27 February 2020 ASX Markets Announcement Office Exchange Centre - - PDF document

27 february 2020 asx markets announcement office exchange
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27 February 2020 ASX Markets Announcement Office Exchange Centre - - PDF document

27 February 2020 ASX Markets Announcement Office Exchange Centre 20 Bridge Street Sydney NSW 2000 BY ELECTRONIC LODGEMENT Full-Year 2020 Results Investor Presentation Please find attached for release to the market, Kina Securities Limiteds


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27 February 2020 ASX Markets Announcement Office Exchange Centre 20 Bridge Street Sydney NSW 2000 BY ELECTRONIC LODGEMENT Full-Year 2020 Results Investor Presentation Please find attached for release to the market, Kina Securities Limited’s Full-Year 2020 Results Investor Presentation.

  • ENDS-

This Presentation was authorised for release by Kina Securities Limited’s Board of Directors For further information: Greg Pawson Chief Executive Officer and Managing Director Email: greg.pawson@kinabank.com.pg Chetan Chopra Chief Financial Officer and Company Secretary Email: Chetan.chopra@kinabank.com.pg

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1

Kina Securities Limited Full year results 2019

February 2020

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You must read this notice before reading or making any use of this document or any information contained in this document. By accepting this document, you agree to the following terms and conditions, including any modifications to them. Confidentiality: This Presentation and the information contained in this Presentation are provided to the recipient (the "Recipient") on a confidential basis for the sole purpose of discussions between the Recipient and representatives of the Kina Group. This Presentation may not be disclosed to any third party or used for any other purpose without the express written permission of the Kina Group. Disclaimer of liability: All information contained in this Presentation has been compiled by the Kina Group from sources believed by it to be accurate and reliable. The information in this Presentation was prepared as of its date, and remains subject to change without notice. The Recipient acknowledges that to the maximum extent permitted by law: (1) any and all liability in respect of the information contained in this Presentation is expressly excluded, including any liability arising from fault or negligence on the part of any person, for any direct, indirect, consequential or contingent loss or damage suffered by any person arising from the use of the information or otherwise arising in connection with it; (2) no responsibility is accepted by the Kina Group for this Presentation, any of the information, any

  • mission from this document or any action taken by the Recipient or any other person on the basis of the information; and (3) the Kina Group is not liable to compensate or reimburse the Recipient for any

liabilities, costs or expenses incurred in reviewing, investigating or analysing this document or taking any other action in relation to the Kina Group or any prospective transaction. Not an invitation, advertisement or offer of securities: This Presentation is not, and should not be considered as, an invitation, advice or recommendation to apply for securities and does not contain any application form for securities. This Presentation does not constitute an advertisement for an offer to sell or the solicitation of an offer to buy securities. This Presentation is not a disclosure document (as defined in the Australian Corporations Act) or a prospectus (as defined in the Papua New Guinea Securities Act). The provision of this Presentation is not a representation to you or any other person that an

  • ffer of securities will be made. Any offer of securities or prospective transaction would be undertaken solely on the basis of a prospectus or other disclosure document prepared in accordance with the

applicable securities laws and regulations. Not financial product advice: The information contained in this Presentation is not, and should not be considered as, financial product advice, investment advice, legal advice, tax advice or other advice. The information does not take into account any Recipient's individual objectives, taxation position, financial situation or needs. Before acting on the information in this Presentation, Recipients should consider the appropriateness of it having regard to their particular circumstances and, if appropriate, seek professional advice, including tax advice. No representations or warranties: None of the information set out in this Presentation or otherwise provided to a Recipient in connection with this Presentation has been independently verified. Accordingly, the Kina Group makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability, or fitness for any particular purpose of any such

  • information. In respect of all information provided, the Recipient will rely entirely upon its own assessment, independent analysis and advice in relation to the business, assets and financial position and

affairs of Kina Securities Limited. Forecasts: This Presentation may contain various plans, costs projections, estimates, forecasts and other forward looking statements ("Forecasts") which involve subjective judgments. Past performance is not a guarantee of future performance or future returns and a loss of original capital may occur. Fluctuations in exchange rates could have an adverse effect on the value or price of, or income derived from, certain investments. No representation, warranty or guarantee, whether express or implied, is made or given by the Kina Group as to the accuracy, completeness, likelihood of achievement or reasonableness of any Forecast. Conflicts: The Kina Group, its Directors, officers, employees or agents may own shares in Kina Securities Limited. By accepting this Presentation, you acknowledge and agree that none of the Kina Group, its Directors, officers, employees or agents are responsible to you in a fiduciary capacity nor is your access to the Presentation or the information evidence of any fiduciary relationship between you, another Recipient or the Kina Group, its Directors, officers, employees or agents individually or at all.

2

Important notice and disclaimer

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3

Financial Results

  • Organic business growth on target
  • Included three months of income from the

acquisition of ANZ PNG’s Retail, SME and Commercial business

  • Final Dividend AUD 6.4 cents per share or PGK

15.5 toea

  • Full Year Dividend AUD 10.4 cents or PGK 25.5

toea per share

  • NPAT up 27% on 2018 to PGK 60.9m
  • Revenue PGK 205.6m up 27%
  • Net Interest Income grew by 31% to PGK 114.6m
  • Earnings per Share increased 22%
  • Return on Equity up 11%
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4

Highlights

  • Completed the ANZ acquisition making Kina the

second largest retail bank in PNG

  • Acquired 15% stake in Nationwide Microfinance

Bank (MiBank) to support financial inclusion and finance to the micro-SME sector

  • USD 10.0m investment by AAA rated Asian

Development Bank to become the second largest shareholder

  • No customer loss during acquisition and organic

customer growth up 17%

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5

Highlights

  • Strong focus on home lending which increased

by 44%

  • Organic home loan book up 26%
  • ANZ acquisition delivered materially under

budget and on time

  • Finalised 2025 Strategic Plan: Building the Bank
  • f the Future. Sets a five year pathway to

becoming PNG’s leading digital bank

  • Delivered several transformational e-commerce

programs that will improve cost efficiency

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  • FX income up 23% to PGK 42m
  • Total Deposits grew by 89% to PGK 2.48b
  • Total Loans grew by 65% to PGK 1.40b
  • Customer numbers now total over 165,000 and

reach extends to over 1.2m Papua New Guineans with MiBank and Kina Investment and Superannuation Services

  • Funds Management grew 7% to PGK 8b
  • Funds Administration up 7% to PGK 12.5m

Business Growth

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7

Economic update

  • Calm transition to the Marape Government

formed in May 2019

  • Economy recovering from external shocks, growth
  • utlook soft due to rising uncertainties
  • GDP growth of 5.6% modest, forecast to fall to 3.1

– 3.5% over 2020/21

  • Building an inclusive and sustainable economy

requires structural reforms

  • Government Medium Term Development Plan

2018-2022 (MTDP III) is a comprehensive strategy to deliver on the country’s development aspirations

  • Foreign exchange reserves have improved with

some depletion of domestic liquidity

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Key revenue measures

8

Revenue NPAT

38 10 2 14 42 10 5 18 43 9 14 22 47 13 20 18 47 14 19 19 63 23 23 30 Interest on Loans Interest on Investments Foreign Exchange Income Others

PGK'm

Jun17 (HY) Dec17 (HY) Jun18 (HY) Dec18 (HY) Jun19 (HY) Dec19 (HY) 3.0 20.0 20.6 27.5 23.6 37.3 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 Jun17 (HY) Dec17 (HY) Jun18 (HY) Dec18 (HY) Jun19 (HY) Dec19 (HY)

PGK'm

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NIM FX Income

Key revenue measures

2 5 14 20 19 23 Jun17 (HY) Dec17 (HY) Jun18 (HY) Dec18 (HY) Jun19 (HY) Dec19 (HY)

PGK'm

33.6 38.9 41.6 45.9 45.7 68.9 7.3% 7.6% 8.1% 7.6% 7.0% 8.8% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

  • 10.0

20.0 30.0 40.0 50.0 60.0 70.0 80.0 Jun17 (HY) Dec17 (HY) Jun18 (HY) Dec18 (HY) Jun19 (HY) Dec19 (HY) Net interest income (PGK'm) Net interest margin (%)

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Productivity

Cost to income Return on equity

67.8% 54.9% 58.2% 50.2% 57.1% 57.0% Jun17 (HY) Dec17 (HY) Jun18 (HY) Dec18 (HY) Jun19 (HY) Dec19 (HY) 8.0% 8.9% 16.1% 18.3% 17.5% 20.4% Jun17 (HY) Dec17 (HY) Jun18 (HY) Dec18 (HY) Jun19 (HY) Dec19 (HY)

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11

Shareholder returns

Earnings per share Dividends per share

1.8 12.2 12.6 16.7 14.4 21.3 0.7 4.6 4.8 6.7 5.8 8.8 Jun17 (HY) Dec17 (HY) Jun18 (HY) Dec18 (HY) Jun19 (HY) Dec19 (HY) Earnings per share (PNG Toea) Earnings per share (A cents) 5.0 10.0 10.0 12.1 10.0 15.5 2.0 4.0 4.0 5.0 4.0 6.4 Jun17 (HY) Dec17 (HY) Jun18 (HY) Dec18 (HY) Jun19 (HY) Dec19 (HY) Dividend per share (PGK toea) Dividends per share (A cents)

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On Call 79% 1 month 4% 2 months 2% 3 months 5% 6 months 3% 12 months 4% 24 months 3% On Call 58% 1 month 8% 2 months 7% 3 months 5% 6 months 15% 12 months 7% 24 months 0% Overdraft 7% Term Loans 68% Investment Property Loan 5% Asset Financing 2% Housing Loan 14% Esi loan 4%

12

Balance sheet

Loans FY18 Loans FY19 Deposits FY18 Deposits FY19

Overdraft 5% Term Loans 62% Investment Property Loan 6% Asset Financing 1% Housing Loan 23% Esi loan 3%

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13

Capital management

Capital adequacy Leverage ratio

28% 28% 29% 29% 30% 22% 12% 12% 12% 12% 12% 12% Jun17 (HY) Dec17 (FY) Jun18 (HY) Dec18 (FY) Jun19 (HY) Dec19 (FY) Capital Adequacy: T1 + T2 BPNG minimum total risk based capital 16% 16% 16% 14% 15% 9% 6% 6% 6% 6% 6% 6% Jun17 (HY) Dec17 (FY) Jun18 (HY) Dec18 (FY) Jun19 (HY) Dec19 (FY) Leverage Ratio BPNG minimum leverage ratio

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14

Asset quality

0.2% 4.2% 1.1% 0.4% 1.8% 0.4% 3.3% 1.4% 0.2% 1.8% 0.5% 2.1% 1.0% 0.8% 2.4% 0.6% 2.2% 0.6% 1.4% 2.1% 0.2% 2.2% 0.9% 1.5% 2.2% 0.2% 5.9% 3.3% 2.6% 1.4%

Loan impairment expense Non-performing loans and loans in arrears

  • 90 day arrears
  • Gross non-performing loans

(> 180 days) Total provision Jun17 HY Dec17 HY Jun18 HY Dec18 HY Jun19 HY Dec19 HY

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15

Portfolio

21 12 7

  • 4

19 3 4 15

  • 1

1 50 73 87 147 155 279 81 84 92 6 5 9 6 15 1 182 249 294 2 1 11 40 22 70 208 247 538

  • 100

200 300 400 500 600

Dec-17 Dec-18 Dec-19

Agriculture, Forestry & Fishing Mining Manufacturing Electrical, Gas & Water Building and Construction Wholesale & Retail Hotel & Restaurants Transport & Storage Financial Intermediation Real Estate/Renting/Business Services Equipment Hire Other Business Personal Banking

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Customer growth

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28,397 136,617 15,101 17,271 18,442 20,625 23,788 165,014 20000 40000 60000 80000 100000 120000 140000 160000 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19

(PGK Bln)

Total Organic customer base Total Acquired customer base Customer Number Growth

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Market share gains

17

Market share percentage - lending Market share percentage - deposits

685 732 786 852 866 1,402 5.5% 5.8% 6.0% 6.4% 6.4% 10.1% Jun 17 (HY) Dec 17 (FY) Jun 18 (HY) Dec 18 (FY) Jun 19 (HY) Dec 19 (FY)

PGK'm

Total System lending {Source BPNG} Kina Loan Book Kina Lending Market Share 965 1,019 1,098 1,316 1,418 2,480 4.5% 4.8% 5.3% 6.5% 7.0% 11.8% Jun 17 (HY) Dec 17 (FY) Jun 18 (HY) Dec 18 (FY) Jun 19 (HY) Dec 19 (FY)

PGK'm

Total system deposit {Source BPNG} Kina Deposit Book Kina Deposit Market Share

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Balancing deposits

18

585 60 302 18 602 93 298 21 661 103 316 18 650 251 396 19 585 456 357 20 556 544 1,087 293 200 400 600 800 1000 1200 Fixed Term Cash Management Accounts Current Accounts Savings Accounts

PGK'm

Jun17 (HY) Dec17 (FY) Jun18 (HY) Dec18 (FY) Jun19 (HY) Dec19 (FY)

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Wealth management

19

Funds under administration Funds under management

6.22 10.51 11.38 11.72 12.31 12.55 177 708 717 750 771 790

  • 100

200 300 400 500 600 700 800 900

  • 2.00

4.00 6.00 8.00 10.00 12.00 14.00 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19 Funds under administration (PGK'bn) Members ('000) 6.60 6.97 7.14 7.46 8.08 7.95

  • 1.00

2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19

PGK'bn

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