The Bank of Queensland Ltd (ASX: BOQ) share price will be one to watch on Wednesday.
That's because the regional bank has just released its full-year results.
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Bank of Queensland share price on watch following FY 2023 results
- Statutory profit after tax down 70% to $124 million
- Cash earnings down 8% to $450 million
- Net interest margin down 2 basis points to 1.69%
- Final dividend of 21 cents per share
What happened during the year?
For the 12 months ended 31 August, Bank of Queensland reported a disappointing 70% decline in statutory net profit after tax to $124 million. This was driven largely by material one-off items. These include a $200 million impairment of goodwill, $57 million of ME integration costs, a $42 million provision for its Remedial Action Plans, and $35 million in restructuring costs from its simplification program.
Things weren't quite so bad for its cash earnings, which were down 8% to $450 million. This reflects total income growth of 5%, which was offset by softer net interest margins and an 8% lift in expenses.
In light of its softer earnings, the bank cut its final dividend by 4.2% to 21 cents per share. For the full-year, this meant total dividends of 41 cents per share, down from 44 cents per share in FY 2022.
How does this compare to expectations?
This result appears to have fallen short of expectations, which could be bad news for the Bank of Queensland share price today. For example, Goldman Sachs was expecting the following versus the consensus:
FY23E cash earnings down -7.7% on pcp to A$453 mn vs. VA consensus of A$476 mn. : 2H23 final DPS of A20¢ vs. VA consensus of A21¢.
Management commentary
Bank of Queensland's managing director and CEO, Patrick Allaway, said:
We recognise that this has been a difficult year for our shareholders and take accountability for the operational risk failings that led to the two Court Enforceable Undertakings. Our results reflect the market cycle and the business in transformation. We continue to invest through the cycle and traded some performance in FY23 for medium and long-term benefits.
We have high conviction in our strategy and a clear roadmap in place to deliver a stronger, simpler, digitally enabled, low-cost bank with exceptional customer experience. We are committed to addressing our challenges head on, and our transformation is progressing at pace with key milestones achieved in FY23. We are managing what we can control in current market conditions, positioning BOQ for recovery and growth when the cycle turns.
Outlook
Management appears cautious on the year ahead, noting that it anticipates "increasing risk into FY24 due to the elevated cost of living, lagged impact and sustained higher interest rates."
It expects this to lead to "continued revenue and margin pressure to continue in FY24 from slower credit growth and competition." It adds:
We anticipate that mortgage pricing will need to adjust at some point to provide returns above banks' cost of capital. Heightened deposit competition is expected to remain across the industry through the refinancing of the TFF. Inflationary pressures will be partially offset by our simplification program and we anticipate low single digit cost growth to our underlying cost base, plus investment spend and amortisation as we continue to invest.
The Bank of Queensland share price is down 15% over the last 12 months.
