Bank of Queensland Ltd (ASX: BOQ) shares are marching higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock closed yesterday trading for $7.56. In late morning trade on Wednesday, shares are swapping hands for $7.66 apiece, up 1.3%.
For some context, the ASX 200 is down 0.1% at this same time.
The Bank of Queensland share price has also raced ahead of the benchmark longer term. Over the past 12 months, shares are up 29.7% compared to the 6.9% gains posted by the ASX 200.
And that doesn't include the 35 cents a share in fully franked dividends the bank has paid (or shortly will have paid) its stockholders. This sees Bank of Queensland shares trading on a fully franked dividend yield of 4.6%.
But with the Reserve Bank of Australia (RBA) widely expected to deliver two or more interest rate cuts this year, Argonaut's Harrison Massey believes the year ahead could throw up headwinds for Bank of Queensland (courtesy of The Bull).
Here's why.
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Time to sell Bank of Queensland shares?
"The bank delivered cash earnings after tax of $183 million in the first half of fiscal year 2025, an increase of 6% on the prior corresponding period," said Massey, who has a sell recommendation on Bank of Queensland shares.
Commenting on the ASX 200 bank stock's half-year results (reported on 16 April), Massey said:
The net interest margin of 1.57% was stable on the second half of fiscal year 2024. Also, BOQ generated commercial lending growth. Further cost cutting measures should support BOQ moving forward, but, in our view, the banking sector is overvalued.
And if the RBA begins to cut interest rates this year, as expected, Massey believes Bank of Queensland shares could underperform heading into 2026.
"In a fiercely competitive environment, the major banks are better equipped than their smaller counterparts to deal with the challenges of potentially falling interest rates in 2025," he said.
The RBA is set to make its next interest rate decision on Tuesday, 20 May.
The ASX's RBA Rate Indicator currently shows a 51% consensus expectation of an interest rate decrease to 3.60% at the next RBA board meeting. That would bring the official Aussie interest rate down from the current 4.10%.
What else did the ASX 200 bank stock report for the half year?
Atop the metrics Massey mentioned above, Bank of Queensland shares have enjoyed support after the bank achieved a 13% year-on-year increase in its half-year statutory net profit after tax (NPAT) to $171 million.
And the bank's Common Equity Tier 1 (CET1) ratio increased 0.21% to 10.87%.
Commenting on the results on the day, Bank of Queensland CEO Patrick Allaway said:
Our improved performance and stable margin in the current operating environment validate our strategy to shift our portfolio towards higher-returning segments, and reposition the Retail Bank as a scalable, low cost to-serve digital bank.
Bank of Queensland shares closed up 5.5% on the day the company reported.
