Later this week, all eyes will be on Bank of Queensland Limited (ASX: BOQ) shares when the regional bank releases its half year results.
Ahead of the release on Thursday, let's take a look at what the market is expecting from the bank.
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What is the market expecting from Bank of Queensland?
According to a note out of Goldman Sachs, for the six months ended February 28, its analysts are expecting Bank of Queensland to report cash earnings of $222 million.
This will be a 16.5% decline from the $266 million reported for the prior corresponding period.
The broker expects this to be driven by bad and doubtful debts and tax expense increases, offsetting a 1.1% increase in revenue to $835 million.
Despite this reduction in cash earnings, Goldman is forecasting an increase in Bank of Queensland's interim dividend. It has pencilled in a 22 cents per share fully franked dividend, up 29.4% from 17 cents per share a year earlier.
What else should you look out for?
Goldman is looking for Bank of Queensland to deliver on its target of positive jaws in FY 2022. This is where revenue grows quicker than costs, which supports margin expansion.
It commented: "BOQ is expecting at least 2% jaws (GSe 2.9%) in FY22, driven by above system volumes in conjunction with expenses to be c. 1% lower than FY21 (consistent with GSe)."
"We will be keen to see how BOQ is tracking on this front particularly on the expense side of things and note the following drivers highlighted by BOQ management: i) +3% FY22 underlying expense growth target comprised of 2% from amortization uplift, and 1% to support ongoing business growth, and ii) benefits from synergies should get BOQ's FY22 expected expenses to slightly lower versus FY21. BOQ further noted FY23 will have a similar profile, while in FY24 BOQ could see an acceleration in the fall in its CTI," the broker added.
Are Bank of Queensland shares in the buy zone?
Goldman is positive on the bank and sees a lot of value in Bank of Queensland shares. It currently has a buy rating and $9.84 price target on them.
Based on its current share price of $8.45, this implies potential upside of 16.6% over the next 12 months.
In addition, Goldman expects fully franked dividends per share of 45 cents in FY 2022 and 49 cents in FY 2023. This represents yields of 5.3% and 5.8%, respectively.
