Floods submerge BoQ profits

by Adam Smith27 Mar 2012

A massive surge in impairments has seen Bank of Queensland flag a $91m first-half loss.

The bank has announced it will seek to raise $450m in new equity to strengthen its Tier 1 capital position and "fund organic growth opportunities", but has warned a significant rise in impairments will see it report a $91m loss in the first half of 2012, compared to its $48m profit from the first half of 2011.

BoQ saw its impairments rise from $134m in the first half of last year to $328m in the first half of 2012, a result managing director Stuart Grimshaw said could be put down to natural disasters and Queensland's waning tourism market.

"Queensland has been negatively impacted by the flow-on effects of a downturn in tourism, and has endured recent natural disasters such as floods and cyclones," Grimshaw pointed out.

Nevertheless, Grimshaw promised a "prudent approach to capital and liquidity" in the bank's equity raising drive. He said the drive will see the bank increase its Core Tier 1 ratio from 6.4% to 8.6%. He also vowed that the bank would continue to target growth above system through the SME market, agribusiness and retail customers.

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COMMENTS

  • by Steve McClure 28/03/2012 12:56:09 PM

    BOQ can't blame all of this on natural disasters. They have almost 30 branches in WA, in addition to the other states. The facts are that BOQ dropped all brokers and relied on "quality direct" business. They were complicit with Storm Financial and then had operators go bust (pre-cyclone) in their branch model, leading them to sue BOQ. Now, with a $91M loss, Grimshaw admits that the market questions the quality of their loan book. Meanwhile, the most profitable lenders with the highest quality books, writing well over 80% of new business - are committed to the professional broker channel. Absolute proof of the necessity and value of brokers.

  • by 1martym1 28/03/2012 1:56:15 PM

    here here Steve the proof is in the pudding. we are the cheapest and most effective distribution model. End of argument. Look at who isnt playing and what happens to their lending volumes and quality.