BOQ to defer dividend after APRA advice
Bank of Queensland will defer paying dividends to shareholders after the Australian Prudential Regulation Authority urged banks to consider doing so due to the coronavirus impact.
The regional lender said on Wednesday it would defer a decision on paying its interim dividend until the economic outlook was clearer.
In its first-half results presentation, chief executive George Frazis said management would talk to APRA before deciding whether to pay shareholders.
BOQ has reported a 10 per cent drop in cash earnings to $151 million for the first half of 2020.
APRA on Tuesday asked banks to conserve capital and reduce dividends, given the uncertain economic outlook.
This would ensure banks could continue to lend and underwrite insurance.
Bank of Queensland chairman Patrick Allaway said the bank understood the impact of its decision on shareholders but APRA's guidance was a prudent step.
The bank's revenue was flat at $545 million for the six months to February 29, while expenses soared 31 per cent to $377 million, including $47 million in non-recurring expenses associated with its strategic review and restructure.
Statutory net profit dropped 40 per cent to $93 million.
Management estimates the impact of the coronavirus pandemic will be between $49 million and $71 million in its full-year figures.
However, Mr Frazis said the bank was well positioned to handle the financial impact of the pandemic.
He said the business was much more diversified than it had been during the global financial crisis.
Mr Frazis also said the loan to value ratio of those customers asking for help was quite low.
Loan to value ratio indicates the risk a borrower may not be able to repay a loan.
Retail banking cash earnings fell 17 per cent to $55 million in the first half. This was due to a lower cash rate and spending on regulatory activities.
Business banking fared a little better. Cash earnings were down 3.0 per cent to $99 million.
There was better news in the bank's lending operations.
Lending growth was 3.0 per cent after gross loans and advances rose $781 million to $47 billion.
The BOQ Specialist and Virgin Money Australia divisions were top performers.
The bank's shares were down 15 cents, or 2.92 per cent, to $4.99 at 1212 AEST.