BOQ Raises $108m Through Institutional Placement and SPP

Wednesday, 28/01/2009 

  • BOQ has raised $108 million through a share placement to institutional and sophisticated investors and the upcoming issue of shares allocated for the Share Purchase Plan (SPP).
  • Additional capital earmarked to fund organic growth opportunities in existing business. 
  • Funding position strong: retail deposits growth funding 170% of YTD asset growth.
  • $500 million government guaranteed term debt issued.
  • Continuing high asset quality focused predominantly in Queensland.
  • Strengthened capital base with Tier 1 above 8%. 

Bank of Queensland today announced it had successfully raised $63 million of equity capital through a placement to institutional and sophisticated investors at $7.64 per share. 

This placement is in addition to approximately $45 million at the same issue price* that on initial indications will be raised from the issue of shares allocated for the Share Purchase Plan (SPP).  The actual result from the SPP, which closed on 23 January 2009, will be finalised later today. 

BOQ Managing Director David Liddy said he was pleased with the take-up of the SPP. 

“In light of the adverse financial market conditions in recent days, we are very pleased with the response from our retail shareholders and professional investors. I am particularly pleased that we were able to offer all our shareholders the opportunity to participate in the SPP at the same price as the institutional placement,” said Mr Liddy. 

The capital raising was supported by BOQ’s largest shareholder, France’s BRED Banque Populaire. 

Mr Liddy said the additional capital will be used to continue to fund the organic growth opportunities in BOQ’s existing business. 

“The additional capital raised will place the Bank in a comparable position to its banking peers on a Tier 1 ratio exceeding 8.0% but with a lower risk asset book and reduced reliance on innovative hybrids. 

“We continue to make good progress across most of the key elements of the 2009 Business Plan. 

“We have achieved strong growth in retail deposits, which has meant the Bank was in the enviable position of funding more than 170% of our above system asset growth in the four months to December from retail deposits; an increase on the 116% flagged at our AGM last December. 

Mr Liddy reiterated the guidance on asset quality provided at the FY08 results presentation, saying: “Our impairment charges year to date remain in line with our FY08 performance, indicating continued high asset quality, benefiting from our focus on secured lending in housing and small business, predominantly in Queensland.” 

On prospects for the FY09 results, Mr Liddy reinforced earlier statements that volatility across the markets made EPS guidance impractical. 

“As indicated at our AGM last year, we expect continued growth in our normalised cash profits but, in line with the rest of the sector, we expect our first half Net Interest Margins (NIM) to be under pressure with recapture of margins in the second half as pricing actions on lending and retail deposits take effect. 

“In effect, we expect the NIM trend across the two halves will be similar to that of FY08”. 

Mr Liddy also commented on the Bank’s focus on shareholder value. 

“Having proven the resilience, flexibility and productivity of the BOQ banking model, we as a management team have a clear line of sight to adding shareholder value. 

“Project Pathways, which was announced at our AGM in December, is now underway and we are continuing to evaluate external opportunities emerging in the Australian financial services sector and have kicked off a series of internal efficiency programs to ensure we are positioned for the next wave of growth. 

“We expect to be in a position to provide an update on the progress of Project Pathways with our half-year results in early April.” 

Project Pathways is a formal process to investigate innovative ways to continue the Bank’s growth trajectory.  It is reviewing a series of options to further enhance our ongoing growth, including strategic partnerships, complementary merger opportunities and new business strategies such as portfolio optimisation and efficiency initiatives. 

*Calculated by reference to a 7.5% discount to the 5-day VWAP ended 23 January 2009. Formal allotment confirmations are expected to be dispatched to shareholders on 6 February 2009