Bank of Queensland (BOQ) has announced a $450 million equity raising to strengthen the bank’s Tier 1 capital position in response to an expected loss of $91 million for the six months to 29 February 2012.
The loss was contributed to by a downturn in Queensland tourism and in the commercial and residential property market, partly due to recent natural disasters in the state, BOQ chief executive Stuart Grimshaw said.
The $450 million equity raising would consist of an institutional placement to raise approximately $150 million, an institutional entitlement offer to raise approximately $135 million, and a retail entitlement offer to raise approximately $165 million, the bank announced.
The equity raising would strengthen the bank’s Tier 1 capital ratio from 6.4 per cent to 8.6 per cent, fund organic growth opportunities and fund the redemption of the remaining $105 million Tier 2 convertible notes.
"This equity raising will strengthen our balance sheet and provide Bank of Queensland with the capacity for continued growth," Grimshaw said.
"The proceeds will be used to ensure Bank of Queensland is one of the best protected banks in Australia, with one of the highest Core Tier 1 capital ratios, while also allowing us to strengthen provisioning of our current loan book," he said.
The bank also announced a sightly increased underlying profit before tax of $222 for the half year, as well as a significantly increased impairment expense of $328 million, up from $134 million in the prior corresponding period.
Grimshaw said he expected conditions in Queensland to remain challenging over the next few years and a continuation of higher competition in the banking market.
