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.
