Tax not helping sector: CEO

By DALE LUMA
THE Additional Company Tax (ACT) imposed on the Bank South Pacific (BSP) Financial Group Ltd by the Government does not incentivise the banking sector, says chief executive officer Robin Fleming.
“It does not address the underlying competition issue,” Fleming said.
“By taxing the most dominant player, you are not giving BSP the incentive to continue to enhance its product range and continue to grow its profitability.
“Equally at the same stage, it does not provide any incentive for the other banks to compete more effectively.”
He said an independent advisory group was undertaking further discussions (with) the Bank of PNG on how they can improve competition.
“That’s a key aspect of trying to reduce the risks and that BSP faces in terms of the systemic nature that they are too big to fail,” he said.
“Equally in the absence of competition from other banks especially with lending, if BSP does start to put some brakes on lending, from an overall economic perspective, that could mean that the growth opportunities won’t be realised in a timely manner.”
Fleming was commenting on the ACT it had to pay when announcing the bank’s first half-year results yesterday.
He said the extra government tax “is not a loss to BSP but to the shareholders” who saw a decrease in interim dividend of 34 toea – a 12.8 per cent reduction compared to the same period last year.
The bank declared a first-half profit of K396 million – a 12 per cent decrease from the K449 million in the same period last year – after paying the extra tax of K190 million in March. During the first half of 2022, BSP experienced strong underlying performance across the group which resulted in an increased first-half profit of K586 million.