Bank of Queensland Ltd (ASX: BOQ) shares are having a tough time on Wednesday.
In morning trade, the regional bank's shares are down over 4% to $5.53.
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Why are Bank of Queensland shares falling?
Investors have been hitting the sell button today after Bank of Queensland reported a sharp earnings decline and cut its dividend in FY 2023.
According to the release, despite reporting a 5% increase in total income, the bank's statutory profit after tax was down 70% to $124 million and its cash earnings after tax was down 8% to $450 million.
It is worth noting that the bank's statutory result was impacted by one-offs and is not a true representation of its performance. However, that said, its cash earnings were still well short of the market's expectations.
The bearish analysts at Goldman Sachs were forecasting cash earnings of $453 million, whereas the market was expecting cash earnings of $476 million.
And while the Bank of Queensland final dividend of 21 cents per share (down 4.2%) was in line with consensus estimates, this hasn't been enough to stop its shares from being sold off.
Also weighing on its shares has been management's cautious outlook statement. It warned that it anticipates "increasing risk into FY24 due to the elevated cost of living, lagged impact and sustained higher interest rates." In addition, it is expecting "continued revenue and margin pressure to continue in FY24 from slower credit growth and competition."
Broker response
Goldman Sachs wasn't overly impressed with the result. It said:
BOQ's FY23 cash earnings of A$453 mn were down -8.4% on pcp and was 1%/4% lower than GSe/Visible Alpha (VA) consensus. […] Very little quantitative outlook was provided but trends appear to suggest downside risk to FY24 forecasts on both 2H23 NIM trajectory and higher costs.
The latter could mean a lower-than-expected Bank of Queensland dividend in FY 2024. Though, time will tell if that is the case.
