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BANK of Queensland (ASX:BOQ) will counter challenging market conditions caused by the high dollar with a new focus on small to medium enterprise (SME) banking.
Managing director Stuart Grimshaw (pictured) reveals the strategy will also address heightened competition in the financial services sector.
“Against this backdrop, our strategy of focusing on relationships through the SME market, agribusiness and our core retail customers will provide opportunities to grow above system over the long term,” he says in an ASX statement.
“We will target growth above system over the long term while maintaining costs at or under the inflation rate.”
BOQ has approved a $450 million capital raising to counter $579 million in ‘non performing’ residential and commercial property loans as well as a 244.7 per cent rise in impairment expenses to $328 million incurred during the first half of 2011.
“This equity raising will strengthen our balance sheet and provide BOQ with the capacity for continued growth,” says Grimshaw.
“This reflects an increased level of conservatism at BOQ when it comes to our balance sheet and capital position, while also recognising the significant opportunities for organic growth that additional equity provides.”
The raising has successfully completed a fully underwritten institutional placement of $150 million. It includes an accelerated, pro-rata and non-renounceable entitlement offer of $300 million that comprises of both $134 million institutional and $165 million retail entitlement offers.
Priced at $6.05 per unit the offer represents a 17.1 per cent discount to the March 23 closing price of BOQ shares and a 13.5 per cent saving on the theoretical ex-rights price.
The bank predicts a $91 million statutory net loss after tax for the six months to February 29, 2012. The figure represents a 221.9 per cent decrease on the previous corresponding period. Full results will be released on April 18.
“Queensland has been negatively impacted by the flow-on effects of a downturn in tourism and has endured recent natural disasters such as floods and cyclones,” says Grimshaw.
The Board of directors declared a fully franked interim dividend of 26 cents per share, which will be paid on May 25.
BOQ shares remained flat today at $7.30 per unit.
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