While Morgan Stanley has no knowledge of merger talks between Bank of Queensland and Bendigo & Adelaide Bank, which has been speculated upon by the media, some initial thoughts are proffered.

Competitive disadvantages for smaller banks suggests mergers make sense, according to the analysts, and in the past few years Bendigo & Adelaide Bank has altered its former preference to remain independent.

Moreover, the broker believes a potential merger is unlikely to raise competition concerns and be blocked by the ACCC.

The Equal-weight rating and $7.40 target for Bank of Queensland is unchanged. Industry view: In-Line.

Sector: Banks.

Target price is $7.40.Current Price is $7.19. Difference: $0.21 - (brackets indicate current price is over target). If BOQ meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2023 Acquisdata Pty Ltd., source FN Arena