Credit loss provision releases and one-off revenue gains (non-interest income) for Bank of Queensland’s 1H cash earnings drove an 8% beat versus Morgans expectation. A fully franked interim dividend of 22cps was declared.
Meanwhile, the underlying net interest margin (NIM) contraction of -7bps from the 2H FY21 was broadly in-line with the analyst’s forecast, and also in-line with industry trends.
The broker forecasts improvements for the cash return on tangible equity (ROTE) metric for FY24. Further out, the ROTE should improve again due to improving efficiency on costs and potential funding synergies related to the mE Bank acquisition.
The Add rating and $11 target price are unchanged.
Sector: Banks.
Target price is $11.00.Current Price is $7.99. Difference: $3.01 – (brackets indicate current price is over target). If BOQ meets the Morgans target it will return approximately 27% (excluding dividends, fees and charges – negative figures indicate an expected loss).
