How BOQ’s August 2025 Basel III Report Signals Resilience Amid Portfolio Growth

Capital Position and Regulatory Compliance

Bank of Queensland Limited (BOQ) has released its quarterly APRA Basel III Pillar 3 disclosures for the period ending 31 August 2025, providing a detailed update on its capital adequacy, risk exposures, and governance framework. The report confirms that BOQ continues to operate comfortably within its targeted capital ranges, with a Common Equity Tier 1 (CET1) ratio of 10.94%, a slight increase from 10.80% in the previous quarter. The Tier 1 Capital Ratio and Total Capital Ratio also edged up to 12.58% and 15.18% respectively, reflecting the bank’s prudent capital management aligned with APRA’s revised Basel III standards effective from January 2025.

Risk-Weighted Assets and Portfolio Growth

The bank’s risk-weighted assets (RWA) rose by $268 million during the quarter, primarily driven by growth in commercial property lending, land acquisition, development and construction (ADC), leases, and general corporate exposures. This increase was partially offset by a reduction in residential property exposures. The rise in RWA signals ongoing business expansion but also underscores the importance of vigilant risk monitoring to maintain capital adequacy.

Liquidity Strength and Funding Resilience

BOQ’s liquidity metrics remain robust, with an average Liquidity Coverage Ratio (LCR) of 143% for the quarter, comfortably above APRA’s 100% minimum requirement. The Net Stable Funding Ratio (NSFR) also improved to 124%, reflecting a well-diversified and stable funding base. The bank’s liquidity strategy emphasizes maintaining high-quality liquid assets and diversified funding sources, including retail deposits, wholesale markets, covered bonds, and securitisation programs.

Comprehensive Risk Management Framework

The Pillar 3 report offers an extensive overview of BOQ’s risk management approach, highlighting a strong governance structure with clear roles and responsibilities across the Board, executive committees, and risk functions. The bank employs a three lines of defence model to manage credit, market, operational, and liquidity risks. Notably, BOQ has implemented a refreshed risk culture framework to embed risk awareness throughout the organisation. Stress testing and scenario analysis are integral to the Internal Capital Adequacy Assessment Process (ICAAP), ensuring capital buffers remain sufficient under adverse conditions.

Credit Risk and Securitisation Activities

Credit risk management remains a core focus, with BOQ maintaining diversified portfolios and robust credit approval processes. The bank’s securitisation activities, including Residential Mortgage Backed Securities (RMBS) and asset-backed securities, continue to provide diversified funding and risk transfer benefits. The report details the composition of securitisation exposures and associated capital requirements, reflecting compliance with APRA’s prudential standards.

Outlook and Governance

BOQ’s disciplined capital and liquidity management, combined with a comprehensive risk governance framework, positions the bank well to navigate evolving market conditions and regulatory expectations. The Board’s annual review and approval of prudential policies ensure ongoing alignment with best practices and regulatory standards.