The downgrade came as Bank of Queensland reported first-half cash earnings of $151 million, down 10 per cent on the same time last year.  BOQ’s statutory net profit after tax decreased by 40 per cent to $93 million which the company said was largely a result of the previously guided restructuring charges and intangible asset review.

It has also deferred its dividend after pressure from the regulator APRA.

Managing director George Frazis said in “these extremely uncertain times, we are doing all we can to support our customers and our people with prudent and meaningful measures and to ensure the strength of the bank”.

“BOQ is well capitalised, providing us with the necessary buffer to respond to rapidly changing economic conditions,” he said.

“We moved early to strengthen our capital position, raising a total of $340 million in the recent capital raising, which included our proactive decision to increase the size of the retail share purchase plan to $90 million.”

In its report on the major banks, Fitch said Australia was at risk of more protracted downturn with a shallow recovery, with the banks suffering lower asset quality and higher impaired loans.

Fitch said the downgrade reflected “the significant impact measures to slow the spread of the coronavirus will have’’ in core markets of Australia and New Zealand. “We expect the Australian economy to contract by over 2 per cent in 2020, with unemployment averaging 7.7 per cent for the year,’’ the ratings agency said.

The agency’s base case is for a sharp downturn in economic growth in the first half of 2020, with only a partial stabilisation in the third quarter. Ratings agency, S&P also downgraded Australia’s economic outlook from stable to negative and said the negative outlook reflected its view that Australia faced fiscal and economic risks that were tilted toward the downside.

Fitch also said a proper recovery was not anticipated to begin until the fourth quarter, but would likely still be weighed down by a weakened labour force.

It said it expected asset quality and profitability to be significantly affected in the medium term.

“Fitch has revised its operating environment factor outlook for Australia to negative as part of this action.

“Under this scenario, we would be likely to maintain our operating environment mid-point at ‘AA-‘ and revise the factor outlook back to stable once the recovery was established.

“However, risks are clearly to the downside and a longer, more protracted downturn and then a shallower recovery will have a more lasting impact on the Australian economy, through lower GDP growth and higher levels of unemployment. Such a scenario would be likely to result in a lowering of our operating environment factor mid-point to ‘A+’.’’

Its view of all four of the big banks was same, saying asset quality to come under pressure.

“A significant weakening in the impaired-loan ratio is not likely to become evident in the next 12 months due to actions taken by the banks and authorities to support borrowers and the economy,’’ it said.

The big four’s long-term rating changed from AA- to A+. Short term it moved from F1+ to F1 and the outlook remained negative.