The Bank of Queensland Ltd (ASX: BOQ) share price is barely ahead on Friday after the ASX bank provided an update on its approaching second-half result for FY23.
At the time of writing, investors are swapping shares in the Queensland-based bank at $5.77, up 0.17% from yesterday's closing price. In contrast, other banking majors are struggling to bust into positive territory today despite an optimistic reception across bank shares on Wall Street last night.
Investors of this $3.8 billion retail bank appear unphased by the financial impacts outlined in this morning's update.
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Confession season arrives at the Bank of Queensland
With the Bank of Queensland's second-half earnings results less than two weeks away, the time for confessing any meaningful departures from previously set expectations is upon us.
Today, the bank has informed investors that the bottom line will be taking a hit in the latest half.
According to the release, the bank's statutory net profit after tax (NPAT) will wear a $79 million smack due to two items. These items consist of $35 million in restructuring costs and an additional $44 million in ME Bank integration costs.
Providing greater detail, the Bank of Queensland broke down its restructuring costs into the following:
- $25 million in redundancy-related costs linked to 250 impacted roles
- $11 million in property impairment costs after consolidating its corporate offices
- $14 million in technology costs tied to impaired intangible assets
The relative magnitude of these impacts on the Bank of Queensland's results is unknown. However, in the last half, the bank reported a statutory NPAT of $4 million after recognising $13 million in integration costs associated with ME Bank.
That being said, the ME integration program was completed during the half. Bank of Queensland noted that ME Bank's integration was within the guided cost range of $130 million to $140 million after acquiring the Melbourne-based bank in July 2021 for $1.325 billion.
Lastly, an adjustment was made to the weighted average lift of the bank's housing loan portfolio. The change reduces the BOQ's net interest margin (NIM) by 3 basis points in the second half.
What's next for the Bank of Queensland share price?
It's been a disappointing 12 months for Bank of Queensland shareholders.
While the financial sector has climbed 5.8%, the Bank of Queensland share price has slid 15.1%. Adding to the pessimism, analysts at Goldman Sachs recently downgraded the bank, citing cost inflation concerns.
Goldman slapped BOQ with a price target of $5.60 after factoring in the risk of inflating costs.
The next big event for the Bank of Queensland will be the release of its results on 11 October. Upon release, investors will be able to see the true extent of today's announced impacts on earnings.
