Bank of Queensland Limited (ASX: BOQ) shares could be a turnaround opportunity after providing a business update.
Business update
The regional bank said that at 30 November 2020, it had 2,500 housing loans remaining in deferral for a balance of $889 million. These balances represent 3% of BOQ’s housing loan portfolio. In June 2020 it was $4.5 billion and in October 2020 it was $1.3 billion.
It also has 3,300 small and medium business (SME) loans remaining on deferral with a balance of $390 million at 30 November 2020. These loans also represent 3% of BOQ’s total SME lending. In June it was $2.7 billion and in October it was $1 billion.
BOQ Managing Director and CEO George Frazis said: “It is really pleasing to see the vast majority of our customers who accessing the banking relief package resuming repayments. We will continue to work with the remaining 3% of customers still accessing our banking relief packages to support them in their recovery.
“BOQ continues to execute on its transformation program with the family and friends phase 1 launch of the Virgin Money digital bank going live this week. We reconfirm the FY21 outlook for BOQ to deliver broadly neutral jaws.”
Are BOQ shares a recovery idea?
The BOQ share price is now actually higher than it was before the COVID-19 market crash. So it has actually already recovered. Can it go even higher? Perhaps.
There are a number of factors that could help push BOQ higher over the next 12 months. The Australian property market has been far more resilient than some people were expecting, which reduces the risks of bad debts. Growth in the loan book may be spurred higher by more demand for buying property. The higher levels of deposits provide a stable base for banks like BOQ to lend against. The APRA dividend restrictions may soon be listed so that banks can go back to paying the level of dividends they think is suitable.
A bank isn’t my highest conviction ASX share idea at the moment. That would be Pushpay Holdings Ltd (ASX: PPH). In terms of ASX dividend shares with a bit of ‘turnaround’ element to it, I think Brickworks Limited (ASX: BKW) is a quality option to consider.
