Weak updates from the financial sector yesterday.
The Bank of Queensland yesterday scrapped its 2019-20 earnings guidance but maintains that its capital position and funding are strong after the recent $340 million capital raising.
However, the company announced it has decided that it will no longer seek APRA’s approval for an exemption in relation to the 12-months profit test for the interim dividend.
The market liked the news and BoQ shares rose 5.6% to $5.03
The bank has also decided to place plans for a dividend exemption test from APRA, meaning there’s every chance a lower or even no dividend will be paid in respect of the final six months of the financial year to the end of August.
“Due to the highly uncertain environment and associated challenges in providing accurate forecasts for this year, BOQ believes it is prudent to withdraw the FY20 guidance and outlook statements provided at the Investor Day on 27 February 2020. Furthermore, the Board has decided that it will no longer seek APRA’s approval for an exemption in relation to the 12‐months profit test for the interim dividend,” the bank said in the statement to the ASX.
CEO George Farzis said in a statement at the investor day in February “With improved momentum across BOQ since the capital raising, FY20 cash earnings is now expected to be 4% to 6% lower than FY19 driven by better than expected income growth and improved impairment expense.”
That no longer applies.
The bank said yesterday that its “capital position and funding remain strong, with a pro forma FY19 CET1 Ratio of 10.07% following the recent capital raising, which represents a large buffer in excess of APRA’s unquestionably strong capital requirements. BOQ’s funding position will also be further enhanced by the provision of the RBA term funding facility to support customers with new lending.
“Despite the significant shift in the economic environment, BOQ remains focused on executing its refreshed strategy and importantly retains the flexibility to respond to changing market dynamics.
“BOQ will continue to work with the Federal Government, State Governments and regulators to support its customers, employees and the wider community through the period of disruption caused by COVID‐19. BOQ is well placed to support households and business customers during this extraordinary time for the Australian economy,” The bank said in its statement.
Eftpos provider Tyro Payments yesterday withdrew the guidance in its prospectus, saying it had experienced a compression in transaction value growth rates because of measures to combat the pandemic.
“In addition, given the considerable uncertainty that remains, we are not in a position to offer a reliable forecast at this time,” said chief executive Robbie Cooke.
Tyro shares ended up 0.3% at $1.666 after being off more than 6% at one stage.
Tyro provides payments and banking solutions to more than 32,000 merchants, including many SMEs, predominantly operating in the hospitality, retail and health verticals.
It said in yesterday’s statement that “Many of our merchants are finding the impact of COVID-19 extremely challenging despite all their efforts to innovate and adapt, and notwithstanding the various assistance packages on offer.”
It is the current view of Tyro’s Board that the escalation of the measures being implemented by the federal, state and territory governments in response to COVID-19 will as time progresses, increasingly negatively impact our merchants’ businesses and any revenue we may derive from those transactions.
“Coupled with the current uncertainty in relation to the spread and duration of the COVID-19 pandemic, Tyro’s Board considers it appropriate to withdraw the Forecast Financial Information contained in Tyro’s Prospectus,” the company said.
