Ann: CEO & Chairman Update, page-30

BOQ facing more margin pain vs peers: GS
Potential merger candidate Bank of Queensland's half-year results on April 20 – the first under chairman-turned-chief executive Patrick Allaway – may reveal more margin pressures than its peers, challenging earnings for the next three years, analysts at Goldman Sachs predict.

Goldman Sachs has revised its earnings per share estimate by 9 per cent for each of the financial years through to FY25 because of lower net interest margins with BOQ "being overweight (on) housing and rate sensitive deposits", the broker's note to clients stated.

Rated as neutral at Goldman Sachs, the revisions have lowered BOQ's target price to $7.21 per share, from $7.80 earlier.

"Despite valuation support, we believe its NIM leverage will ultimately underperform peers and its expenses will remain under pressure given the current inflationary environment and headwinds from running legacy systems along with building its new digital bank, which we expect could somewhat offset ME Bank synergies and restructuring benefits".

In recent weeks, Citi analysts have weighed the merits of a tie up between BOQ and Bendigo and Adelaide Bank – a merger that also makes sense for analysts at Morgan Stanley. Shares in the $4.2bn BOQ last at $6.48.