Moody’s has announced a downgrade of the Bank of Queensland’s rating from A2 to A3. 

 

Ratings affected by this downgrade are the Bank’s long-term senior unsecured debt rating to A3 from A2, subordinated debt rating to Baa1 from A3, preference stock rating to Ba1(hyb) from Baa3 (hyb), short-term rating to Prime-2 from Prime-1, and Bank Financial Strength Rating to C- from C (its stand-alone rating, which maps to a Baa1 from A3 on the long-term ratings scale).

 

BOQ Managing Director and Chief Executive Officer Stuart Grimshaw said “While we are obviously disappointed that Moody’s has chosen to downgrade the Bank’s rating, we remain focused on offering our customers a unique and personal banking experience.

 

“We are confident in terms of our funding requirements for 2012 and, as at 30 August 2011, our reliance on offshore wholesale funding was just 1.5% of the Bank’s total funding.

 

“Also at 30 August 2011, our Total Capital ratio was 11.4% with Tier 1 Capital of 8.4%.

 

“We believe BOQ remains a well capitalised Australian Bank with a strong funding and liquidity position; we do not face the same funding pressures as the major banks and believe our wholesale funding task for FY2012 is extremely manageable.”

 

The Moody's report said that BoQ had a "slightly weaker business profile than Bendigo; we also consider the BoQ's franchise strength and stability outside its home state is weakr than Bendigo's houtside its home state."

 

"Furthermore, we consider that BoQ and Suncorp are exposed to higher competition in their home state of Queensland, where all regional and major banks actively  compete and there are a large number of non-bank financial institutions competing for business that is targeted by BoQ"

 

BoQ wrote off loans totalling $49.7 million in November, up from $19.9 in August.

 

The downgrade follows an announcement by Standard and Poor's in July last year that it had lowered their long-term issuer credit rating on BOQ to 'BBB' from 'BBB+'. The short-term rating was affirmed at 'A-2' and the outlook as 'stable'.