The Bank of Queensland Ltd (ASX: BOQ) share price has risen slightly in the two days following the ASX bank share's FY25 result, which included growth in a number of metrics.
Analysts have reviewed the numbers and formed their opinions on the result, assessing whether the business is an attractive investment opportunity.
BOQ revealed that cash earnings after tax grew 12% to $383 million, the second-half dividend was increased by 11% to 20 cents per share, the net interest margin (NIM) rose 8 basis points to 1.64%, and commercial lending grew by 14%.
Let's take a look at what Macquarie thought of the BOQ result and the current appeal of the BOQ share price.
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Delivering on its strategy
Macquarie stated that BOQ continues to deliver and execute its strategy of simplifying the business, reducing costs, and reshaping its loan book towards higher-returning segments.
The bank achieved guidance for stable underlying margins and broadly flat costs in FY25.
However, the broker noted the bank's FY26 guidance was slightly weaker than expected, with margins "at risk", softer book growth, and expense growth to be "below inflation" compared to "lower" previously.
Macquarie suggested that Bank of Queensland's potential move towards an originate-to-distribute model suggests a further transformation ahead, which may support better returns but would leave it more exposed to investor appetite.
While costs were flat in FY25, with productivity helping, cost guidance was raised for FY26. The key driver of this was the "sequencing" of the transformation, with around $20 million to $30 million of benefit from decommissioning legacy ME Bank systems not expected to be felt until FY27.
In terms of margins and loan growth, Macquarie expects BOQ's volumes to remain weak, with falling mortgage balances partly offset by commercial lending growth, but supporting margins.
Is the BOQ share price a buy?
With a limited prospect of the bank making returns above its cost of capital, Macquarie said it sees "little reason to own it long term".
The broker currently has an underperform rating on the business, which essentially equates to a sell.
Macquarie has a price target of $5.90 on the business. A price target is the broker's estimate of where the share price will be in 12 months.
Therefore, Macquarie suggests that the BOQ share price could fall by 18% over the next year, at the time of writing. The broker described BOQ as a sub-scale operator, which wasn't attractive despite trading at a price-earnings (P/E) ratio of 13.
