BSP Financial Group Ltd. · ASX:BFL
BSP Financial — FY2019 Earnings Presentation
19 slides from BSP Financial's earnings presentation, February 2020
Slide 1: Shareholder Presentation: 2019 Full Year Results
SHAREHOLDER PRESENTATION 2019 Full Year Results Author Robin Fleming – Group CEO
Slide 2: South Pacific market leader
South Pacific market leader We continue to grow and build scale ... in pursuit of sustainable market leadership K13.2b 119 branches and sub-branches In lending Largest network K19.3b K5.5m In deposits Sponsorships and donations K673m ~ 2.5m Dividends paid Active customer accounts K5.6b > 12m per mon
Slide 3: Portfolio growth
Portfolio growth BSP’s geographical and income diversification strategy continues to progress … with BSP Finance Lao entering our portfolio. BSP is the only majority owned PNG bank operating in both the domestic and international markets. BANKING ASSET FINANCE LIFE INSURANCE FUNDS MANAGEMENT & CORPO
Slide 4: 2019 results
2019 results Record profit + strong capital position + stable dividend 2019 2019 vs 2018 ● Profit [NPAT, Km] 890 + 5.5% ● Net assets [Kb] 24.5 + 6.2% ● Cost-to-income ratio [%] 37.7 - 323bps ● Capital adequacy ratio [%] 22.0 - 91bps ● Earnings per share [toea] 191 + 5.5% ● Dividend per share [toea]
Slide 5: Group NPAT
Group NPAT NPAT grew by K46m [5.5%] ... despite economic headwinds and uncertainties INCOME [Km] OPERATING LOAN IMPAIRMENT NPAT [Km] EXPENSE [Km] EXPENSE [Km] Flat (7.7%) + 5.5% + 20% 2,166 2,171 887 890 819 99 844 90 691 82 1,547 532 ● Interest income flat, despite ● Prudent cost management in- ● G
Slide 6: NPAT by division
NPAT by division All of our divisions made a positive contribution to Group NPAT … with offshore branch profit growth approaching PNG levels PNG BANK [Km] OFFSHORE BRANCHES [Km] SUBSIDIARIES [Km] + K19m + K20m + 12.5% + K7m + 3.1% + 16.4% 170 668 151 648 48 41 458 67 5 2015 2018 2019 2015 2018 2019
Slide 7: NPAT contribution mix
NPAT contribution mix Our diversification strategy is working ... with growing offshore branch and subsidiary contributions NPAT CONTRIBUTION MIX OFFSHORE BRANCH AND SUBSIDIARY NPAT 2019 [%] CONTRIBUTION [%] 0.9% 4.9% 5.4% BSP Fiji 38% 13% 18% BSP Solomon Islands 18% 19% BSP Samoa 9% BSP Tonga 8% BS
Slide 8: Financial metrics
Financial metrics Balance sheet indicators illustrate continued growth in 2019 LOANS [Kb] TOTAL ASSETS [Kb] + 5.3% + 6.2% 12.5 13.2 23.1 24.5 8.6 18.2 CAGR = 11.3% CAGR = 7.7% 2015 2018 2019 2015 2018 2019 DEPOSITS [Kb] DEPOSIT MIX [Kb] + 6.0% 3.0 4.3 4.0 CAGR = 7.5% 18.2 19.3 14.6 11.6 13.9 15.3 CA
Slide 9: Key ratios
Key ratios BSP Group has maintained strong results across all key performance ratios COST TO INCOME [%] ROE & ROA [%] (100bps) Flat 44.7 (323bps) 3.7 3.7 30.7 41.0 29.7 37.7 27.8 3.1 2015 2018 2019 2015 2018 2019 2015 2018 2019 CAPITAL ADEQUACY [%] PROVISIONS TO LOANS / NPL TO LOANS [%] (90bps) 4.9
Slide 10: Income stream trends
Income stream trends Total income was flat … given fee reduction initiatives and movement of interest bearing investments Net interest Fee/ FX Other Total KEY DRIVERS income commission income income income ● Interest income – loans, T-bills/ YOY: 0.8% 0.2% 4.4% (24.3%) 0.3% I. Stock CAGR 4.4% 1.5% 9
Slide 11: Expenditure trends
Expenditure trends Prudent cost management in-light of market conditions Staff Admin Premises/ Computing NLL Total costs costs equipment cost operating KEY DRIVERS costs ● Staff Costs – salaries , training, additional staff, staff rentals YOY: 2.9% (19.9%) (7.0%) (6.6%) (93.0%) (7.7%) ● Admin Costs
Slide 12: Market strength
Market strength BSP’s 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 [2019, %] DEPOSIT MARKET SHARE [2019, %] Rank Rank PNG 63% #1 PNG 62% #1 Solomon Islands 55% #1 Solomon Islands 53% #1 Tonga
Slide 13: Channel investment
Channel investment Continued channel investment to improve customer service levels across the BSP Group Total Branches 81 43 17 8 5 2 4 2 48 46 0 0 0 0 0 2 Sub Branches ATMs 548 318 121 32 24 13 27 13 EFTPOS 12,115 8,045 2,064 321 424 439 450 372 EFTPOS 557 358 44 52 36 8 32 27 Agent P13
Slide 14: Channel growth trends
Channel growth trends Almost three-quarters [73%] of total transactions were via digital channels in 2019. We average >10m digital transactions per month … most [64%] via mobile phones ANNUAL TRANSACTION MIX BY TRANSACTIONS PER MONTH BY CHANNEL CHANNEL [million] 10% 12% 10% 1.4 1.4 0.9 59% 71% 73% 1
Slide 15: Digital initiatives
Digital initiatives BSP was the first PNG bank to pioneer multichannel experiences, with ATMs, EFTPOS and debit Cards introduced in 1995 … we will continue innovate and pioneer new services to improve customer service levels 2020 1995 2010 2017 ● Development and ATM + EFTPOS + Mobile Top Up on EMV C
Slide 16: Social license to operate
Social license to operate BSP is a trusted brand across the South Pacific. We understand that our communities and many stakeholders rely on BSP’s activities … and we must continue to meet your increasing standards COMMUNITY CUSTOMER SERVICE FAIR SHARE [Km] RETAIL BANK Expectations Exceeded One of PN
Slide 17: Share price
Share price Dividend yield of 12%, based on K12.00 share price … and market capitalization of K5.6b SHARE PRICE MOVEMENTS DEC-18 TO DEC-19 12.00 11.82 1,400 1,260 K5.6b 1,200 11.50 market Cap 11.65 11.76 11.77 11.63 11.53 967 11.38 1,000 Share Price 11.00 K12.00 11.09 800 11.05 28-FEB-19 10.97 600 1
Slide 18: BSP Group strategy focus
BSP Group strategy focus Key Board decisions made at the 2019 strategy offsite are summarised below ● Advance digital strategy, initiatives and capability ● Develop robust response plan in face of external risks ● Bed down the Lao JV and transition to BSPF operating model ● Continue examining market
Slide 19: Conclusions
Conclusions ● Record Group NPAT of K890m in 2019, however growth slowed to 5.5% ● Total Assets up 6.2% and Loans up 5.6% ● Cost to income reduced to 37.7% from 41.0% in 2018 ● Capital adequacy steady at 22.0%, still well above BPNG requirement of 12% ● Loan provision increased to 4.8%, NPL up to 1.9