BoQ Earnings Beat, Pays Special Dividend
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A muted response from investors to the surprise special dividend declared yesterday by the Bank of Queensland (BOQ) with its full year results.
The bank, which balances on August 31, told the ASX that it would make a one off payment of 8 cents a share after reporting net earnings that topped market forecasts.
The bank is paying a steady 38 cents a share final dividend which brought the total for the year to 76 cents before the special payment which makes a total payout to shareholders of 84 cents a share.
Considering the better than expected profit and one off payment it’s a surprise the shares weren’t able to sustain the surge to a 52 week high of $13.40 in trading yesterday after the release of the results.
They closed 1.1% higher at $13.109 yesterday, up 11% for the year so far which is much better than 2% rise in the ASX 200.
BOQ reported annual cash earnings of $378 million, above the consensus forecast of $361 million, for the year ended August 31.
The bank said its strong capital position had enabled it to make the return funds to shareholders.
In July, the key bank regulator, the Australian Prudential Regulatory Authority set a new common equity tier 1 (CET1) capital target of 10.5% for the four major banks (which are those considered to be systemically important to the Australian financial system and economy).
For “standardised” banks (no systemically important) such as BOQ, APRA said minimum capital would need to rise by 50 basis points.
BOQ reported a CET1 ratio of 9.39% at August 31, up 10 basis points over the half.
The bank said the position "will be further strengthened by 20 to 25 basis points following business and regulatory changes expected to occur in the first half of FY2018".
BOQ's surprise special dividend move comes ahead of three of the major banks reporting full-year results in late October and early November.
Chief executive Jon Sutton said the increase in CET1 and coming benefits provides BOQ with flexibility for capital management and the bank would explore other options to best manage its capital base in future periods.
“Following APRA's clarity on 'unquestionable strong' in July this year, we believe we are in a very strong position at 9.39 per cent CET1," Mr Sutton said in a statement to the ASX.
"The second half largely played out as we said it would at our first half result," Mr Sutton said.
"Lending growth improved in both the housing and commercial loan portfolios."
Mr Sutton said he was comfortable with the asset quality of the loan portfolio, which showed no signs of systemic stress.
He added that the BOQ still had flexibility to explore other options for capital management in the future. The special dividend surprised some analysts, who had acknowledged BOQ’s strong capital levels but expected capital management initiatives to follow APRA’s guidance on mortgage risk weighted asset requirements, expected later this year.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.