Bank of Queensland will miss its projected net profit for the second half of 2012 by between A$20 million to $25 million thanks to a further top up of provisions and refunds to customers because of wrongly charged fees, as well as escalating legal bills.
This result is likely to lead BOQ to report a loss in the order of $15 million for the full financial year.
BOQ said on Friday that its bad debt expense will range from between $70 million and $75 million for the second half, or $10 million to $15 million more than analysts' expectations.
Most of the additional provision relates to loans in the $1 million to $5 million range - a cohort excluded from a review undertaken late in the bank's first half.
That earlier review led to a 30 per cent rise in impaired assets, a lift in the provision by $262 million and a first-half loss of $91 million.
"It's taken us a while to catch up," with required reviews of the credit quality of its loan book the bank's chief executive, Stuart Grimshaw, told the
Financial Review.
BOQ said on Friday that it would also incur $10 million in costs relating to four "legacy issues", including "incorrect interest charges" and the costs of two drawn-out legal wrangles. These are the Storm Financial case (being heard in Brisbane) and the franchisees case (being heard in Sydney). In both cases the plaintiffs are supported by litigation funders
BOQ is said it estimated "normalised underlying profit before tax" at between $220 million and $225 million for the half year to August 2012.
In the half year to February 2012, BOQ put this profit measure at $222 million.
Over the six months to August, BOQ reported a decline of three per cent in its lending to business (according to APRA), which compares with growth of six per cent for all banks.
BOQ reported growth of 3.1 per cent in mortgage lending over the last six months, about 1.5 times the industry average.