BSP Financial Group Ltd. · ASX:BFL
BSP Financial — Shareholder Meeting (May 2012)
109 slides from BSP Financial's shareholder meeting presentation, May 2012
Slide 1: BSP Group Investor Presentation 2011 Results
BSP Group Investor Presentation 2011 Results Annual General Meeting, May 2012 The Leading Bank in the South Pacific 1
Slide 2: Presentation overview
Presentation overview Contents Presenter • Recent performance to 2011 Ian B. Clyne, Group CEO • Vision & strategy Ian B. Clyne, Group CEO • 2011 performance & operations Ian B. Clyne, Group CEO • Economic outlook Robin Fleming, Deputy Group CEO/CRO • Market share Robin Fleming, Deputy Group CEO/CRO
Slide 3: Overview of BSP
Overview of BSP High Level statistics • Established, Port Moresby, 1957 • 41 branches in Papua New Guinea, 20 in Fiji, 8 in Solomon Islands, 1 in Niue • market share, end of 2010: Loans Deposits Total Assets Profit PNG Bank >50% >50% >K9.71 bil K451.2 mil Pacific Bank - 2011 ~38% ~47% >K 11.41 bil K
Slide 4: Recent Performance to 2011
Recent Performance to 2011 i esr
Slide 5: Group Profit Before Tax
Group Profit Before Tax The Leading Bank in the South Pacific 5
Slide 6: Recent Performance
Recent Performance The Leading Bank in the South Pacific 6
Slide 7: Recent Performance
Recent Performance The Leading Bank in the South Pacific 7
Slide 8: Vision and Strategy
Vision and Strategy
Slide 9: Strategy Map
Strategy Map 1 2 4 3 The Leading Bank in the South Pacific 9
Slide 10: Customer sales and service focused
Customer sales and 2010 INITIATIVES service focused 2011 INITIATIVES SBU Description SBU Description WB Product review Profitable To be the leading bank in PNG and Operational WB Branch service delivery model growth the South Pacific excellence WB/RB PNG LNG WB Customer Relationship Management syste
Slide 11: Operational excellence
2010 INITIATIVES Customer sales and service focused 2011 INITIATIVES SBU Description SBU Description WB Treasury system RB Photo Card system WB RM support Profitable To be the leading bank in PNG and Operational growth the South Pacific excellence RB Biometrics RB Processes in branches RB SME end-to
Slide 12: High performing team
Customer sales and service focused 2010 INITIATIVES 2011 INITIATIVES SBU Description SBU Description HR Deliver account opening training Profitable To be the leading bank in PNG and Operational IT Processes and procedures, training growth the South Pacific excellence HR Deliver product knowledge tra
Slide 13: Profitable growth
Customer sales and service focused 2010 INITIATIVES 2011 INITIATIVES Profitable To be the leading bank in PNG and Operational growth the South Pacific excellence SBU Description SBU Description Customer profitability model – FIN Corporate High performing team FIN Cost allocation review Customer prof
Slide 14: BSP's Journey
BSP’s Journey The Leading Bank in the South Pacific 14
Slide 15: BSP's Journey
BSP’s Journey The Leading Bank in the South Pacific 15
Slide 16: BSP's Journey
BSP’s Journey The Leading Bank in the South Pacific 16
Slide 17: Modernization Program
Modernization Program • The “Modernization Program” is ongoing, and BSP’s “Vision” remains the same. “Our improved financial performance reflects our achievements to date and vindicates the adoption of the program” • An enormous amount of work has been carried out by each BSP business unit in 2011,
Slide 18: Business strategy: Retail Banking
Business strategy: Retail Banking • BSP’s Retail Business Strategy is now “Electronic TRANSACTION Focused”. The Leading Bank in the South Pacific 18
Slide 19: Retail banking strategy: customer segmentation
Retail banking strategy: customer segmentation Segmentation - Retail Branding High Value BSP First Invitation Invitation Segment only only BSP First Inflow account >K 30.000 BSPPotential First Total assets >K 500.000 Potential BSP Priority Core Customer Upscale Youth & & Segment Upscale Youth Studen
Slide 20: Retail strategy: Mass market / BSP Rural
Retail strategy: Mass market / BSP Rural •BSP’s Retail has a “transaction focused” business model •Kundu Card is the “Key” banking access method. RETAIL CUSTOMER 2010 2011 2012 PNG 600,000 800,000+ 1,000,000+ “1.4 million Retail FIJI 150,000 200,000+ 250,000+ Customers by Year S.I 50,000 75,000+ 85,
Slide 21: Retail strategy: Client access/electronic banking
Retail strategy: Client access/electronic banking 7 Days a Week, with many service points, it is cheaper for our customers & it is cheaper for BSP The Leading Bank in the South Pacific 21
Slide 22: Retail strategy: Client access/electronic banking
Retail strategy: Client access/electronic banking • BSP will continue to expand our Electronic Banking Service in 2012-2014 Electronic Banking Service 2011 ATM’s EFTPOS BSP RURAL CASH AGENT PNG 224 4,800+ 14 10 FIJI 100 600+ - - S.I 17 40+ - - The Leading Bank in the South Pacific 22
Slide 23: Retail & Branch strategy: Service improvement initiatives
Retail & Branch strategy: Service improvement initiatives • Separated Retail Banking & Branch Network into separate Business Units. • Retail is Sales & Product Development Focused, GM Retail Frans Kootte. • Branch Network is at present a manual service delivery channel (operational). • New GM Networ
Slide 24: Retail & Branch strategy: Branch service upgrade
Retail & Branch strategy: Branch service upgrade Branch Remodeling is a multi year strategy: Step 1: • Aggressive Implementation of Kundu Card/Electronic Channels Client Acquisition. “We need to educate retail customers to use “Electronic” Channels. They are more convenient & cheaper”. Step 2: • Mea
Slide 25: Retail & Branch strategy: Branch service upgrade
Retail & Branch strategy: Branch service upgrade Branch Remodeling is a multi year strategy: Step 3: • Simplify & Automate all major Branch Processes. Step 4: • Remodeling of our Branches to meet: – “Actual” business potential of Towns in which we operate. – Greater focus on branches servicing our P
Slide 26: Retail strategy: client acquisition focus
Retail strategy: client acquisition focus • Significant Increase in Retail competition from Telco’s (E Wallet launch). • Significant increase in Retail competition from Savings & Loan Societies, Microfinance Banks, NDB, SuperFunds & others. • Retail Banking is now “marginally” profitable based on ou
Slide 27: Retail strategy: client acquisition focus
Retail strategy: client acquisition focus • 2011 “Green Gold” Program was aimed at Client education (using electronic channels) & motivating them to open bank accounts through the chance to win prizes. 135,000 New Customers were acquired. • Every 100,000 new customers = K7-8 Million increased gross
Slide 28: Branch strategy
Branch strategy “Our Retail Service Modernization Strategy is a multi year investment in processes, systems, people and premises”. The Leading Bank in the South Pacific 28
Slide 29: Business strategy: Corporate Banking
Business strategy: Corporate Banking • Corporate Banking strategy focuses on: non interest income growth, new customer acquisition, improved product & service performance, and increased cross selling. The Leading Bank in the South Pacific 29
Slide 30: Corporate banking strategy: customer segmentation
Corporate banking strategy: customer segmentation Segmentation - Corporate Branding High Value Segment Strategic Top 10 Mix of existing and potential Clients Large Turnover > K150m Corporate Core Customer Mid Corporate Turnover K25 to K150m Segment Business Turnover = K2m to K25m Wholesale / Small B
Slide 31: Business strategy: Corporate Banking
Business strategy: Corporate Banking • Corporate Banking & Treasury are BSP’s biggest profit earners. • Corporate Banking, Treasury & Paramount subsidize Retail Banking and make it possible for BSP to maintain & even expand our Retail Banking Network & BSP Rural throughout PNG. • In BSP Fiji we only
Slide 32: Business strategy: Corporate Banking
Business strategy: Corporate Banking • Despite positive results BSP Corporate Banking can still improve its performance. • BSP has now modernize nearly all our Corporate Banking services, products, processes & people (training) across the Pacific. • Non Interest Income is improving but remains below
Slide 33: Business strategy: Corporate Banking
Business strategy: Corporate Banking • Co Location of CB in PNG, Treasury & Risk Management occured in 2011(New Harbor City Offices) and has had a very positive impact on productivity. • General Manager Mr. Peter Beswick has re-engineered the team. • Several new Relationship Managers • New General M
Slide 34: Business strategy: Paramount Banking
Business strategy: Paramount Banking • As a key liquidity provider, Paramount’s strategic focus is on its service model to compete for government and landowner funds The Leading Bank in the South Pacific 34
Slide 35: Business strategy: Paramount Banking
Business strategy: Paramount Banking • Continues to be BSP PNG’s major liquidity provider. • For that reason Paramount Banking is a Key business unit. • 2011 deposits increased, however reinvestment rates remained low throughout the year. • Relatively small Business Unit, Team was expanded in 2011.
Slide 36: Operations & IT strategies
Operations & IT strategies • “Always on” Technology platforms & infrastructure The Leading Bank in the South Pacific 36
Slide 37: Operations & IT strategies
Operations & IT strategies • Group Chief Operations Officer is Robert Loggia. • Head of IT Neil Gamble, is having a positive impact on overall technology performance. • ATM Network availability & service quality is improving, however further improvements still required. • Project Management Office &
Slide 38: Other support business strategies
Other support business strategies • Reliable and efficient support for business – Risk, Legal and Compliance – Finance – Human Resources – Security The Leading Bank in the South Pacific 38
Slide 39: Other support business strategies
Other support business strategies • Risk Management – New Deputy GM Credit Risk, Mr Frank Gamble – BSP continues to improve our overall Risk Management Framework. – Operational Risk identified various system & process weaknesses, however positive progress is evident in addressing these risks. – Inte
Slide 40: Other support business strategies
Other support business strategies • Human Resources – New HR System has been implemented. – Recruitment Processes are improving. – New Performance Bonus System for PNG has been implemented. – Significant Improvement in Training quality & Quantity. – Change Management Training is an important Focus.
Slide 41: 2011 Performance & Operations
2011 Performance & Operations
Slide 42: Group Profit Before Tax
Group Profit Before Tax The Leading Bank in the South Pacific 42
Slide 43: Group Profit After Tax
Group Profit After Tax The Leading Bank in the South Pacific 43
Slide 44: Group Profit & Loss Trends
Group Profit & Loss Trends PROFIT & LOSS TREND ANALYSIS (Millions of Kina) 2005 2006 2007 2008 2009 2010 2011 CAGR Income Net interest income 162 210 277 377 474 544 597 21% Foreign exchange income 87 65 116 127 104 139 193 12% Fee and other income 57 70 86 117 147 272 392 32% Total income 306 344 4
Slide 45: Group Total Assets
Group Total Assets The Leading Bank in the South Pacific 45
Slide 46: Group Deposits & Loans
Group Deposits & Loans The Leading Bank in the South Pacific 46
Slide 47: Group Balance Sheet Trends
Group Balance Sheet Trends BALANCE SHEET TRENDS (Millions of Kina) 2005 2006 2007 2008 2009 2010 2011 CAGR Assets Cash and short term deposits 429 501 1,025 788 1,188 1,344 1,501 20% Loans and advances 879 1,167 1,551 2,352 3,639 4,091 4,301 25% Investment 1,483 2,394 2,954 3,397 3,838 3,803 4,669 1
Slide 48: Group Net Interest Margin
Group Net Interest Margin The Leading Bank in the South Pacific 48
Slide 49: Group Cost to Income Ratio
Group Cost to Income Ratio The Leading Bank in the South Pacific 49
Slide 50: Group Cost to Income Ratio
Group Cost to Income Ratio • The cost to income ratio is within the 50-60% range of the Australian regional banks • It is equal to or better than small Asian regional banks, and similar banks in Africa and the Caribbean. • The cost to income ratio could be lower: – By 5-6% if rates on non-lending in
Slide 51: Group Non-Interest Income
Group Non-Interest Income The Leading Bank in the South Pacific 51
Slide 52: BSP PNG Operating Non Lending Losses
BSP PNG Operating Non Lending Losses • Non Lending Loss Trends 2009 - 2011 Nadi Floods, Fiji, Mar 2012 The Leading Bank in the South Pacific 52
Slide 53: BSP PNG Operating Non Lending Losses
BSP PNG Operating Non Lending Losses BSP PNG Operating Non Lending Loss Trend (2009 to K18.0 mln 2012) K4.9 mln K3.0 mln K0.3 mln 2009 2010 2011 2012 YTD The Leading Bank in the South Pacific 53
Slide 54: BSP PNG Operating Non Lending Losses
BSP PNG Operating Non Lending Losses 2011 non lending loss (by Strategic Business Unit) K3,500,390 • Majority of the losses were incurred in Network (71%) and (71%) Operations (17%). K825,110 (17%) K204,974 K130,220 K68,093 K67,745 K63,169 K26,933 K22,255 (4%) (3%) (1%) (1%) (1%) (1%) (>1%) Network
Slide 55: Branches and ATMs
Branches and ATMs • New branches were added in PNG at • The ATM roll out is continually reviewed Vision City, Porgera and Motukea • Top ups now includes Easi-Pay in PNG • There are also 10 Rural Branches in • Deposit ATMs are part of the future PNG, and 36 in Fiji strategy • There are 10 cash agents
Slide 56: Customers
Customers • Significant increase in PNG numbers through Green Gold • A major clean up of old and dormant accounts in Fiji in Dec • Steady growth in Solomon Islands The Leading Bank in the South Pacific 56
Slide 57: PNG ATM Growth 2009 to 2012
PNG ATM Growth 2009 to 2012 The Leading Bank in the South Pacific 57
Slide 58: PNG Eftpos Growth 2009 to 2012
PNG Eftpos Growth 2009 to 2012 The Leading Bank in the South Pacific 58
Slide 59: PNG Mobile Banking Growth 2009 to 2012
PNG Mobile Banking Growth 2009 to 2012 The Leading Bank in the South Pacific 59
Slide 60: Internet Banking Growth 2009 to 2012
Internet Banking Growth 2009 to 2012 The Leading Bank in the South Pacific 60
Slide 61: Branch Transactions - Stable 2009 to 2012
Branch Transactions - Stable 2009 to 2012 The Leading Bank in the South Pacific 61
Slide 62: Account Growth 2009 to 2012
Account Growth 2009 to 2012 • “Green Gold” added 134,000 New Account in a 5 month period • “Largest” New Customer Acquisition Initiative ever in the history of PNGBC/BSP • PNG: 1 Million target by 2012 • GROUP:1.4 Million Target by 2012 The Leading Bank in the South Pacific 62
Slide 63: Customer first
customer first ❶ “Transformation” of our processes, systems, procedures, training will continue……. ❶ However our “main focus” from 2012 & beyond will be on “significantly” improving our Customer Service Quality. ❶ BSP Needs “more” new customers ❶ Need to sell more “Products & Services” ❶ Must contin
Slide 64: Customer first
customer first ❶ We must serve our existing customers Better. “More Efficiently, more Effectively & more Friendly” ❶ BSP “without doubt” is the Leading Bank in PNG & the South Pacific. ❶ More Branches, More Agencies, More ATM’s & EFTPOS. ❶ More Staff in our branches than our competition. ❶ More Inco
Slide 65: Economic Outlook
Economic Outlook
Slide 66: Economic outlook – Global
Economic outlook – Global The global recovery is continuing. It remains two-speed though, with the world economy projected to grow by ~ 4% and the emerging market economies by ~ 7% The Leading Bank in the South Pacific 66
Slide 67: Economic outlook - PNG
Economic outlook - PNG • Growth projections currently in the 3%-5% range; LNG long term impacts are not factored in to these forecasts. • Short-medium term inflation forecasts are in the 5-8% range. The Leading Bank in the South Pacific 67
Slide 68: Market Share
Market Share 5(0 ° Y - f r fig ES im WE ARE FORSTA
Slide 69: Market Share
Market Share In the biggest market: • BSP is holding its position in loans and deposits • There is scope to gain more competitive FX market share The Leading Bank in the South Pacific 69
Slide 70: Pacific Market Share
Pacific Market Share • Across its Pacific markets, the overall market share is approximately 38% in loans and 47% in deposits The Leading Bank in the South Pacific 70
Slide 71: Credit Quality
environment - a consideration in everything we do : 3 Credit Quality y
Slide 72: Credit Quality
Credit Quality • Total 3.91% remains relatively stable • Fiji effect has been largely addressed • Trend reflects loan portfolio trend and evolving risk profile in a growth region The Leading Bank in the South Pacific 72
Slide 73: Credit Quality
Credit Quality • Lending is dominated by Wholesale or Corporate • Remains diversified across sectors • A slight shift in 2011, from private households to Commerce & other businesses and transport & communication The Leading Bank in the South Pacific 73
Slide 74: 2011 Full Year Results
2011 Full Year Results
Slide 75: 2011 Highlights
2011 Highlights The Leading Bank in the South Pacific 75
Slide 76: Overview of 2011 Results
Overview of 2011 Results Growth 2010 2011 2011 vs. 2010 Profit after tax K 283.1m K 355.9m 25.7% Revenue K 954.9m K 1,182.3m 23.8% Expenses K 522.8m K 688.6m 31.7% Bad and doubtful debt expense K 20.6m K 25.2m 22.6% Earnings per Share 59.0 toea 75.1 toea 27.3% Customer deposits K7.984bn K9.366bn 17.
Slide 77: Profit Before Tax
Profit Before Tax • Continuing strong growth trend, featuring strong non interest income • High historical long term growth rate • 16% Increase from last year The Leading Bank in the South Pacific 77
Slide 78: Total Assets
Total Assets • Liquidity growth conditions prevail in Pacific markets. • Pressure on rates • But credit growth slower • Challenge is to find assets with good returns at acceptable risk. • 17% Increase from last year to K11.7 billion • 21% long term growth The Leading Bank in the South Pacific 78
Slide 79: Loans & Deposits
Loans & Deposits • Liquidity growth conditions prevail in Pacific markets. • credit growth slower • 17.5% Increase in deposits, lower for loans • 21% long term growth rate for deposits; 25% for loans The Leading Bank in the South Pacific 79
Slide 80: Capital Management and Liquidity
Capital Management and Liquidity
Slide 81: Capital management
Capital management • The Group has sufficient capital • Sufficient to support additional asset growth • Can support capital investments for profit generation • Can absorb a significant one-off risk/loss contingency The Leading Bank in the South Pacific 81
Slide 82: Funding
WE ARE FOR FAMILY Funding
Slide 83: Funding
Funding • Funding is dominated by Wholesale, but a shift towards Retail savings is starting • The portfolio duration is short The Leading Bank in the South Pacific 83
Slide 84: Profitability and Key Ratios
Profitability and Key Ratios
Slide 85: Key Prudential Ratios
Key Prudential Ratios • Key prudential requirements exceeded • Capital Adequacy and leverage positions are well above regulatory minimums The Leading Bank in the South Pacific 85
Slide 86: Earnings per share & return on equity
Earnings per share & return on equity • Very high long run average ROE still maintained (30%) • Consistent growth in earnings per share; 27% change from 2010, to 75 toea in 2011 The Leading Bank in the South Pacific 86
Slide 87: Cost to Income Ratio
Cost to Income Ratio • Globally within peer range • Transformation costs impact of 2-3% will reduce over next few years • 5-6% impact of reduced interest rates on investments since 2009 • Fiji restructure & operations: has a 80- 90% cost to income ratio • PNG CRR increases have also removed revenue
Slide 88: Non Interest Income
Non Interest Income • Strategic shift to make income streams more resilient • Driven by • automated or electronic transactions • growth in customer base & transaction volumes • FX income market share still needs to be improved The Leading Bank in the South Pacific 88
Slide 89: Net Interest Margin
Net Interest Margin • Margin has declined from 2008. • Lower interest rates on investments • Competitive pricing on loans • Conservative approach to sectoral risks The Leading Bank in the South Pacific 89
Slide 90: Comparison of Key Ratios
Comparison of Key Ratios WEsARE FOR MANY ARE FOR ONE
Slide 91: Comparative Performance
Comparative Performance • Well ahead on ROE • Capital Adequacy position is conservative BSP Aust. majors Aust. regionals • Net interest margins differential is premium for risk • Cost to income ratio is within range The Leading Bank in the South Pacific 91
Slide 92: Dividend and Shares
EN Dividend and Shares
Slide 93: Share price performance
Share price performance The Leading Bank in the South Pacific 93
Slide 94: Share price Performance
Share price Performance The Leading Bank in the South Pacific 94
Slide 95: Dividends toea per Share
Dividends toea per Share The Leading Bank in the South Pacific 95
Slide 96: Conclusion
P acs) Conclusion Community
Slide 97: Conclusion
Conclusion • 2011 was an extremely successful year: The Leading Bank in the South Pacific 97
Slide 98: Conclusion
Conclusion • 2011 was an extremely successful year – Before Tax Profits of K475 mln – Net Income exceeds K1 Billion – Balance Sheet now exceeds K11 Billion – Continued positive Loan & Deposit Growth – Very strong Capital & Liquidity position – Significant expansion of our Electronic Banking Platform
Slide 99: Conclusion
Conclusion • BSP Rural a rural agency banking network using Electronic Banking Solutions is currently 14 with 20 new BSP Rural Agencies by July 31st. • Piloted “State of Art” Electronic Banking Technologies in late 2011 which will revolutionize Retail & Rural Banking in PNG & the Pacific. • Green Go
Slide 100: Conclusion
Conclusion • BSP’s “Social & Community” Projects have achieved major milestones: – “Go Green" Environmental Initiative (international recognition). – BSP School Kriket won “ 2011 ICC Global School Cricket Award” (95 countries. 116,000 children) – 70 local community projects carried out in PNG, SI &
Slide 101: Conclusion
Conclusion “BSP’s Vision is to be the Leading Bank in the South Pacific, we are achieving our vision, but there is still much work to do!” Thank You The Leading Bank in the South Pacific 101
Slide 102: BSP Group Investor Presentation 2012 Qtr 1 Results
BSP Group Investor Presentation 2012 Qtr 1 Results Annual General Meeting, May 2012 The Leading Bank in the South Pacific 102
Slide 103: Presentation content
Presentation content 2012 Qtr 1 Financial Results and Operations Johnson Kalo, Group Deputy CEO/CFO The Leading Bank in the South Pacific 103
Slide 104: Financial Results
Financial Results Qtr 1 2012 Income & Expense ACTUAL LAST YR Profit after tax K98.01m K75.84m PNG K93.64m Overseas K4.37m Revenue K331.86m K259.05m PNG K259.99m Overseas K71.87m Expenses K192.62m K150.71m PNG K125.91m Overseas K66.71m Cost to income 58% 58% Non Interest Income to total income 50% 45
Slide 105: Financial Results
Financial Results Qtr 1 2012 Balance Sheet ACTUAL LAST YR Loans & Advances K4.4b K4.1b PNG K3.4b Overseas K1.0b Other Interest Earning Investments K4.9b K4.0b PNG K4.7b Overseas K0.2b Customer Deposits K10.2b K8.6b PNG K8.7b Overseas K1.5b Net Assets K1.4b K1.2b PNG K1.2b Overseas K0.2b Total Assets
Slide 106: Capital Adequacy, Funding, Credit Quality
Capital Adequacy, Funding, Credit Quality • Wholesale continues to dominate at 78%. • Retail has increased to 24% of total funding. • Demand deposit increase by 0.93% to K8.4b (82%). • Term deposits increase to K1.8b (18%) • Capital adequacy remains above the BPNG requirement of 12%. • Credit qualit
Slide 107: Share price performance
Share price performance The share price is a fair reflection of the value of the company. The second K40m buyback is in progress. The Leading Bank in the South Pacific 107
Slide 108: Market Share
Market Share • PNG deposit growth increased by 1.23%. PNG has 99% of total group deposits. • PNG lending growth reduced by 0.81%. PNG 82% of total group lending. • Fiji improved deposit growth by 9%, while lending remained stable. • SI improved deposit growth by 3% and lending growth by 1%. The Lead
Slide 109: Customers, EFTPOS, ATMs, Branches, SMS
Customers, EFTPOS, ATMs, Branches, SMS • The implementation of BSP strategies are now delivering increases in selected channels. • Eftpos, ATMs and SMS channels have grown significantly from last year. • Total customer numbers continue to increase. The Leading Bank in the South Pacific 109