Presentation to Shareholders 23 May 2014 Robin Fleming - Group CEO - - PowerPoint PPT Presentation

Presentation to Shareholders

23 May 2014 Robin Fleming - Group CEO

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Vision

“To be the Leading Bank in PNG and the South Pacific”.

Strategic Imperatives

“To maintain, develop, and foster customers that will deliver value to BSP; through customer care, best employees and innovation, and a continuing contribution to community development”.

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Strategic Focus 2013

• In 2013 BSP moved from “transformation ” to

“implementation”

• BSP has placed a sharper focus on strategically

critical areas and cost control measures

• This focus has supported short term results in 2013

and is expected to positively impact future results

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Strategic Imperatives 2014

• A key component of BSP’s strategy will be a whole of

bank sales and service program integrated with our vision, our values, our culture

• Linkage of BSP’s values of integrity, professionalism,

leadership, quality, people, and teamwork is intrinsic to embedding a true service and sales culture within BSP

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Strategic Imperatives 2014

• BSP’s optimal sales and service culture is to place

customer satisfaction at the forefront of planning processes and operational activities

• Customer satisfaction should then translate to

improved returns for shareholders

• BSP is placing a renewed emphasis on training and

career development of staff

• Financial inclusion remains a key objective of Retail

bank’s strategy

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Strategic Imperatives 2014

“Improved customer Sales & Service” will be delivered through market leadership in innovation, technological advances and the modernization of all

• ur systems and procedures, and the continued

simplification & automation of all our operational & support processes. “Appropriately train, develop & reward our staff.” “Continue our Social & Sporting commitment to people and communities in which we operate.”

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Financial Performance 2013

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87 408 437

• 50

100 150 200 250 300 350 400 450 500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Group Profit After Tax

(Kina ‘million)

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Group Profit & Loss Trends

(Millions of Kina) 2009 2010 2011 2012 2013 CAGR, last 5 Years Income Net Interest Income 474 544 597 682 741 14.5% Foreign Exchange Income 104 139 193 224 353 22.7% Fee and other Income 147 272 304 380 428 29.6% Total Income 726 955 1,094 1,285 1,522 19.6% Expenses Operating Expenses (296) (469) (547) (597) (658) 26.6% Depreciation and SW Amort'n (39) (54) (53) (84) (176) 45.0% Bad and doubtful debt (15) (21) (25) (71) (79) 47.2% Other expenses 2 (1) (15)

• 21.4%

Profit before tax 378 411 468 534 595 12.5% Tax expense (121) (128) (119) (138) (170) 11.1% Share of Profits from Assoc. 6 11 12 Profit after tax 257 283 356 408 437 13.8% EPS (toea) 56.3 59.1 75.9 86.9 93.3 13.0% Dividends per share (toea) 22.0 53.7 47.3 55.0 58.0 21.4%

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Group Balance Sheet Trends

(Millions of Kina) 2009 2010 2011 2012 2013 CAGR, last 5 Years Assets Cash & Short Term Deposits 1,188 1,344 1,501 2,134 3,476 37.1% Loans & Advances 3,639 4,091 4,301 4,805 5,306 17.8% Investments 3,886 3,857 4,724 4,861 5,571 10.6% Fixed Assets + Other Assets 685 735 1,155 1,533 1,455 30.8% Total Assets 9,398 10,027 11,681 13,333 15,809 18.4% Liabilities Customer Deposits 7,494 7,985 9,366 10,861 12,201 16.1% Non-Lending Provisions 165 95 170 109 143

• 0.6%

Other Liabilities 805 813 801 898 1,845 68.9% Total Liabilities 8,464 8,893 10,337 11,867 14,190 18.5% Shareholder Equity 934 1,134 1,344 1,466 1,619 16.8%

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Cost To Income Ratio – BSP Group

55.3% 57.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

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* PNG – 8,456 merchants

BSP continues to expand its service channels

BSP Group Banking Services as at April 2014 Branches BSP Rural sub- branches ATM's EFTPOS AGENTS/ Rural Outlets PNG 42 39 295 12,535 225 FIJI 18

• 108

1,838 42 SI 7

• 18

129 17

*

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200 400 600 800 1,000 1,200 1,400 1,600 2009 2010 2011 2012 2013

Group Income Growth 2009 - 2013

(Kina ‘million)

Other Income Net Insurance Income Fx Income Banking Fee and Commissions Net Interest Income

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PNG Profit After Tax

Year Ended 30 September 2013 (Kina ’million)

BSP, 393.8Mn ANZ, 313.0Mn WPAC, 235.7Mn

Fiji

2013 Profit After Tax (FJD ’million)

15 15

Banks

BSP, 8.7Mn

ANZ, 49.2Mn WPAC, 50.1Mn BOB, 5.7Mn

0.0 20.0 40.0 60.0 80.0

Revenue Expense

2012 2013

BSP Life (FJD 11.6m profit)

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Solomon Islands

2013 Profit After Tax (SBD ’million) BSP, 29.2Mn WPAC, 35.8Mn ANZ, 19.9Mn

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Group Objectives – Four Themes

• 1. Financial:
• Income growth through serving all segments (whole of

bank proposition) across all market segments, higher yielding products; revenue leakage mitigation through diversification of BSP’s customer base

• 2. Customer:
• Brand preservation, effectively servicing the “unbanked”,

and ensuring retention. Intensifying the Group wide effort to develop profitable products and channels that our current and future customers need and want.

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Group Objectives – Four Themes (cont’d)

• 3. Operational Excellence:
• Continually challenge and improve internal

processes, and realise efficiencies through technology and other significant investments to materially reduce cost

• 4. People:
• Foster a culture committed to teamwork and
• accountability. Focus on basic skills proficiency,

professionalism, sales culture, outstanding employment practices

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BSP’s Core Values

Theme of 2014 Managers Conference

• BSP’s Core Values are shared by and serve to underpin, guide,

and shape everything we do as we work toward realising the vision of being the leading bank of the South Pacific 1. Integrity 2. Professionalism 3. Leadership 4. Quality 5. People 6. Teamwork

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Capital Management

The Capital Base of the BSP Group exceeds regulatory standards for an adequately capitalised bank

• The decrease in the
• verall ratio is reflected

in the build up of capitalised fixed assets, and in larger holdings of FC deposits

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 2010 2011 2012 2013 Tier 2 Tier 1 Bank PNG requirement

Capital Adequacy

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Capital Management

Other “capital management KPIs” are trending well

• BSP’s capital is mainly

profits, paid up equity, and reserves.

• Sound, stable capital

position over the long term 0% 5% 10% 15% 20% 25% 30% 35% 40%

2007 2008 2009 2010 2011 2012 2013

Equity to Loans Equity to RWA Equity to total deposits Equity to total assets

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Return on Equity

• ROE is stable, very

strong

• Earnings per share

continues to increase:

• 20.6% CAGR from 2006

to 2013

31.7% 39.5% 34.7% 30.6% 27.4% 28.7% 29.0% 28.3% 0.25 0.42 0.50 0.56 0.59 0.75 0.86 0.93 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% 2006 2007 2008 2009 2010 2011 2012 2013

ROE EPS (toea)

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Share Price

0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 7.00 7.20 7.40 7.60 7.80 8.00 8.20

Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14

Share b’back ceased March 2013 Dec’2011 K7.53

Volume Traded in millions

K3.6bn market Cap

Share Price K7.78 30th Apr

Share Price in Kina

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Dividend

20 toea

• Interim

46 toea

• Final

66 toea

• Full
• increase with

profit

• 8.6% yield
• Pay June 20

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BSP Qtr.1/2014 Results Summary

Johnson Kalo, Group Deputy CEO / Group CFO

Annual General Meeting, May 2014

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Profit & Loss

(Kina ‘million)

Qtr.1 2014 profit after tax of K136m is above Qtr. 4 2013 by K9m.

• Q1/14 Revenue is in line with

the previous quarter - forex earnings remain strong

• Bad and Doubtful debts

increase on the previous quarter consistent with asset growth

• Other Operating Expenses

reduce as dep’n and SW amort’n adjustments from Q3/Q4 of 2013 end, normalises in Q1/14. 136 425 21 211

50 100 150 200 250 300 350 400 450 Net Profit (After tax plus

• Assoc. Inc.)

Revenue Bad and Doubtful Debts Other Operating Expenses

Q1-13 Q2-13 Q3-13 Q4-13 Q1-14

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Balance Sheet

(Kina ‘billion)

• Slight growth in loans

but fx translation also impacting

• Other Interest Earning

assets decline slightly driven by reduction in C-Bills and T-Bills

• Slight decline in

deposits

• Total Assets decline is

largely driven by lower balances in Cash, and T Bills and C-Bills

5.7 5.2 12.0 15.7

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 Loans Other Interest Earning Assets Deposits Total Assets

Q1-13 Q2-13 Q3-13 Q4-13 Q1-14

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Financial ancial Risk sk Manageme agement nt

Capital Adequacy Provisions to Loans

5.0% 4.0% 4.2% 4.4% 4.6% 4.8% 5.0% 5.2% 14.4% 5.6% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Tier 2 Capital Tier 1 Capital BPNG requirement - 12%

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Funds

73% 27%

0% 20% 40% 60% 80% 100% 120%

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13

Wholesale Retail Current 10.0Bn 83% Term , 2.0Bn, 17%

Deposit Type (K ‘billion) Deposit Mix (K ‘billion)

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Qtr.1-2014 Performance Summary

• Revenues

– Q1/14 Revenue is in line with the previous quarter - forex earnings remain strong – Channel growth continuing with more eftPOS devices in market

• Balance Sheet

– Stable lending market share in PNG

• Capital Adequacy

– Improvement in Q1 of 2014 to 20.0%

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Summary

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“2013 was another successful year”

• NPBT of K595 Million, NPAT of K436.8 Million
• Net Income K1.52 Billion
• Total Assets now at K15.8 Billion
• Continued positive Loan & Deposit Growth
• Very strong Capital & Liquidity position.

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• Papua New Guinea continues to be the

predominant driver of BSP’s performance

• Strong growth in international services product

lines

• Continued growth in net interest income from

increased loan assets off-setting margin compression in a more competitive lending market

• Income contribution emerging from BSP’s

Mobile Banking suite of products

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• Substantial investment in critical IT infrastructure all but

complete in 2013, bar the relocation of core systems to new Pacific Operations Center in Q1/2015

• Full depreciation associated with IT investments now captured

in expense base

• Higher depreciation expense expected to normalise in 2016
• Having completed investment in (mainly IT) transformative

projects, focus now realigned from project delivery to benefit realisation

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• Investments seen as enablers to increase productivity and

increased sales capability

• There is a recognition of the largely untapped sales potential
• f the BSP branch network
• BSP remains the only major Financial Institution in PNG truly

committed to taking “cost effective” banking services to all Papua New Guineans including rural areas.

• All underpinned by BSP’s strategy of a whole of bank sales

and service program integrated with our vision, our values, our culture

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Thank You