Shares of the Australian lender Bank of Queensland (ASX:BOQ) slumped after the company reported a 70% fall in profit attributable for the year.

The company flagged elevated costs of living and sustained higher interest rates as key risks in FY24.

Compared to its peers, Bank of Queensland (ASX:BOQ) has been operating at a cost disadvantage and with low operating margins.

Jefferies, who currently rates the shares as ‘underperform’ with a price target of A$4.8, slashed FY24/25 and FY26 earnings estimates due to negative operating leverage associated with the company’s NIM changes dragged by a smaller loan book.

Morningstar lowered its FY24 NIM forecasts by 20 basis points to 1.55% due to the competitive environment and an increase in anticipated operating expenses amid sustained inflationary pressures.

MAQRO expects a negative earnings revision of 2%-3% for FY24 and future periods, while Citi keeps FY24 earnings view unchanged on better revenue assumptions, expecting NIM to trough earlier than anticipated before stabilizing.

Bank of Queensland (ASX:BOQ) is an Australian financial institution dealing primarily in retail banking.