 52-week lows, as shown below.
However, the entire financial sector has taken a beating this year such that the S&P/ASX 200 Financials Index (ASX: XFJ) has also faltered more than 5% this year to date and is now flat over the past 12 months.
But that's still no excuse for the lacklustre performance compared to some of its peers. The bank had embarked on a turnaround strategy of sorts back in 2021, fostering its time on a digital transformation.
It acquired ME Bank last year as well and by financial year's end, integration had already progressed well and the firm was excited to "continue to execute against [its] strategic transformation roadmap".
This was supposed to be the turnaround year for the bank, whose share price has fallen from a 5-year high of $13.02, and has yet to make a recovery to pre-COVID highs.
As such, BOQ is trailing a number of the other banking majors who have weathered the recent storm and held the fort well.
But fundamentals are fundamentals, and one must look past the singular 'catalysts' that might move the needle in BOQ's case.
Analysts at JP Morgan recognise this in a recent update to clients. The firm noted that BOQ now "lacks the deposit gathering capabilities of its peers" because it is approximately 20 basis points above the majors for its short/medium term deposits.
But this shouldn't plague the share price too much, says JP Morgan. Instead, the investment into digital transformation should begin to come through as a reduction in premium.
"BOQ believes the premium it will need to pay in the future will be lower than what it has paid in the past, reflecting improvements in Digital", the broker said.
"Should this prove accurate, it would provide a tailwind to margins".
As such, given this outlook and the potential for a successful digital transformation, JP Morgan analysts like BOQ's investment prospects, particularly given its exposure to regional accounts.
This allows for a more diversified exposure, the firm says.
"BOQ remains our preference in the Regionals post results despite bottom-of-peer rate leverage", it added.
BOQ share price snapshot
In the last 12 months, the BOQ share price has collapsed more than 13% and is down 5% this year to date. Over the course of this previous month, it has fallen a further 4%.
