The first few months of 2022 have been volatile for the S&P/ASX 200 Index (ASX: XJO). But what is the outlook for the Bank of Queensland Limited (ASX: BOQ) share price?
Recent history has been a strange period for BOQ shares. The past month shows an 11% rise for the challenger bank. However, it's only up by 2% since the start of 2022. Looking further back, the BOQ share price has fallen 13% in the past six months.
At the time of writing, it is down 0.35% in early trade today to $8.44.
What next for the BOQ share price?
It's impossible to know what's going to happen in any given week, month, or even year for an investment. Just look at how COVID-19 turned the world upside down over the past two years.
However, two brokers recently downgraded their ratings on the bank. Ord Minnett downgraded its rating to a hold, and Macquarie downgraded its rating to neutral. The Ord Minnett price target is $8.90, and the Macquarie price target is $9.
Those two brokers suggested that BOQ's net interest margin (NIM) could come under pressure. Competition continues to be strong in the lending space and is expected to remain like that. Macquarie doesn't think the upcoming result will impress the market due to the NIM challenges.
However, one positive note from a broker about BOQ this month came from Morgan Stanley. The broker believes the bank can achieve the 'positive jaws' that it has been aiming for. It has a price target of $10.20 on the business.
BOQ is now a larger business after the acquisition of ME Bank.
The bank recently said that it was revising its accounting policy in relation to costs relating to software-as-a-service arrangements. The change led to a $25 million decrease in retained earnings as of 1 September 2021.
BOQ share price valuation and dividend expectations
Based on Morgan Stanley's numbers, the Bank of Queensland share price is valued at 12x FY22's estimated earnings with a potential FY22 grossed-up dividend yield of 7.8%.
Looking further ahead to FY23, Morgan Stanley's estimate put the BOQ share price at 11x FY23's projected earnings. The FY23 grossed-up dividend yield is expected to be 8.6%.
Interestingly, Macquarie actually thinks BOQ will generate more profit in FY22 than what Morgan Stanley has pencilled in. Macquarie's estimates put the BOQ share price at under 12x FY22's estimated earnings. The projected FY22 grossed-up dividend yield could be 7.6%.
Macquarie has also estimated some numbers for FY23 for the bank. The BOQ share price is valued at 11x FY23's estimated earnings with a possible grossed-up dividend yield of 8.1%.
New chief financial officer
BOQ announced this morning that it has appointed Racheal Kellaway as its new chief financial officer (CFO). She will succeed the current CFO on 1 July 2022.
The bank said this transition period would ensure a smooth handover of responsibilities.
Kellaway has been the deputy CFO for the past three years. BOQ said Kellaway has been instrumental in BOQ delivering sustainable, profitable growth. She will become the first female CFO in the bank's 148-year history.
The bank said the appointment and transition period positions the bank to maintain momentum in executing its transformation plan, strengthening the balance sheet, and managing costs.
