The Bank of Queensland Ltd (ASX: BOQ) share price is down more than 8% after reporting its FY26 half-year result.
BOQ is one of the largest non-major banks in Australia, partially thanks to its ownership of ME Bank.
BOQ FY26 half-year result
Here are some of the highlights for the six months to 28 February 2026 compared to the first half of FY25, unless stated otherwise:
- Total income up 5% to $832 million
- Cash operating expenses increased 6% to $553 million
- Loan impairment expense of $20 million
- Cash earnings after tax declined by 4% to $176 million
- Statutory net profit after tax (NPAT) fell 20% to $136 million
- Cash earnings per share (EPS) down 4% to $0.268
- Interim dividend per share hiked by 11% to $0.18
What happened?
There were a few moving parts to this result.
The bank said that, compared to the second half of FY25, home lending fell by 4% (or $2.2 billion). Commercial lending increased by 7% (or $934 million).
BOQ noted that it is prioritising business lending growth over home lending.
On the deposits side of things, there was a contraction of 2% (or $1.4 billion) compared to the second half of FY25, with an “optimisation of funding given [the] reduction” in lending, as well as a targeted run-off in term deposits and a focus on more stable deposits.
The net interest margin (NIM) worsened by 3 basis points (0.03%) during the six-month period, reflecting a “highly competitive environment, non-repeat of benefits from cash rate reductions in the prior half, partially offset by improved asset mix and funding spreads”.
Operating expenses increased 6% year on year (but were flat half on half) because of the inclusion of the branch network. Excluding that impact, costs were down 2%.
BOQ said that simplification initiatives across the bank helped partially offset inflation, higher risk and regulatory costs, and investment in technology and business bank growth.
On the dividend side of things, the business decided on a cash dividend payout ratio of 75%.
Outlook for the BOQ share price
BOQ said it continues to demonstrate financial resilience with strong capital, liquidity and asset quality.
It noted it expects to complete the whole-of-loan sale between late April and early May 2026, which is expected to reduce funding by around $3.4 billion and lead to a return of around $300 million to shareholders after the sale.
BOQ expects a “moderation” of growth in the FY26 second half. Consumer and business confidence is being weighed by elevated inflation, increasing cash rates and Middle East uncertainty. Further cash rate increases are expected.
The ASX bank share said that asset quality “remains strong”, though households are “well placed” to manage through the uncertainty.
Elevated competition for both lending and deposits is expected to continue. BOQ intends to continue commercial lending growth “at or above” system growth.
The BOQ share price is lower, so brave investors may be interested, but I prefer to invest in businesses that are in less competitive sectors.
Therefore, there are other ASX dividend shares that I think could be better buys.
