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Kina Bank Posts Strong Growth in 2020 Despite COVID-19

by PNG Business News - April 21, 2021

Despite a challenging year amid the global Covid-19 pandemic, the Kina Bank Group has recorded strong economic growth for the 12 months to December 31, 2020.

This was the message from Greg Pawson, Managing Director and Chief Executive Officer of Kina Bank.

“We have delivered planned business growth across all of our existing businesses this year, despite the challenges presented by Covid-19. We also achieved the integration benefits critical to the ANZ PNG acquisition. In parallel, we completed a number of strategic initiatives that were market firsts; we launched a suite of new digital products and services; and we achieved significant growth in revenue from our existing digital channels. Our disciplined approach has delivered compelling growth for the year.”

Not only that, but it has also achieved many milestones in PNG and the Pacific region and became the first bank in PNG to design and test an eKYC (electronic Know Your Customer) solution for digital account opening, with full biometric and digital document identification.

It is now working with the regulator on a scalable in-market solution, according to a statement and market report released recently.

Kina’s Funds Administration business continued to record growth in revenue. Profit increased to PGK8.3m representing nine (09) percent growth against the prior corresponding period. This is consistent with revenues arising from increased funds under administration and growth in member numbers compared to the prior year.

Prudent management, innovation and strategic investments had seen significant progress made on a series of strategic initiatives that have successfully delivered growth for the business. 

Some of the achievements of the bank during the period include:

  • Announced the proposed acquisition of Westpac’s Pacific businesses in PNG and Fiji which is expected to complete by 30 September 2021 to become a larger scale regional bank. The acquisition is subject to regulatory approvals by the Bank of Papua New Guinea and the ICCC (Competition regulator). 
  • Simplified the corporate structure and successfully conducted a 1:2 NonRenounceable Rights Issue (ANREO) ensuring strong capital adequacy for the Bank. This will position the company for further growth while creating capacity to take advantage of acquisition and growth opportunities that may arise. 
  • Delivered the planned revenues from new channel income of PGK 18.8m from new channels successfully launched during the year.
  • Introduced a flagship new customer offering, Prime, that includes fee free Visa cards, the lowest fixed rate home loan in PNG history, and a dedicated relationship advisor for expert customer advice for all business customers.  
  • Invested significantly in cards fraud risk and compliance systems and processes, resulting in a 95% reduction in fraud losses. New capabilities include a fraud monitoring module, 3D Secure, SMS email and WhatsApp alerts. 
  • Became the first commercial bank in the Pacific to implement VISA transaction controls online, giving customers greater choice on how their cards are used, further reducing the risk of fraud.
  • Launched a market leading internet payment gateway that facilitates digital payments through multiple online channels for scheme cards and local bank cards issued by Kina Bank. The gateway enables payment partnerships direct to merchants or via intermediated e-commerce providers.

 Kina Bank also signed a digital partnership with a local fintech company to deliver e-government services.  The Department of Lands and the Immigration and Citizenship Authority were onboarded in Q4. The partnership is a significant step forward in Kina's ambition to drive digitally enabled government services. 

It also became the first bank in the Pacific to launch a Xero bankfeed API that will enable business customers to integrate their banking transaction data directly with the Xero platform, and opens up additional commercial partnership opportunities.

In addition to doubling the number of merchant POS terminals in market, implemented a fully integrated solution between Pronto terminals and Kina POS machines, with best in-market performance and superior reliability.

The Financial Results for the year were:

  • Revenue up 53% on PCP to PGK 314.8m
  • Non-interest income up 59% on PCP to PGK145.1m
  • Return on equity 16.8%
  • NPAT up 25% on PCP to PGK 76.0m
  • Net interest income up 48% on PCP to PGK 169.7m
  • Capital adequacy at 23.8%
  • Net interest margin 7.5% • Earnings per share of AUD 11.7 cents or PGK 32.9 toea per share • Full year dividend AUD 10.0 cents or PGK 26.9 toea per share

Net Interest Income increased by 48% to PGK 169.7m compared to the prior corresponding period. This was achieved through growth in the existing loan book, incorporation of the ANZ loans and deposit portfolio and business acquisition, and lower interest expense (against total deposits) compared to the prior year. Overall gross loan book growth was up 16% against the corresponding prior period.

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Kina Bank has pledged support for the second consecutive year to the FODE education program administered by the Kokoda Track Foundation at the Motu Koita FODE centre in Port Moresby. The bank is funding the FODE program and providing mentoring by bank staff to students enrolled at the centre. The one-on-one mentoring program offers students the opportunity to connect with young and seasoned professionals across the bank who provide coaching, and help with their studies, assessments and to prepare for exams. Building on the success of last year, students have direct personal access to a mentor who can guide them on their path to success and help them reach their goals. "Our partnership with Kina Bank is that in every sense of the word. From vital financial support, to their innovative volunteer mentoring program and all of the 'small' ways they assist our work in between, we are proud to partner with Kina Bank and are delighted to continue developing our partnership this year," said KTF CEO, Dr Genevieve Nelson. "In these challenging times, we are poised to deliver a full year of learning to our students, committed to the safety of our students and staff. We are fortunate to have an incredible partner like Kina Bank by our side on this education journey." Kokoda Track Foundation reported to have enrolled 150, an increase in numbers from 2020. “Continuing the partnership with the Foundation for Motu Koita FODE was an easy decision for us, building further on the success of the previous year and to see through some of the students in grades 10 and 11 mentored last year,” said Greg Pawson Kina Bank Chief Executive Officer. “The bank is committed to helping create the workforce of the future by supporting the learning and development of young people in Papua New Guinea. Initiatives such as the Motu Koita FODE program gives a second chance to young people to attain high school certification and progress to higher education and eventually transition into employment with skills and qualifications. At Kina Bank we’re committed to supporting our communities.”


PNG Business News - March 29, 2021

ICCC Evaluating Kina Banks Acquisition of Westpac

Kina Securities Ltd (KSL) has sent an application to the Independent Consumer Competition Commission (ICCC) for approval of its proposed acquisition of Westpac's Pacific company. Through the authorisation process, ICCC will determine the acquisition's competition consequences and public gains, according to Commissioner and Chief Executive Officer Paulus Ain. This will be achieved by a public review process in which the ICCC will accept comments from stakeholders and the general public before reaching a definitive judgment about whether or not to approve the acquisition under the ICCC Act. “The process that ICCC will conduct is very transparent and it is very important for the people of this country, especially from the finance and banking sector, to get themselves involved,” Ain said. “The process has now started and we are formally inviting the people in the finance and banking sector, other commentators, interested parties and the public to the process on assessment. We are looking forward to seeing a lot of submissions come in and this process starts effectively today (Friday).” KSL is awaiting ICCC approval to purchase 89.91 per cent of Westpac PNG Ltd. The proposed acquisition has reached the threshold needed under section 81 of the ICCC Act for mandatory notification and obtaining ICCC approval to continue with the acquisition, according to the ICCC. The authorisation process, according to Ain, has no bearing on the ICCC's decision on who buys. “This is something that ICCC does not or is not required by law to do this,” he said. “It’s outside of the ICCC’s role.”


PNG Business News - March 16, 2021

KAML Makes A Profit of K3.3 Million

  The Kina Asset Management Ltd (KAML) made a net profit of K3.32 million for the year ended December 31, 2020, thanks to a 6.2 per cent investment return. The achievement was made amid the Covid-19 pandemic and continuing geopolitical conflicts, according to KAML chairman Sir Rabbie Namaliu. Sir Rabbie praised KAML's investment strategy's diversification for providing a substantial measure of stability in a tumultuous year. He said, “Asset allocation was maintained close to the preferred portfolio asset weights of 40 per cent domestic/60 per cent international, the latter being held in Australian stocks and global indexed funds. For KAML, this meant overall capital losses were more than offset by dividend and interest income and strong foreign exchange gains. Bank of South Pacific, KAML’s core domestic shareholding, comprising nearly 20 per cent of the portfolio, generated a return of 13.3m per cent for the year. Credit Corporation also performed strongly.” Sir Rabbie, on the other hand, reported that Oil Quest and Kina Securities had experienced major reversals. “Oil Search, badly affected by the pandemic-related fall in the global demand for oil, reported a negative return for the fund of -39.6 per cent,” he said. “Offshore, the recovery in Australia was less strong than in other markets, notably the United States. The year ended with modest overall capital losses on the Australian component of the portfolio, but the strength of the Australian dollar and a series of gradual reductions in the PGK/USD trading band by the Bank of PNG, more than offset this.” Sir Rabbie reported that the net tangible asset backing per share was K1.59 as of December 31. “However, KAML’s price of K0.90 per share represented a substantial discount to the underlying value of the company,” he said. 

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