Bank of Queensland shares focus on strong first-half profit growth
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the Bank of Queensland Limited (ASX:BOQ) The stock price will be one to watch this morning.
This follows the publication of the regional bank’s half-year results.
Bank of Queensland share price under scrutiny after earnings beat
- Total revenue up 1% to $831 million
- Home loan growth up 9% to $2.6 billion
- Business loan growth up 8% to $600 million
- Statutory net profit up 38% to $212 million
- After-tax cash profit up 14% to $268 million
- Fully franked interim dividend per share of 22 cents
- CET1 ratio of 9.68%
What happened during the first half?
For the six months to February 28, Bank of Queensland recorded a 14% increase in cash income to $268 million. This appears to have exceeded market expectations, which could bode well for Bank of Queensland’s share price today. Goldman Sachs, for example, forecast cash earnings of $222 million for the period.
Management said this was due to loan momentum, higher non-interest income, carefully managed costs and loan impairment credit during the six months.
One thing that weighed on its performance was its net interest income. It fell 2% to $741 million due to a 12 basis point decline in its net interest margin (NIM) to 1.74% and the impact of a decline in ME Bank on the average balances of interest-earning assets before ownership.
Management said the weakness in its NIM reflects industry dynamics, including ongoing competition, rising fixed-rate loan volumes and volatility in swap rates.
Bank of Queensland managing director and CEO George Frazis was happy with the half. He said:
“Today’s result demonstrates our disciplined execution of the ME integration and digital transformation program and represents our fifth consecutive semester of improved underlying performance.
This was achieved during a period of continued economic uncertainty due to COVID, and at a time of notable change as we begin the integration of ME and improve our digital capability for customers and our staff.
Fortunately, Mr. Frazis is positive about the bank’s outlook. The CEO commented:
“We are one step closer to realizing our bold strategy of creating a truly multi-brand, cloud-based digital retail bank with the launch of myBOQ joining VMA on the common core banking platform that enhances the customer experience. .
We remain firmly focused on executing our strategy to transform BOQ into a digital bank with a personal touch to create a compelling proposition for our shareholders, customers, associates and the community.
The bank also hinted that margin pressures may ease.
The statement said that management expects to “see NIM’s headwinds diminish and the continued benefits of our integration and productivity programs resulting in cost reductions of at least 1%.”