2010 Results Presentation to shareholders BSP Annual General Meeting, May 2011
Presentation overview • Recent performance to 2010 Ian Clyne, CEO • Vision & strategy • 2010 performance & operations • Economic outlook Robin Fleming, Deputy CEO • Market share • Credit quality • Funding • 2010 full year results Johnson Kalo, Deputy CEO • Capital management & liquidity • Profitability & key ratios Johnson Kalo, Deputy CEO • Comparison of key Rations • Dividends & shares • Conclusions Ian Clyne, CEO The Leading Bank in the South Pacific 2
Overview of BSP High Level statistics • Established, Port Moresby, 1957 • 38 branches in Papua New Guinea, 20 in Fiji, 8 in Solomon Islands, 1 in Niue • market share, end of 2010: Loans Deposits Total Assets Profit PNG >50% >50% > K9,000 mil K280 mil PNG + Fiji i+ SI ~38% ~44% >K10,000 mil K288 mil • Shares publicly listed in PNG since August 2003. > 85% of shareholders are Papua New Guinean. Market Cap at end of 2010 K3.782 billion • S&P credit rating is B+ stable – Strong market position – Good capitalisation and profitability Adequate asset quality – “the bank’s size and brand recognition will continue to support our growth strategy” The Leading Bank in the South Pacific 3
Recent Performance to 2010
Recent Performance Profit before tax 500 410.80 Millions of Kina 400 378.14 328.80 300 283.57 200 142.23 164.52 100 2005 2006 2007 2008 2009 2010 The Leading Bank in the South Pacific 5
Recent Performance Total assets 12.0 10.0 Billions of Kina 8.0 6.0 4.0 2.0 0.0 2005 2006 2007 2008 2009 2010 The Leading Bank in the South Pacific 6
Vision and Strategy
Strategy Map 1 2 4 3 The Leading Bank in the South Pacific 8
Strategy and plans 1 The Leading Bank in the South Pacific 9
Customer sales and service focused Customer sales and 2010 EXISTING INITIATIVES 2011 NEW INITIATIVES service focused SBU Description SBU Description WB Branch service delivery model WB Product review To be the leading bank in PNG and Profitable Operational the South Pacific Customer Relationship growth excellence WB WB/RB PNG LNG Management system WB MasterCard (Paramount) WB Product development RB Mobile money RB/WB Internet banking High performing team Documenting Retail bank RB BSP First RB channel strategies RB BSP Rural agency network RB/WB SME migration To shift BSP Branch redesign (Phase 1: RB RB e-channels: Bank-in-a-Box planning) from an RB Open new branches RB ATM deployments “operationally” RB New deposit products focused SME end-to-end tool (origination RB RB Visa multicurrency travelcard and collection) organization to RB BSP First product package RB e-channels: Moto on EFTPOS a “sales” BCAP Landowner engagement focused RB Call centre solution Develop financial organization e-channels: SMS upgrade mobile BCAP instruments/products for RB top-up enhancements market needs (customer / e-channels: Telikom CDMA on SMS RB market focused) BCAP Branding + marketing banking The Leading Bank in the South Pacific 10
Strategy and plans 2 The Leading Bank in the South Pacific 11
Operational excellence Customer sales and 2010 EXISTING INITIATIVES 2011 NEW INITIATIVES service focused SBU Description SBU Description WB Treasury system WB RM support RB PhotoCard system To be the leading bank in PNG and RB Biometrics Profitable Operational RB Processes in branches the South Pacific growth excellence RB SME end-to-end tool (origination and collection) IT Branch risk mitigation OPS BizeDocs (including new phases, eStatements) OPS ATM monitoring tool (Proview) IT IT management facility (NOC) OPS National Clearing House OPS ATM maintenance in-sourcing IT Project Resourcing High performing OPS Kundupei system enhancements / replacement team FIN Investor relations strategy OPS My BSP - SharePoint intranet rollout OPS Operation centralisation building Standardised financial performance FIN OPS Collections system reporting To move BSP IT AS/400 upgrade C&R Improved matters tracking record IT Network upgrade from 25 year old IT New data centres (Prod & DR) Collateral sub-system processes to C&R IT Postillion upgrade implementation IT Active directory 2008 implementation modern best C&R Business Continuity Planning - PNG IT IT security & controls practice IT IT governance (ITIL) - IT implementation phase 1 C&R Branch audit program review FIN Financial dashboards automated FIN INFOR PM budget & forecasting (phase 2) C&R IT audit program review FIN Procurement review implementation processes C&R Admin audit program review FIN SUN GL v5 implementation …increase FIN Reconciliation solution C&R Establish compliance office HR HR system replacement operational C&R Personal loan charge-off C&R Wholesale Process Modernisation efficiency BCAP OMS (Share Trading) BCAP POMSOX restructuring BCAP RIMS (Middle office) BCAP Investier (Funds Management) The Leading Bank in the South Pacific 12
Strategy and plans 3 The Leading Bank in the South Pacific 13
High performing teams Customer sales and 2010 EXISTING INITIATIVES 2011 NEW INITIATIVES service focused SBU Description SB U Description IT Processes and procedures, training To be the leading bank in PNG and Profitable Operational HR Deliver account opening the South Pacific growth excellence HR Annual assessment of product training and process knowledge HR Deliver product knowledge HR Change management training training (including sales culture) High performing team HR eTraining project HR BSP specialist training program (BSP Academy) HR Performance management HR Specialist IT training and HR Rewards management assessment HR Recruitment – BSP First HR Secondments to overseas banks To address HR Intercompany secondments HR Recruitment – New branches BSP’s under- HR Succession planning HR Recruitment – BSP Rural investment in its HR Employee satisfaction survey people and the HR University program current HR Develop talent pool manpower and HR Internal communication skills gap BCAP NSL Investment Manager The Leading Bank in the South Pacific 14
Strategy and plans 4 The Leading Bank in the South Pacific 15
Profitable growth Customer sales and service focused 2010 EXISTING INITIATIVES 2011 NEW INITIATIVES To be the leading bank in PNG and Profitable Operational SBU Description the South Pacific SBU Description growth excellence FIN Customer profitability FIN Cost allocation review model – Corporate High performing FIN Customer profitability FIN Capital allocation - team model – Paramount transfer pricing FIN Activity Based Model To maximise C&R Moody's upgrade (product and branch the value of profitability) BSP’s customer C&R Replacement credit relationships to scoring engine for Retail C&R Economic Capital Model fuel profitable bank growth C&R Portfolio management The Leading Bank in the South Pacific 16
Strategic initiatives 122 strategic initiatives : “Business as ● The number of Usual” (BAU) tasks and projects. 64 are new. ● strategic Progress slower than forecast: 47% of ● initiatives has projects in pre-project phase due to size & complexity of some projects. more than Pre- project, doubled 12% 64 58 Low, 35% High, 22% Existing New Initiatives Medium, initiatives 31% The Leading Bank in the South Pacific 17
Transformation Project • The “Transformation Process” is already happening, and BSP’s “Vision” remains the same. “There is simply no turning back” • An enormous amount of work has been carried out by each BSP business unit in 2010, but even more needs to be delivered in 2011, in terms of timely execution & delivery of projects, commitment & accountability. • All Commercial Businesses need to have “FAR MORE URGENCY” in focusing on New Business Generation in 2011. The Leading Bank in the South Pacific 18
Business strategy: Retail Banking BSP’s Retail Business Strategy is now “Electronic TRANSACTION Focused”. The Leading Bank in the South Pacific 19
Retail banking strategy: customer segmentation Segmentation - Retail Branding High Value BSP Invitation Invitation Segment First only only Inflow account >K 30.000 BSP First Total assets >K 500.000 BSP First Potential Potential Core Customer BSP Priority Segment Youth & Upscale Upscale Upscale Upscale Youth & Students Inflow account >K 10.000 Student Total assets >K 20.000 s Cost Control Segment BSP Kundu ‘Smart Smart’ ’ Banking/Light Mass Banking/Light Mass ‘ ‘Smart Smart’ ’ Banking/Light Mass Banking/Light Mass ‘ BSP Rural The Leading Bank in the South Pacific 20
Retail strategy: Mass market / BSP Rural •BSP’s Retail has a “transaction focused” business model •Kundu Card is the “Key” banking access method. RETAIL CUSTOMER 2010 2011 2012 600,000 800,000+ 1,000,000+ PNG “1.5 million 150,000 200,000+ 250,000+ FIJI Retail Customers 50,000 75,000+ S.I by Year end 2012” The Leading Bank in the South Pacific 21
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