BSP Financial Group (BFL) H2 2024 earnings summary

Executive summary

• Achieved record pre-tax profit of just under PGK 1.8 billion, up 14% year-over-year, and statutory profit up 17% to PGK 1.038 billion, driven by strong revenue growth, improved loan book quality, and higher volumes.

• Maintained market leadership in the South Pacific, with over 60% share of lending and deposits in Papua New Guinea and strong positions in other regional markets.

• Advanced modernization strategy with significant investments in technology, digital channels, and talent, resulting in a 20% annual increase in digital transactions and rollout of 600 new ATMs.

• Conservative capital management and a strong balance sheet position the group for future growth.

Financial highlights

• Statutory NPAT rose 17% year-over-year to PGK 1.038 billion; underlying NPAT up 10% to PGK 979 million.

• Total income grew 8.3% to PGK 2,979 million, led by a PGK 120 million increase in net interest income and PGK 103 million rise in FX income; fee income up PGK 33 million, while insurance and other income fell by PGK 27 million.

• Net interest margin increased to 572 basis points; cost-to-income ratio rose to 41.3% due to modernization investments, but was stable at 38.2% excluding these costs.

• Dividend per share up 16% to 1.66 Kina, with a payout ratio of 75% of statutory profit; share price closed near record highs at year-end.

• Return on equity improved by 180bps to 23.3%; return on assets at 2.8%–3.1%; loans to deposits ratio at 58%–59.9%.

Outlook and guidance

• Cost-to-income ratio expected to remain in the low-to-mid 40% range as modernization continues.

• Net interest margin anticipated to stay in the mid to high 500 basis points range, with no material portfolio shifts expected.

• Effective tax rate will decrease steadily over the next 10 years due to recent PNG government changes.

• Positioned for future growth with a conservative capital strategy and ongoing investment in digital and modernization initiatives.

• Monitoring market conditions, inflation, interest rates, commodity prices, and regulatory changes.