BOQ defers dividend, well capitalised for Covid-19

8 April 2020, Written by David Simmons

BOQ defers dividend, well capitalised for Covid-19

Bank of Queensland (ASX: BOQ) says it is well capitalised to manage the Covid-19 crisis as it defers its decision on paying an interim dividend for 1H20.

The bank's decision comes as the group reports its 1H20 financial results which revealed decreased earnings and NPAT figures.

In light of the Australian Prudential Regulation Authority's request that authorised deposit taking institutions (ADIs) and insurers limit discretionary capital distributions like interim dividends BOQ will defer the decision on paying an interim dividend until the economic outlook is clearer.

"BOQ understands the impact of this decision on shareholders, however also acknowledges this guidance as a prudent step for the industry," says BOQ chairman Patrick Allaway.

APRA's approach is based on its concerns that ADIs conserve capital and use capacity to support the economy during this financial crisis.

Though it has followed APRA's guidance BOQ says it is well capitalised currently with a CET1 (Common Equity Tier 1) ratio of 9.91 per cent an increase of 87 basis points during the half.

Further BOQ says funding remained stable during the half with customer deposits flat at $32 billion.

The group's cash buffer was further strengthened by a $340 million capital raise completed in December 2019.

"BOQ is well capitalised, providing us with the necessary buffer to respond to rapidly changing economic conditions," says BOQ CEO George Frazis (pictured).

"We moved early to strengthen our capital position, raising a total of $340 million in the recent capital raising, which included our proactive decision to increase the size of the retail share purchase plan to $90 million."

The deferment of the decision on paying an interim dividend comes in tandem with BOQ's 1H20 results which the bank describes came "as expected".

While income of $541 million was flat during the half cash earnings were down 10 per cent to $151 million.

Additionally, the group's NPAT was down by 40 per cent to $93 million which the group largely attributes to the result of previously guided restructuring changes and an intangible asset review.

Impairment expenses were flat at $30 million for 1H20 notwithstanding a $10 million increase in the collective provision response to the potential impacts of Covid-19, based on an assessment of market conditions as at 29 February 2020.

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Author: David Simmons

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