Macquarie Securities has downgraded Bank of Queensland from “outperform” to “neutral”, saying it has less capacity to benefit from rising rates than other banks.

Macquarie said BOQ has a relatively weak deposit franchise that results in it paying more for deposits than other banks.

“With competition intensifying and deposit pricing dynamics turning, we see downside risk to earnings. Moreover, with lower leverage to rising rates, we believe BOQ is less likely to outperform in a rising rate environment.”

It said BOQ’s deposit growth has been relatively weak in recent months, which will put pressure on the bank as its funding requirements increase.

In addition, BOQ is integrating ME Bank and is exposed to the risk that it will not achieve the cost savings and other benefits it has forecast.

BOQ is scheduled to reports its interim results on April 14 and Macquarie is forecasting that it will report a net profit of A$181 million, compared with $154 million in the previous corresponding period, but with weaker key metrics.

The net interest margin is forecast to be 1.79 per cent – down from 1.95 per cent. Cost-to-income ratio is expected to be 55.9 per cent, compared with 53.8 per cent in the previous corresponding period. Growth in operating expenses is expected to exceed growth in income.