BSP Financial Group Ltd. · ASX:BFL
BSP Financial — Bank of South Pacific — Shareholder Meeting (May 2019)
31 slides from BSP Financial's shareholder meeting presentation, May 16, 2019
Slide 1: 2019 AGM Presentation
2019 AGM PRESENTATION Group CEO – Robin Fleming
Slide 2: Disclaimer
Disclaimer NOT FOR PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES This presentation has been prepared and issued by Bank of South Pacific Limited (the “Company”), and may not be reproduced in whole or in part, nor may any of its contents be disclosed to any other p
Slide 3: Where BSP operates
Where BSP operates BSP is the leading financial services provider in the countries in which we operate #1 Loan market share in 5 countries #1 Deposit market share in 5 countries POMSOX Share Price of K10.76 as at 03- May-19, Market cap of K5.0b BSP Classification: Internal Use Only 2019 AGM PRESENTA
Slide 4: BSP's growing service offering
BSP’s growing service offering In line with BSP’s geographical and income diversification strategy, BSP has expanded its product / service offering into both existing and new markets. BSP is the only wholly owned Papua New Guinean bank operating both here in PNG and overseas. Papua New Solomon Guine
Slide 5: PNG's economic outlook
PNG’s economic outlook PNG economy is expected to rally in the H2-2019 after a soft 2018, with ~4.0% GDP growth forecast in 2019 … driven by a return to full annual production in the extractives sector PNG GDP GROWTH PROJECTIONS [%] 5.1 3.8 4.0 2.8 2.5 3.0 3.0 3.0 3.1 3.2 3.0 3.2 Avg. = 2.8% Avg. =
Slide 6: Region's economic outlook
Region’s economic outlook BSP’s non-PNG countries have positive growth prospects COUNTRY TREASURY FORECAST RANGE Fiji 2019F 2020F 3.4 3.4 3.3 3.3 3.3 3.4 3.3 3.3 – 3.4 3.3 – 3.4 Solomon Islands 2018e 2019f 2020f 2019f 2020f 2019f 2020f 3.3 2.9 2.8 3.0 3.0 3.4 2.9 – 3.4 2.8 – 3.0 Samoa 2018e 2019f 20
Slide 7: 2018 highlights
2018 highlights The BSP Group continues to perform well with 2018 NPAT up 11.5% to K844m. Further, the 2018 result represents three [3] consecutive years of double digit profit growth. Profit (NPAT) up Total Income up Total Assets up Cost to Income ratio 11.5% to 8.4% to 3% to improves to K844.1m K2
Slide 8: Group financial KPI's
Group financial KPI’s BSP Group has maintained strong results across all key performance ratios COST TO INCOME ROE & ROA 27.8% 29.6% 30.6% 30.7% 44.7% 42.9% 41.0% ROE ROA 42.6% 3.1% 3.3% 3.5% 3.7% 2015 2016 2017 2018 2015 2016 2017 2018 CAPITAL ADEQUACY PROVISIONS TO LOANS / NPL TO LOANS 3.2% 4.9% 4
Slide 9: Group financial KPI's
Group financial KPI’s Balance sheet indicators illustrate continued growth in 2018. LOANS TOTAL ASSETS [Kb] 11.2 12.5 [Kb] 20.8 22.4 23.1 10.1 18.2 8.6 CAGR = 13.5% CAGR = 8.1% 2015 2016 2017 2018 2015 2016 2017 2018 DEPOSITS DEPOSIT MIX CAGR [Kb] 16.9 17.9 18.2 [Kb] 14.6 4.5 4.3 12.7% 3.0 4.1 CAGR
Slide 10: Contribution by business
Contribution by business All countries have contributed positively to BSP’s NPAT and total asset growth. NPAT CONTRIBUTION TOTAL ASSETS CONTRIBUTION [Km] [Km] 880 844 10 6 2 2 24,000 23,050 840 6 3 43 41 52 7 23,00022,370 20 107 187 167 58 57 800 22,000 757 760 21,000 720 20,000 680 19,000 640 18,00
Slide 11: Income stream trends
Income stream trends Total income increased by 8.4% YOY, notwithstanding more subdued economic conditions … despite BSP reducing / removing various fees in recent years. Net interest Fee/ FX income Other Total KEY DRIVERS income commission income income ● Interest income – loans, T- YOY: 8.1% 2.7% 1
Slide 12: Expenditure trends
Expenditure trends Total costs rose marginally by 4.1% in 2018 … below the three year average of 4.8% per annum. Computing costs grew by 10%, which is in-line with our digital strategy and core banking replacement Staff Admin Premises/ Computing NLL Total KEY DRIVERS costs costs equipment cost opera
Slide 13: Market strength
Market strength BSP’s loan and deposit portfolios are predominantly PNG domiciled. During 2018, BSP Samoa improved to #1 in both its loan and deposit market share. LOANS MARKET SHARE DEPOSIT MARKET SHARE 2018 Rank 2018 Rank PNG 61% #1 PNG 61% #1 Solomon Islands 56% #1 Solomon Islands 52% #1 Tonga 42
Slide 14: Customer satisfaction
Customer satisfaction Meeting and exceeding our customers’ needs remains an area of focus ∆ SATISFACTION 2016 2017 2018 ‘16 to ‘18 MEASURE EXAMPLES ● Fees, charges and RETAIL BANK SCORE 83 86 86 +0 rates ● Branch waiting times and queues ● Branch service levels CORPORATE BANK SCORE 74 77 87 +10 ● Re
Slide 15: Channel growth
Channel growth Continued channel investment to improve service levels across the BSP Group Total Branches 83 46 17 8 3 2 3 4 Branches 45 43 0 0 0 0 0 2 Sub Branches ATMs 529 314 118 30 22 9 23 13 EFTPOS 13,042 9,203 1,863 341 405 402 427 401 EFTPOS 591 372 45 75 37 9 29 24 Agent BSP Classification:
Slide 16: Digital initiatives
Digital initiatives BSP will continue to enhance customer experience … largely through digital investment KEY MILESTONES ● Digital SBU established in late 2018 ● Nuni Kulu appointed General Manager ● Commenced roadmap implementation earlier this year ● 2019 key areas of focus ─ Strategy for e-Commer
Slide 17: PNG Market peer comparison
PNG Market peer comparison BSP remains PNG’s market leader TOTAL ASSETS [Kb] NPAT [Km] 673 16.2 13.7 Sep-15 468 Sep-15 Sep-16 CAGR= 12.9% Sep-16 CAGR = 5.7% 6.8 Sep-17 Sep-17 6.7 209 204 4.2 Sep-18 164 Sep-18 3.8 133 1.0 1.7 48 5 BSP ANZ Westpac Kina BSP ANZ Westpac Kina Note: All Kina Bank data is
Slide 18: BSP and the community
BSP and the community.... Our corporate social responsibility … 2018 support Our Community Project of “Solar Light was over K8m in cash and kind. Installation”, enabled BSP to deliver 45 PNG projects to the value of K1.16m in 2018 ... and offshore branches to the value of K148,000 Sponsorship ● 37%
Slide 19: Growing PNG's middle class wealth
Growing PNG’s middle class wealth Our home loan products, particularly the FHOS, are providing Papua New Guineans with the opportunity to grow their personal wealth and consequently greater future financial freedom / security ● Attractive 4.00% per STANDARD annum rate over a 40 FHOS FIRST HOME OWNER
Slide 20: Facilitating PNG's economic growth
Facilitating PNG’s economic growth BSP is a strong supporter of the PNG Government’s economic policy to grow the number and capacity of PNG’s SMEs as seen through its strong growth in 2018 SMART BUSINESS ACCOUNTS 2017 2018 Change Accounts [No.] 23,796 38,341 61% Balance [Km] 465.9 766.8 64% SMART BU
Slide 21: Financial inclusion
Financial inclusion We are tailoring our offerings to grow financial system participation and encourage savings … particularly in low income segments SUMATIN ACCOUNT ● Card, mobile and internet banking Banking made easier for access SUMATIN ACCOUNT student on the go ● Optional Visa debit card access
Slide 22: Delivering greater value to customers
Delivering greater value to customers Zero fee increases since 2014 and forgone fee income in the order of K40.2m per annum in 2018, due to fees reduced or waived … … since 2014, we estimate that the cumulative annual fee income forgone will increase to just under K50m in 2019. 2014 to 2017 2014 to
Slide 23: BSP Group strategic focus
BSP Group strategic focus In 2019 BSP will focus on developing and executing its Digital Strategy and the implementation of its new Banking system. It will also be maintaining its geographic and service diversification strategy. ● Successful implementation of Core Banking system replacement over a t
Slide 24: Q1-2019 results
Q1-2019 results
Slide 25: Profit and Loss [Q1-19]
Profit and Loss [Q1-19] BSP’s NPAT increased by 2.8 % in Q1-19 due to operating costs ... and by 8.6% year-on-year [Q1-18 vs Q1-19] Total Income Operating Lending Write- NPAT costs offs HIGHLIGHTS PQ (5.2%) (13.1%) (12.1%) 2.8% ● Q1-19 operating income is 5% lower than Q4-18, given a YOY 4.2% (1.0%)
Slide 26: Balance sheet [Q1-19]
Balance sheet [Q1-19] Loans and advances increased by 2.3%, while deposits declined by 1.1% in Q1-19. Total assets remain steady at K23b. Loans and Deposits Total Total Net assets / HIGHLIGHTS advances Assets Liabilities SH equity ● Total loans increased by K284m in PQ 2.3% (1.1%) 0.0% (1.1%) 7.6% Q
Slide 27: Group key ratios [Q1-19]
Group key ratios [Q1-19] All key ratios remain positive COST TO INCOME TREND ROE [annualised] 43.1% 32.5% 32.0% 41.6% 40.6% 40.1% 39.5% 28.8% 29.2% 29.8% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 ROA [annualised] LOAN TO DEPOSIT RATIO 3.9% 3.8% 63.9% 65.4% 68.3% 68.7% 69.5% 3.6% 3.
Slide 28: Group key risk ratios [Q1-19]
Group key risk ratios [Q1-19] Our risk ratios remain stable and asset quality remains sound CAPITAL ADEQUACY HIGHLIGHTS 4.9% 3.1% 4.7% ● Capital adequacy ratio increased 6.9% 7.3% slightly to 24.1% in Q1-19 24.1% remaining well in excess of the 20.3% 19.4% 12% prudential requirement. 15.8% 15.0% 19.
Slide 29: Share price
Share price Dividend yield of 12.73%, based on K10.76 share price … and market capitalization of K5.0b. 01st May 2018 TO 08th May 2019 Closing price (Kina) Volume traded red (millions) 12.0 Share Price green K11.50 10.0 K10.50 8.0 K5.03b Share Price Market K9.50 K9.48 6.0 Cap K8.50 28 Apr’17 Share P
Slide 30: 2018 dividend
2018 dividend BSP’s final dividend of K1.01, brings our total dividend to K1.37 FULL PLANNED PROCESSING DATES FINAL ● Ex-date: 31st May 2019 ● Record date: 7 June 2019 K1.37 ● Payment date: 21 June 2019 INTERIM K0.36 + K1.01 = SHAREHOLDER RETURNS SUMMARY 2016 2017 2018 Change EPS [K] 1.38 1.62 1.81
Slide 31: Conclusions
Conclusions 2018 was an outstanding year with NPAT increasing by 11.5% to K844m … with improvements 1 across virtually all financial metrics 2 ROE maintained > 30%, ROA at 3.7% is at highest level in the last five years Cost-to-income ratio down to 41.4% … its lowest level in the last five years, no
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