Kina Securities (KSL) H1 2024 earnings summary

Executive summary

• Revenue increased 17–21% year-over-year and half-on-half, driven by commercial lending, digital, and FX income, with all six key revenue drivers meeting or exceeding budget.

• Underlying NPAT rose 7% to PGK 49.6 million, while statutory NPAT declined 9% to PGK 42.2 million due to a PGK 13.5 million fraud loss provision (PGK 7.4 million post-tax).

• Deposits increased 8% and lending grew 12% year-over-year, reflecting strong organic growth.

• Return on equity was 15.6% underlying and 13.2% statutory; EPS at AUD 0.055, with a dividend per share of AUD 0.04.

• Directors declared a dividend of K30.57 million post-period, payable in October 2024.

Financial highlights

• Net interest income rose 14% to PGK 111.6 million; fee and commission income increased to K74.6 million; FX income up 71% to PGK 37.0 million.

• Digital revenue surged 35% year-over-year, supported by new partnerships and digital channel expansion.

• Cost-to-income ratio increased to 58–64.8%, impacted by higher admin and staff costs, fraud provision, and currency depreciation.

• Operating expenses rose 27–40% due to seasonal factors, fraud provision, and investments in cybersecurity and staff.

• Capital adequacy ratio at 19.3%, above regulatory minimum.

Outlook and guidance

• Management expects continued strong growth in H2 2024, leveraging investments and a robust business development pipeline.

• Targeting a cost-to-income ratio of 52–54% for the full year, expecting normalization in the second half.

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

• Uncertainty remains over timing of major resource projects, including Papua LNG FID.