The Bank of Queensland Ltd (ASX: BOQ) could come under selling pressure today after the Aussie bank reported lower regulatory capital in its latest Basel III Pillar 3 disclosure.
How did Bank of Queensland's numbers stack up?
Bank of Queensland reported lower retained earnings and reserves which saw its Common Equity Tier 1 (CET1) capital fall from $3,845 in February 2019 to $3,760 million, as at 31 May 2019.
The bank's regulatory adjustments saw its CET1 capital fall from $2,776 million in February to $2,711 million while Additional Tier 1 (AT1) capital was unchanged at $500 million for the group.
Overall, these changes saw the bank's total Tier 1 capital fall from $3,276 million to $3,211 million, which, while minor, shows that its regulatory capital has declined despite its Tier 2 capital levels increasing by $7 million to $531 million as at 31 May 2019.
In terms of its risk-weighted assets (RWAs), Bank of Queensland reported increases across its government, bank and residential mortgages asset segments as total RWAs rose from $29.98 billion in February to $30.32 billion in May.
The bank reported lower ratios across the board, with its Level 2 Total Capital Ratio falling by 40 basis points (bps) to 12.3%, while Level 2 CET1 and Level 2 Net Tier 1 capital ratios fell 40 bps and 30 bps to 8.9% and 10.6%, respectively.
Unsurprisingly, the bank's largest exposures remain loans and advances at $43,778 million, accounting for the vast majority of the group's $50,048 million of total exposures.
While Bank of Queensland did report a minor uptick in impaired assets, there is nothing to suggest significant bad assets on the company's balance sheet, with no material change from its February 2019 update.
The bank has maintained very little securitisation exposure, which was also broadly unchanged from February.
In another positive for the bank's credit profile, Bank of Queensland reported an average liquidity coverage ratio (LCR) of 141% over the May quarter, which is well above the minimum 100% required by the Australian Prudential Regulation Authority (APRA) and less than the 134% average recorded in the February quarter.
The Bank of Queensland share price has struggled to make significant capital gains so far this year, following a lack of structural changes recommended in Kenneth Hayne's final report, meaning the bank continues to struggle to capture market share from its 'Big Four' banking rivals.
