Bank of Queensland share price plummets on $260m earnings impact

The Bank of Queensland Ltd (ASX: BOQ) share price is struggling on Friday. It comes after the bank revealed it expects to post a $4 million profit for the first half, including a $260 million hit.

The S&P/ASX 200 Index (ASX: XJO) bank flagged a $60 million provision for an integrated risk program and a non-cash write-down of $200 million of goodwill.

The Bank of Queensland share price is currently trading 3.24% lower at $6.28 on the back of the news.

Let’s take a closer look at what investors might expect to hear when the bank reports next week.

Bank of Queensland share price plunges on $260m hit

Bank of Queensland shares are tumbling on news impairments and adjustments are expected to see the bank’s statutory net profit after tax (NPAT) slump to $4 million for the first half of financial year 2023.

For comparison, it posted a $212 million statutory NPAT for the prior comparable period.

The bank will release its earnings for the six months ended 28 February on Thursday.

A $60 million ($42 million post-tax) provision set to dent its statutory profit has been set aside to cover the cost of a three-year integrated risk program.

Bank of Queensland managing director and CEO Patrick Allaway commented on the program’s intent, saying:

The investment in our integrated risk program will further strengthen our operational resilience. Our shifted focus on strength and simplification whilst digitising BOQ is designed to deliver a low-cost bank with strong foundations.

Meanwhile, most of the goodwill held on its balance sheet relates to the 2007 acquisition of Home Building Society.

Finally, in another announcement released today, it revealed it intends to redeem $200 million of tier two notes, due 2028, following approval from the Australian Prudential Regulation Authority (APRA).

Sneak peek into first-half earnings

The ASX 200 share might also be being impacted by a sneak peek at the Bank of Queensland’s first-half results.

In addition to revealing an expected $4 million statutory NPAT, it also forecast $256 million of unaudited cash earnings and declared its intent to pay a 20 cent per share interim dividend.

The bank also noted its “strong financial position”, with its CET1 ratio at 10.71% and its liquidity coverage ratio at 143%. That’s up from 9.57% and 139% respectively at the end of last financial year.

Bank of Queensland share price snapshot

The Bank of Queensland share price has struggled in recent months.

The stock has tumbled 7% year to date. It’s also 21% lower than it was this time last year.

For comparison, the ASX 200 has gained 6% so far this year and has fallen 3% over the last 12 months.

The post Bank of Queensland share price plummets on $260m earnings impact appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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