Here's why Bank of Queensland shares are making news again this week

Investors in this ASX 200 bank may be in for more disappointment.

| More on:
sad party goer sitting alone after celebration

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Bank of Queensland shares have been trailing the ASX 200 for the past week
  • This comes after the bank revealed a possible dividend cut
  • So here's what is happening for BoQ this week.

The S&P/ASX 200 Index (ASX: XJO) had an incredible week last week. Even though it was a shorter trading week, the ASX 200 rose an impressive 1.98%.

When the ASX 200 has such a strong showing, you can bet that most of the ASX 200 bank shares did, too, thanks to their massive weighting in the index. But one ASX bank share didn't join the party last week. That would be Bank of Queensland Ltd (ASX: BOQ).

Bank of Queensland shares rose by just 0.16% last week. And that was despite the big news we heard on Friday, which saw the BoQ share price lose almost 1% alone when it gave investors a glimpse into its finances. Sadly, there was little good news to celebrate.

Bank profits take a hit

The bank revealed it expected to book a $260 million write-down in earnings. This is a result of a $60 million provision for an integrated risk program and another $200 million in goodwill.

As a result, Bank of Queensland expects to report a statutory net profit after tax (NPAT) of just $4 million for the first half of FY2023. In contrast, last year's corresponding earnings report had BoQ reveal a statutory NPAT of $212 million.

As a result of these lower profits, the bank also revealed its intentions to fund an interim dividend of 20 cents per share, fully franked, for the six months ending 31 December 2022.

Income investors might have found this especially disappointing. Last year, Bank of Queensland shares paid an interim dividend worth 22 cents per share. And 2022's final dividend came to 24 cents per share. That means that if this upcoming dividend indeed comes in at 20 cents per share, it will represent a drop of 9% and 16.6% over those respective past payouts.

Bank of Queensland shares falter on dividend cut news

So Bank of Queensland will again be making news this week when the official earnings report is released on Thursday, 20 April.

Of course, it seems the juiciest parts of this earnings report have already been revealed. But who knows, maybe the bank has another surprise awaiting investors this week.

As my Fool colleague Brooke covered on Friday, a few ASX brokers were expecting a lot more out of BoQ.

Broker Goldman Sachs commented that a 20 cents per share dividend would represent an extremely low payout ratio (for an ASX bank, anyway) of just 51%. Goldman still has a neutral rating on BoQ shares but with a share price target of $7.21.

Earlier this month, we also covered another broker, Ord Minnet, and its $8.40 share price target for Bank of Queensland.

So we'll have to wait and see what Bank of Queensland has in store for investors on Thursday. Perhaps it has saved the best for last. But it might be prudent to hope for the best but prepare for something less impressive.

So far today, Bank of Queensland shares have slipped by 1.4% to $6.34 each.

 

Motley Fool contributor Sebastian Bowen has positions in Bank of Queensland. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

A corporate female wearing glasses looks intently at a virtual reality screen with shapes and lights representing Block shares going up today
Bank Shares

Are Westpac shares a buy following the bank's big tech update?

Is now a good time to buy the banking giant's shares? Let's find out.

Read more »

Different Australian dollar notes in the palm of two hands, symbolising dividends.
Bank Shares

Own CBA shares? It's payday for you!

A dividend is heading to CBA shareholders’ bank accounts.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Bank Shares

Are CBA shares really worth $120?

It has been a good year for ASX bank shareholders.

Read more »

a group of people sit around a computer in an office environment.
Bank Shares

Westpac shares push higher on $9.8b technology simplification plan

Westpac plans to spend big on technology to close the gap on its rivals.

Read more »

A worried woman looks at her phone and laptop, seeking ways to tighten her belt against inflation.
Economy

NAB boss issues dire prediction for Aussie economy

NAB’s CEO has issued a stark warning on the outlook for Australia’s economic growth.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Bank Shares

Own CBA shares? Here's the tech stock the banking giant just invested in

CBA has made an interesting investment. Here's what you need to know.

Read more »

A woman gives two fist pumps with a big smile as she learns of her windfall, sitting at her desk.
Bank Shares

ANZ shares charge higher on $57.5 million class action settlement news

ANZ shares have continued their positive run on Monday.

Read more »

Two people comparing and analysing material.
Bank Shares

Better buy: CBA or Westpac stock?

Which ASX bank share is a better buy?

Read more »