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BSP records NPAT of K672 million in Q3 of 2022

Thursday, October 27, 2022

BSP’s strong business performance across the Group was maintained in the third quarter of 2022, with Group net profit after tax of K672m, compared to K699m for corresponding 2021 period. This sound performance was achieved notwithstanding BSP having expensed the Additional Company Tax (ACT) payment of K190m, which was introduced this year.

According to BSP Group CEO Robin Fleming, the company’s underlying profit growth reflects the improved economic conditions in the region, resulting in loan growth of +5.6% and increased transactional activities, which has contributed to non-lending fee income increase of +14.3%, despite BSP continuing to reduce its fees.

Overall Group expenditure increased by 15.1% in Q3-22, compared to Q3-21.  This higher level of expenditure was driven by additional roles being created in Retail, Operations and Compliance teams to support customer growth, more effective compliance, higher channel related costs (contributing to the higher channel revenue raised above) and property maintenance costs.

Investor Victor Seeto asking questions during BSP’s Q3 Financial presentation today, at the BSP Waigani Head Office.

With the support of its shareholders, BSP is pursuing a judicial review to challenge the constitutional validity of the ACT, given its material impact on shareholder returns.  Nevertheless, the K190m tax was paid on 30 September 2022 into an escrow account held with BPNG, pending the outcome of BSP’s legal challenge to the ACT.  The full K190m was taken up in BSP’s first quarter accounts.

Despite the above, Mr Fleming stated that BSP Group’s key performance ratios remained strong, with cost-to-income improving to 37.7%.  He added that BSP’s capital base remains robust, with total capital adequacy as at September 2022 at 23.3%, in line with September 2021 levels, well above the minimum Bank of Papua New Guinea prudential requirement of 12.0%.  Group Return on Equity (ROE) was 27.1% in Q3-22, impacted by the ACT.

Nambawan Super Chief Investment Officer David Kitchnoge asking questions during the BSP Financial Group.

Mr Fleming also said that irrespective of the K190m Additional Company Tax, BSP has expanded its branch network, with Eriku branch opening in the first week of November 2022, NCD Lending Centre in Port Moresby in December 22, Telefomin hybrid sub-branch in the first quarter of 2023, and Dobel branch in Western Highlands in the first half of 2023.

Mr Fleming concluded that BSP remains the largest and most profitable bank in the South Pacific.  BSP also continues to deliver sustainable growth, as evidenced by its strong year to date profit results.

Post Courier’s Business Editor Melisha Yafoi asking questions during the BSP Investor Relations presentation.