The Bank of Queensland Limited (ASX: BOQ) share price has come under pressure on Friday morning and is dropping lower.
At the time of writing the regional bank’s shares are down by just over 2% to $6.29.
This latest decline means the Bank of Queensland share price is now down a disappointing 37% from its 52-week high of $9.98.
Why is the Bank of Queensland share price dropping lower?
This morning Bank of Queensland released a very revealing quarterly APRA Basel III Pillar 3 report for the period ending 31 May 2020.
This update shows that the bank has experienced a sharp increase in bad and doubtful debts because of the pandemic.
According to the release, Bank of Queensland’s +90 days past due loans has increased by $112 million during the quarter.
This $112 million includes $58 million of customer loans where banking relief package applications have been processed subsequent to 31 May 2020.
Management advised that the balance of the increase relates to customers who have not elected to enter into a relief package or who were ineligible.
In light of the above, Bank of Queensland has decided to increase its COVID-19 provisions.
It has taken a further collective provision of $61 million during the third quarter, bringing the total COVID‐19 related collective provision to $71 million.
This provision is at the top end of the range of $49 million to $71 million which was detailed in the half year results.
But whether it stops there, only time will tell. Management warned that there remains considerable economic uncertainty and it will continue to monitor the impacts of COVID‐19 on its portfolio and the collective provision prior to finalising its year end position.
No comments were made in respect to its dividend plans. A further update will be provided with its full year results later this year.