BSP Financial Group Ltd. · ASX:BFL
BSP Financial — H1 2020 Earnings Presentation
20 slides from BSP Financial's earnings presentation, 2020
Slide 1: Investor Presentation: 2020 Half Year Results
INVESTOR PRESENTATION 2020 Half Year Results Author Robin Fleming – Group CEO
Slide 2: South Pacific market leader
South Pacific market leader We continue to consolidate across the Pacific K13.2b 119 branches and sub-branches In lending Largest network K19.5b K1.1m [1H-20] In deposits Sponsorships and donations K117m ~ 2.5m Interim 2020 dividend Active customer accounts K5.6b > 12m per month Market capitalisatio
Slide 3: 1H-2020 results
1H-2020 results Sound financial performance in difficult economic conditions across the region 1H-20 1H-20 vs 1H-19 ● Profit [NPAT, Km] 382 - 12.2% ● Total assets [Kb] 24.9 + 6.4% ● Cost-to-income ratio [%] 38.5 0bps ● Capital adequacy ratio [%] 21.3 + 40bps ● Earnings per share [toea] 81.7 -12.2% ●
Slide 4: Group NPAT
Group NPAT NPAT decreased by K53m, or 12.2% ... due largely to an increase in impairments, driven by COVID-19 impacts and a 100bps reduction in BSP’s PNG Indicator Lending Rate INCOME [Km] OPERATING LOAN IMPAIRMENT NPAT [Km] EXPENSE [Km] EXPENSE [Km] -12% -1.0% +122% 1,067 1,071 1,054 435 111 435 41
Slide 5: NPAT by business
NPAT by business All of our businesses were negatively impacted by COVID-19 related contractions in economic activity PNG BANK [Km] OFFSHORE BRANCHES [Km] SUBSIDIARIES [Km] - K36m - K13m - K4m -10.8% -15.9% -20.4% 328 333 80 23 297 19 71 18 67 1H-18 1H-19 1H-20 1H-18 1H-19 1H-20 1H-18 1H-19 1H-20 P5
Slide 6: Financial metrics
Financial metrics Economic conditions constrained loan growth across all countries … positive deposit growth in 1H-20 LOANS [Kb] TOTAL ASSETS [Kb] + 0.8% + 6.4% 13.1 13.2 24.9 CAGR = 2.9% 23.4 12.1 23.0 CAGR =2.7% 1H-18 1H-19 1H-20 1H-18 1H-19 1H-20 DEPOSITS [Kb] DEPOSIT MIX [Kb] + 7.1% 4.1 4.5 3.7
Slide 7: Key ratios
Key ratios BSP Group has maintained sound results across all key performance ratios, giving regard to difficult macroeconomic conditions COST TO INCOME [%] ROE & ROA [%] - 20bps - 170bps 41.0 30.8 3.7 Flat 30.2 3.6 38.5 38.5 3.5 28.5 1H-18 1H-19 1H-20 1H-18 1H-19 1H-20 1H-18 1H-19 1H-20 CAPITAL ADEQ
Slide 8: Income stream trends
Income stream trends An increase in volume related interest income was offset by a decline in fee, FX and other income … resulting in reduced income levels Interest – Interest – Fee/ FX Other Total KEY DRIVERS loans investments commission income income income ● Interest from loans – YOY: 4.2% (3.9%)
Slide 9: Net interest margin trends
Net interest margin trends BSP PNG’s net interest margin has been impacted as a consequence of BSP reducing its ILR by 100bps on 1 April 2020 PNG – NET INTEREST MARGIN TRENDS [%] 7.6% 7.6% 7.5% 7.3% 7.4% 7.4% 7.2% 7.1% 7.0% 6.9% 6.8% 6.8% Jan Feb Mar Apr May Jun 2019 NIM 2020 NIM P9
Slide 10: Expenditure trends
Expenditure trends Prudent cost management in-light of market conditions. Prospect of exchange rate movements impacting on 2H-20 offshore computing hardware and service costs Staff Admin Premises/ Computing NLL Total costs costs equipment cost operating KEY DRIVERS costs ● Staff Costs – salaries , t
Slide 11: Market position
Market position BSP is #1 in lending in 5 countries … and #1 in deposits in 4 countries. Our loan and deposit portfolios are predominantly PNG domiciled. LOANS MARKET SHARE [1H-20, %] DEPOSIT MARKET SHARE [1H-20, %] Rank Rank PNG 66% #1 PNG 62% #1 Solomon Islands 54% #1 Solomon Islands 53% #1 Tonga
Slide 12: Channel growth trends
Channel growth trends Just over three-quarters [76%] of total transactions were via digital channels in 1H-20. Average transactions per months reduced due to economic conditions and COVID-19 international and domestic travel restrictions TRANSACTION MIX BY TRANSACTIONS PER CHANNEL MONTH BY CHANNEL [
Slide 13: 2020 interim dividend
2020 interim dividend Interim dividend decrease to 25 toea … giving due regard to ongoing uncertainty relating to COVID-19 impacts on operating performance for the 2H-20. 2019 2020 PLANNED PROCESSING Interim Interim YoY ∆ DATES ● Ex-date: 01-Oct-20 = -34% ● Record date: 07-Oct-20 K0.38 Vs K0.25 ● Pa
Slide 14: Share price
Share price Annualised dividend yield of 10.1%, based on K12.00 share price … below recent prior year ranges of between 11% and 12% SHARE PRICE MOVEMENTS [JUN-19 TO JUN-20] 12.07 12.08 12.01 12.00 12.00 11.76 11.77 11.81 K5.6b market Cap 11.63 11.63 11.65 Share Price 11.36 K12.00 30-Jun-20 11.07 1,2
Slide 15: Q2-2020 results
MISSF Q2-2020 results
Slide 16: Group NPAT [Q2-20]
Group NPAT [Q2-20] Revenue contracted in Q2-20, as business conditions became more difficult with international and domestic travel restrictions. Cost management initiatives did not offset COVID-19 impairment expenses … resulting in NPAT declining INCOME [Km] OPERATING LOAN IMPAIRMENT NPAT [Km] EXPE
Slide 17: Lending interest income [Q2-20]
Lending interest income [Q2-20] The ILR interest rate reduction [100bps] has come at some cost to BSP in PNG … ~ K7m per month PNG – NET LENDING INTEREST INCOME [Km] - 10% 219.5 213.2 207.9 198.6 Q1-19 Q2-19 Q1-20 Q2-20 P17
Slide 18: Provisions to loans [Q2-20]
Provisions to loans [Q2-20] BSP Group’s provisioning levels remain above IFRS9 requirements with more scrutiny of provisions for business directly affected by COVID-19 PROVISIONS TO LOANS BSP Group [Provisions to loans] BSP Group [Under IFRS9] 5.7 4.6% 4.7 4.7 6.1% 4.4% 5.8% 4.2% 5.4% Q2-18 Q2-19 Q2
Slide 19: Capital adequacy trends [Q2-20]
Capital adequacy trends [Q2-20] All of BSP’s banking operations meet their prudential capital requirements CAPITAL ADEQUACY [%] GROUP 23.8 20.9 21.3 29.2 28.3 16.5 16.6 4.2 26.8 15.1 6.2 5.3 5.4 3.5 7.7 7.6 15.0 4.7 4.6 12.0 12.0 T2 14.7 19.6 16.0 T2 19.1 23.8 20.7 T2 10.4 13.0 12.0 T1 T1 T1 Q2-19 Q
Slide 20: Conclusions
Conclusions ● Sound profitability levels maintained, despite COVID-19 impacts … with Group NPAT of K382m in 1H-20 ● Economic conditions constrained loan growth across all countries … positive deposit growth in 1H-20 ● BSP Group has maintained positive results in key performance ratios ̶ Cost to inco