Bad debts keep growing

Analysts are worried that BOQ is still leaving itself overexposed to bad debt growth by under-provisioning. The 20 per cent increase in first half impairments was offset by an equivalent reduction in provisions, suggesting BOQ has optimistically seen no reason to top up the protection.

Or did the bank just want to make sure it reached profit growth guidance, lest its share price be slammed?

BOQ's shares fell seven per cent after the earnings release - not as bad as Bendigo's equivalent 13 per cent fall. But despite concerns over how the bank will fare as the Australian recession plays out, analysts noted the restructuring program, cost-cutting and efficiency drive under way will leave BOQ in good stead when things begin to return to a more even keel.

BOQ just has to make it through. Analysts also applauded a significant dividend cut and a move to a lower payout policy, although this, too, came as a surprise.

BOQ's result prompted only one broker downgrade from FNArena's broker universe, with Macquarie moving to underperform from neutral. This leaves BOQ with a 1/4/5 buy/hold/sell ratio, which is lower than the lowest rated of the big four (CBA on 1/6/3) but equivalent to Bendigo's ratio.