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

Presentation to Shareholders 23 May 2014 Robin Fleming - Group CEO

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”. 2

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 3

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 4

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 5

Strategic Imperatives 2014 “ Improved customer Sales & Service ” will be delivered through market leadership in innovation, technological advances and the modernization of all our 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.” 6

Financial Performance 2013 7

Group Profit After Tax (Kina ‘million) 500 437 450 408 400 350 300 250 200 150 87 100 50 - 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 8

Group Profit & Loss Trends CAGR, last 5 (Millions of Kina) 2009 2010 2011 2012 2013 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% 9

Group Balance Sheet Trends CAGR, last 5 (Millions of Kina) 2009 2010 2011 2012 2013 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% 10

Cost To Income Ratio – BSP Group 70.0% 55.3% 57.3% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 11

BSP continues to expand its service channels BSP Group Banking Services as at April 2014 BSP Rural AGENTS/ sub- Rural Branches branches ATM's EFTPOS Outlets PNG 42 39 295 12,535 225 * FIJI 18 - 108 1,838 42 SI 7 - 18 129 17 * PNG – 8,456 merchants 12

Group Income Growth 2009 - 2013 ( Kina ‘million) 1,600 1,400 1,200 Other Income Net Insurance Income 1,000 Fx Income 800 Banking Fee and Commissions 600 Net Interest Income 400 200 0 2009 2010 2011 2012 2013 13

PNG Profit After Tax Year Ended 30 September 2013 (Kina ’million) WPAC, 235.7Mn BSP, 393.8Mn ANZ, 313.0Mn 14

Fiji 2013 Profit After Tax (FJD ’million) BSP Life (FJD 11.6m profit) Banks BOB, BSP, 80.0 5.7Mn 8.7Mn WPAC, 60.0 50.1Mn 40.0 20.0 0.0 Revenue Expense 2012 2013 ANZ, 49.2Mn 15 15

Solomon Islands 2013 Profit After Tax (SBD ’million) ANZ, 19.9Mn BSP, 29.2Mn WPAC, 35.8Mn 16

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. 17

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 18

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 19

Capital Management Capital Adequacy The Capital Base of the 30.0% BSP Group exceeds 25.0% regulatory standards for an 20.0% adequately capitalised bank 15.0% • The decrease in the 10.0% overall ratio is reflected 5.0% in the build up of capitalised fixed assets, 0.0% and in larger holdings of 2010 2011 2012 2013 FC deposits Tier 2 Tier 1 Bank PNG requirement 20

Capital Management Equity to Loans Other “capital management Equity to RWA KPIs” are trending well Equity to total deposits • BSP’s capital is mainly Equity to total assets profits, paid up equity, 40% and reserves. 35% • Sound, stable capital 30% position over the long 25% term 20% 15% 10% 5% 0% 2007 2008 2009 2010 2011 2012 2013 21

Return on Equity ROE EPS (toea) • ROE is stable, very 100.0% 0.93 strong 0.86 90.0% • Earnings per share 80.0% 0.75 continues to increase: 70.0% • 20.6% CAGR from 2006 0.59 0.56 60.0% to 2013 0.50 50.0% 0.42 40.0% 34.7% 31.7% 28.7% 28.3% 39.5% 30.0% 30.6% 27.4% 29.0% 0.25 20.0% 10.0% 0.0% 2006 2007 2008 2009 2010 2011 2012 2013 22

Share Price 8.20 0.7 0.6 8.00 Share b’back ceased March 0.5 2013 7.80 Share Volume K3.6bn 0.4 Price Traded market 7.60 in in Cap millions 0.3 Kina Dec’2011 7.40 0.2 K7.53 Share Price 7.20 K7.78 0.1 30 th Apr 7.00 0.0 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13 Dec-13 Apr-14 23

Dividend • increase with profit • 8.6% yield 46 • Pay June 20 20 66 toea toea toea • Interim • Full • Final 24

BSP Qtr.1/2014 Results Summary Johnson Kalo, Group Deputy CEO / Group CFO Annual General Meeting, May 2014 25

Profit & Loss (Kina ‘million) Qtr.1 2014 profit after tax of K136m is above Qtr. 4 2013 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 by K9m. 450 425 • Q1/14 Revenue is in line with 400 the previous quarter - forex 350 earnings remain strong 300 • Bad and Doubtful debts 211 250 increase on the previous 200 quarter consistent with asset 136 growth 150 100 • Other Operating Expenses 50 reduce as dep’n and SW 21 amort’n adjustments from 0 Q3/Q4 of 2013 end, Net Profit Revenue Bad and Other normalises in Q1/14. (After tax plus Doubtful Operating Assoc. Inc.) Debts Expenses 26

Balance Sheet (Kina ‘billion) • Slight growth in loans but fx translation also Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 impacting 18.0 15.7 16.0 • Other Interest Earning 14.0 assets decline slightly 12.0 driven by reduction in 12.0 C-Bills and T-Bills 10.0 8.0 • Slight decline in 5.7 5.2 6.0 deposits 4.0 • Total Assets decline is 2.0 largely driven by lower 0.0 balances in Cash, and Loans Other Interest Deposits Total Assets T Bills and C-Bills Earning Assets 27

Financial ancial Risk sk Manageme agement nt Capital Adequacy Provisions to Loans Tier 2 Capital Tier 1 Capital 5.2% BPNG requirement - 12% 5.0% 5.0% 25.0% 4.8% 20.0% 5.6% 4.6% 15.0% 4.4% 10.0% 14.4% 4.2% 5.0% 0.0% 4.0% 28

Funds Deposit Mix (K ‘billion) Deposit Type (K ‘billion) Wholesale Retail 14.0 120% Current 12.0 10.0Bn 100% 83% 27% 10.0 80% 8.0 60% 6.0 40% 73% Term , 4.0 2.0Bn, 20% 2.0 17% 0.0 0% Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 29