The issuer credit ratings on Bank of Queensland (BoQ) reflect our view of the bank's sound asset quality, which, notwithstanding its recent deterioration, remains supported by a high proportion of low-credit-risk residential lending exposures, sound capitalization, and the bank's good market position and brand in its Australian home State of Queensland. These strengths are moderated by our view that BoQ has a greater than peers' appetite for growth through acquisitions, although small in size, plus has a material exposure to wholesale funding--similar to many of its domestic peers. Furthermore, we are cautious about the bank's concentration in the Queensland property sector, noting that 61% of its exposures are in Queensland. BoQ's earnings profile has been negatively affected by an increase
