BOQ Announces Positive 1H16 Results
The underlying credit quality of BOQ’s portfolio remained strong during the period as the bank continues to emphasise on prudent lending and risk management practices in a favourable low interest rate environment.
Bank of Queensland Limited (ASX: BOQ) announced financial results for the half-year ended February 2016, reporting after tax cash earnings of $179 million, a 7% increase on PCP.
5% EPS Growth
The bank stated that its net interest margin was maintained at 1.97% in a highly competitive market impacted by volatile wholesale funding markets. BOQ lifted its earnings per share, on a cash basis, by 5% to 47.8cents per share. The bank improved its return on average equity by 20 basis points to 10.5%.
Managing Director and CEO Jon Sutton attributed the positive results to “above System” housing lending growth and strong asset quality levels.
BOQ achieved loan growth of $2 billion, 1.2 times above the System levels, predominantly due to successful diversification of distribution channels. Housing mortgage growth was $1.7 billion during the half, as the bank focused on maintaining its credit quality and acheive appropriate pricing for risk within its targeted niche segments. BOQ Specialist’s commercial loan book grew 14% to $2.4 billion year-on-year.
Strong Credit Quality
Mr. Sutton stated that BOQ’s return on growth was a key highlight of the result: “The momentum in the broker channel and BOQ Specialist demonstrates the effectiveness of our strategy to expand our business. We also made good progress with growing our target niche commercial segments.”
The underlying credit quality of BOQ’s portfolio remained strong during the period, as the bank continues to emphasise on prudent lending and risk management practices in a favourable low interest rate environment.
Total loan impairment expense was flat on the pcp at $36 million while total impaired assets across Retail, Commercial and BOQ Finance fell 7% to $240 million.
In order to maintain its margins and offset higher funding costs, the bank has increased its variable home loan interest rate by 12 basis points for owner occupied loans and 25 basis points for investor loans, with effect from the 15th of April 2016.
The BOQ Board announced a fully franked interim dividend of 38 cents per share, up 6% on previous distribution. The dividend is payable on the 19th of May, 2016.
Author: Kaivalya Kandarpa
Apr 07, 2016
Kaivalya is an equity analyst and a client advisor at Wise-owl. She specialises in fundamental and technical analysis for large and mid-cap companies. Having completed her bachelor's degree in Business Administration majoring in Finance, Kaivalya has a comprehensive understanding of international stock market movements. She tracks local and overseas markets and compiles analytical reports for various industries.