The Bank South Pacific Group (B.S.P.) has announced that it has recorded a consolidated operating profit after tax of K844 million (T$647,885,161) for the 2018 financial year.

A statement on the banking group’s performance last year by the Group Chairman Sir Kostas Constantinou was approved for release to the media by the B.S.P. Board recently.

The consolidated operating profit after tax of K844 marks a 11.5 per cent increase on the consolidated 2017 operating profit after tax of K757 million. 

Sir Kostas said total assets of the Group increased by 3 per cent or approximately K680.2 million to K23.05 billion, driven by good growth in the loan book across all countries. Loan book growth amounted to K1.321 billion, from increased lending in Papua New Guinea (corporate, SME and housing loans), strong growth in Fiji and uplift across most other countries, some of which can be attributed to the translation effect of movements in the value of the PNG Kina.

He said revenues generated by the Group also increased by 8.4 per cent last year with the revenue growth coming from interest income streams – especially loans and advances –with the bank growing its loan book by 11.8 per cent, on top of additional income from BSP Finance businesses in PNG, Fiji, Solomon Islands and Cambodia.

Profit growth, according to the Group Chairman, was positive with after tax profits increase of 9.2 per cent to K787.4 million and with net income interest up 7.1 per cent, due to the increase in the bank’s loan portfolio.

The bank’s total assets at the end of 2018 were K20.696 billion. Loans and advances to customers has seen net growth of K1.138 billion to K11.233 billion. However, Sir Kostas said customer deposits were slow in 2018 with a growth of K115.4 million to K16.959 billion.

The Group’s operating expenses show an increase of K35 million (or 4.1 per cent), mainly due to expenses relating to their core banking system upgrade and costs associated with delays in moving to the new Head Office at Waigani in the PNG capital Port Moresby. Despite these cost increases, Sir Kostas said the “cost to income ratio” for the Group reduced to 40.96 per cent from 42.6 per cent in 2017.

The bank’s operating expenses increased by K29 million and cost to income ratio had also similarly reduced to 40.43 per cent versus 41.73 per cent in 2017.

The Group’s capital base remains sound according to the Group Chairman. Total capital adequacy at the end of 2018 is 23 per cent (2017 = 24.5 per cent), notwithstanding the impact of continued growth in balance sheet assets as well as total dividend payments of K597.36m against 2017 at K521.86m. The capital adequacy ratio exceeds the minimum Bank of Papua New Guinea (BPNG) prudential requirement of 12.00 per cent.

Notwithstanding a forecast reduction in GDP growth rate across the region and somewhat difficult trading conditions in PNG, Sir Kostas said the 2018 result is notable for the continuation of positive performances for the bank and most of its subsidiaries, as well as additional growth in the group’s balance sheet.

Sir Kostas said the Group achieved a number of significant milestones last year. 

“Our group net profit before tax again exceeded K1 billion and achieved a ‘compound average growth rate’ (CAGR) of 14.1 per cent over the last 5 years,” he said. 

The Group also got the approval of the BPNG to commence a life insurance business in PNG, added the Group Chairman, which opened its doors January 2 this year and is called BSP Life PNG Limited.

He said BSP also signed an agreement with partners RMA Group to enter into a joint venture with them in an asset finance business in Laos, further extending the bank’s reach in the Mekong delta.

Sir Kostas congratulated staff and management in all of the bank’s operations and businesses across PNG, Fiji, Solomon Islands, Samoa, Tonga, Cook Islands, Vanuatu and Cambodia on the results achieved in 2018.

And he remains confident that the bank will perform to expectations, with the support of its stakeholders, its competitive operations, and the effective execution of its strategies will enable the Group to produce another stellar year in 2019.