Bank of Queensland (ASX:BOQ) posted a net profit of $154m in the six months to February 28. This profit is 14 per cent higher than the $135m profit from the previous period. Cash earnings after tax increased by 19 per cent to $167m, slightly below analyst’s forecasts. Revenue raised 20 per cent to $537m, driven mostly by the acquisition of Investec’s specialist finance and leasing businesses. Watermark analyst Omkar Joshi believes the results were "overall, a compositionally soft result with high cost growth, although somewhat offset by strong NIM expansion due to the Investec acquisition". The company will raise its fully-franked interim dividend by 13 per cent to 36c per share. Bank of Queensland chief executive John Sutton highlighted the company’s capability to conform to new regulations. “Given our robust comparative capital position, we are very comfortable with our position and ability to adjust to any new regulatory requirements.”
Despite the uptick in profits, the company is concerned about potential economic troubles in Australia. Bank of Queensland has cited a lack of confidence as a burden on the Australian economy. "The economy is currently running at a pace below its long-run trend and, while there are some positive factors emerging, any sustained improvement will require a pick-up in consumer and business confidence," Mr. Sutton said. One of the positive factors cited by Mr. Sutton include the company’s net interest margin (NIM) increase of 20 basis points to 1.97 per cent. This growth has mainly come from the bank’s specialist division performing well in highly competitive markets. Although consumer and business confidence is low, Mr. Sutton said he was “particularly pleased to see lending growth improve while the banks' risk settings, margins, balance sheet and capital settings are all strengthening.”
Shares of BOQ are down 34c, or 2.37 per cent, at $14.02 per share at mid-day on Thursday. BOQ has advanced 9.86 per cent in the last 12 months and is up 15.11 per cent so far this year.