Hot stock pick Bank of Queensland


This week Money asks Kalkine for a hot stock pick - Bank of Queensland (ASX:BOQ)

The Bank of Queensland's strategies and acquisitions have finally paid off as the group reported an increase of 19% after tax cash earnings of $167 million for the first half of 2015 compared to $140 million in the corresponding period of last year.

The increase was driven by the acquisition of Investec Bank (Australia) Limited in July 2014 which was renamed BOQ Specialist. The BOQ Specialist business contributed a net profit after tax of $19 million and is well positioned to achieve a full year target of $38 million in earnings. The statutory profit after tax rose by 14% on a year over year basis to $154 million. The total lending achieved an annualised growth of 7% and is in line with the group's expectation.


The BOQ's initiatives of "customer in charge" strategy of broadening the channels has paid off, driving this growth. The BOQ branch network witnessed an additional growth in BOQ business and decreased the concentration on lower quality lending sectors like credit exposures. Gross loans and advances rose to $39.7 billion in the first half of 2015 from $38.4 million in 2014, driven by the retail segment.

The BOQ has a stable funding coverage for 99% of lending balances. House loans lending represent 69% of the assets, while the cash and highly liquid assets contribute 18% of lending.

Meanwhile, customer deposits account for 67% of funding, followed by long term wholesale funding which represent 24%. The short term wholesale funding contribute to 19% of the liabilities, which is mainly used to fund major liquid assets and trading securities.

Bank of Queensland table
Bank of Queensland


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