BSP Insights: PNG FX Liquidity expected to continue growing into the half-year
by PNG Business News - May 02, 2022
Photo: BSP Group General Manager – Treasury, Rohan George
Quarter one of 2022 Foreign Exchange (FX) market inflow momentum is expected to continue into the half-year, assisted by firmer commodity prices, end of half-year dividend flows and foreign aid, according to BSP Group General Manager – Treasury, Rohan George.
“As FX inflows can be lumpy, we expect there to be periods where outstanding FX orders build up.
“To manage volatility in foreign currency flows, businesses should place FX orders (with correct documentation), as soon as possible, ensure orders are cash-backed whilst awaiting execution, ensuring tax clearance certificates are current and reflect the expected FX order execution time,” Mr. George stated in the BSP Pacific Economic and Market Insight Q1 2022 Report.
He emphasised in the report that in the first quarter of 2022, FX market turnover fell 2% from the strong December Quarter 2021, but rose 24% from March Quarter 2021 (12 months ago), supported by strong commodity prices, in particular Oil, Copper, Palm Oil, Coffee.
“Firmer commodity prices offset the lost FX market inflows from the closure of the Porgera Gold Mine (Barrick FX inflows down 75%), whilst the stronger commodity prices added to transportation and input costs of imported goods increased the volume of new FX orders placed post-Christmas,” Mr George added.
Meanwhile, the outstanding FX orders expectation of reopening the Porgera Gold Mine is also positive from foreign exchange perspective remained similar to levels seen 12 months ago.
“BPNG FX intervention rose 8% in 2022, reducing some of the outstanding FX order backlogs, but remains unchanged from March Quarter 2021.
“The Kina fell 10 basis points against the U.S. dollar to 0.2840 in 2022, the first movement for over 14 months. Stronger commodity prices, due to the invasion of Ukraine, strengthened the Australian dollar and saw the Kina fall to 0.36,” Mr. George further added.
Article courtesy of Bank South Pacific
PNG Business News - May 26, 2021
BSP Group Records Net Profit of K203 Million
In the first quarter of 2021, South Pacific Financial Group Ltd recorded a net profit of K203 million. According to the bank, this is a 2.6 per cent decrease from the first quarter of 2020, owing to a decrease in net insurance revenue and a rise in computing costs. Some highlights included net assets of K3.6 billion, a cost to income ratio of 40.3 per cent, a capital adequacy ratio of 25 per cent, a provision coverage ratio of 5.7 per cent, a market capitalisation of K5.6 billion, and earnings per share of 43 toea. The last 12 months had been tough, according to Group Chairman Sir Kostas Constantinou, "but we did well with the profits that we achieved." “We have an excellent staff, everybody’s committed,” he said. “It is unfortunate with the Covid-19, but we progress forward now with the inoculation of our staff who are behind it. The intention is to do most of the branches. We have had problems through the Pacific, places like Samoa, Tonga which have been restricted because of tourism. The Cook Islands have opened up so we are yet to see what happens. In spite of this, Sir Kostas remained positive. “Good times are coming for Papua New Guinea with the recent announcements on the progress of some of the country’s resource projects,” he said. “We are fortunate that we have the Papua LNG project that has been successfully completed and is proceeding with Total who’s the lead partner doing the upstream and Exxon doing the downstream. These projects are K48 billion and right on our doorstep and there’s not a lot of countries in the world that have these types of projects.” The news about P'Nyang was also embraced, according to Sir Kostas. Reference: The National (24 May 2021). Bank records first quarter profit of K203 million
PNG Business News - May 26, 2021
Bank South Pacific Joins ASX
The Bank South Pacific Financial Group Ltd has had its application to join the Australian Securities Exchange (ASX) accepted. The bank will be listed on the ASX this week, according to Group Chief Executive Officer Robin Fleming, and shareholders will be able to transfer partial shares to the ASX. “We were listed on the PNGX (PNG Stock Exchange) in 2003 but because of the size of BSP, that market capitalisation was close to K5.6 billion,” he said. “And because of the size of BSP, it was difficult for shareholders to have larger partials of shares and actively trade their shareholdings. Being listed on the Australian Stock Exchange, shareholders can move their shares either in full or in parts to the ASX and, therefore, trade their shares far more easily on a very liquid stock exchange market. PNG resident shareholders still have to go through a process in making sure their compliant with the Internal Revenue Commission (IRC) and Bank of PNG guidelines in respect to exchange control as to how they deal with any share sales. But once they move to the Australian stock exchange, they then have the capability to trade their shares far more readily and in a far more accessible format than is the case for PNG. He added, “While we have a good shareholding base in PNG because of BSP’s success, the composition of BSPs investment and the portfolio of some of the superannuation funds which is very high, we’ve been successful. Our portfolio continues to increase and even if they want to trade more actively, it is constrained by the absence of liquidity in PNG.” Sir Kostas Constantinou, the bank's chairman, said it was a watershed moment for the bank, allowing it to collect money and grow more. “It gives us liquidity, it gives our shareholders liquidity so that they can buy and sell shares and trade on the Australian Stock Exchange,” he said. Reference: The National (24 May 2021). BSP set to start trading on ASX
PNG Business News - March 31, 2021
BSP Changes Group Name
BSP Financial Group has replaced Bank South Pacific Limited as the company's name. Sir Kostas Constantinou, Chairman of the BSP, revealed this last week. The shareholders approved the name change, as well as other legislative amendments, according to Sir Kostas. BSP will now proceed with the filing of its application for listing on the Australian Securities Exchange (ASX). “The notice of the meeting is currently subject to advise and approvals, which are expected to be finalised during March 2021,” Sir Kostas said. According to BSP Group CEO Robin Fleming, the proposed ASX listing would provide access to new pools of capital on Australia's largest market. “While BSP has been listed since 2003 on the PNGX, there are a number of constraints that BSP faces in sourcing new forms of equity capital,” he said. “Accordingly, BSP is pursuing the proposed listing as a means of mitigating some of these constraints. Access to new sources of capital will allow BSP to explore future growth opportunities. Another benefit of joining the ASX is that it will facilitate increased liquidity for BSP’s shareholders (trading of BSP shares). The ASX is a much deeper (larger pool of investors) and (more) active market than the PNGX. Accordingly, shareholders will find it easier to trade BSP shares on the ASX.” The visibility of BSP would increase if it joined the ASX, according to Fleming. “It will provide the opportunity to better educate the international marketplace in relation to BSP and PNG,” he said. BSP's shares would be exchanged on both the PNGX and the ASX if authorised. When asked about the name change, CEO Robin Fleming confirmed that the iconic trade name of BSP would continue to be used throughout the Pacific.
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PNG Business News - August 12, 2022
Going Green: FAO-led EU-STREIT PNG Programme provides green-powered facility to local agricultural authorities to effectively service rural farmers
EU Funded UN Joint STREIT Programme in Papua New Guinea establishes a renewable energy-powered facility to support local government authorities in East Sepik Province, in delivering effective services to rural farmers and entrepreneurs. With generous support of the European Union, the FAO-led EU STREIT Programme officially opened a new 3 cluster office building on 10 August 2022, to host the Programme along with the East Sepik provincial divisions of Agriculture and Livestock, Cocoa Board and the National Agriculture Quarantine & Inspection Authority. The new-look office building is powered by 189 solar panels, which significantly reduce greenhouse gas emissions and reduces the collective dependence on fossil fuel. The solar panels supply the building with 90 KW of energy, relieving the resident agencies and authorities from relying on fossil-generated electricity for their needs, including lighting, ICT, water pumping, and temperature control. This zero-carbon-emission facility has the capacity to accommodate around 90 experts, technicians and extension service officers. Equipped with 120 batteries, the building can support staff’s operation for 36 hours in case of experiencing high cloud cover. The building, currently co-resided by the Programme and provincial agricultural bodies, will be transferred over to the East Sepik Provincial Administration at the end of the Programme and will continue to provide a sustainable base for sustainable support to agriculture-related services in the Province. Officiating the opening ceremony, His Excellency Ambassador Jernej Videtič, Head of the European Union Delegation to PNG, in his address, said: “I am happy to be here and to see that things are moving in the right direction to bring sustainable benefits to the people of East Sepik” Ambassador Videtič further highlighted that “with resources from the citizens of Europe to fund the EU-STREIT Programme in providing training, tools and support, the quantity and quality of cocoa, vanilla and fisheries products will increase. The objective is also to protect these quality products in international markets under the EU-STREIT introduced initiative of Geographical Indication.” The East Sepik Acting Deputy Provincial Administrator, Mr James Baloiloi, in his speech expressed his appreciation to the EU for funding the EU-STREIT Programme and the interventions that the Programme is doing in East Sepik and Sandaun provinces. “The STREIT Programme has gone ahead to introduce a culture of agribusiness that now enables the people of this Province and the people of Sandaun Province to have cash income that can sustain their livelihoods.” Mr Baloiloi added, “this infrastructure and building supports us and facilitates the service delivery to our people in this Province as well as Sandaun Province.” Thanking the EU for its generous funding support, Dr Xuebing Sun, the EU-STREIT Programme Coordinator, said: “the Programme has generated substantial impacts at beneficiary, local institutions and enabling business environment levels. This would not be possible with good partnership, increased ownerships and leaderships of the governments and implementing partners.” “This co-residing and close co-operation among UN agencies and their national partners in this integrated space reflect the partnership approach taken by the Programme to sustainably develop agri-enterprise activities in the region,” added Dr Xuebing Sun, adding “the new climate-friendly facility, which is fully powered by solar energy, also provides a space to welcome, advise and serve the farmers, including interested women and youth, who play very important roles along agri-food value chains”. “This kind of ‘green investment’ enables a shift to a more green economy for local institutions and infrastructure to meet cocoa, vanilla and fishery value chains stakeholders” advised Anthony Bennett, the FAO Lead Technical Officer of the EU-STREIT PNG Programme. United Nations’ implementing partners supporting the FAO-led EU-STREIT PNG present in the office include the International Labour Organization (ILO), International Telecommunication Union (ITU), United Nations Capital Development Fund (UNCDF) and United Nations Development Programme (UNDP). The EU-STREIT PNG is being implemented as a UN Joint Programme (FAO as leading agency, and ILO, ITU, UNCDF and UNDP as implementing partners), is the largest grant-funded Programme of the European Union in the Country and the Pacific region. It focuses on increasing sustainable and inclusive economic development of rural areas through increasing the economic returns and opportunities from cocoa, vanilla and fishery value chains and strengthening and improving the efficiency of value chain enablers, including the business environment and supporting sustainable, climate-proof transport and energy infrastructure development.
Paul Oeka - August 12, 2022
CPAPNG annual meet to discuss global changes
Certified Practicing Accountants of Papua New Guinea will be hosting their 23rd annual conference with about 400 participants nationwide expected to attend the two day conference organized by CPA PNG in Lae Morobe Province from August 18 to19, 2022 CPAPNG was established in 1974 and has come a long way with a lot of achievements along the way. Over the years its membership grew from mere numbers to just below 2000 which includes 40% locals and 60% non-citizens. . The CPA PNG conference is one of CPAs three significant annual events on their calendar with this year's conference theme; Is PNG prepared for the recession?" The conference will see certain key leaders in executive management roles from both the public and private sector delivering presentations in line with the conference theme. CPA PNG's Executive Director Mr. Yuwak Tau said the theme of the conference was selected because there was a decline in the global economy and the general so when that eventuates small economies tend to be affected. He added that they have basically selected the theme that was current and appropriate so that members would find relevance during the course of the conference. “The meeting is to create intellectual and interactive discussions with seasoned business leaders to present and share their ideas and experiences to find probable outcomes within their business environment and industries in times of economic uncertainty”. Some of the topics to be presented by consultants are current significant issues such as crypto currency, transport pricing, bit coin block chain technology and stress management. This were some topics that people have heard about but have not really ventured into. Mr. Tau added that it would be quite hard to measure the benefits immediately but the participants will be able to look at insights shared during the conference that would be appropriate in the areas of employment, accounting, finance, auditing and others. The conference will create an environment where participants can also share information so That they can take points to apply in their work place and industries. In relation the Kumul petroleum Holdings had also presented a cheque of K50, 000 to support the coming event at their head office. The cheque was presented by KPHL's executive General Manager Corporate Affairs, Luke Liria and was received by CPA PNG Chairman Richard Kuna. Mr. Liria said KPHL has appreciated the effort put in by CPA PNG to ensure that its members in State owned enterprises and the private sector were given appropriate level of training and as part of KPHL's corporate social responsibility and commitment they hope that their support will continue to help the organization facilitate and make sure the accounting practices is of international standards. CPA PNG's Chairman, Richard Kuna acknowledged KPHL for their support and stated that he was looking forward to seeing KPHL being a big part of the upcoming conference.
Paul Oeka - August 12, 2022
BSP: Small to Medium Enterprises Loans reaches 60% rate.
Bank South Pacific's Financial Group Ltd Chief executive officer Mr. Robin Fleming has recently announced that the bank has granted more than K200 million as loans to small to medium enterprises under its credit scheme facility that the then Marape government had released to the bank to support Small to Medium Enterprise (SME) and local businesses during the peak of the COVID-19 pandemic. Mr. Fleming said about 1523 customer loans have been approved, that is about 60% of loan approval rates since 2019. Prior to this announcement BSP and the Department of Commerce and Industry (DCI) had agreed to increase the maximum loan under the small-to-medium enterprise (SME) credit enhancement facility to K5 million. The previous limit was K3 million when the Government first released K100 million as security to the bank under its K200 million SME allocation for BSP to rollout the loan facility last year. Fleming stated that even though they have exhausted and rolled out the bulk of the governments relief funds for SME's they will still be running the SME loan program under its credit facility scheme “At this stage, BSP has not received the funding planned for this year but that is not preventing BSP from giving loans under the facility”. “There remains significant capacity for BSP to continue to assess, approve and funds loans under the facility”. “The agreement with the Government did provide for momentum in the SME facility to be maintained while allowing for the Government budget and funding process to be adhered to”. As part of the government SME relief funding, Commercial Banks were allocated K200 million with BSP Financial Group receiving K100 million, NDB K80 million and another K20 million was allocated to the department of Commerce and Industry BSP could not comment on how the National Development Bank (NDB) is dealing with the K80 million it received, but the intent, when discussions were initiated, was that BSP would be lending to more mature SMEs and NDB to startup ventures. In addition to enabling SMEs to access lower cost of funds through the facility with BSP, the bank has also made it a responsibility to ensure that Government funding is preserved by not approving loans that have a higher risk of default.