Bank of Queensland Ltd.'s (BOQ) continued robust asset quality, sound funding profile, and strengthening franchise support the ratings. The relatively low credit risk inherent in BOQ's largely mortgage-secured loan book, which exhibits little sectoral or size concentration, as well as the bank's sound capitalization ratios, also are reflected in the bank's current rating. The bank, however, will be challenged to improve profitability and manage its recent above-peer loan growth, as the economic cycle begins to weaken. BOQ's success in managing these challenges will be a key indicator as to the future movement in the bank's credit rating. Constraining the rating is BOQ's continued geographic concentration within the Queensland market, its relative lack of operational diversity, a high expense base, and
