subscribe to our newsletter

BOQ arrears rise, raises COVID provisions

The non-major bank has significantly increased COVID-related provisions amid an increase in delinquencies across its portfolio.

BOQ has released its latest capital disclosure report, revealing that it has raised its COVID-related collective provisions to $71 million, up $61 million from $10 million.

According to BOQ, its total provisions are now at the “top end” of forecasts for collective provisions of between $49 million to $71 million, outlined in its financial report for the first half of 2020 (1H20).

This comes amid a $112-million increase in over 90-day arrears across its loan portfolio, which includes $58 million in loans processed with COVID relief packages after 31 May 2020.

The remainder of the increase in loan arrears ($54 million) relate to borrowers who have not requested loan relief or were not eligible for COVID assistance.



BOQ had been expected to increase its collective provisions in response to heightened credit quality concerns against a backdrop of income loss and high unemployment.

The bank has acknowledged that there “remains considerable economic uncertainty”, adding that it would continue to monitor the impacts of COVID‐19 on the portfolio and the collective provision “prior to finalising our yearend position”.

BOQ is the latest lender to increase its collective provisions in response to mounting credit quality concerns, with Bendigo and Adelaide Bank lifting its provisions in May.

S&P Global Ratings reported that it is forecasting an 85 bps increase in credit losses across the Australian banking sector’s loan portfolio in the 2020 financial year (FY20).

The 85 bps increase, which is expected to moderate to 50 bps in 2021, amounts to approximately $29 billion in gross loans, nearly six times higher than the record low in FY19.

In light of such forecasts, lenders have lowered their risks appetites, tightening serviceability requirements for new lending.

[Related: Credit crunch could ‘exacerbate’ price falls]

BOQ arrears rise, raises COVID provisions

Latest News

Lenders have received best practice guidance from the prudential regulator regarding the management of loans on repayment holidays. ...

The central bank has left the door open to further reductions to the cash rate but has maintained its stance on negative interest rates. ...

The founder and director of a commercial lender has issued a warning over the growing phenomenon of “sleeper risk” loan applicants arisi...


LATEST PODCAST: How lenders are viewing the property price outlook

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.