Behind the BOQ numbers

It has been a phenomenal year for local banks and Bank of Queensland (BOQ) has maintained the momentum with a stellar FY report today.

- Cash earnings ahead of consensus

- Great turnaround

- Bullish price action

BOQ’s cash earnings came in at $250.9 million, beating estimates of $250.1 million while a FY dividend of 58 cents was up 12%. The bank’s net income of $185.8 million was at the lower end of an analyst range but BOQ saw strong sales momentum. While the bank is concerned about a challenging global business environment, it said it is on track to meet key management targets for FY15.

Great turnaround story

I feel BOQ is a fantastic turnaround story and today’s results are a testament to how hard management has worked to catch up to the strong performances by other banks. The composition of the result is impressive from a cost and margin perspective. Although BOQ was coming off a low base compared to its peers, today’s 4% plus rise sees the stock up nearly 50% for the year. Strong cost savings (to the tune of $20 million) have been well utilized in growth initiatives and this has also been complemented by solid margin improvement.

Bullish price action

It’s not only the fundamentals that are showing good signs for BOQ; the price action is also looking increasingly bullish. The fact that Bendigo & Adelaide Bank is trading lower today also indicates that there is a switching trade going on there at the moment. BOQ shares tested key support at $8 in June and this really attracted the buyers and saw its price action bounce strongly off that level. Since then it has been one way traffic as the price grew from strength to strength and bullish momentum mounted. The key break was a move above $10 which is where it had stalled back in April. This break saw the stock accelerate to $11 which prompted some consolidation ahead of the results, with the stock trading at 3-year highs. Today the stock has already printed a high of $11.12 and a close above $11 will leave it open to mount a challenge towards $12. Traders looking at longs could potentially place stops just under $10.

BOQ pushing through $11BOQ pushing through $11

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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