Bank of Queensland : APRA Basel III Pillar 3

APRA BASEL III PILLAR 3

Thursday, 15 April 2021, Sydney: Bank of Queensland Limited (ASX: BOQ) wishes to release the attached APRA Basel III Pillar 3 report relating to the period ending 28 February 2021.

Ends

Authorised for release by: The Board of Directors, Bank of Queensland Limited

APRA BASEL III PILLAR 3 DISCLOSURES

Quarter ended 28 February 2021

BANK OF QUEENSLAND LIMITED, BASEL III PILLAR 3 DISCLOSURES

For the Quarter Ended 28 February 2021

Introduction

Bank of Queensland (Bank or BOQ) is an Authorised Deposit-taking Institution (ADI) regulated by the Australian Prudential Regulation Authority (APRA) under the authority of the Banking Act 1959.

This report has been prepared by BOQ to meet its disclosure requirements set out in APRA's prudential standard APS 330 'Public Disclosure' (APS 330). It presents information on the Bank's capital adequacy, credit risk, securitisation exposures and liquidity coverage ratio.

In addition to this report, the Bank's main features of capital instruments are updated on an ongoing basis and are available at the Regulatory Disclosures section of the Bank's website at the following address: https://www.boq.com.au/regulatory_disclosures.

Key points

The Bank's capital management strategy aims to ensure adequate capital levels are maintained to protect deposit holders. The Bank's capital is measured and managed in line with Prudential Standards issued by APRA. The capital management plan is updated annually and submitted to the Board for approval. The approval process is designed to ensure the plan is consistent with the overall business plan and for managing capital levels on an ongoing basis.

Capital Ratios

The Board has set the Common Equity Tier 1 Capital target range to be between 9.0% and 9.5% and the Total Capital target range to be between 11.75% and 13.5%.

As at 28 February 2021:

• Common Equity Tier 1 Capital Ratio was 10.0% (9.9% as at 30 November 2020); and
• Total Capital Ratio was 13.8% (13.7% as at 30 November 2020).

Capital Initiatives

In November 2020, the Bank raised AUD 260 million through the issue of capital notes.

CONTENTS	PAGE
1. Capital Structure	3
2. Capital Disclosure Template	4
3. Reconciliation between the Consolidated Balance Sheet and the Regulatory Balance Sheet	8
4. Entities excluded from the Regulatory Scope of Consolidation	10
5. Capital Adequacy	11
6. Credit Risk	12
7. Securitisation Exposures	14
8. Liquidity Coverage Ratio	15
9. Net Stable Funding Ratio	17

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Bank of Queensland Limited and its Controlled Entities

ABN 32 009 656 740 AFSL No. 244616

BANK OF QUEENSLAND LIMITED, BASEL III PILLAR 3 DISCLOSURES

For the Quarter Ended 28 February 2021

1. Capital Structure

	February 21		August 20
	$m		$m
COMMON EQUITY TIER 1 CAPITAL
Paid-up ordinary share capital	3,870	3,871
Reserves	298	134
Retained earnings, including current year earnings	199	163
Total Common Equity Tier 1 Capital	4,367	4,168
REGULATORY ADJUSTMENTS
Deferred expenditure	(201)	(187)
Goodwill and intangibles	(927)	(909)
Other deductions	(18)	17
Total Regulatory Adjustments	(1,146)	(1,079)
Net Common Equity Tier 1 Capital	3,221	3,089
Additional Tier 1 Capital (1)	610	350
Total Tier 1 Capital	3,831	3,439
TIER 2 CAPITAL
Tier 2 Capital	350	350
General Reserve for Credit Losses	263	230
Net Tier 2 Capital	613	580
Total Capital Base	4,444	4,019

Notes:

(1) Tier 1 capital was raised in November 2020 through the issue of Capital 2 Notes.

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Bank of Queensland Limited and its Controlled Entities

ABN 32 009 656 740 AFSL No. 244616

BANK OF QUEENSLAND LIMITED, BASEL III PILLAR 3 DISCLOSURES

For the Quarter Ended 28 February 2021

2. Capital Disclosure Template

Common Equity Tier 1 Capital (CET1): Instruments and Reserves	$m	Ref
1	Directly issued qualifying ordinary shares (and equivalent for mutually-owned entities) capital	3,870	A
2	Retained earnings	199	B
3	Accumulated other comprehensive income (and other reserves)	298	-
4	Directly issued capital subject to phase out from CET1 (only applicable to mutually-owned companies)	-	-
5	Ordinary share capital issued by subsidiaries and held by third parties (amount allowed in group CET1)	-	-
6	Common Equity Tier 1 capital before Regulatory Adjustments	4,367	-
Common Equity Tier 1 capital : Regulatory Adjustments	$m	Ref
7	Prudential valuation adjustments	-	-
8	Goodwill (net of related tax liability)	685	C
9	Other intangibles other than mortgage servicing rights (net of related tax liability)	242	D
10	Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of	-	-
related tax liability)
11	Cash-flow hedge reserve	(86)	E
12	Shortfall of provisions to expected losses	-	-
13	Securitisation gain on sale (as set out in paragraph 562 of Basel II framework)	-	-
14	Gains and losses due to changes in own credit risk on fair valued liabilities	-	-
15	Defined benefit superannuation fund net assets	-	-
16	Investments in own shares (if not already netted off paid-in capital on reported balance sheet)	-	-
17	Reciprocal cross-holdings in common equity	-	-
	Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory	-
18	consolidation, net of eligible short positions, where the ADI does not own more than 10% of the issued share capital	-
	(amount above 10% threshold)
19	Significant investments in the ordinary shares of banking, financial and insurance entities that are outside the scope	-	-
of regulatory consolidation, net of eligible short positions (amount above 10% threshold)
20	Mortgage service rights (amount above 10% threshold)	-	-
21	Deferred tax assets arising from temporary differences (amount above 10% threshold, net of related tax liability)	-	-
22	Amount exceeding the 15% threshold	-	-
23	of which: significant investments in the ordinary shares of financial entities	-	-
24	of which: mortgage servicing rights	-	-
25	of which: deferred tax assets arising from temporary differences		-
26	National specific regulatory adjustments (sum of rows 26a, 26b, 26c, 26d, 26e, 26f, 26g, 26h, 26i and 26j)	305	-
26a	of which: treasury shares	-	-
26b	of which: offset to dividends declared under a dividend reinvestment plan (DRP), to the extent that the dividends	-	-
are used to purchase new ordinary shares issued by the ADI
26c	of which: deferred fee income	174	F
26d	of which: equity investments in financial institutions not reported in rows 18, 19 and 23	29	G
26e	of which: deferred tax assets not reported in rows 10, 21 and 25	61	H
26f	of which: capitalised expenses	14	I
26g	of which: investments in commercial (non-financial) entities that are deducted under APRA prudential	6	J
requirements
26h	of which: covered bonds in excess of asset cover in pools	-	-
26i	of which: undercapitalisation of a non-consolidated subsidiary	-	-
26j	of which: other national specific regulatory adjustments not reported in rows 26a to 26i	21	K
27	Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and Tier 2 to cover	-	-
deductions
28	Total Regulatory Adjustments to Common Equity Tier 1	1,146	-
29	Common Equity Tier 1 Capital (CET1)	3,221	-

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Bank of Queensland Limited and its Controlled Entities

ABN 32 009 656 740 AFSL No. 244616