BANK OF QUEENSLAND LIMITED. (BOQ)



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General Information
Company Name: Bank of Queensland Limited
Stock Code: BOQ
Website: www.boq.com.au
GICS Sub-Industry: Diversified Banks
Market Cap ($M): 4,077
Equiv. Shares (M): 323

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
 $ 12.925 $ 12.800 $ 12.950 $ 12.740 $ 12.640 2,309,858 $ 0.285  2.255 %

Current Broker Consensus Recommendation more
Recommendation: Hold
Recommendation Date: 2nd Apr 2014
12 Month Target Price (average): $11.52
Brokers Surveyed: 2

Company Overview

Business Description:
Bank of Queensland Limited (BOQ) is a financial institution offering core banking (commercial/retail) services, equipment finance, wealth management and insurance. BOQ uses its unique concept of the Owner-Managed Branch (OMB), which is a partnership between the Bank of Queensland (franchisor) and experienced bank managers (franchisees) to provide banking services.

Strategy Analysis:
Growth has been driven by acquisition and the interstate Owner Management Branches (OMB) rollout program. Total OMBs of 198 include 115 in Queensland. In addition BOQ operates 71 corporate branches and 8 transaction centres. The expansion strategy clearly has not worked despite successfully delivering a two-and-a-half times increase in assets over the past five years. During the same period ROE has more than halved from over 12% in FY06 to 1% in FY12. The cost to income ratio declined following considerable work on driving down the cost base. BOQ is targeting a medium term cost to income ratio in the low 40% range. The key challenges facing BOQ in the short term is maintaining the recovery in asset quality and improving return on equity. Competition for deposits is tough, particularly retail deposits which fund a large majority of loan growth. Bank of Queensland reported a net loss of $17.1m for the year ended 31 August 2012. The reduction in profit after tax was largely attributable to significant loan related impairment charges. Revenues from ordinary activities were $804.3m, up 1% from last year. The major driver of the subdued income growth was the reduction in other operating income. This was offset by growth in net interest income of $28.1m (5%). Diluted EPS was (10.2) cents compared to 60.3 cents last year. Net operating cash flow was $156.0m compared to $261.5m last year. The final dividend declared was 26 cents, taking the full year dividend to 52 cents compared with 54 cents last year.


Financial Summary
Year to Aug NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2015  F 374.2 103.2 10.5 12.3 72.0 5.7 100.0
2014  F 307.0 93.4 16.7 13.5 65.0 5.1 100.0
2013  A 250.9 80.0 593.5 10.4 58.0 6.9 100.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F
ANZ Bank (ANZ) $91,983 M -0.0092 0.1637 0.0567 15.4963 13.3164 12.6020 0.0489 0.0524 0.0555
Bank of Queensland (BOQ) $4,071 M 8.3851 0.1390 0.1106 16.3387 14.3442 12.9158 0.0460 0.0510 0.0560
Commonwealth Bank (CBA) $124,679 M 0.0893 0.1112 0.0534 16.2548 14.6284 13.8874 0.0473 0.0511 0.0534
National Aust. Bank (NAB) $82,523 M 0.0508 0.0831 0.0564 14.1485 13.0626 12.3655 0.0542 0.0577 0.0622
Westpac (WBC) $106,858 M 0.0657 0.0677 0.0432 15.3178 14.3465 13.7524 0.0564 0.0530 0.0555

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth
BOQ 0.92 15.1 1.46 1.13
Market 1.08 15.8 1.26 1.97
Sector 1.01 15.0 1.42 1.44

Directors
Name Position Start Date
Mr Stuart Ian Grimshaw Chief Executive Officer,Managing Director 01 November 2011
Ms Carmel Therese Gray Non-Executive Director 06 April 2006
Mr Richard George Andrew Haire Non-Executive Director 18 April 2012
Mr Steven Crane Non-Executive Director 11 December 2008
Mr Bruce James Carter Non-Executive Director 27 February 2014
Ms Michelle Kim Tredenick Non-Executive Director 22 February 2011
Ms Margaret Seale Non-Executive Director 21 January 2014
Mr Neil Berkett Non-Executive Director 30 July 2013
Mr David Stephen Willis Non-Executive Director (other) 22 February 2010
Mr Roger Andrew Davis Non-Executive Director,Non-Executive Chairman 20 August 2008

Management
Name Position
Brian Bissake Chief Executive Officer, Virgin Money
Anthony Rose Chief Financial Officer
Julie Bale Chief Information Officer
Jon Sutton Chief Operating Officer
Peter Deans Chief Risk Officer
Melissa Grundy Company Secretary
Brendan White Group Executive, Business Banking, Agribusiness & Financial Markets
Karyn Munsie Group Executive, Corporate Affairs, Investor Relations & Government Relations
Renato Mazza Group Executive, Insurance
Chris Nilon Group Executive, IT & Operations
Matthew Baxby Group Executive, Retail and Online Banking

Calendar of Events
Date Event
10 April 2015 Report (Interim)
24 October 2014 Report (Annual)
09 October 2014 Report (Prelim)
23 May 2014 Div Pay Date
29 April 2014 Books Close
24 April 2014 Div Ex Date
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.

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