Bank of Queensland has announced FY18 cash earnings of $372m, ahead of Morgans’ forecasts. No special dividend was declared, contrary to expectations. The broker believes this is explained by the CET1 ratio being weaker than expected and uncertainty around the completion of the sale of the St Andrews life business.
The broker believes the bank’s relatively inferior mortgage fulfilment times in the broker channel will continue to work against credit growth and it will be difficult to achieve system home loan growth without compromising margins. Morgans maintains an Add rating and reduces the target to $11.30 from $11.50.
Target price is $11.30.Current Price is $11.01. Difference: $0.29 – (brackets indicate current price is over target). If BOQ meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges – negative figures indicate an expected loss).