BSP Financial Group Ltd. · ASX:BFL

BSP Financial — Shareholder Meeting (May 2013)

113 slides from BSP Financial's shareholder meeting presentation, May 2013

1. Slide 1: Presentation to Shareholders

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2. Slide 2: Presentation Overview

   3UHVHQWDWLRQ2YHUYLHZ Page Subject Presenter 4 The BSP Journey: Vision & Strategy Ian B Clyne, Group CEO 10 2012 Performance & operations Ian B Clyne, Group CEO 21 Non Lending Loss Trends Ian B Clyne, Group CEO 25 Channel Performance 2009-2013 Ian B Clyne, Group CEO 33 Group Income Analysis Ian B Cly

3. Slide 3: Ian B Clyne, Group Chief Executive Officer

   Ian B Clyne ,DQ%&O\QH ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ Group*URXS&KLHI ([HFXWLYH2IILFHU Chief Executive Officer

4. Slide 4: The Journey will continue

   7+(-2851(< ZLOO´FRQWLQXHµ 2009 - “The need to Change” 2010 - “Transformation” Customer segmentation 2011 - “Leading the Way” Strategic Map 2012 - “I Care” Customer Service & Acquisition 2013 - “Grow Together” 4 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

5. Slide 5: Vision and Strategic Imperatives

   Vision “To be the Leading Bank in PNG and the South Pacific”. Strategic Imperatives “Maintain, Develop, and foster “customer sales” through the provision of high quality product and service delivery, that will create value for BSP, our Customers, our Shareholders, and our Staff.” 5 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝ

6. Slide 6: Strategic Imperatives (continued)

   6WUDWHJLF,PSHUDWLYHV FRQWLQXHG “Improved customer Sales & Service will be delivered through market leadership in innovation, technological advances and the modernization of all our systems and procedures, and the continued “simplification” & automation of all our operational & support processes. “Ap

7. Slide 7: BSP's Strategic Map

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8. Slide 8: Segmentation: Corporate

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9. Slide 9: Segmentation: Retail

   6(*0(17$7,21 6(*0(17$7,21 5(7$,/ ,ŝŐŚ BSP Invitation Invitation only sĂůƵĞ First only ^ĞŐŵĞŶƚ BSPFirst BSP First Potential Potential BSP Priority ŽƌĞƵƐƚŽŵĞƌ Upscale Yout ^ĞŐŵĞŶƚ h& Youth & Upscale Stud Students ents ŽƐƚŽŶƚƌŽů BSP Kundu ^ĞŐŵĞŶƚ ‘Smart’ Banking / Light ‘Smart’ BSP Rural Banking/Light

10. Slide 10: Achievements and Financial Performance

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11. Slide 11: Group Profit Before Tax

    *5283352),7%()25(7$; 600 500 545 475 Kina, Millions 400 411 378 300 329 284 200 165 100 142 0 2005 2006 2007 2008 2009 2010 2011 2012 11 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

12. Slide 12: Group Profit After Tax

    *5283352),7$)7(57$; 450 400 408 350 356 Kina, Millions 300 250 283 257 200 228 150 191 100 99 112 50 0 2005 2006 2007 2008 2009 2010 2011 2012 12 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

13. Slide 13: Profit & Loss Trend

    *5283352),7 /266 75(1'6 PROFIT & LOSS TREND CAGR, last 5 (Millions of Kina) 2006 2007 2008 2009 2010 2011 2012 yrs Income Net interest income 210 277 377 474 544 597 682 13% Foreign exchange income 65 116 127 104 139 193 224 12% Fee and other income 70 86 117 147 272 392 458 31% Total income 344 479

14. Slide 14: Group Total Assets

    *5283727$/$66(76 14 13.29 12 11.68 10.03 10 9.4 Kina, Billions 8 6.81 5.82 6 4.33 4 2.95 2 0 2005 2006 2007 2008 2009 2010 2011 2012 14 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

15. Slide 15: Group Deposits and Loans

    *5283'(326,76 /2$16 15 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

16. Slide 16: Group Balance Sheet Trends

    *5283%$/$1&(6+((775(1'6 BALANCE SHEET CAGR, last 5 (Millions of Kina) 2006 2007 2008 2009 2010 2011 2012 2011 yrs Assets Cash and short term deposits 501 1,025 788 1,188 1,344 1,501 2,134 22% Loans and advances 1,167 1,551 2,352 3,639 4,091 4,301 4,805 15% Investment 2,394 2,954 3,397 3,838 3,803 4,

17. Slide 17: Group Interest Income

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18. Slide 18: Cost to Income Ratio - BSP Group

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19. Slide 19: Cost to Income Ratio - PNG Banks

    &RVWWRLQFRPHUDWLR 31*%$1. 19 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

20. Slide 20: Non-Interest Income

    121,17(5(67,1&20( ϲϬ͘Ϭй ϱϬ͘Ϭй ϰϵ͘ϱй ϱϬ͘Ϭй ϰϬ͘Ϭй ϰϯ͘Ϭй ϰϮ͘Ϯй ϯϵ͘ϭй ϯϵ͘ϯй ϯϬ͘Ϭй ϯϰ͘ϳй ϮϬ͘Ϭй ϭϬ͘Ϭй Ϭ͘Ϭй ϮϬϬϲ ϮϬϬϳ ϮϬϬϴ ϮϬϬϵ ϮϬϭϬ ϮϬϭϭ ϮϬϭϮ EŽŶ/ŶƚĞƌĞƐƚ/ŶĐŽŵĞƚŽdŽƚĂů/ŶĐŽŵĞ 20 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

21. Slide 21: Non Lending Loss Trends

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22. Slide 22: Non Lending Loss Trend 2010 to YTD 2013

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23. Slide 23: 2012 Non Lending Loss by Strategic Business Unit

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24. Slide 24: 2012 Non Lending Loss by Loss Type

    ;< Ζŵ ů Ŷ Ϳ &ƌĂ ƵĚ <Ϭ <Ϯ <ϰ <ϲ <ϴ Θ & Ž ƌŐĞ ƌŝ Ğ Ɛ <ϲ͘ϭϭŵůŶ KĨ Ĩŝ Đ Ğ dĞ ƌƌ Ž ůů Ğ ƌƐ ƌ Ɛ ĞĨ ŝ Đ ŝĞ d ŶĐ D ŝ ĞƐ Ă ƐŚ <Ϭ͘ϳϲŵůŶ <Ϭ͘ϱϱŵůŶ Ğ Wƌ ĨŝĐ Žŵ ŝ ĞŶ Ž ƚ ŝŽ Đŝ Ğ ŶĂ Ɛ ů ŝƚ Ğ ŵƐ t ͬK ^Ƶ ĨĨƐ ŶĚ & ƌLJ dW tƌ ŝ ƚĞ ϮϬϭϮEKE>E/E'>K^^;ďLJ>ŽƐƐdLJƉĞͿ K^ Ž ĨĨ Ğ Ĩŝ Đ Ɛ ŝ ĞŶ ĐLJ Đ ĐŽ ƵŶ ƚ ZŽ ďď Ğƌ ŝĞ Ɛ <Ϭ͘ϭϳŵůŶ <Ϭ͘

25. Slide 25: Channel Performance 2009 to 2013

    &KDQQHO3HUIRUPDQFH WR 25 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

26. Slide 26: BSP must continue to expand our service channels

    %63PXVWFRQWLQXHWRH[SDQG RXUVHUYLFHFKDQQHOVLQ RXUVHUYLFHFKDQQHOVLQ %63*URXS%DQNLQJ6HUYLFHVDVDW$SULO %UDQFKHV $70·V ()7326 %63 $*(176 585$/ 5XUDO 2XWOHWV 31* ),-, 6, * PNG – 7,451 merchants 26 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

27. Slide 27: ATM Growth

    $70*52:7+72 ϯ͕ϯϬϬ͕ϬϬϬ ϯϬϬ ϯ͕ϭϬϬ͕ϬϬϬ No. Transactions No. ATMs ϮϱϬ Ϯ͕ϵϬϬ͕ϬϬϬ Ϯ͕ϳϬϬ͕ϬϬϬ ϮϬϬ Transactions Ϯ͕ϱϬϬ͕ϬϬϬ Ϯ͕ϯϬϬ͕ϬϬϬ ϭϱϬ Ϯ͕ϭϬϬ͕ϬϬϬ ϭϬϬ ϭ͕ϵϬϬ͕ϬϬϬ ϭ͕ϳϬϬ͕ϬϬϬ ϱϬ ϭ͕ϱϬϬ͕ϬϬϬ ϭ͕ϯϬϬ͕ϬϬϬ Ϭ :ĂŶͲϬϵ DĂƌͲϬϵ DĂLJͲϬϵ :ƵůͲϬϵ ^ĞƉͲϬϵ EŽǀͲϬϵ :ĂŶͲϭϬ DĂƌͲϭϬ DĂLJͲϭϬ :ƵůͲϭϬ ^ĞƉͲϭϬ EŽǀͲϭϬ :ĂŶͲϭϭ DĂƌͲϭϭ DĂLJͲϭϭ :ƵůͲϭϭ ^Ğ

28. Slide 28: EFTPOS Growth

    ()7326 *52:7+² *52:7+² ϭ͕ϲϬϬ͕ϬϬϬ ϭϬ͕ϬϬϬ EŽ͘dƌĂŶƐĂĐƚŝŽŶƐ EŽ͘dĞƌŵŝŶĂůƐ ϵ͕ϬϬϬ ϭ͕ϰϬϬ͕ϬϬϬ ϴ͕ϬϬϬ ϭ͕ϮϬϬ͕ϬϬϬ ϳ͕ϬϬϬ EŽ͘&dWK^dĞƌŵŝŶĂůƐ ϭ͕ϬϬϬ͕ϬϬϬ dƌĂŶƐĂĐƚŝŽŶƐ ϲ͕ϬϬϬ ϴϬϬ͕ϬϬϬ ϱ͕ϬϬϬ ϰ͕ϬϬϬ ϲϬϬ͕ϬϬϬ ϯ͕ϬϬϬ ϰϬϬ͕ϬϬϬ Ϯ͕ϬϬϬ ϮϬϬ͕ϬϬϬ ϭ͕ϬϬϬ Ϭ Ϭ 28 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

29. Slide 29: Mobile Banking Growth

    02%,/(%$1.,1**52:7+ 02%,/(%$1.,1**52:7+ ϰϬϬ͕ϬϬϬ ϭ͕ϰϬϬ͕ϬϬϬ ZĞŐŝƐƚƌĂƚŝŽŶƐ ϯϱϬ͕ϬϬϬ dƌĂŶƐĂĐƚŝŽŶƐ ϭ͕ϮϬϬ͕ϬϬϬ ϯϬϬ͕ϬϬϬ ϭ͕ϬϬϬ͕ϬϬϬ DŽďŝůĞƌĞŐŝƐƚƌĂƚŝŽŶƐ dƌĂŶƐĂĐƚŝŽŶƐ ϮϱϬ͕ϬϬϬ ϴϬϬ͕ϬϬϬ ϮϬϬ͕ϬϬϬ ϲϬϬ͕ϬϬϬ ϭϱϬ͕ϬϬϬ ϰϬϬ͕ϬϬϬ ϭϬϬ͕ϬϬϬ ϱϬ͕ϬϬϬ ϮϬϬ͕ϬϬϬ Ϭ Ϭ :ĂŶͲϬϵ ƉƌͲϬϵ :ƵůͲϬϵ KĐƚͲϬϵ :ĂŶͲϭϬ ƉƌͲϭϬ :ƵůͲϭϬ KĐƚͲϭϬ :ĂŶͲϭϭ ƉƌͲϭϭ :ƵůͲ

30. Slide 30: Internet Banking Growth

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31. Slide 31: Branch Transactions

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32. Slide 32: Account Growth 2009 to 2012

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33. Slide 33: Group Income Analysis

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34. Slide 34: Group Income Growth 2008-12

    ϭϰϬϬ Group Income Growth 2008 -12 ϭϴϰ ϭϮϬϬ ϲϴ ϭϴϭ ϭϳϴ ϭϬϬϬ ϱϮ ϭϴϬ ϭϰϴ ϴϬϬ Ϯϰϭ ϰϱ ϰϲ ϮϬϰ ϰϬ ϵϭ ϯϴ ϱϴ ϲϬϬ ϯϯ ϭϰϯ Ϯϯϳ ϰϮ ϭϭϮ Ϯϭϵ ϭϯϭ ϰϬϬ ϮϮϱ Ϯϴϯ Ϯϭϰ ϰϰϱ ϮϬϬ ϯϳϴ Ϯϳϭ ϭϲϯ ϭϴϳ Ϭ ϮϬϬϴ ϮϬϬϵ ϮϬϭϬ ϮϬϭϭ ϮϬϭϮ KƚŚĞƌŝŶĐŽŵĞ >ĞŶĚŝŶŐĨĞĞƐ EŽŶůĞŶĚŝŶŐĨĞĞƐ KĨĨƐŚŽƌĞĐŽŵŵŝƐƐŝŽŶ ĂƌŶŝŶŐƐŽŶůŝƋƵŝĚƐ EĞƚ ŝŶƚĞƌĞƐƚ ŝŶĐŽŵĞ 34 ŶŶƵĂů

35. Slide 35: 35

    35 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

36. Slide 36: Competition Analysis: PNG

    &RPSHWLWLRQ$QDO\VLV31* BSP, ANZ, WBC (latest financial years) 36 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

37. Slide 37: Branches

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38. Slide 38: ROE

    52( 38 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

39. Slide 39: Profit Before Tax

    3URILW%HIRUH7D[ NP 39 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

40. Slide 40: Revenue

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41. Slide 41: FX of total income

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42. Slide 42: Loans

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43. Slide 43: Deposits

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44. Slide 44: Competition Analysis: Fiji

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45. Slide 45: Branches

    %UDQFKHV 45 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

46. Slide 46: Profit Before Tax

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47. Slide 47: Competition Analysis: Solomon Islands

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48. Slide 48: Branches

    %UDQFKHV 48 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

49. Slide 49: ROE

    52( 49 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

50. Slide 50: Profit Before Tax

    3URILW%HIRUH7D[ 6%'P 50 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

51. Slide 51: BSP Strategy Setting

    BSP Strategy Setting d JA Managers Conference 2013

52. Slide 52: BSP Strategic Workshop

    %636WUDWHJLF:RUNVKRS %636WUDWHJLF:RUNVKRS073 • Asked ourselves – “How Do we continue to grow BSP, especially given increased competition and a more challenging economic environment?” 52 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

53. Slide 53: External Trends that may impact BSP

    :KDWDUHWKH([WHUQDO7UHQGVWKDWPD\ LPSDFW%63" 2XWFRPHV ƒ Competition in 2012 is intensifying in PNG, Fiji, & SI. Pressure on Lending Margins, FX margins and Fees, & will continue. ƒ Economic Growth began to slow (across all markets) in 2012. This will continue in 2013 – 15. ƒ Excess Liquidity (impacts

54. Slide 54: BSP Historic Growth Targets

    %63+LVWRULF*URZWK7DUJHWV² %63+LVWRULF*URZWK7DUJHWV² 4XHVWLRQ 4XHVWLRQ FDQZHPDLQWDLQWKHVHLQ FDQZHPDLQWDLQWKHVHLQ" 2XWFRPHV ƒ Group Assets & Liabilities grown - 18% YoY. ƒ Group Profits – 15% YoY. ƒ Share price has recovered & is Stable - K8.12. ƒ Customer Base is now 1.5 million across the Pacific &

55. Slide 55: What areas need greater focus

    :KDWDUHDVQHHGJUHDWHU)RFXV :KDWDUHDVQHHGJUHDWHU)RFXV EHQHILWVUHDOL]DWLRQ ƒ Acquisition of new customers & improved ability to sell our Products. ƒ Branch profitability, improved in PNG, Fiji and Solomon Islands because of an improved Sales & e banking solutions, but manual operational costs remain hi

56. Slide 56: BSP's Prospects and Opportunities

    :KDWDUH%63·V3URVSHFWV 2SSRUWXQLWLHV" 2XWFRPHV ƒ BSP can increase our “share of wallet” if we can improve our ability to “effectively” serve & cross sell our (Retail) products to our Customers – a “Whole of Bank” Sales & service Focus especially to Strategic and Large Corporate. (Retail, Corporate, T

57. Slide 57: BSP's Prospects and Opportunities (cont.)

    :KDWDUH%63·V3URVSHFWV 2SSRUWXQLWLHV FRQW 2XWFRPHV ƒ Build & Leverage on our Electronic Banking and Technological leadership position. Develop “New Business” opportunities and “Reduce Costs” – Cashless Banking. “Continue to be innovative” ƒ Greater focus on Branch Automation, and Operational Efficien

58. Slide 58: Future Financial Imperatives

    )XWXUH)LQDQFLDO,PSHUDWLYHV" 2XWFRPHV ƒ Maximize Income Earning Opportunities: “Whole of Bank Sales and Service improvements”. ƒ Expand our Retail and SME Lending Business. ƒ Expand our Trade Finance Business (lock in FX). ƒ Need more Strategic & Large Corporate Customers to diversify and expand our

59. Slide 59: Future Customer Imperatives

    )XWXUH&XVWRPHU,PSHUDWLYHV" 2XWFRPHV ƒ Improve the Customer “Experience” e.g. BSP First, BSP Premium Branches, BSP Rural, Agents….. ƒ “Educate” the customers to use Electronic solutions, Mobile Phone Banking, Wantok Moni. ƒ Protect and expand our Strategic Customer relationships. “Whole of Bank” Sale

60. Slide 60: Major Strategic Project Initiatives

    0DMRU6WUDWHJLF3URMHFW ,QLWLDWLYHV ,QLWLDWLYHV ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

61. Slide 61: Major Strategic Initiatives

    0DMRU6WUDWHJLF,QLWLDWLYHVIRU 1. Automation of the Loan Origination Platform “Lend fast”. 2. Automation of the Retail Collection Process, PNG retail default rate is 15%. 3. Introduction of a New Agent Management System. 4. Automation of the Branch Cheque Processing System 61 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

62. Slide 62: Major Strategic Initiatives

    0DMRU6WUDWHJLF,QLWLDWLYHVIRU 5. Embedding a proper Corporate Strategic Customer Planning process. Facilitated by the creation of the Strategic Customer Service team (SCS), who are responsible to work with the Relationship Managers and all other Commercial & Support SBU’s to “Significantly” enhance a

63. Slide 63: Major Strategic Initiatives

    0DMRU6WUDWHJLF,QLWLDWLYHVIRU 6. Treasury Sales – increase contact & value added services for our Strategic & Large Corporate Customers. 7. Trade Finance – Outsourcing all Back Office operations to “Wells Fargo Bank” in Hong Kong. BSP focuses on an improving Sales & middle office. 8. Enhance Manageme

64. Slide 64: Major BSP Building Projects

    0DMRU%63%XLOGLQJ3URMHFWV 0DMRU%63%XLOGLQJ3URMHFWV 64 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

65. Slide 65: BSP Haus Harbour City

    %63+DXV+DUERXU&LW\ 65 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

66. Slide 66: Pacific Operations Centre, Port Moresby

    3DFLILF2SHUDWLRQV&HQWUH3RUW0RUHVE\ 66 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

67. Slide 67: Pacific Operations Centre, Port Moresby

    3DFLILF2SHUDWLRQV&HQWUH3RUW0RUHVE\ 67 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

68. Slide 68: Gordon's Commercial Centre

    *RUGRQ·V&RPPHUFLDO&HQWUH 68 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

69. Slide 69: BSP Lae Commercial Centre

    %63/DH&RPPHUFLDO&HQWUH 69 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

70. Slide 70: Summary

    Summary ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ 70

71. Slide 71: 2012 was another extremely successful year

    “2012 was another “extremely” successful year” - NPBT of K545 Million, NPAT of K408 Million - Net Income K1.36 Billion - Balance Sheet now exceeds K13 Billion - Continued positive Loan & Deposit Growth - Very strong Capital & Liquidity position. 71 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

72. Slide 72: Electronic banking and financial inclusion

    - Continued successful expansion of our Electronic Banking Platforms (ATM’s, Eftpos, Mobile Phone, SMS, Internet) - Extremely successful “Financial Inclusion” strategy BSP Rural & Agent Network - BSP has approx 1.5 million Retail Customers in PNG, Fiji & SI. - “Green Gold” Promotion opened 275,000 n

73. Slide 73: BSP commitment to PNG

    - BSP remains the only major Financial Institution in PNG truly committed to taking “cost effective” banking services to all Papua New Guineans including rural areas. - Corporate Banking & Treasury Sales Teams continue to significantly improve their Financial Performance through a ‘Whole of Bank” Sa

74. Slide 74: BSP is the clear Market Leader

    BSP is the clear “Market Leader” in banking services in PNG & the Pacific. The Transformation Program initiated in 2008, has been an “outstanding” success in changing BSP from a typical small former state owned bank into a “Globally” recognized modern, innovative emerging market bank. We have signif

75. Slide 75: BSP Group Financial Performance

    %63*URXS)LQDQFLDO 3HUIRUPDQFH -RKQVRQ.DOR*URXS'HSXW\&(2&)2 Annual General Meeting, May 2013 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

76. Slide 76: Economic Conditions

    (&2120,&&21',7,216 76 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

77. Slide 77: Global Economy

    *OREDO(FRQRP\ Real GDP growth Non-OECD OECD • Globally, Conditions have (% change, year on year) World been difficult 10.0 9.0 • China’s growth path is at 8.0 lower levels, but India’s 7.0 growth is strong 6.0 • US prospects for recovery 5.0 are likely to improve in in 4.0 3.0 2014, Japan’s growth i

78. Slide 78: PNG Economy

    31* (FRQRP\ • Growth is expected to slow in 2013 • Significant step change is expected when PNG LNG Gas first flows, 2014 78 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

79. Slide 79: BSP Group Full Year Results

    %63*5283)8//<($5 5(68/76 79 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

80. Slide 80: Profit performance drivers

    SHUIRUPDQFH 'ULYHUV The factors influencing profit in 2012 are: Credit growth Net Interest • Solid credit growth, from strong Income sales approaches Investments Interest rates • Depressed investment rates of return on bills and securities Liquidity, spread FX & turnover • Strong FX liquidity, stron

81. Slide 81: Financial Overview results

    )LQDQFLDO2YHUYLHZUHVXOWV 2011 2012 % Change Profit after tax (Km) 355.9 407.7 14.6% Revenue (Km) 1,182.3 1,353.4 14.5% Expenses (Km) 688.6 748.3 8.7% Net Loan loss (Km) 25.2 71.0 281.7% Earnings per share (K) 0.75 0.87 16.0% Customer deposits (Km) 9,366.3 10,860.5 16.0% Loans (Km) 4,300.9 4,804.6 11

82. Slide 82: Credit, Liquidity, Capital

    &5(',7/,48,',7< &$3,7$/ 82 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

83. Slide 83: Credit Quality

    &UHGLW4XDOLW\ Total 4.32% remains relatively stable Trend reflects loan portfolio trend and evolving risk profile in a growth region, including: • Exposure of natural resource projects to global economic conditions • Susceptibility of markets to natural catastrophe • Market share strategy in Fiji 83

84. Slide 84: Credit Quality: lending type

    &UHGLW4XDOLW\ OHQGLQJW\SH 84 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

85. Slide 85: Credit Quality: sector spread

    &UHGLW4XDOLW\ VHFWRUVSUHDG 85 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

86. Slide 86: Funding

    )XQGLQJ • Total funds have increased significantly from prior year. • Proportion of wholesale funds has reduced from 2010 • Segmentation • Product improvements, customer acquisition • PNG still retains close to 90% of deposits • Funds on demand still represent 80% of funding 86 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬ

87. Slide 87: Cashflow performance

    &DVKIORZ SHUIRUPDQFH • The business generates good cash profits • Invested back into the business • Distributed, returned • Deposit funds have increased rapidly • The cash held: • 40% is reserving required by Central Bank(s) • 60% is held for short term liquidity protection 87 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭ

88. Slide 88: Strong cash profit flows

    6WURQJFDVK SURILWIORZV • Strong Cash Results • In, 2012, the business generated strong cash profits • Growth in depositors funds has also been very strong in 2012 • Each year, there has been surplus liquidity 88 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

89. Slide 89: Investment in the business

    ,QYHVWPHQWLQ WKHEXVLQHVV • Strong capacity to invest or distribute • Despite regulatory cash reserving policies 89 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

90. Slide 90: Capital Management

    &DSLWDO 0DQDJHPHQW The Capital Base of the BSP Group exceeds regulatory standards for an adequately capitalised bank • Profits earned during the year are tier 2 until audited • The decrease in the overall ratio is reflected in the build up of loans, and other assets 90 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

91. Slide 91: Capital Management

    &DSLWDO 0DQDJHPHQW Other “capital management KPIs” are trending well • BSP’s capital is mainly profits, shares, and reserves. i.e. equity • Sound, stable capital position over the long term • The risk in the balance sheet is with loans: credit risk 91 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

92. Slide 92: Capital Management

    &DSLWDO 0DQDJHPHQW Maximum Book Assets: A conservative capital leverage 6% Actual Book management approach: Assets: • BSP can add another leverage 9% K4.9 billion of 100% risk weighted assets before it reaches its minimum Room for More RW capital adequacy limits Assets: 12% • Replace risk free asset

93. Slide 93: Profitability and Key Ratios

    352),7$%,/,7<$1'.(< 5$7,26 93 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

94. Slide 94: Key prudential ratios

    .H\SUXGHQWLDO UDWLRV Bank PNG minimum capital adequacy ratio: 12% Bank PNG minimum leverage ratio: 6% 94 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

95. Slide 95: Return on Equity

    5HWXUQRQ (TXLW\ • ROE is stable, very strong • Earnings per share continues to increase: • 16% increase from 2011 95 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

96. Slide 96: Key Comparisons

    .(<&203$5,6216 96 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

97. Slide 97: Key Ratio comparisons

    .H\5DWLRFRPSDULVRQV Return on equity Capital adequacy ratio BSP BSP Australian Regional Banks Average Australian Regional Banks Average 40 Australian Major Banks Average 30 Australian Major Banks Average 35 25 % 30 % 20 25 20 15 15 10 10 5 5 0 0 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011

98. Slide 98: Key Ratio comparisons

    .H\5DWLRFRPSDULVRQV Net interest margin Cost to income ratio BSP BSP Australian Regional Banks Average Australian Regional Banks Average 10 Australian Major Banks Average 60 Australian Major Banks Average 9 55 8 50 %7 % 45 40 6 35 5 30 4 25 3 20 15 2 10 1 5 0 0 2007 2008 2009 2010 2011 2012 2007 200

99. Slide 99: Shares and Dividend

    6+$5(6',9,'(1' 99 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

100. Slide 100: Share Price

     6KDUH3ULFH Share price (LHS) Today Dec 2012 • K8.13 • K8.08 Volumes Dec (RHS) 2011 • K7.53 100 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

101. Slide 101: Dividend

     'LYLGHQG • increase with profit • 7.1% yield 38 • Pay on June 24 20 58 toea • Interim toea toea • Full • Final 101 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

102. Slide 102: BSP Qtr1 Results Summary

     %634WU5HVXOWV6XPPDU\ -RKQVRQ.DOR*URXS'HSXW\&(2&)2 Annual General Meeting, May 2013 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

103. Slide 103: Profit and Loss

     Qtr1-12 Qtr2-12 Qtr3-12 Qtr4-12 Qtr1-13 362.9 334.73 400.00 341.3 329.9 3URILW /RVV 314.2 350.00 Qtr.1 2013 profit after tax of K91.2m is below Qtr. 4 300.00 2012 by K14.5m. 210.2 250.00 180.99 192.6 178.6 • Slowdown in customer 164.5 transaction activity 200.00 • Low tax rate in 2012 106.0 105.7 Al

104. Slide 104: Balance Sheet

     %DODQFH 6KHHW Liquidity continues to grow, • Loans show strong growth • Non lending Investments have reduced • Cash reserve requirement in PNG • Capital expenditure has also increased 104 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

105. Slide 105: Share Price

     6KDUH3ULFH Share price (LHS) K3.8bn market Cap Share Price Volumes K8.13 (RHS) 105 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

106. Slide 106: Market Share

     0DUNHW6KDUH Deposits Loans 106 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

107. Slide 107: Customers and Channels

     &XVWRPHUVDQG&KDQQHOV Customers (‘000) EFTPOS 107 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

108. Slide 108: Customers and Channels

     &XVWRPHUVDQG&KDQQHOV ATMs Branches, BSP Rural (PNG) 108 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

109. Slide 109: Customers and Channels

     &XVWRPHUVDQG&KDQQHOV Mobile Banking Users Transactions 109 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

110. Slide 110: Financial Risk Management

     )LQDQFLDO5LVN0DQDJHPHQW Capital Adequacy Provisions to Loans Tier 2 30.0% Tier 1 Bank PNG Requirement 25.0% 4.4% 6.9% 20.0% 8.8% 10.3% 4.9% 6% 15.0% 10.0% 19.8%18.2% 17.4% 14.5%13.5% 16.8% 5.0% 0.0% 110 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

111. Slide 111: Funds

     )XQGV Deposit Mix Deposit Type (Km) 111 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

112. Slide 112: Qtr Performance Summary

     4WU3HUIRUPDQFH6XPPDU\ • Growth trend slowed significantly between the end of 2012 and March 2013 – Winding down of LNG construction activity – Prices for export commodities softening as global conditions tightening 112 ŶŶƵĂů'ĞŶĞƌĂůDĞĞƚŝŶŐϮϬϭϯ

113. Slide 113: ABB

     > ii @ | ABB ess Tellers, Smaller Queues, Faster Banking.

BSP Financial Group — Shareholder Meeting (May 2013) on 6ix