Bank of QLD (BOQ) closed yesterday at its lowest point in more than 2 years following last week’s surprise early release of their 1H23 result (meant to be out tomorrow). Cash earnings of $256m for the half was 3.4% below consensus while they were a lot more conservative on the dividend, announcing 20c for the half versus market expectations of 24c. A new program centred around managing risk, which will cost $60m, was also announced.
This is an underwhelming result for the regional lender and the stock has acted accordingly, however, we wonder if this is a ‘clearing of the decks’ under nearly appointed Managing Director Patrick Allaway, who was previously the Chair (who sacked the last MD George Frazis). BOQ are looking for a new MD with a global search underway, and it seems like Allaway is getting the ducks lined up, the house in order, to entice a strong candidate and provide them with a solid foundation to grow. From an investment standpoint, it means we should keep BOQ on our radar for the appointment of a new MD which could reinvigorate the regional lender, or, the possibility of a takeover/merger with another regional in a quest for scale. BOQ is cheap, and its balance sheet is in reasonable shape, they just need to sort out its digital capabilities and reduce the costs associated with serving customers.
- Trading on 9x, BOQ is 22% ‘cheap’ versus its 5-year average PE, is on just 0.6x book value, and is yielding 7% fully franked.
MM prefers the majors for now, however, we sense something is brewing at BOQ
Add To Hit List
