Bank South Pacific reports K844mil profit

The National Business

BANK South Pacific Group has recorded positive profit increases for 2018 with a consolidated operating profit after tax of K844 million for the 2018 financial year, a 11.5 per cent increase on the consolidated 2017 operating profit after tax of K757 million, says chairman Sir Kostas Constantinou.
He says the group’s performance included:

  • Total assets of the group increased by 3 per cent or approximately K680.2 million to K23.05 billion driven by good growth in the loan book across all countries. Loan book growth amounted to K1.321 billion from increased lending in PNG (corporate, SME and housing loans), strong growth in Fiji and uplift across most other countries some of which can be attributed to the translation effect of movements in the Kina;
  • Group revenues increased 8.4 per cent during the year. This revenue growth has come from interest income streams, in particular from loans and advances, with BSP growing its loan book by 11.8 per cent as well as the additional income from the BSP Finance businesses in PNG, Fiji, Solomon Islands and Cambodia;
  • The bank’s profit growth was positive with after tax profits increasing 9.2 per cent to K787.4 million with net interest income up 7.1 per cent due to the increase in the loan portfolio. Total assets of the bank at the end of 2018 are at K20.696 billion. Loans and advances to customers has seen net growth of K1.138 billion to K11.233 billion. Customer deposits were slow in 2018 with growth of K115.4 million to K16.959 billion;
  • The group’s operating expenses showed an increase of K35 million (or 4.1 per cent) mainly due to expenses relating to its core banking system upgrade and costs associated with delays in moving to the new head office at Waigani. Despite these cost increases the ‘cost to income ratio’ for the group reduced to 40.96 per cent from 42.6 per cent in 2017. The bank’s operating expenses increased by K29 million and cost to income ratio had also similarly reduced to 40.43 per cent versus 41.73 per cent in 2017.
  • The group’s Capital base remains sound. Total capital adequacy at the end of 2018 is 22.9 per cent (2017 = 24.5 per cent) notwithstanding the impact of continued growth in balance sheet assets as well as total dividend payments of K597.36 million against 2017 at K521.86 million. The capital adequacy ratio exceeds the minimum Bank of PNG prudential requirement of 12 per cent.
  • Notwithstanding a forecast reduction in GDP growth rate across the region and somewhat difficult trading conditions in PNG, the 2018 result is notable for the continuation of positive performances for the bank and most of its subsidiaries, as well as additional growth in the group’s balance sheet.
  • BSP achieved a number of significant milestones in 2018. The group net profit before tax again exceeded K1 billion and achieved a ‘compound average growth rate’ (CAGR) of 14.1 per cent over the last five years. Also BSP obtained approval from the Bank of PNG to commence a life insurance business in PNG, BSP Life PNG Ltd, which commenced on January 2, 2018. In early 2019, BSP signed an agreement with our partners RMA Group to enter into a joint venture with them in an asset finance business in Laos, further extending BSP’s reach in the Mekong delta.

Sir Kostas congratulated staff and management in all of BSP’s operations and businesses across PNG, Fiji, Solomon Islands, Samoa, Tonga, Cook Islands, Vanuatu and Cambodia on the results achieved in 2018.
He remained confident BSP would perform to expectations, with the support of its stakeholders, to enable BSP Group to produce another successful year in 2019.