Bank of Queensland Shares down on FY21 Update (ASX:BOQ)

Bank of Queensland Ltd [ASX:BOQ] saw profit rise 221% in FY21 to $369 million, as revenue rose 14% to $1.25 billion.

Despite these results, BOQ shares slumped on the news.

BOQ shares are trading at $9.26 per share, down 4.70% at the time of writing.

ASX BOQ - Bank of Queensland Share Price Chart


BOQ’s FY21 performance

Let’s get into the numbers.

Bank of Queensland reported a statutory net profit after tax (NPAT) for FY21 of $369 million, an increase of 221% on FY20.

BOQ attributed this primarily to increased net interest income and a credit-to-loan impairment expense, which was partly offset by higher operating expenses.

The bank’s cash NPAT for FY21 stood at $412 million, an 83% increase on FY20.

Due to strong underlying profit growth for the period, the cash earnings per share increased 51% to 74.7 cents per share (cps).

As a result, BOQ decided to pay a final fully franked dividend of 22 cents per share, bringing the FY21 dividend to 39 cents a share.

The total income came at $1.26 billion, an increase of 13% compared to FY21. Excluding ME Bank income, total income stood at $1.18 billion, a rise of 5%.

HOODWINKED! Why Australia’s ‘miracle’ economy is a farce

BOQ’s Net Interest Margin was 1.92% for the financial year.

Excluding the impacts from ME Bank, BOQ’s underlying NIM rose four basis points to 1.95% but was flat half-on-half.

The bank said the improvement was driven by lower funding costs but was offset somewhat by market competition and the prevailing low interest rate environment.

Company Presentation

Source: Company Presentation

So why did BOQ shares fall today?

The selling pressure on Bank of Queensland’s shares may have been driven by BOQ’s outlook, particularly its comments on NIM.

BOQ advised today it expects its ‘NIM to decline by c.5-7bps in FY22, as competition continues and the low interest rate environment remains.’

Not only that, the bank also expects expenses to grow by 3% on an underlying basis to support business growth, although it thinks this will be offset by ‘accelerated integration synergies’.

Managing Director and CEO, George Frazi, however, wanted to highlight the long-term outlook:

Our refreshed strategy announced in February 2020 set out a clear path to return the Group to sustainable profitability and today’s results show our momentum with four consecutive halves of improving performance.

Bank of Queensland is not the only firm feeling the impact of Australia’s low interest rate environment.

But that’s not to say opportunities for yield don’t exist.

In a recent report for Rum Rebellion, our Editorial Director Greg Canavan went through five stocks he thinks have strong potential to perform amid enduring low interest rates.

It’s well worth a read.


Kiryll Prakapenka,

For Rum Rebellion.

PS: The Rum Rebellion is a fantastic place to start your investment journey. We talk about the big trends driving the Australian Economy. Learn all about it here.

The Rum Rebellion