Moody's places BoQ on review
THE Bank of Queensland faces a potential downgrade of its single-A credit rating, with ratings agency Moody's placing the regional lender on review after last week's announcement of a profit slide.
THE Bank of Queensland faces a potential downgrade of its single-A credit rating, with ratings agency Moody's placing the regional lender on review after last week's announcement of a profit slide.Moody's said yesterday the review would focus on BoQ's asset outlook and the likelihood of a drop in impairment expenses next year.BoQ said last week its annual profit fell by 13 per cent to $158 million, following a near-doubling of impairment charges caused by its exposure to the regional commercial property sector.But the bank's acting chief executive, Ram Kangatharan, said he was confident the lender could retain its rating following the three-month review. "We expect that during this period we will be able to demonstrate BoQ's continued improvement in recent trends in asset quality," he said.Much of the increase in lending losses related to flood and weather events of a one-off nature, he said. At the same time, the performance of the bank's leasing portfolio had stabilised, he said.The Moody's rating of "A2" on BoQ is two notches higher than the bank's BBB ratings from other agencies, including Standard & Poor's.Marina Ip, an assistant vice-president at Moody's, said BoQ's asset quality continued to deteriorate at the end of 2010-11, albeit at a slower pace. "There are increased delinquency rates in the housing and commercial loan books, with the former running at levels higher than system average," Ms Ip said.