Bank of Queensland (ASX:BOQ) has defended the company's credit rating in the wake of Moody's placing it on review for a possible downgrade.
Moody's on Thursday announced it would review the company's A2 rating, citing concerns over deteriorating asset quality.
Moody's also expressed concerns about the bank's ratio of wholesale funding to total funding, as well as an increase in non-performing loans.
But acting Bank of Queensland CEO Ram Kangatharan said he was confident of convincing Moody's to maintain its rating.
He said he expects the company's performance to continue to improve over the three-month duration of the review.
“Our results in the second half of FY11 confirm the one-off nature of the flood and weather events overlays and provisions related to large expenses booked in 1H11,” Kangatharan said.
“In fact, we have made considerable progress in 2011 addressing many of the concerns raised by Moody's at their last review in December 2010.”
He added that the company had stabilized a recent growth in impaired assets, and is well-provided for its exposure to the impairments.
Moody's A2 rating is two notches higher than Bank of Queensland's BBB+ rating from Standard & Poor's and Fitch.
Last week, Bank of Queensland reported a 13% decline in FY11 profit to $158.7 million.
BOQ shares fell 2.89% on Thursday to $8.070.
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