It has been an economically challenging year so far with political events in May and last month. Business reporter CLARISSA MOI speaks to Kina Bank’s head of business development GERRY HARTIGAN to provide an outlook on how the economy will affect business this year, plus an update on the bank’s development.
Q: What are your views on the economy and how will it influence business this year?
A: Global growth is expected to ease to 2.6 per cent this year mainly due to the trade war between the US and China, although the G20 saw an easing of tension between the two countries. The major central banks around the world are lowering interest rates in an effort to stimulate growth. And we’re seeing the same here with the Bank of PNG (BPNG) lowering the Kina Facility Rate in July by 0.25 per cent to 6.0 per cent.
Q: Foreign exchange availability has been one of the most pressing issues for business last year which has seen domestic liquidity across the banking system decreased from K21 billion in January last year to K19.9 billion at the end of May this year. How do you see this issue this year?
A: Bank of PNG have been actively intervening in the foreign exchange market to provide much needed foreign currency. And that certainly has impacted on domestic liquidity. The Central Bank is very careful though to do this in a measured way and have been forward-thinking in introducing a facility that ensures the commercial banks can access liquidity if needed. In relative terms, domestic deposits are still at historically high levels.
Q: The Government intervened in reducing internet rates earlier this month through Kumul Telikom Holdings subsidiaries bmobile and Telikom. What do you say about this?
A: This has been a very positive move and a great initiative by the Government. Cutting data bundle rates by up to 80 per cent will ensure much broader access to the internet and will benefit all sectors of society. Students will be able to access the internet to assist with assignments and small businesses will be able to showcase their product to a much wider audience.
Q: The country’s economic activity is said to increase towards the end of this year based on the memorandum of understanding between the Government and the Papua LNG partners last year, the memorandum contemplating the gas agreements being finalised in April. What are your views on economic activities for this year?
A: While the 2019 Budget was based on the Gross Domestic Product (GDP) growth of 4.0 per cent, the first half of the year has been very challenging. And Treasurer Sam Basil was quick to provide an update to Parliament on the fiscal position for the first five months of the year. The Government is clearly committed to making the adjustments needed and we’ll get an update on those and on growth estimates in the Mid-Year Economic and Fiscal Outlook due out in late July.
Q: How was 2018 like for Kina Bank?
A: 2018 was a great year for Kina Bank. We were ranked the most innovative business in Papua New Guinea last year after achieving some major milestones. We invested heavily in automating our systems and improving our processes. And we’ve carried that through to this year where we’ve put in a substantial amount of work reviewing all our products and services. We’ve got a great team here and staff who take great pride in supporting each other and that has been critical to our success so far.
Q: Could you give an update on the transitioning of ANZ Bank’s retail, commercial and SME banking business to Kina Bank?
A: The acquisition of ANZ PNG’s retail, commercial and SME businesses is on track and is a very exciting step forward for us. Preparations are advanced for the transfer of the national retail branch network and the automated teller machines (ATMs) and Electronic Funds Transfer at Point of Sale (Eftpos) fleets.
Come September, we will become the second largest retail bank in PNG.
Lae has been the first to see the changes when we moved into the former ANZ branch in Top Town.
And post the acquisition in September, Kina Bank effectively becomes the second largest retail bank in Papua New Guinea.
Q: Kina Bank’s vision is to be the leading digital bank in the country. What does digital banking mean?
A: Effectively, for our customers it means they can transact with us anywhere, anytime, anyhow.
Quality, convenience and simplicity are the key themes of our banking proposition. We’re building best-in-class digital capabilities that support the growing middle market demographic. Customers want to transact digitally – they have smart phones and they’re very tech-savvy.
We’ve got the newest core banking system in the market and we’re the leaders in digital expertise, which means we can drive the technology agenda. And we’re not encumbered by old legacy systems that are now out of date.
Last year, we introduced online account opening and loan applications which were a huge hit with customers. We plan to continue investing in cutting edge technology to provide the best level of service at the lowest cost to you. This year, we’re looking at an online FX service, contactless payments like GooglePay and we’ll continue to automate things behind the scenes to make things faster and more efficient for customers. We’re building a better bank and we’re building for the future.
Q: What is the progress for Kina Bank’s home lending?
A: We announced PNG’s cheapest home loan earlier this year and it prompted other major banks to reduce their interest rates to remain competitive. Increased competition in the banking sector has led to lower costs for everyone and we are really pleased about that. It’s a great win for all customers across PNG.
The Kina Bank home loan variable rate is currently 6.95 per cent and can be used to buy an existing home, buy land and build your own home or to refinance an existing loan. But our competitive advantage lies in the fact that there are no hidden costs or charges with us.
Apart from our low interest rate, our establishment fee is a flat K1,000. Other banks often charge a percentage amount or an ongoing monthly “service” fee.
We’re transparent. No hidden fees or nasty surprises. It’s this transparent approach that has made us the go-to bank for home loans.
In November last year, Kina Bank announced its partnership with UnionPay International.
Q: Can you give us an update of this?
A: UnionPay customers can now use our ATMs and Eftpos terminals allowing Kina Bank to accept a globally recognised card offering customers more choice and in an ever-growing destination market for UnionPay cardholders, it also works well for Union Pay customers. The partnership comes as part of Kina Bank’s commitment to enhancing our suite of products and services working towards our goal of becoming the most dynamic, progressive and accessible financial services company in Papua New Guinea.
Q: Kina Bank’s outlook for this year?
A: The most immediate issue is the review of the Papua LNG project gas agreement and this needs to satisfy the requirements of all parties. Hopefully, that outcome will be achieved and without too much delay.
Long-term and broad-based growth need to also focus on agriculture, fisheries, food security and manufacturing and there’s been some very encouraging initiatives in those sectors.