(Closes shares in fifth paragraph.)
Oct. 13 (Bloomberg) -- Bank of Queensland Ltd., Australia’s worst performing bank stock this year, said full-year profit fell 13 percent as bad debts almost doubled.
Net income in the 12 months ended Aug. 31 dropped to A$158.7 million ($161 million) from A$181.9 million a year earlier, the Brisbane-based bank said today. Bad debts jumped 92 percent from a year earlier to A$200.5 million as a “result of one-off commercial deals, the current economic conditions, and extreme weather events of early 2011,” the bank said.
Acting Chief Executive Officer Ram Kangatharan, who took over the post after David Liddy stood down in August and will pass the role to Stuart Grimshaw next month, is overseeing a bank battered by natural disasters and waning property prices in its home state. The highest borrowing costs in the developed world have cut demand for loans in Australia to the weakest level in more than three decades.
“Credit quality is the key risk that is holding back BOQ’s returns and shareprice,” Sydney-based analysts led by John Buonaccorsi at Royal Bank of Scotland Group Plc said in a note dated Oct. 7. “Although the Queensland economy is now picking up, a recovery in property valuations will lag the improvement in the wider economy.”
The shares rose 1.4 percent to A$8.10 in Sydney after Kangatharan said bad debts “will fall” in the current fiscal full year. The shares have slipped 22 percent this year. The benchmark S&P/ASX 200 Index fell 10.6 percent in 2011.
Liddy, CEO for more than 10 years, in February cut his annual profit forecast for a second time after Queensland’s worst floods since 1974 and cyclone Yasi. Liddy’s replacement by Grimshaw was announced in August.
Retail deposits rose 1.5 times the system in the fiscal full year, and loan growth expanded at 1.4 times the total market, the bank said today.
Bank of Queensland’s underlying profit, which excludes one- off bad debts and weather-related provisions, gained 18 percent in the 12 months to A$447.4 million.
--Editors: Malcolm Scott, Edward Johnson
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