What’s Going on with Bank of Queensland’s Share Price?

What happened to the Bank of Queensland share price?

If you think the share prices of the Big Four banks have been under pressure over the last 12 months, then spare a thought for our regional banks.

After trading as high as $14.50 in November last year, Bank of Queensland [ASX:BOQ] shares hit a low of $10.67 today — a near 7% fall from yesterday’s close. That takes the fall to over 25% in a little over four months.

Why have BOQ shares fallen so much?

Who’d want to be a bank boss these days? After delivering an increase in first-half profit of 7% to $179 million, a 6% increase to the dividend (to 38 cents per share), and recording a decrease in impaired loans, the market quickly took a hammer to the share price.

The reason for the selloff was that BOQ’s profit result came in around 5% lower than consensus forecasts. Along with the result came the announcement that the bank is raising mortgage rates by 0.12% on owner-occupied homes, and 0.25% on investor loans. The reason? The bank blamed an increase in funding costs for the rise.

What now for Bank of Queensland?

You don’t need to follow the markets too closely to realise that all the banks are under pressure. Especially in the case of regional banks, whose funding costs are higher than their big city counterparts. The market will now be watching to see if the hike in mortgage rates leads to a loss of market share for BOQ, and whether the higher funding costs will come at the expense of future dividends.

Matt Hibbard,
Money Morning

Money Morning Australia