The Kina Bank Board is pleased to announce an underlying NPAT (Net Profit After Tax) of PGK 96.2m, with a statutory NPAT of PGK 70.8m.
This result is a solid increase of 27% on the previous financial year’s NPAT growth of 27%. Kina’s CEO and Managing Director Greg Pawson said “The results demonstrate our ability to grow organically, maintain costs and execute on strategic priorities”.
Kina Securities Limited (ASX:KSL|PNGX:KSL) is pleased to provide the following update on its full year 2021 results.
Kina Bank has announced an underlying NPAT of PGK 96.2m, an increase of 27%, with a statutory NPAT of PGK 70.8m. This result is a solid increase of 27% on the previous financial year’s NPAT growth of 27%.
Notably, one-off costs associated with the Westpac acquisition termination impacted this growth.
In good news for shareholders, The Board has declared an unfranked final dividend for the 2H21 of 0.7 cents (AUD) per share and 26.8toea (PGK) per share. The full year unfranked dividend is 10.0 cents (AUD) per share / 26.8 toea (PGK) per share.
Kina’s CEO and Managing Director Greg Pawson said, “These results demonstrate our ability to grow organically, maintain costs and execute on strategic priorities.”
He added “Throughout 2021, everyone on our team has been focused on delivering strong growth in all target segments, while maintaining disciplined cost management and ensuring our communities remain safe in a pandemic. The implementation of our Corporate Banking strategy and response in developing digital solutions for our customers, has helped build a sustainable growth profile.”
Kina’s capital position remains well above the regulatory target of 12% with Total Capital adequacy of 23.3%.
Performance snapshot:
· Underlying NPAT increased by 27% to PGK 96.2m.
· The Loan book delivered a 21% growth.
· Foreign Exchange (FX) revenue grew by 19%.
· Net Fees and Commissions increased by 17% to PGK 89.3m.
· The performance in non-interest income from fees and commissions and foreign exchange income
contributed 18% to Kina’s strong revenue growth.
· Cost to income ratio (underlying) maintained at 58%.
· Reduction in impairment cost to PGK 6.5m.
· Kina’s Funds Administration business achieved NPAT of PGK 10.1m, which reflects a 22% improvement.
Delivering on the Kina’s 2025 Strategic Plan
All strategic initiatives have progressed well. In FY21 the focus was on simplifying the business, building digital capability, creating a competitive Corporate bank and having a compelling home loan product and offering. Kina delivered:
· Digital capability across core banking which saw an uplift in Digital usage by 95%, year on year.· Competitive deposit products such as fee-free online banking helped deliver 8% Customer acquisition growth.
· Effective management of loan levels well within industry benchmarks.
· An expanded suite of products and services for SMEs including transaction accounts, concessional rate loans, online banking enhancements, digital payments gateways and with future partnerships such as Xero integration planned.
· A refresh of the Brand and Marketing strategy including a new website that will underpin customer acquisition in FY22.
· An improvement in executive diversity, with women in 60% of first line management and level one senior managers roles.
· Financial inclusion through MiBank (microfinance partner) onboarding 66,829 new customers in 2021.
Banking grows
For the banking division, strong lending growth of 21% was achieved. Total loans and advances increased to PGK 1,950.5m. Kina improved market share in total loans and advances by 2% to 15%, ahead of Westpac and ANZ, positioning Kina as the second largest bank by loans and advances in PNG. The deposit base has increased by 19% with a 23% uplift in at call accounts. The improvement in On Call accounts is attributed to growth in net customers by 8%.
NIM reflects a mix of increased lending to the corporate sector, strong deposit growth to maintain the loan to deposit ratio at less than 70%, and our strategy to grow FX revenues with the resources sector. While interest earning assets saw a 20% increase over the prior year, 69% of this growth was recorded in the second half.
We expect NIM to normalise in the first half of 2022, well within the target range of 6-8%. The impact on NIM is offset by a strong performance in non-interest income which includes FX revenues and channel fees. Overall, fee income increased to PGK 57mn, a 24% increase. The largest contributor was Merchant facilities fees achieving strong growth from the increased distribution of Point of Sale terminals.
Funds Under Administration
Another positive year for Kina Funds Administration with NPAT of PGK 10.1m, a 22% improvement on the prior year. This is due to an increase in Funds under administration and growth in the membership base.
Strategy and Outlook
Kina’s purpose is to constantly improve the prosperity of the people, communities, and markets it serves. The bank achieves this by being the most dynamic, progressive, and accessible financial services organization in the Pan Pacific. To deliver on our purpose the bank developed a series of priorities.
2022 Priorities overview
· Digital partnership platforms including e-KYC onboarding, payment system and digital wallets.
· Deliver propositions to target segments, Prime home loans, Prime Plus (Employee referrals) and Private Bank
· Developing ESG framework and renew commitment to micro finance partner MiBank.
· Selectively build the brand into regional areas with the greatest growth opportunities.
The BPNG’s outlook for economic growth is positive, with forecast GDP real growth of 5.4% driven by mining sector activity. Commodities such as coffee and palm oil are also forecast to grow, supporting Kina’s corporate proposition and target segments.
COVID-19 continues to present a systemic risk for PNG with low vaccination rates. In order to support our customers, communities and staff, we will drive to deliver a more accessible and inclusive financial services business. This will include the implementation of key digital programs to ensure our customers can bank anywhere, anytime.
Bank CEO and Managing Director Greg Pawson outlined Kina Bank’s growth plan, “Our customer growth, brand recognition and commitment to our communities has established the group as a leading diversified financial services company in PNG. 2021 was the start of our growth agenda. We have a strategic plan that sets out our opportunities to grow sustainable revenues and build on our digital capabilities and partnerships.
Leveraging our assets and our people across financial services in the Pan-Pacific region, backs our vision to deliver value for all our stakeholders”.