Kina Securities (KSL) H1 2024 earnings summary

Executive summary

• Revenue grew 17% half-on-half and year-over-year, with all key revenue streams exceeding or meeting budget.

• Underlying NPAT rose 7% to PGK 49.6 million, while statutory NPAT fell 9% to PGK 42.2 million due to a one-off fraud provision.

• Deposits increased 8% and lending grew 12% compared to June 2023, reflecting strong organic growth.

• Digital and FX revenues surged, with digital up 35% and FX up 71% half-on-half and year-over-year.

• Dividend of K30.57 million declared post-period, payable in October 2024.

Financial highlights

• Net interest income rose to K111.6 million, with fee and commission income at K74.6 million and FX income at K37.0 million.

• Underlying return on equity at 15.6%, statutory at 13.2%.

• EPS at AUD 0.055 (statutory), with an interim/ordinary dividend of AUD 0.04 per share.

• Cost-to-income ratio increased to 58.9% due to higher expenses.

• Total capital ratio at 19.3%, above regulatory minimum.

Outlook and guidance

• Confident in achieving double-digit loan growth for the full year, supported by a strong pipeline and solid July/August results.

• PNG real GDP growth forecasted at 4.6% in 2024, with inflation expected at 5%.

• Cost-to-income ratio targeted at 52-54% for the full year, expected to normalize as front-loaded costs subside.

• Forecast guidance remains solid despite recent fraud and higher tax rate.

• Uncertainty remains over timing of major resource projects, with Papua LNG FID expected in late 2025 or early 2026.