Bank of Queensland share price on watch amid 70% earnings dive

Bank of Queensland had a tough time in FY 2023. What happened?

| More on:
Man on a laptop thinking.

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

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.

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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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 Earnings Results

Doctor doing a telemedicine using laptop at a medical clinic
Earnings Results

Polynovo share price surges after 57% revenue gain in FY24

Global sales continue to grow for Polynovo.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Earnings Results

Paladin Energy share price in focus on quarterly production data

The uranium producer had a reasonably constructive quarter.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Earnings Results

ASX 200 stock jumps 10% on strong FY24 results

How did this KFC restaurant operator perform in FY 2024?

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock just slashed its final dividend by 23%

This retailer had a tough time during the 12 months. Here's how it performed.

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »