- Bank of Queensland (BOQ) is the latest publicly-listed company to withdraw its earnings guidance
- The company’s financials have been hit by the COVID-19 pandemic
- Despite the withdrawal, the regional lender argues it has a strong balance sheet and is well supported by its cash reserves
- However, the bank will no longer seek an exemption that would have allowed it to make a dividend payout greater than its profit margin
- For its customers, Bank of Queensland has brought in three new initiatives to keep families financially afloat
- These include business loan deferrals, flexible mortgage repayment plans, and hardship assistance packages
- On the back of the news, BOQ is up 3.56 per cent at market close, with shares trading for just shy of $5
Bank of Queensland (BOQ) is the latest publicly-listed company to withdraw its earnings guidance as its financials are hit by the global COVID-19 pandemic.
“Due to the highly uncertain environment and associated challenges in providing accurate forecasts for this year, BOQ believes it is prudent to withdraw the FY20 guidance,” the bank told its investors today.
The Australian banking stalwart also said it would no longer seek an exemption from the Australian Prudent Regulation Authority (APRA) in order to deliver a dividend payment larger than its profit margin.
Last year, the bank paid a 65 cent per share dividend; down 14 per cent on the previous financial year. Prior to today, it had projected an FY20 dividend payout ratio would be set between 70 and 80 per cent of the company’s cash earnings.
Although not one of the nation’s big four, BOQ is still one of Australia’s largest retail banks. It boasts over 900,000 customers and holds its own as a member of the benchmark ASX 200.
Bank in business
Despite the decision, the regional lender says it’s doing all it can financially to support its customers in this tough time.
Managing Director and CEO George Frazis said the bank has a strong balance sheet and the security of solid capital and funding.
Making the most of this, Bank of Queensland has announced three key initiatives to help mums and dads keep financially afloat.
Firstly, the bank is offering deferred repayment plans for up to half a year to customers with up to $10 million in business loans.
Secondly, homeowners can elect to defer their mortgage repayments or only pay interest on their property over a three-month term.
Finally, hardship assistance packages will be fast-tracked to customers who need it most.
“BOQ will continue to … support its customers, employees and the wider community through the period of disruption … [we are] well placed to support households and business customers during this extraordinary time for the Australian economy,” the regional lender explained.
Bank of Queensland is just the latest in a string of financial companies which have fallen privy to the earnings withdrawal trend.
Today, fintech Tyro Payments and insurer QBE joined the fray.
“The escalation of the measures being implemented by the federal, state and territory governments in response to COVID-19 will, as time progresses, increasingly negatively impact our merchants’ businesses and any revenue we may derive from those transactions,” said Tyro as it withdrew its guidance this morning.
Meanwhile, QBE echoed Bank of Queensland and said mass uncertainty made it difficult to calculate its earnings projections.
However, Insurance Group Australia bucked the trend today, instead reaffirming its financial guidance.
The group said its underlying performance had remained strong, although its year-to-date profitability could be hampered by natural perils claims.
“From the outset, we have prioritised the health and wellbeing of our people, customers and business partners, as well as the communities in which we operate, as we respond to this dynamic situation,” IAG Managing Director and CEO Peter Harmer told shareholders in an announcement today.
As a result, IAG shares spiked 10.9 per cent come market close.
Lender lifeline lifts shares
Despite the news today, BOQ shares have actually enjoyed an uptake.
BOQ CEO George Frazis reiterated the bank would be flexible and support patrons in this time of vulnerability.
“We are here for our customers and will work with them through the challenges ahead,” George concluded.
BOQ shares are up 3.56 per cent at market close, trading for $4.95 each.