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Australia's leading regional bank, Bank of Queensland Limited (ASX:BOQ) has provided an update on trading conditions for the half year period ending 28 February 2019 (1H19).
As per the trading and earning update, the bank is expecting its cash earnings after tax to be in the range of $165-170 Mn in 1H19, compared to the 1H18 cash earnings after tax result of $182 Mn. A decrease in the earnings is mainly due to Non-Interest Income which is expected to be $8-10 Mn lower than the 1H18 level of $75 Mn.
The Non-Interest Income is impacted by continued downward pressure across fee, trading, insurance and other income lines. Following the release of this news, the share price of BOQ decreased by 6.935% as on 18 February 2019 (AEST 1:51 PM).
The bank is anticipated its Net Interest income to be broadly in line with the 1H18 level of $475 million. Further, it is expected its Net Interest Margin (NIM) to be in the range of 1.93% to 1.95%, compared to 1.97% in the first half of FY 2018. The decrease in the Net Interest Margin is due to continuing funding cost pressures as well as price competition for new loans.
As per the update, the Recurring operating expenses of the bank in 1H FY 2019 are largely in line with expectations; however, some nonrecurring costs have negatively impacted the half-year result. The bank is expecting its Loan impairment expense to be in the range of 11-13 basis points of gross loans.
In the trading update, the bank has informed that its capital position is strong with the first half Common Equity Tier One ratio expected to be above the 9.1% reported in the November quarter Pillar 3 disclosure.
While providing the outlook for the second half of FY 2019, the bank informed that its market conditions are expected to remain challenging in the second half. Further, the bank is expecting its regulatory costs will increase as it adapts to changes in regulatory requirements and expectations, including the impacts of the Royal Commission.
As per the recently released Basel III Pillar 3 Disclosures, the bank has informed that as at 30 November 2018 the bank had Common Equity Tier 1 Capital Ratio of 9.1% (9.3% as at 31 August 2018) and Total Capital Ratio of 12.6% (12.8% as at 31 August 2018).
Now, let us have a quick look at BOQâs stock performance and the return it has posted over the last few months. The stock is currently trading at a price of $9.260 with a market capitalization of ~$4 billion as on 18 February 2019 (AEST 1:51 PM). The counter opened the day at $9.650 reached and touched the dayâs low of $9.210 with a daily volume of ~3,772,811. The stock has provided a YTD return of 4.63% & also posted returns of -10.60%, 2.58% over the past six months and three months period respectively. It had a 52-week high price of $13.00 and touched 52 weeks low of $9.100, with an average volume of ~1,406,912.
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