BSP Financial Group Ltd. · ASX:BFL
BSP Financial — Shareholder Meeting (May 2010)
74 slides from BSP Financial's shareholder meeting presentation, May 21, 2010
Slide 1: 2009 Financial Year presentation to Shareholders
2009 Financial Year presentation to Shareholders BSP Annual General Meeting, 21 May 2010
Slide 2: Presentation overview
Presentationoverview Presentation overview • Historic Overview Ian B. Clyne, CEO • 2009 General Review Ian B. Clyne, CEO • BSP’s Vision 2010 & Beyond Ian B. Clyne, CEO • 2009 Performance Overview Ian B. Clyne, CEO • Operational Statistics Ian B. Clyne, CEO • Economic Outlook Robin Fleming, Deputy CE
Slide 3: 2009 Overview
2009 Overview 2009 Overview IanB. Ian B.Clyne, Clyne, ChiefExecutive Chief ExecutiveOfficer Officer
Slide 4: Historic Overview
Historic HistoricOverview Overview Headquartered at Port Moresby, BSP is PNG's largest retail and commercial bank with 35 branches in PNG and overseas branches in Niue (1), Fiji (20) and the Solomon Islands (8). The acquisition of the National Bank of Fiji in November 2009, added 18 branches to the
Slide 5: Historic Overview (continued)
HistoricOverview Historic Overview(continued) (continued) BSP is a publicly listed company incorporated in PNG. BSP's shares were listed on POMSoX on 27 August 2003. Its shares are widely held by individuals, companies and financial institutions, the majority of which are PNG nationals. It is theref
Slide 6: Brief history
Brief Briefhistory history Year Profit Key events after tax 1957 The Bank commenced operations on 1 May 1957 in Port Moresby as a branch of the National Bank of Australasia Limited. 1974 Operations were expanded to several centres and on 17 May 1974 the Company was incorporated as Bank of South Paci
Slide 7: Share price movements 2004-2010
Shareprice Share price movements2004-2010 movements 2004-2010 BSP’s share price increased 1.6 Global financial BSP listed BSP Share Price History crisis - Sept 08 from K0.1* in 2004 and on reached K1.4 in July 2008. 1.4 POSOX, Completed Aug 03 *K1 adjusted for 10 for 1 Colonial share split 1.2 trans
Slide 8: 2009: A Year of Significant Uncertainty
2009:“A 2009: “AYear Yearof ofSignificant SignificantUncertainty” Uncertainty” • Global Financial Crisis (GFC) – created enormous unknowns in terms of potential impact. • BSP focused on “Capital & Liquidity” planning, and “Credit Risk” management. • PNG Gov.’s Fiscal Management was tested. • Bank of
Slide 9: 2009: A Year of Significant Uncertainty
2009:“A 2009: “AYear Yearof ofSignificant SignificantUncertainty” Uncertainty” • The future of many banks was definitely uncertain….
Slide 10: 2009: BSP's Internal Challenges
2009:BSP’s 2009: BSP’sInternal InternalChallenges Challenges • BSP’s Customer Service Levels, Product Offers, Systems & Operational Processes, and Staff Training were “simply” not at level required to meet future client expectations, future competition levels, to support the potential business needs
Slide 11: 2009: BSP's Internal Challenges (continued)
2009:BSP’s 2009: BSP’sInternal InternalChallenges Challenges(continued) (continued) • Actions – Appointed International Consultants to review “Every Business Unit” • Findings: - 25 year old manual processes. - Core System poorly configured & under developed. - Lack of Integration & Automation. - Bas
Slide 12: 2009: BSP's Internal Objectives
2009:BSP’s 2009: BSP’sInternal InternalObjectives Objectives • Simplify, Standardize, Modernize & Automate all our Major Systems, and Processes. • Upgrade BSP’s Branch Network to give “Vastly Improved” products & customer service levels to all business segments. • Leader in E Banking services & inno
Slide 13: 2009: BSP's Achievements
2009:BSP’s 2009: BSP’sAchievements Achievements • 12.6% improvement in after tax Profitability – K257 million. • 21% increase in loan growth – K2.86 billion. • Balance sheet now exceeds K9 billion. • Re branded Bank of South Pacific to “BSP”, with a new “young, modern, energetic” look. • Launched PN
Slide 14: BSP's Vision 2010 & Beyond
BSP’s Vision BSP’s Vision 2010 & 2010 & Beyond Beyond IanB. Ian B.Clyne, Clyne, ChiefExecutive Chief ExecutiveOfficer Officer
Slide 15: Vision
Vision Vision BSP’s vision is… To be the leading bank in PNG and the South Pacific … in terms of: Customer and Sales focus Modern, best practice operations Investment in people and performance Growth based on profitability Through transforming ourselves into a modern, technologically driven 21st Cen
Slide 16: BSP 2010 & Beyond: Strategies & Plans
BSP2010 BSP 2010&&Beyond: Beyond:“Strategies “Strategies&&Plans Plans BSP’s key strategies and plans include: Customer and sales focus Modern, best practice operations • Market profiling and Segmentation – customers & • Simplified, standardised & automated client products transaction processing (“st
Slide 17: BSP 2010 & Beyond: Strategies & Plans
BSP2010 BSP 2010&&Beyond: Beyond:“Strategies “Strategies&&Plans Plans BSP’s key strategies and plans include: “Customer and sales focused”: • Market profiling and Segmentation – customers & products. • Improved customer data & profitability metrics. • Product & channel innovation and continuous impr
Slide 18: BSP 2010 & Beyond: Strategies & Plans
BSP2010 BSP 2010&&Beyond: Beyond:“Strategies “Strategies&&Plans Plans BSP’s key strategies and plans include: “Modern, International Best Practice” operations: • Simplified, standardised & automated client transaction processing (“straight-through”). • Embed operational risk framework and improve co
Slide 19: BSP 2010 & Beyond: Strategies & Plans
BSP2010 BSP 2010&&Beyond: Beyond:“Strategies “Strategies&&Plans Plans BSP’s key strategies and plans include: Growth based on “Profitability” • Pricing for risk and customer value. • Cross-selling for share-of-wallet growth. • Revenue balance between interest and non interest sources. • Revenue & Ri
Slide 20: BSP 2010 & Beyond: Strategies & Plans
BSP2010 BSP 2010&&Beyond: Beyond:“Strategies “Strategies&&Plans Plans BSP’s key strategies and plans include: Reward employees who “Perform”, penalize employees who “under perform”. • Centralised HR function to coordinate Group HR management. • New HR systems & streamlined processes. • “Back to Basi
Slide 21: 2009 Performance overview
2009 Performance 2009 Performance overview overview IanB. Ian B.Clyne, Clyne, ChiefExecutive Chief Executiveofficer officer
Slide 22: Recent performance
Recent Recentperformance performance Total assets Net profit after tax 10.0 300 8.0 M illio n s o f K in a Billions of Kina 200 6.0 4.0 100 2.0 0 0.0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Loan provisions to gross loans Cost to income ratio 5% 60.0% 50.0% 4% 40.0% 3% 30.0% 2% 20.0% 1% 10.
Slide 23: Operations – branches & ATMs
Operations––branches Operations branches&&ATMs ATMs The number of branches: Number of branches • Has remained steady in 80 PNG from 2005 to 2009 63 60 • Increased by 2 in 2006 45 45 when BSP commenced 36 38 in Fiji 40 • Increased by 8 in 2007, 20 when BSP expanded to the Solomon Islands 0 • Increase
Slide 24: Operations – Customer Accounts
Operations––Customer Operations CustomerAccounts Accounts •Opened 82,000 PNG Kundu Accounts Opened Kundusaver Accounts 10,000 in PNG Over 580,000 8,000 •Opened over 4,000 savings & Kundusaver accounts transaction 6,000 in Solomon Islands accounts in PNG 4,000 •Opened over 30,000 deposit accounts in
Slide 25: Operations – ATM and EFTPOS Transactions
Operations––ATM Operations ATMand andEFTPOS EFTPOSTransactions Transactions IN PNG PNG Electronic Banking Transactions •Over 42 million electronic banking 5,000,000 transactions in PNG in 4,500,000 4,000,000 2009, and monthly 3,500,000 average still growing 3,000,000 2,500,000 •8.5 million annual Fi
Slide 26: Operations – SMS banking in PNG
Operations––SMS Operations SMSbanking bankingin inPNG PNG •SMS banking users reached 40,000 at the end of Dec 09, and is 45,000 K900,000 still growing 40,000 K800,000 35,000 K700,000 30,000 K600,000 Transaction values 25,000 K500,000 Users 20,000 K400,000 15,000 K300,000 10,000 K200,000 5,000 K100,0
Slide 27: Economic outlook
Economic Economic outlook outlook RobinFleming, Robin Fleming, DeputyCEO, Deputy CEO,Chief ChiefRisk RiskOfficer Officer
Slide 28: Economic outlook - global
Economicoutlook Economic outlook--global global Global economy is expected to regain growth momentum in early 2010 Emerging and developing economies, including the Pacific region, are expected to achieve stronger growth than advanced economies IMF – Global GDP Growth (percent; quarter -over-quarter,
Slide 29: Economic outlook - PNG
Economicoutlook Economic outlook--PNG PNG LNG’s impact on PNG PNG’s economy is projected to grow in the range from economic Grow th 3.3% to 5.3% per year in 2010 and 2011 depending on the source The growth is forecasted to exceed the global economic growth These growth projections do not include the
Slide 30: Market share
Marketshare Market share BSP’s market share in both PNG deposits and lending is above 50%. BSP’s Solomon Islands BSP market share in PNG operations currently claim 30% of the market in the Solomon Islands 70.00% The acquisition of the National Bank of Fiji from CBA in 2009 increased 60.00% market sh
Slide 31: Fiji transaction
Fiji Fiji transaction transaction RobinFleming Robin Fleming DeputyCEO, Deputy CEO,Chief ChiefRisk RiskOfficer Officer
Slide 32: Purchase of Colonial National Bank in Fiji
Purchaseof Purchase ofColonial ColonialNational NationalBank Bankin inFiji Fiji In October 2009 BSP agreed to buy National Bank of Fiji Limited, Colonial Fiji Limited and associated companies from Commonwealth Bank Australia; Ownership changed hands on 1 December 2009. The price was a fraction over
Slide 33: Purchase of Colonial National Bank in Fiji (continued)
Purchaseof Purchase ofColonial ColonialNational NationalBank Bankin inFiji Fiji(continued) (continued) The group reported earnings were K24.5 million for the year ended 30 June 2009; At the end of the year, the combined assets of the newly acquired Fiji businesses were about K1.3 billion, about K940
Slide 34: Financial Results: 2009 full year review
Financial Results Financial Results 2009 full 2009 full year year review review JohnsonKalo Johnson Kalo DeputyCEO, Deputy CEO,Chief ChiefFinancial FinancialOfficer Officer
Slide 35: Overview of 2009 results
Overviewof Overview of2009 2009results results Bank Growth 2009 vs. Group 2009 Bank 2009 2008 Profit after tax K 257.1m K 257.7m 10.5% Revenue K 725.7 m K 701.9m 14.2% Expenses K 335.1 m K 308.7m 10.7% Bad and doubtful debt K 15.0 m K 16.4m 44.3% expense Earnings per Share 5.6 toea 5.7 toea 10.1% Cu
Slide 36: 2009 Highlights
2009Highlights 2009 Highlights BSP maintained its market share above 50% in deposits and lending in PNG Group profit after tax grew from K227m in 2008 to K258m in 2009. Solid liquidity growth in the home market underpinned the year’s results, with competitive growth in corporate lending; Bank net in
Slide 37: Profit after tax
Profitafter Profit aftertax tax BSP’s profit after tax has grown from K99.2m in 2005 to K257.1m in 2009. Net profit after tax The compounded annual growth rate has been 27% 300 from 2005 to 2009. Millions of Kina 250 *BSP CNB effect on the profit for the year is minor as profit 200 & loss is consoli
Slide 38: Profit & loss trends
Profit&&loss Profit losstrends trends PROFIT & LOSS TREND ANALYSIS While BSP’s profit has grown in dollar terms its (Millions of Kina) 2005 2006 2007 2008 2009 CAGR profitability has also Income improved as total income Net interest income 161.8 209.6 276.9 377.1 474.0 31% has grown at a Compounded
Slide 39: Total assets
Totalassets Total assets BSP’s total assets have grown from K2.9 billion in 2005 to K8.1bn in December 2009. Total assets The compounded annual growth rate has been 29% from 2005 to 2009. 10.0 On a group basis, the major addition to date has 8.0 Billions of Kina been with the acquisition of the Colo
Slide 40: Deposits and loans
Depositsand Deposits andloans loans Total loans and deposits have grown strongly from 2005 to 2009. Total loans have grown from K874m in 2005 to Growth in deposits and loans K3.6bn in 2009 while total deposits have grown from 8.0 K2.54bn to K7.5bn during the same period. 7.0 From 2005 to 2009, loans
Slide 41: Balance sheet trends
Balancesheet Balance sheettrends trends BALANCE SHEET TRENDS BSP’s total assets show compounded annual (Millions of Kina) 2005 2006 2007 2008 2009 CAGR growth of approximately 34% from 2005 to 2009. Assets The growth has been Cash and short term deposits 211.3 268.5 440.8 434.6 996.4 47% driven by a
Slide 42: Liquidity and Capital management
Liquidity and Liquidity and Capital Capital management management JohnsonKalo Johnson Kalo DeputyCEO, Deputy CEO,Chief ChiefFinancial FinancialOfficer Officer
Slide 43: Capital management
Capitalmanagement Capital management In late 2008, BSP planned Capital Management Agenda to reach K1 billion in capital in 2010. Maintain strong capital position & Tier 1 Capital and Total Capital Adequacy improve long term liquidity K75.5m in tier 2 capital - PNG domestic market lending raised in 2
Slide 44: Key prudential ratios
Keyprudential Key prudentialratios ratios In 2009, BSP’s liquid asset ratio was 50.1%, well above the Bank of PNG minimum requirement of 25%. 0% 10% 20% 30% 40% 50% 60% Similarly, the capital adequacy and leverage ratios at the end of 2009 Liquid asset ratio 50.1% were clearly above the Bank of PNG
Slide 45: Credit quality
Credit Credit quality quality RobinFleming Robin Fleming DeputyCEO, Deputy CEO,Chief ChiefRisk RiskOfficer Officer
Slide 46: Credit quality
Creditquality Credit quality BSP loan provisions as a percentage of gross loans reduced from 3.3% in 2005 to 2.1% in 2008 reflecting improved credit processes Loan provisions to gross loans and arrears management. Provisions increased to a total of 3.4% of gross loans 5.00% in 2009. The reason for T
Slide 47: Economic sector risk concentration
Economicsector Economic sectorrisk riskconcentration concentration BSP’s lending is well diversified across industry sectors. The largest exposure is to ‘commerce finance and other business’ which Governm ent and totals 51% of all lending as Public Authorities at 31 December 2009. 0.2% Agriculture P
Slide 48: Lending by type – PNG, SI & Fiji branches
Lendingby Lending bytype type––PNG, PNG,SI SI&&Fiji Fijibranches branches Wholesale lending in PNG accounts for approximately 82% of total lending. Retail lending in PNG Wholesale makes up approximately (excl leases) 10% of the portfolio with the remainder comprised 75.3% of loans in the smaller Fij
Slide 49: Lending by type – including BSP Colonial subsidiary
Lendingby Lending bytype type––including includingBSP BSPColonial Colonialsubsidiary subsidiary On a group basis: •wholesale lending accounts for 69.9% of total lending. •Housing loans total 17.3% and other personal loans Wholesale, 7.6% of total lending. 69.9% Leases, 5.3% Personal - Personal - hou
Slide 50: Funding profile
Funding Funding profile profile JohnsonKalo Johnson Kalo DeputyCEO, Deputy CEO,Chief ChiefFinancial FinancialOfficer Officer
Slide 51: Deposit mix
Depositmix Deposit mix Wholesale deposits accounted for approximately 75% of total deposits as at 31 Deposit mix December 2009. 8.0 24% 6.0 Billions of Kina 20% 21% 4.0 24% 76% 2.0 31% 80% 79% 76% 69% 0.0 2005 2006 2007 2008 2009 Wholesale Retail
Slide 52: Deposits by type and country
Depositsby Deposits bytype typeand andcountry country Deposits at call total approximately 70% of all Deposits by type deposits while wholesale deposits account for approximately 75% of total Term deposits. 27.0% Deposits by country Demand / current 73.0% PNG 84.9% Fiji 12.2% Niue Solomon 0.2% Islan
Slide 53: Profitability and key ratios
Profitability Profitability and key and key ratios ratios JohnsonKalo Johnson Kalo DeputyCEO, Deputy CEO,Chief ChiefFinancial FinancialOfficer Officer
Slide 54: Earnings per share and return on equity
Earningsper Earnings pershare shareand andreturn returnon onequity equity BSP’s earnings per share have increased from 2.3 toea per share in 2004 to 5.6 toea per share in 2009. BSP’s Return on Equity Earnings Per Share and Return On Equity (ROE) has remained above 30% from 2005 to 2009. 6.0 40.0% 35
Slide 55: Cost to income ratio
Costto Cost toincome incomeratio ratio BSP’s cost to income ratio declined from 55% in 2005 to 40% in 2007, rising to 43% (Group) in 2009. Cost to income ratio The reduction in the ratio has been driven by strong 60.0% growth in income and discipline on operational 50.0% costs. The global economic 4
Slide 56: Non-interest income
Non-interestincome Non-interest income BSP’s non-interest income to total income ratio has declined as lending volumes and interest income has increased. Non-interest income to total income 2009 Non interest income also suffered from the 50.0% impact of the global downturn through a K23m decline in
Slide 57: Net interest margin
Netinterest Net interestmargin margin BSP’s net interest margin (including loans and investments) has increased from 6.87% in 2005 to Net interest margin 7.19% in 2009. (total of loans and investments) The return on loans and investments has increased more than the gross cost of funds. 8.50% 8.00% 7
Slide 58: Key Ratios comparisons
Key Ratios Key Ratios comparisons comparisons JohnsonKalo Johnson Kalo DeputyCEO, Deputy CEO,Chief ChiefFinancial FinancialOfficer Officer
Slide 59: Comparisons
Comparisons Comparisons Cost to incom e ratio Net interest margin BSP’s Net Interest Margin, 14.0 70 Return on Equity and 13.0 Capital Adequacy ratios 12.0 60 11.0 are above Australian 10.0 50 regional and major banks. 9.0 8.0 40 BSP’s Cost to Income ratio, % 7.0 % however, is in the same 6.0 30 ran
Slide 60: IFC transaction & Scenario analysis
IFC transaction IFC transaction & Scenario & Scenario analysis analysis RobinFleming Robin Fleming DeputyCEO, Deputy CEO,Chief ChiefRisk RiskOfficer Officer
Slide 61: Addressing capital requirements
Addressingcapital Addressing capitalrequirements requirements •BPNG Prudential • BPNG Prudential requirements for well requirements capitalised: 14% capital adequacy Return •BSP targets •International standards • BSP capital management targets: BPNG prudential + allowance for operational risk, asset
Slide 62: Why does BSP need capital?
Whydoes Why doesBSP BSPneed needcapital? capital? • A prudent approach; be safe rather than sorry – recent bank failures & shrinkage in capitalisation because of crisis in the financial market – banks prided themselves on running at “efficient” capital levels of 8-12% of risk weighted assets, and le
Slide 63: Scenario planning
Whydoes Why doesBSP BSPneed needcapital? capital? Scenarioplanning Scenario planning LNG F.A.Q • What sort of business (or risk) can BSP expect because of LNG? •If PNG GDP is going to double, what about BSP’s – What sort of businesses (potential BSP clients) will operate & balance sheet? grow (or fa
Slide 64: Can BSP get the capital if/when it needs it?
CanBSP Can BSPget getthe thecapital capitalif/when if/whenititneeds needsit? it? •All scenarios considered • Not easily… by BSP indicate a need for capital – The PNG capital market is still developing. •The need is short or long – BSP is likely to need more capital than the local market can supply:
Slide 65: How else BSP and its stakeholders benefit from an association with IFC?
Howelse How elseBSP BSPand andits itsstakeholders stakeholdersbenefit benefitfrom froman an associationwith association withIFC? IFC? • Access potentially to sizeable amounts of capital. • Taking opportunity of IFC’s own change in global investment and operational strategy: – Technical expertise • M
Slide 66: Shareholder returns & capital management
Shareholder returns Shareholder returns & capital & capital management management JohnsonKalo Johnson Kalo DeputyCEO, Deputy CEO,Chief ChiefFinancial FinancialOfficer Officer
Slide 67: Dividend Policy
DividendPolicy Dividend Policy •Capital management • Capital maintenance and dividends are distinct and critical parts of decisions are driven by the critical need to sustain BSP the same question of shareholder value: as a viable, profitable – A reasonable return is an expectation that should be me
Slide 68: Dividend 2010
Dividend2010 Dividend 2010 •A decision can still be made to reward existing The directors declare: shareholders with a beneficial return based on • a total dividend of 4.0 toea per share known performance • Comprising: normal dividend of 2.2 toea special dividend of 1.8 toea • this represents a tota
Slide 69: Regularly Re-assess the need for capital
RegularlyRe-assess Regularly Re-assessthe theneed needfor forcapital capital •The natural follow on • Ensure earnings stability; from the dividend decision is to continually assess capital needs • Seek asset and earnings growth opportunities, at acceptable risk • Determine the need for capital • Con
Slide 70: Conclusions
Conclusions Conclusions IanB. Ian B.Clyne, Clyne, ChiefExecutive Chief ExecutiveOfficer Officer
Slide 71: Conclusion
Conclusion Conclusion • 2009 was in “Management’s” view a very good financial performance from a year with considerable “uncertainties”. • There were many “positives” in 2009 - Continued YOY Growth & Enhanced Profitability. - Better Management Processes & Strategic Planning. - Effectiveness of Re br
Slide 72: 2010 & Beyond
2010&&Beyond 2010 Beyond • Transformation Programs are aimed at delivering - Better Product Offers. - Better Customer Service levels. - More access options ATMs/Eftpos/SMS/Internet Banking. - New Delivery Channels: BSP first/BSP priority/BSP rural. - New Branches (Porgera/Vision City/Harbour City).
Slide 73: BSP's Transformation Program
BSP’sTransformation BSP’s TransformationProgram Program
Slide 74: Thank You
Thank You Thank You