BOQ +5.17%: 1H results for the regional bank today caused a strong bounce in the share price, though the numbers still showed signs the smaller banks are struggling to compete with the Big 4. Cash earnings of $172m were around 5% ahead of consensus, driven largely by beats on bad debts, costs and the Net Interest Margin (NIM) which fell less than expected to 155bps. Home loan lending fell 1%, as did asset finance while consumer lending fell 10%. The company reiterated FY26 targets, however, they will have to improve volumes across these areas if they are to achieve this, flagging that additional strategies will need to be implemented given the competitive nature of the banking space at the moment. Wholesale funding costs continue to weigh on margins as well and BOQ has a significant portion of funding coming up for renewal in 2H that may weigh on earnings. The stock has been unloved for a while and remains cheap, the market may be forced to look through their issues if credit quality remains strong.
MM remains cautiously bullish BOQ
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