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  • Bank of Queensland (BOQ) shares tumble as a poor forecast for future near-term net interest margins (NIM) offsets higher profits and a bolstered dividend
  • While NIM grew to 1.95 per cent over the 12 months to the end of August 2021, BOQ predicts an NIM decline of between five and seven per cent over its 2022 financial year
  • Meanwhile, the company says it increase statutory profit by 221 per cent to $369 million over its 2021 financial year
  • This translates to a final dividend of 22 cents, fully franked, taking BOQ’s total dividend for the 2021 financial year to 39 cents per share
  • Shares in Bank of Queensland close 4.32 per cent lower at $9.30 each this afternoon

Bank of Queensland (BOQ) shares tumbled today as a poor forecast for future near-term net interest margins offset higher profits and a bolstered dividend.

The lender this morning released its annual financial report for the 12 months to the end of August 2021, highlighting an increase in statutory net profits after tax of 221 per cent to $369 million compared to the $115 million tabled over the same time period the year before.

Cash earnings grew 83 per cent compared to the 2020 financial year, to $412 million, while BOQ bumped up its common equity tier 1 (CET1) ratio by two basis points to 9.8 per cent.

All this translated to a 22 cent final dividend, fully franked — taking the company’s total shareholder returns to 39 cents per share for the 2021 financial year. This is more than triple the 12 cents per share returned to shareholders in FY20.

BOQ’s net interest margin (NIM) grew by four basis points to 1.95 per cent in FY21, though this figure dips slightly to 1.92 per cent when accounting for ME Bank’s performance. BOQ completed its $1.3 billion buyout of ME Bank at the start of July.

Nevertheless, for all the increase, it seemed shareholders were more concerned with the Bank of Queensland’s future than its past.

The company said it expected net interest margins to decline by between five and seven basis over the 2022 financial year “as competition continues and the low-interest-rate environment remains”.

Despite this, BOQ Managing Director and CEO George Frazis said the increased financials over FY21 reflected the company’s progress towards executing its growth strategy highlighted early last year.

“Our refreshed strategy announced in February 2020 set out a clear path to return the group to sustainable profitability and today’s results show our momentum with four consecutive halves of improving performance,” Mr Frazis said.

“We have achieved this during a period marked by uncertainty, and also in a year where we executed the transformative acquisition of ME Bank.”

He added that while COVID-19 continues to make economic conditions uncertain, BOQ had the capital strength to support business growth and its asset quality remains “sound”.

Still, shares in Bank of Queensland closed 4.32 per cent lower at $9.30 each this afternoon. The company has a market cap just shy of $6 billion.

BOQ by the numbers
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