The Bank of Queensland Ltd (ASX: BOQ) share price is up 0.87% in early morning trade.
Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock are currently trading for $6.345 apiece.
This comes following the release of the company's half-year results (1H23) for the six months to the end of February.
Here's what you need to know.
Bank of Queensland share price lifts despite profit dive
- Statutory net profit after tax (NPAT) of $4 million, down 98% from 1H22
- Cash earnings after tax of $256 million, down 4% from 1H22
- Net interest margin of 1.79%, up 0.04% from 2H22
- Common equity tier 1 (CET1) ratio 10.71%, increased 1.14% from 2H22
- Interim dividend of 20 cents per share, fully franked, down 9% year on year
What else happened during the half year?
Atop seeing cash earning slip over the six months, the Bank of Queensland share price also is shaking off the bank's 7% year-on-year increase in operating expenses, which reached $495 million for the six months.
The bank noted that its dramatic decline in statutory NPAT included two one-off non-cash items. Namely the $60 million provision for its Integrated Risk Program and a $200 million impairment of goodwill.
BOQ said the boost in its CET1 ratio includes the benefit it received from the implementation of Basel III. The bank intends to retain the higher capital buffer with a revised CET1 target range of 10.25% to 10.75%.
Over the six months, Bank of Queensland progressed with its digitisation program. It reported having $3.8 billion of customer deposits on its new digital banking platform.
What did management say?
Commenting on the results that see the Bank of Queensland share price in the green in early trade today, CEO Patrick Allaway said:
BOQ is in a strong financial position as we enter this more challenging economic cycle. We are well positioned to continue to invest in our transformation to deliver a stronger and simpler low-cost digitally enabled bank.
We have made significant progress since announcing our strategy in 2020 across digitisation; improving our strategic position through the ME bank acquisition, achieving growth across our brands and strengthening our financial resilience.
What's next?
Looking ahead to what could impact the Bank of Queensland share price down the road, management said it expects heightened mortgage competition to continue. Deposit competition will also remain stiff due to Term Funding Facility refinancing. The bank anticipates interim margin compression.
BOQ said its focus will remain on its multi-brand approach, with diversification across the retail and business banking portfolios. Its dividend payout ratio target range is 60% to 75% of cash earnings.
Flagging potential headwinds, the bank noted that "a number of internal and external reviews identified a material uplift is required" in its "operational resilience, risk culture and governance and BOQ's Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) program and compliance".
Bank of Queensland said its Integrated Risk Program will be independently assured. However, the bank added, "There remains a risk that BOQ will be subject to penalties, sanctions or other enforcement action in respect of these matters."
Bank of Queensland share price snapshot
As you can see in the chart below, it's been a difficult year for the Bank of Queensland share price, down 21% over the past 12 months.
