Bank credit policies explain the slow-down in credit growth over the last year, Neil Summerson, chair of the Bank of Queensland, told the bank's annual meeting yesterday.
"Financial institutions are also still generally cautious on credit, and therefore credit growth has slowed since earlier this year," said Summerson in remarks lodged with the ASX.
On top of low credit growth, smaller businesses are trading in straightened times. While mining may be strong in Queensland, tourism and retail are not, Summerson noted.
"SMEs are feeling the delayed effects of the macro-economic slow-down and this has been reflected in the increase in bad debts," he said.
Summerson said management was cautious about predicting the level of bad debts, but did say that the bank will "see an improvement" in the second half of the current financial year.
That improvement will follow a just-announced doubling in the projected bad debt expense for the current half.
Investors in BOQ cut six per cent from the stock price yesterday in response. At one stage the fall was nine per cent.
The Australian reported yesterday on the fall of more than three per cent in BOQ shares during trading on Wednesday. The profit warning "didn't shock everyone", the newspaper noted.
Summerson also used his speech to remind shareholders that "an upgrade from our current BBB+ rating would be difficult without scale and diversification", a reference to the need for BOQ to buy, merge or sell - and something the bank has attempted to negotiate with Bendigo Bank and foreign banks over recent years, without success.