Bank of Queensland (BoQ) is poised to post the first full year loss by an Australian bank in 20 years because of its exposure to the struggling south-east Queensland property market.
The regional lender expects to post a loss of up to $20.6 million for the year to August 31, the first suffered by a local bank since ANZ made a $579 million loss in its 1991/92 fiscal year.
Shares in BoQ dropped 5.2 per cent, or 41 cents to $7.55 on Friday.
“The bank continues to be hurt by its over exposure to a Queensland economy and its uneven property market,” Patersons analyst Tony Farnham said.
A large increase in the bank’s provisions for bad debts – loans that get written off because they can’t be recovered – caused BoQ to post a $90.6 million loss in the first half of its fiscal year.
Another increase to those provisions, plus $10 million in unforeseen losses, will mean BoQ’s second half profit will not be large enough to prevent a full year loss for 2011/12.
BOQ expects to make a profit of $70 million to $75 million in the second half of its fiscal year, the six months to August 31.
That result will include $10 million in losses from “legacy issues” identified in an operational review carried out by the bank’s new management, the bank said.
Chief executive Stuart Grimshaw took over in November 2011, and chief financial officer Anthony Rose joined the bank three months later.
The review uncovered the need for refunds to a small number of customers for incorrect interest charges on specific accounts, BOQ said.
There was also legal expenses associated with the Storm Financial case, restructuring and redundancy costs, and government guarantee break fees.
“Surely the honeymoon period for the new management team on this front must be in wind-back stage,” Mr Farnham said.
BoQ also added another $15 million to its bad debt provisions because of the ongoing challenges in the economy and property market, particularly in south-east Queensland.
That will take its second half bad debt expenses to between $70 million and $75 million, higher than consensus analyst expectations.
BoQ expects normalised pre-tax net profit for the six months to August 31, which excludes one-off items, to be between $220 million and $225 million, BOQ said.
That would take its full year normalised profit to between $441.9 million and $446.9 million.
BOQ will release its audited full year results on October 18.
