The counterparty credit ratings on Bank of Queensland Ltd. (BOQ) reflect its continued sound asset quality, low-risk funding profile, and strengthening franchise. The ratings also are supported by 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. The bank could be challenged to improve profitability and to maintain its recent high loan growth in a weaker economic cycle. BOQ's success in managing these challenges is key to any future movement in the rating. Offsetting factors are the bank's continued geographic concentration within the Queensland market, relative lack of operational diversity, high expense base, and the small absolute size of the capital base.
