Bank of Queensland Limited (ASX:BOQ) shares rose more than 10% to a day’s high of AU$7.57, after the Australian lender reported a profit increase for FY2022.
The lender reported a 15% jump in its statutory profit to AU$426 million. The profit included contributions from ME Bank, which BOQ acquired in 2021. For cash earnings, the bank reported a 5% decline, to AU$508 million.
The bank faced margin pressures in the year, with its net interest margin dipping to 1.74% from 1.86% in the previous year. However, BOQ has started to see positive margin momentum heading into FY2023, which the bank said was due to the impact of higher interest rates flowing through. The lending business can be more profitable when interest rates are lifted, as is now occurring with the Reserve Bank of Australia (RBA) attempting to wrestle down soaring inflation levels.
Bank of Queensland share price prediction
Along with the broader market pullback, Bank of Queensland shares have declined about 15% year-to-date. According to TipRanks’ analyst rating consensus, BOQ stock is a Moderate Buy based on four Buys and three Holds. The average Bank of Queensland share price prediction of AU$8.29 suggests about 10% upside potential.
Bank of Queensland is receiving favourable mentions on financial blogs. TipRanks data shows that financial blogger opinions are 100% Bullish on BOQ, compared to a sector average of 67%.
Closing remarks
Lenders such as Bank of Queensland can benefit if the RBA’s rate hikes succeed in bringing down inflation without triggering a recession. Taming inflation would deliver operating cost relief to banks, while rising rates would improve their profit margin.
