Bank of Queensland Declares Fully Franked AUD 1.24 Distribution on Capital Notes 3
Bank of Queensland Limited has announced a fully franked quarterly distribution of AUD 1.2415 per Capital Note 3 security, reflecting a steady income stream tied to the 3-month BBSW plus margin.
- Ordinary fully franked distribution of AUD 1.2415 per Capital Note 3 security
- Distribution based on 3-month BBSW plus 3.40% margin
- Annualised distribution rate of 4.9797%
- Payment scheduled for 15 September 2025, with record date 29 August
- Payment subject to BOQ’s discretion and satisfaction of payment conditions
Distribution Announcement Overview
Bank of Queensland Limited (ASX, BOQ) has confirmed its ordinary quarterly distribution on its Capital Notes 3 (ASX, BOQPG), declaring a fully franked payment of AUD 1.2415 per security. This announcement, dated 17 June 2025, sets the payment date for 15 September 2025, with the ex-dividend date on 28 August and the record date on 29 August.
Calculation and Rate Details
The distribution rate is anchored to the 3-month Bank Bill Swap Rate (BBSW) plus a margin of 3.40%, resulting in an annualised rate of 4.9797%. This calculation aligns with the terms set out in the Capital Notes 3 Prospectus dated 1 November 2022. The distribution is fully franked, meaning it carries a 30% corporate tax credit, enhancing its attractiveness to Australian investors seeking tax-effective income.
Payment Conditions and Investor Implications
While the distribution is declared, the payment remains subject to BOQ’s absolute discretion and the satisfaction of specific payment conditions outlined in the Capital Notes 3 Prospectus. This introduces a degree of uncertainty, as the bank retains the right to withhold payment if conditions are not met. Investors should note this when assessing the reliability of income from these securities.
Context Within BOQ’s Capital Strategy
This distribution reflects BOQ’s ongoing capital management strategy, balancing investor returns with regulatory and financial prudence. The use of a floating rate tied to BBSW plus margin ensures that distributions adjust with prevailing market interest rates, providing a hedge against rate fluctuations. The fully franked nature of the payment also signals BOQ’s confidence in its profitability and tax position.
Looking Ahead
Investors will be watching closely for any changes in BOQ’s payment discretion or shifts in the underlying BBSW rate that could impact future distributions. The steady quarterly income stream from Capital Notes 3 remains a key consideration for income-focused portfolios, particularly in a market environment where yield and credit quality are closely scrutinized.
Bottom Line?
BOQ’s fully franked distribution underscores steady income potential but hinges on discretionary payment conditions.
Questions in the middle?
- Will BOQ maintain its discretion to pay distributions amid changing market conditions?
- How might fluctuations in the 3-month BBSW affect future distribution rates?
- What impact could regulatory changes have on the payment conditions for Capital Notes 3?
