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Australia's Bank of Queensland warns of decline in net interest margin, shares fall

Australia's Bank of Queensland on Wednesday warned that its net interest margin in the coming year would decline by 5 to 7 basis points due to stiff competition and a low interest rate environment, sending the lender's shares down 4per cent.

The Brisbane-based regional bank was the biggest percentage loser on the benchmark index.

"There may still be uncertainty associated with COVID-19 over the next year," Bank of Queensland said in a statement.

The lender is targeting a dividend payout ratio in the range of 60per cent-75per cent of cash earnings for 2022, and expects common equity tier 1 ratio, a closely watched measure of spare cash, to remain comfortably above 9.5per cent.

The bank's 2022 outlook was "largely in-line with market expectations", Citi said in a note.

The company said cash net profit after tax jumped 83per cent to AUS$412 million (US$302.49 million) for the 12 months to August, also largely in-line with Citi's estimates.

BoQ's operating expenses for the year jumped 12per cent to AUS$684 million driven in part by higher business volumes, and the company expects it to grow 3per cent more on an underlying basis in financial year 2022.

It declared a final dividend of 22 Australian cents per share, up from 17 Australian cents declared in the first half of 2021.

(US$1 = 1.3620 Australian dollars)

(Reporting by Savyata Mishra in Bengaluru; Editing by Amy Caren Daniel)

Source: Reuters

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