SHAREHOLDER PRESENTATION 2019 Full Year Results Author Robin - PowerPoint PPT Presentation

SHAREHOLDER PRESENTATION 2019 Full Year Results Author Robin Fleming – Group CEO

South Pacific market leader We continue to grow and build scale ... in pursuit of sustainable market leadership K13.2b 119 branches and sub-branches In lending Largest network K19.3b K5.5m In deposits Sponsorships and donations K673m ~ 2.5m Dividends paid Active customer accounts > 12m per month K5.6b Market capitalisation Digital transactions P2

Portfolio growth BSP’s geographical and income diversification strategy continues to progress … with BSP Finance Lao entering our portfolio. BSP is the only majority owned PNG bank operating in both the domestic and international markets. BANKING ASSET FINANCE LIFE INSURANCE FUNDS MANAGEMENT & CORPORATE ADVISORY Feb-2020 P3

2019 results Record profit + strong capital position + stable dividend 2019 2019 vs 2018 ● Profit [NPAT, Km] 890 + 5.5% ● Net assets [Kb] 24.5 + 6.2% ● Cost-to-income ratio [%] 37.7 - 323bps ● Capital adequacy ratio [%] 22.0 - 91bps ● Earnings per share [toea] 191 + 5.5% ● Dividend per share [toea] 139 + 9.4% ● Market capitalisation [Kb] 5.5 + 14.8% P4

Group NPAT NPAT grew by K46m [5.5%] ... despite economic headwinds and uncertainties INCOME [Km] OPERATING LOAN IMPAIRMENT NPAT [Km] EXPENSE [Km] EXPENSE [Km] (7.7%) Flat + 5.5% + 20% 890 887 2,166 2,171 844 99 819 90 691 82 1,547 532 ● Interest income flat, despite ● Prudent cost management in- ● Growth off a low base … loan growth [+ 5.3%] > 2 x light of market conditions remains in-line with historic system growth ... re-alignment levels and market conditions of investments drove result 2015 2018 2019 2015 2018 2019 2015 2018 2019 2015 2018 2019 P5

NPAT by division All of our divisions made a positive contribution to Group NPAT … with offshore branch profit growth approaching PNG levels PNG BANK [Km] OFFSHORE BRANCHES [Km] SUBSIDIARIES [Km] + K19m + K20m + K7m + 12.5% + 3.1% + 16.4% 170 151 668 648 48 41 458 67 5 2015 2018 2019 2015 2018 2019 2015 2018 2019 P6

NPAT contribution mix Our diversification strategy is working ... with growing offshore branch and subsidiary contributions NPAT CONTRIBUTION MIX OFFSHORE BRANCH AND SUBSIDIARY NPAT 2019 [%] CONTRIBUTION [%] 0.9% 4.9% 5.4% BSP Fiji 38% 13% BSP Solomon Islands 18% 18% 19% BSP Samoa 9% BSP Tonga 8% BSP Cook Islands 4% BSP Vanuatu 3% Subsidiaries BSP Life Fiji 15% 86% OSBs BSP Life PNG 0% 77% 75% BSP Finance PNG 2% PNG Bank BSP Finance Fiji 3% BSP Finance Cambodia 2% BSP Finance SI 0% BSP Capital 0% 2015 2018 2019 P7

Financial metrics Balance sheet indicators illustrate continued growth in 2019 LOANS [Kb] TOTAL ASSETS [Kb] + 5.3% + 6.2% 13.2 12.5 24.5 23.1 8.6 18.2 CAGR = 11.3% CAGR = 7.7% 2015 2018 2019 2015 2018 2019 DEPOSITS [Kb] DEPOSIT MIX [Kb] + 6.0% 3.0 4.0 4.3 CAGR = 7.5% 19.3 18.2 14.6 11.6 13.9 15.3 CAGR = 7.2% CAGR = 7.2% Term deposits P8 Demand deposits 2015 2018 2019 2015 2018 2019

Key ratios BSP Group has maintained strong results across all key performance ratios COST TO INCOME [%] ROE & ROA [%] (100bps) Flat (323bps) 3.7 3.7 44.7 30.7 41.0 29.7 37.7 3.1 27.8 2015 2018 2019 2015 2018 2019 2015 2018 2019 CAPITAL ADEQUACY [%] PROVISIONS TO LOANS / NPL TO LOANS [%] (90bps) + 10bps 4.9 + 10bps 2.0 23.1 22.9 4.8 1.9 22.0 4.7 1.8 P9 2015 2018 2019 2015 2018 2019 2015 2018 2019

Income stream trends Total income was flat … given fee reduction initiatives and movement of interest bearing investments Net interest Fee/ FX Other Total KEY DRIVERS income commission income income income ● Interest income – loans, T-bills/ YOY: 0.8% 0.2% 4.4% (24.3%) 0.3% I. Stock ● Fees & commission – Channels CAGR 4.4% 1.5% 9.0% (3.1%) 4.2% income, lending fees, service charges GROUP INCOME STREAMS [Km] ● FX Income – Forex 2,171 2,166 ● Other Income – Life Fiji income, 1,998 operating lease 1,392 1,381 Key: 1,277 CAGR = Compound annual growth rate [3 years] YOY = year on year 385 328 384 374 276 314 67 89 71 Net interest Fee and FX income Other income Total income income commission 2017 2018 2019 P10

Expenditure trends Prudent cost management in-light of market conditions Staff Admin Premises/ Computing NLL Total KEY DRIVERS costs costs equipment cost operating costs ● Staff Costs – salaries , training, additional staff, staff rentals YOY: 2.9% (19.9%) (7.0%) (6.6%) (93.0%) (7.7%) ● Admin Costs – marketing, Telco, VAT CAGR 2.9% (15.5%) (0.3%) 1.4% (66.1%) (1.9%) ● Premises costs – buildings, depreciation, generators, GROUP EXPENDITURE [Km] electricity ● Computing Costs – software 887 maintenance, licenses, data links 852 819 Key: CAGR = Compound annual growth rate [3 years] 394 YOY = year on year 382 372 171 154 164 184 172 149 139 123 99 33 20 2 Staff costs Administration Premises and Computing Non lending Total costs equipment losses operational costs P11 2017 2018 2019

Market strength BSP’s is #1 in lending in 5 countries … and #1 in deposits in 4 countries. Our loan and deposit portfolios are predominantly PNG domiciled. LOANS MARKET SHARE [2019, %] DEPOSIT MARKET SHARE [2019, %] Rank Rank 62% PNG 63% PNG #1 #1 Solomon Islands Solomon Islands 55% 53% #1 #1 Tonga Tonga 40% #1 40% #1 #1 #1 Cook Islands 40% Cook Islands 36% #2 #1 Samoa 32% Samoa 28% #2 #2 Fiji 26% Fiji 25% #4 #4 Vanuatu 17% Vanuatu 16% LOANS PORTFOLIO COMPOSITION DEPOSIT PORTFOLIO COMPOSITION [2019, %] [2019, %] PNG PNG 64.3% 68.3% Fiji Fiji 22.3% 16.2% Solomon Islands Solomon Islands 5.3% 4.0% Samoa Cook Islands 3.0% 3.5% Tonga Samoa 2.7% 2.2% Vanuatu 2.5% Tonga 2.1% P12 Cook Islands Vanuatu 1.9% 1.6%

Channel investment Continued channel investment to improve customer service levels across the BSP Group Total Branches 81 43 17 8 5 2 4 2 48 46 0 0 0 0 0 2 Sub Branches ATMs 548 318 121 32 24 13 27 13 EFTPOS 12,115 8,045 2,064 321 424 439 450 372 EFTPOS 557 358 44 52 36 8 32 27 Agent P13

Channel growth trends Almost three-quarters [73%] of total transactions were via digital channels in 2019. We average >10m digital transactions per month … most [64%] via mobile phones ANNUAL TRANSACTION MIX BY TRANSACTIONS PER MONTH BY CHANNEL CHANNEL [million] 1.4 10% 10% 12% 1.4 0.9 59% 10.1 73% 71% 8.3 5.4 31% 2.9 17% 2.2 16% 2.0 2016 2018 2019 2016 2018 2019 ATM Digital Branch ATM Digital Branch P14

Digital initiatives BSP was the first PNG bank to pioneer multichannel experiences, with ATMs, EFTPOS and debit Cards introduced in 1995 … we will continue innovate and pioneer new services to improve customer service levels 2020 ● Development and 1995 2010 2017 ATM + EFTPOS + Mobile Top Up on EMV Chip cards utilisation of APIs … Debit Cards SMS Banking and with Paywave growth of API suite ATMs and services ● Implementation of BSP Sandbox ● Promote to domestic 1995 2000 2005 2010 2015 2020 merchants, online and mobile banking as alternate payment platforms for Business and SMEs 2009 2014 2019 SMS Banking Mobile App Upgrades to PoS fleet, Visa 3DSecure for online card payments, and value-add payments on Mobile Banking service & BSP App P15

Social license to operate BSP is a trusted brand across the South Pacific. We understand that our communities and many stakeholders rely on BSP’s activities … and we must continue to meet your increasing standards COMMUNITY CUSTOMER SERVICE FAIR SHARE [Km] RETAIL BANK Expectations One of PNG’s Exceeded 86 362.6 29% Tax largest taxpayers 125 84 Expectations Fully Met 100 5,581 shareholders 653.9 52% Dividends 2018 2019 Positive ● K5.5m in donations and and millions more Point via super in PNG, sponsorships CORPORATE BANK 75 Fiji, SI and Samoa 90 ● 22 education projects Investment in the 236.4 19% Reinvested business and its ● 7 health projects 87 employees 2019 ● 27 community projects 2018 2019 P16

Share price Dividend yield of 12%, based on K12.00 share price … and market capitalization of K5.6b SHARE PRICE MOVEMENTS DEC-18 TO DEC-19 12.00 1,400 11.82 1,260 K5.6b 1,200 market Cap 11.76 11.77 11.65 11.50 11.63 11.53 967 1,000 11.38 Share Price K12.00 11.00 11.09 800 11.05 28-FEB-19 10.97 600 10.50 10.58 424 10.37 400 10.31 290 10.00 200 129 113 100 78 51 35 21 15 4 9.50 0 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Volume shares traded per month ['000] Monthly average share price [K] P17

BSP Group strategy focus Key Board decisions made at the 2019 strategy offsite are summarised below ● Advance digital strategy, initiatives and capability ● Develop robust response plan in face of external risks ● Bed down the Lao JV and transition to BSPF operating model ● Continue examining market opportunities to further expand Asset Finance within South-East Asia P18