The relative performance across the ASX Banking Sector has been significant, even in 2024, when they at least all travelled in the same direction. For example, year-to-date, Commonwealth Bank (CBA) has rallied +19.2% while the Bank of Queensland (BOQ) has edged up just +2.9%.
- CBA is estimated to yield 3.4% fully franked over the coming year, while it is currently trading 31% above its 5-year average P/E.
- BOQ is estimated to yield 5.64% fully franked over the coming year, while it is currently trading 22% above its 5-year average P/E.
At a glance, BOQ looks cheap, but structural headwinds remain, including declining Net Interest Margins (NIM) and rising Operating Expenditure (OPEX). Conversely, CBA might be the world’s most expensive bank, but MM’s main issue with this quality operator is high expectations ahead of its FY24 result, scheduled to be released on August 14th – it will certainly need to deliver to justify its price!
- We believe the significant relative outperformance has probably run its course, but we wouldn’t switch from CBA to BOQ in a world where the relationship between technology and banking will only grow – MM is long CBA in our Active Income Portfolio.
MM is still preferring CBA over BOQ
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Bank of Queensland (BOQ) v Commonwealth Bank (CBA)
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Bank of Queensland (BOQ) v Commonwealth Bank (CBA)
