Bank of Queensland Interim Results Preview + Technical Analysis

When?

The Bank of Queensland (ticker: BOQ) is set to report its interim (H1 FY21) results this Wednesday, April 15.

BOQ Share price

In the lead up to these results the BOQ share price has performed strongly, rising close to 9% in the last three months and opened higher on 12 April.

BOQ opened at $8.72 on Monday, well off its 52-week low of just $4.38.

Indeed, while Australian banks were sold off heavily during the height of the pandemic, investor optimism around ASX-listed financial stocks has improved dramatically over the last six months. From the lows recorded in March — the big four banks and BOQ have seen their share prices return to pre-pandemic levels.

At the time of writing, BOQ is up ~75% in the last year, ahead of where it was in January 2020, in fact.

Management

Following the institutional raise completed in late February, BOQ's management team provided the market with some commentary on how the bank was tracking for the half.

The language used as part of this commentary was decisively optimistic, with the bank saying it ‘was on track for a strong 1H21 operating and financial result.'

Here, the bank said it expected to report net profit growth of between 60-65% and statutory profit growth of between 8-10%, as part of the interim result. For income-focused investors, the bank said it expects to declare a 17 cents per share interim dividend.

Looking further out, BOQ’s Chairman said the aim now was to:

'Deliver around 1% positive jaws in FY21, with the uplift driven by above system growth in lending, an improved margin outlook to slighlty positive.'

That growth would be partially offset by an approximately 3% uplift in costs for the full-year.

From a capital perspective, BOQ said it expected its CET1 ratio to be above 10% by the end of the first half.

Analyst expectations

Despite that solid performance, on the whole, analysts remain mixed on the bank as we head into its interim results. BOQ has a Hold rating on average, made up of 5 Buy recommendations, 7 Hold recommendations and 1 Sell recommendations.

Goldman Sachs has a positive view on BOQ, reiterating their Buy rating as we head into the H1. The investment bank is expecting the Bank of Queensland to report interim cash earnings of $164 million, implying year-on-year growth of 9%; and an interim dividend of 17 cents per share, in line with management forecasts.

Impacted by APRA’s crackdown on dividends, the bank’s previous (final) dividend came in at just 12 cents per share.

Looking at some specific forecasts, Goldman said they expected BOQ to report better net interest margins (NIMs) and above system housing loan growth.

Home loan growth is anticipated to come in at +5% while business loan growth is expected to be ‘negative to flat’. Goldman said particular attention should be paid towards management’s commentary around the sustainability of this above system growth.

Goldman also said investors should pay attention to the bank’s BDD (credit impairment charges), with Westpac and ANZ's recent Q1 results showing an improvement in asset quality.

‘We will be particularly interested on whether BOQ follows this trend, or whether it takes a more conservative approach given the recent roll off of government support packages,’ the investment bank said.

BOQ Technical Analysis (TA)

Looking at the weekly BOQ chart, according to IG Market Analyst Kyle Rodda:

'The trend is skewed to the upside for Bank of Queensland shares, though after touching its 200-week MA, price momentum has slowed for the stock. Currently, price is re-testing support/resistance around $8.80 per share, which if broke, my open resistance at the stock’s most recent highs around 9.50 per share. If it fails to do so, and the company’s share price breaks its current ascending wedge pattern, downside at support around $7.70 could come into view.'

See chart below: