Bank of Queensland share price leaps 6% on improving outlook

ASX 200 investors are bidding up the Bank of Queensland share price on Wednesday.

| More on:
Delighted adult man, working on a company slogan, on his laptop.

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 is soaring higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $5.80. In morning trade on Wednesday, shares are swapping hands for $6.17 apiece, up 5.7%.

For some context, the ASX 200 is down 0.1% at this same time.

This comes following the release of the bank's half-year results for the six months ending 29 February.

Here are the highlights.

Bank of Queensland share price leaps on results

  • Total income of $795 million down 12% year on year
  • Cash net profit after tax (NPAT) of $172 million, down 33% from 1H 2023
  • Net interest margin (NIM) of 1.55%, down from 1.58%
  • Operating expenses of $524 million increased 6% from 1H FY 2023
  • Interim fully franked dividend of 17 cents per share, down 15%

What else happened during the half year?

On the positive side of the ledger, the bank's half-year statutory NPAT came in at $151 million, a significant year on year increase, impacted by the sale of its New Zealand asset portfolio.

And the Bank of Queensland share price is rising with the 33% half-year cash NPAT decline beating expectations. The company said the decline was driven by lower revenue and higher operating costs.

Meanwhile, the decline in the bank's NIM drove the 12% drop in total income, with the impact partly offset by higher average interest earning assets. The NIM came under pressure amid ongoing competition in lending and deposits and higher funding costs across the banking sector.

The tightening net interest margins were also reflected in the 13% fall in net interest income, which came in at $725 million. Net interest income did receive a boost from the 1% growth in average interest earning assets.

Non-interest income of $70 million was in line with the prior corresponding half year.

On the cost front, the bank reported a 6% increase in operating expenses, which reached $524 million. Management said the higher costs were due to inflation along with an uplift in risk, regulatory and compliance and technology investment. Rising costs were partly offset by simplification benefits.

The 17 cents per share interim dividend represents a payout ratio of 65.2% of cash earnings.

What did management say?

Commenting on the results lifting the Bank of Queensland share price today, CEO Patrick Allaway said:

This result has been impacted by continuing industry headwinds, with heightened competition for lending and deposits and higher funding costs. Pleasingly, in a reduced revenue and high inflation environment, we have held BAU [business as usual] cost growth at just 1.2% in the half.

As for the bank's strategic priorities, Allaway added:

We have made a good start to our simplification productivity agenda and have agreed Remedial Action Plans with our regulators, to continue strengthening the bank. Our digital transformation is progressing on plan.

What now?

Looking at what could impact the Bank of Queensland share price, the company said it expects loan impairment expenses to stay below the long-term average.

"With a well secured portfolio and prudent provision settings, BOQ is well positioned for a changing credit loss environment," the bank stated. Loan impairment expenses in the reported half were down 56% year on year.

Management also expects revenue and margin pressures will moderate in the second half of 2024, while deposit competition is forecast to continue apace.

The company expects low single digit BAU expense growth for 2H24.

And management highlighted the bank's "strong capital position". BOQ expects its CET1 to "remain comfortably within" the target range of 10.25% to 10.75%.

Bank of Queensland share price snapshot

The Bank of Queensland share price is down 4% over the past year, excluding dividend payouts.

Shares in the ASX 200 bank stock are up 1% in 2024.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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

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 »

increasing rural asx share price represented by happy looking sheep
Earnings Results

Why is this ASX All Ords stock staying strong as profits crash 76%

How is this company's share price marching higher after mowing down more than three-quarters of its profits compared to a…

Read more »

Two men sit side by side on a couch with video game controls in their hands and expressive looks on their faces as they react to the action in front of them in a home setting.
Earnings Results

Guess which ASX 200 stock is surging 11% on an 'outstanding' result

This ASX gaming giant just posted a 17% jump in profits, and its shareholders are basking in the glory.

Read more »

Agricultural ASX share price on watch represented by farmer in field looking at tablet computer.
Earnings Results

Graincorp share price lifts off as dividend is maintained and debts plunge

ASX 200 investors are bidding up the Graincorp share price today. But why?

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Earnings Results

Why is this ASX 200 stock avoiding the market selloff and pushing higher?

Not all shares are falling with the market on Thursday.

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Bank Shares

CBA share price on watch following $2.4b third quarter profit

CBA delivered another bumper profit for the three months.

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Earnings Results

ANZ share price on watch amid first-half earnings beat and $2b buyback

The banking giant appears to have outperformed expectations during the half.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Earnings Results

Westpac shares charge higher on half-year earnings beat and buyback

Investors are loving this bank's half-year results release. But why?

Read more »