Bank of Queensland : APRA Basel III Pillar 3 Disclosures - Qtr ended 28 Feb 2017

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APRA BASEL III

PILLAR 3 DISCLOSURES

QUARTER ENDED 28 FEBRUARY 2017

This report has been prepared by Bank of Queensland Limited (Bank or BOQ) to meet its disclosure requirements under the Australian Prudential Regulation Authority's (APRA) Prudential Standard APS 330: Public Disclosure. It has been prepared using 28 February 2017 data.

The Bank's capital management strategy aims to ensure adequate capital levels are maintained to protect deposit holders. The Bank's capital is measured and managed in line with Prudential Standards issued by APRA. The capital management plan is updated annually and submitted to the Board for approval. The approval process is designed to ensure the plan is consistent with the overall business plan and for managing capital levels on an ongoing basis.

The Board has set the Common Equity Tier 1 Capital target range to be between 8.0% and 9.5% and the Total Capital range to be between 11.5% and 14.5%. As at 28 February 2017:

• Common Equity Tier 1 Capital Ratio was 9.3% (8.9% as at 30 November 2016);

• Total Capital Ratio was 12.6% (12.2% as at 30 November 2016).

Capital Structure 3

Table 1: Capital Disclosure Template 4

Reconciliation between the Consolidated Balance Sheet and the Regulatory Balance Sheet 8

Entities excluded from the Regulatory Scope of Consolidation 10

Table 2: Main Features of Capital Instruments 11

Table 3: Capital Adequacy 12

Table 4: Credit Risk 13

Table 5: Securitisation Exposures 15

Table 20: Liquidity Coverage Ratio 16

BANK OF QUEENSLAND LIMITED, BASEL III PILLAR 3 DISCLOSURES, 28 FEBRUARY 2017

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BANK OF QUEENSLAND LIMITED, BASEL III PILLAR 3 DISCLOSURES, 28 FEBRUARY 2017

CAPITAL STRUCTURE

February 17 August 16

$m $m

Paid-up ordinary share capital 3,308 3,243

Reserves 6 (18)

Retained earnings, including current year profits 323 311

Goodwill and intangibles (872) (869)

Deferred expenditure (164) (158)

Other deductions 1 15

Tier 2 Capital 251 253

General Reserve for Credit Losses 218 221

Bank of Queensland Limited and its Controlled Entities ABN 32 009 656 740 AFSL NO. 2446163

TABLE 1: CAPITAL DISCLOSURE TEMPLATE

The Bank is using the post 1 January 2018 capital disclosure template because it is fully applying the Basel III regulatory adjustments as implemented by APRA.

Common Equity Tier 1 Capital (CET1): Instruments and Reserves $m Ref

1 Directly issued qualifying ordinary shares (and equivalent for mutually-owned entities) capital 3,308 A

2 Retained earnings 323 B

3 Accumulated other comprehensive income (and other reserves) 6 -

4 Directly issued capital subject to phase out from CET1 (only applicable to mutually-owned companies) - -

5 Ordinary share capital issued by subsidiaries and held by third parties (amount allowed in group CET1) - -

6 Common Equity Tier 1 Capital before Regulatory Adjustments 3,637 -

Common Equity Tier 1 Capital: Regulatory Adjustments $m Ref

7 Prudential valuation adjustments - -

8 Goodwill (net of related tax liability) 682 D

9 Other intangibles other than mortgage servicing rights (net of related tax liability) 190 E Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax

10 liability) - -

11 Cash-flow hedge reserve (125) F

12 Shortfall of provisions to expected losses - -

13 Securitisation gain on sale (as set out in paragraph 562 of Basel II framework) - -

14 Gains and losses due to changes in own credit risk on fair valued liabilities - -

15 Defined benefit superannuation fund net assets - -

16 Investments in own shares (if not already netted off paid-in capital on reported balance sheet) - -

17 Reciprocal cross-holdings in common equity - -

Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation,

18 net of eligible short positions, where the Authorised Deposit-taking Institution (ADI) does not own more than 10% of the - - issued share capital (amount above 10% threshold)

Significant investments in the ordinary shares of banking, financial and insurance entities that are outside the scope of

19 regulatory consolidation, net of eligible short positions (amount above 10% threshold) - -

20 Mortgage service rights (amount above 10% threshold) - -

21 Deferred tax assets arising from temporary differences (amount above 10% threshold, net of related tax liability) - -

22 Amount exceeding the 15% threshold - -

23 of which: significant investments in the ordinary shares of financial entities - -

24 of which: mortgage servicing rights - -

25 of which: deferred tax assets arising from temporary differences - -

26 National specific regulatory adjustments (sum of rows 26a, 26b, 26c, 26d, 26e, 26f, 26g, 26h, 26i and 26j) 288 - 26a of which: treasury shares - -

26b of which: offset to dividends declared under a dividend reinvestment plan (DRP), to the extent that the dividends are used - -

to purchase new ordinary shares issued by the ADI

26c of which: deferred fee income 140 G

26d of which: equity investments in financial institutions not reported in rows 18, 19 and 23 50 H

26e of which: deferred tax assets not reported in rows 10, 21 and 25 56 I

26f of which: capitalised expenses 14 J

26g of which: investments in commercial (non-financial) entities that are deducted under APRA prudential requirements 5 K 26h of which: covered bonds in excess of asset cover in pools - -

26i of which: undercapitalisation of a non-consolidated subsidiary - -

26j of which: other national specific regulatory adjustments not reported in rows 26a to 26i 23 L

27 Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and Tier 2 to cover deductions - -

28 Total Regulatory Adjustments to Common Equity Tier 1 1,035 -

29 Common Equity Tier 1 Capital (CET1) 2,602 -

BANK OF QUEENSLAND LIMITED, BASEL III PILLAR 3 DISCLOSURES, 28 FEBRUARY 2017

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