BoQ lender hit hardest by S & P ratings downgrades
and Adelaide Bank dropped 19¢ to $11.64, or 1.6 per cent, yesterday.
The impact followed S & P citing concerns about property prices and household debt levels, cutting ratings for 23 Australian lenders on Monday.
The hit came weeks after the market had pushed up stock in lenders such as BoQ because they were expected to receive a competitive boost from the Federal Government’s proposed levy on their Big Bank rivals.
Those same Big Banks were spared in the S & P ratings downgrade because of perceived support from the Government in any crisis, while fellow Queensland bank Suncorp also missed the whip because it was part of a big insurance business.
Analysts at Deutsche Bank estimated the ratings downgrade, from A- to BBB+, would chip BoQ earnings by 2.4 per cent, or $13 million, and Bendigo’s by 1.5 per cent, or $10 million over several years.
The hit to 190-branch BoQ was higher because it relied more than Bendigo on wholesale funding, which uses the credit ratings, the analysts said.
Shares in Bundaberg-based Auswide Bank, which also copped a downgrade, remained flat at $5.20.
Suncorp stock was down 4¢ to $14.05 after missing the ratings cut but revealing lukewarm growth in home loans on Monday.
S & P’s move ripped away a prized rating BoQ attained in 2013.
BoQ argued the rating drop had struck despite a “significantly lower level of exposure to the Sydney and Melbourne property markets than many other industry participants”.