Very good asset quality, with adequate provisioning coverage Good operating performance Strengthening franchise, assisted by the acquisition of UFJ Finance Australia Pty Ltd. Degree of geographical concentration in Queensland Small absolute capital base, compared with peers', but acceptable by international standards Susceptibility to weakening operating environment, particularly any slowdown in the housing sector The counterparty credit ratings on Bank of Queensland Ltd. (BOQ) reflect its continued sound asset quality, strengthening franchised through an expanding branch network, increasing efficiency partially through additional scale, sound capitalization ratios, and predominately retail-based funding profile. The bank's asset quality position is supported by the relatively low credit risk inherent in BOQ's largely mortgage-secured loan book, which exhibits little sectoral or size concentration. The bank has
