Investors pushed Bank of Queensland shares sharply higher yesterday in the wake of the bank’s release of its 2021-22 annual results that seem not to have contained any land mines.
Final dividend was lifted 2 cents to 24 cents a share, which with the interim of 22 cents (up five cents), made a total for the year of 46 cents a share, up from 39 cents for 2020-21.
The higher dividend came despite a 5% fall in cash earnings to $508 million for the year to July and a statutory profit of $426 million, up 15%.
Investors chased the shares higher all day – they ended up more than 11% at $7.59, the highest they have been for two months.
And the higher dividend came despite a 12-point fall in the bank’s net interest margin (The NIM) – the key profitability measure – to $1.74 and a slight fall of 11 points in its top tier (CET1) capital figure to 9.57%.
The fall in the NIM was driven by a 12-basis points reduction in its net interest margin, which reflects the impact of increasing competition and swap rate volatility.
The bank said the NIM edged up 1 point to 1.75% in the July half year, a reaction to the higher rates from the Reserve Bank and on home mortgages and slower and lower increases in deposit rates.
The bank said this offset flat operating expenses and a 7% increase in housing loan growth to $4.4 billion as well as business loan growth to $1.2 billion.
CEO George Frazis said the financial results for FY22 “highlight our progress on delivering quality sustainable profitable growth and reflect the sharp focus on the execution of our strategic plan.”
“Today’s result demonstrates the disciplined execution of our strategy, the digital transformation program and ME integration and represents another period of improved underlying performance.
“This has been achieved during ongoing economic uncertainty, and as we bed down the integration of ME and upgrade our digital capability for our customers and our people.
“We have advanced our strategy and have a clear pathway to 2025 which builds on the success of our execution to date on the digital transformation and the ME (Members Equity Bank) integration.
“Our capital strength has enabled our business to grow and to invest significantly in our transformation. Our asset quality remains sound with prudent collective provisioning levels,” he said..
Looking to 2023 the bank said “BOQ remains focussed on achieving quality, sustainable, profitable growth. Growth across all brands in FY22 provides a revenue tailwind moving in to FY23. We have positive NIM momentum, with tailwinds from rising interest rates partly offset by headwinds from rising funding costs.
“Inflation and the costs of the new digital bank create near term headwinds for expenses, however, these will be partly offset by ongoing benefits from the integration and productivity programs.
“The integration of ME is well progressed and we continue to execute against our strategic transformation roadmap. We have a clear pathway to the inclusion of ME on the digital bank platform and a plan to launch the new ME digital transaction and savings product and migrate existing ME deposit customers by the end of calendar 2023.”
