BOQ shares lower on restructure
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More news: Shares in Bank of Queensland dropped 2.65% to $6.25 in early trading on the ASX after its announcement that it would cut 400 jobs.
However, over the past 12 months its share price has risen 6.2%.
E&P Capital analyst Azib Khan said the bank’s earnings were even more uncertain following the announcement. E&P have a $4 price target and a 'negative' rating on the bank.
Khan said there was “plenty” of near-term earnings and uncertainty and execution risk even if decisions such as converting all owner manager branches (OMB) to corporate branches, accelerating the business bank growth, and the job cuts turned out to be the right choice over the medium term.
What they said: “We were not expecting BOQ to meet its FY26 ROE target of >9.25% and CTI target of <50%, and this morning’s announcement confirms this will be the case. We continue to believe the stock is expensive, trading at 0.9x NTA,” Khan said.
“ … While the OMBs are being converted, we see risk of retail deposit growth being hampered.”
Bank of Queensland to cut 400 jobs as part of restructure
The news: Bank of Queensland has announced 400 job losses as part of a broad restructuring plan to streamline distribution and focus on growth in its business bank.
The numbers: The bank will cut the equivalent of 400 full time roles across the business as part of its ongoing transformation. This will result in savings of around $50 million a year, and the bank will recognise a restructuring charge of $25 million to $35 million in its full-year accounts.
The lender will also convert all 114 of its owner managed branches into corporate branches, with the cost of conversion in the range of $115 million to $125 million to be amortised over four years. This will result in cash profit benefit of $20 million annually starting in the 2026 financial year, it said.
The context: Bank of Queensland has been considering ways to reduce complexity across its business and transition to digital banking as part of a restructure plan and focus on business banking amid heightened competition across both lending and deposits.
What they said: "We have long recognised the need to address legacy complexity and structural challenges to change the way we do business," CEO Patrick Allaway said.
The Finance Sector Union said the job losses will inevitably impact customers and the service they receive by the bank.
“As part of a pledge to the market to deliver $200 million in productivity by 2026, BOQ have already axed 250 jobs. Confirmation of a further 400 jobs cut is a devastating blow to workers at BOQ,” FSU National Secretary Julia Angrisano said.
The sources: ASX announcement, Finance Sector Union statement
