It’s been a rough few years for Bank of Queensland (ASX: BOQ). But the winds of change are in the air.

From multiple leadership changes to some costly acquisitions - most notably its troubled buyout of ME Bank - the stock has worn the label of "problem child" among Australia’s second-tier banks in the opinion of Paul Rickard and Peter Switzer of Switzer Report.

But both agree that the outlook for BOQ may be changing.

On this week’s episode of Switzer Investing TV, Paul Rickard explained why BOQ could now be worth a look - especially for income-focused investors.

Press play on the below video to jump to Paul Rickard's commentary on BOQ:

But, he added, "When they’re super cheap, I like them. And right now, BOQ is starting to clean itself up."

Shrinking to grow

After years of trying to chase growth and acquisitions, the new strategy from BOQ’s leadership is refreshingly straightforward: simplify.

"They’re shrinking themselves," Rickard explained. "They’ve let their home loan book wind down and pulled out of the broker channel. That’s increased their margins and helped improve return on equity."

Rather than try to go head-to-head with the big four, BOQ is tightening its focus - leaning into business banking and selectively strengthening its core brands.

Still not a growth story, but that’s not the point

Rickard was clear in his comments that this isn’t a high-flyer in waiting.

"Do I think it’s going to be a great growth performer? No," he said rather definitively. "But I do think it can improve return on equity and provide decent returns to shareholders."

The dividend is a big part of the appeal. At around 5%, fully franked, BOQ is offering something that’s becoming increasingly rare among the big four banks.

"Compare that to CBA, where the yield is under 3%, and it starts to look pretty compelling," Rickard said. 

The risk is no longer what it was

Perhaps the biggest shift is one of perception.

"A lot of the risk that used to be there in BOQ has now been taken out," Rickard said. While the bank is still working through its transformation, much of the volatility that scared off investors seems to be fading.

And for investors hunting for yield without chasing speculative growth, that could be enough to bring BOQ back into consideration.

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