Bank of Queensland Limited’s (ASX: BOQ) shares soar despite lower profit

  • Oct 04, 2018 AEST
  • Team Kalkine
Bank of Queensland Limited’s (ASX: BOQ) shares soar despite lower profit

Early this morning, 4 October 2018, Bank of Queensland announced their FY18 results for the 12 months ended 31 August 2018. Statutory net profit after tax for fiscal 2018 slipped to $336 million, down by 5% on previous year NPAT of $352 million. It reflects the adjustments of one-off cost including the amortization expenses incurred in respect of capacity acceleration for additional capital initiatives in FY19-20. BOQ has generated cash earnings of $372 million in FY18, representing a 2% decrease on FY17. As a result, cash basic earnings per share fell from 97.6 cents per share in FY17 to 94.7 cents per share in FY18.

Driven by the higher net interest income, total income grew by 1% to $1,110 million compared to previous corresponding year. The growth in net interest income was as high as 4%, but the downswing in non-interest income hit 17% contraction, primarily due to disposal of a vendor finance entity which occurred in FY17 and considerate reduction in fees, trading and insurance income from FY17 levels.

BOQ’s Common Equity Tier 1 ratio (CET1) for fiscal 2018 was 9.31%, reflecting a decline of 8 basis points for the year at the back of capital initiatives offset by positive underlying capital generation. In April this year the Group announced the sale of St Andrew’s Insurance business to Freedom Insurance Group for total consideration of $65 million. However, as of now the transaction remains subject to regulatory approvals. BOQ expects the capital released on the settlement of the transaction will be incremental to BOQ’s CET1 ratio.

During FY18, the Bank issued two senior unsecured debt transactions, $600 million for four years and $550 million for five years in November 2017 and February 2018. The credit rating agencies S&P, Moody’s Investor Service and Fitch Ratings have given stable outlook to BOQ current’s debt levels. As at 31 August 2018, cash in hand of the Group was $1,212 million. 

The Board of Directors have announced the fully franked dividend final dividend of $0.38 payable on 14 November 2018 to shareholders, recorded on registry on 25 October 2018. This has brought fiscal year 2018 dividend to remain unchanged to 76 cents per share. Moreover, the Group moves ahead in FY19-20 to further extends its digital footprints in Banking industry.

Despite reporting lower profits for the fiscal year 2018, the share price of BOQ has moved up on ASX. It has surged by 2.878% to $11.080 on 4 October 2018 (2:53 PM AEST). The stock has seen a performance change of -17.73% over the past one year.

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