Kina continues strong revenue momentum supported by growth in core business

by PNG Business News - August 29, 2022

Photo: Kina’s CEO and Managing Director Greg Pawson

Kina has today announced an NPAT of PGK 45.6m an increase of 15% compared to the prior corresponding period (PCP). Kina’s 1H22 results reflect strong revenue growth and ongoing progress against the key strategic priorities of the Group. Kina remains committed to delivering improved returns by growing market share organically, disciplined expense management and a prudent approach to maintaining a resilient balance sheet. Revenue growth was evident across both net interest and non-interest income. Net interest income grew by 8% against PCP due to solid lending performance in SME and home lending. In non-interest income, merchant facility fees and FX income contributed to the 34% increase against PCP. 

In good news for shareholders, The Board has declared an unfranked half year dividend for the H122 of AUD 4.1 cents per share/ PGK 10.3 toea per share.

Kina’s CEO and Managing Director, Greg Pawson said the result demonstrates top line growth momentum, execution of our digital initiatives and a solid start to lending for the half.

“Over the past 6 months we have continued to build out our organic growth strategy. Increasing market share in our targeted segments remains the focus for 2022 supported by a robust balance sheet that ensures profitable growth. Underpinning revenue momentum is a disciplined approach to deliver customer-led digital solutions. The Launch of our ‘Single View’ is a market first in PNG. Single View enables customers to access their superannuation balances via Kina’s online banking channel.”  Other key achievements for the half were:

  • New customer segment propositions Kina PRIME PLUS (home loans), Kina Private (mass affluent), Kina Venture (SME)
  • Established a Corporate Advisory Services Unit
  • Expansion of Business Banking footprint to key provincial centres
  • Implementation of customer analytics and artificial intelligence for AML and transactions monitoring
  • Several Key payment partnerships such as Pei Beta and Xero,
  • Digital channels income up by 92% and scheme card growth of 138%
  • Implemented Environment and Social Management System for commercial loan origination (in partnership with Asian Development Bank)
  • Development of the ESG strategy and objectives for implementation over H2 2022
  • Expansion of MiBank financial inclusion partnership including the first co-branded branch in Alotau, Milne Bay province

Performance snapshot:

  • Increase in NPAT by 15% to PGK 45.6m. 
  • Loan book growth of 5%, to PGK 2.05b.
  • Net Interest Income increased by 8% to PGK 92.5m, compared to PGK 85.4m in the PCP.  
  • Foreign Exchange (FX) grew by 10%.
  • Fees and Commissions increased by 34% against PCP due to the ongoing expansion of Kina’s digital channel network.  
  • Cost to income increased 2% compared to PCP due to non-recurring expenditure in capability projects and initiatives targeted to drive sustained efficiency.
  • Kina’s Funds Administration business recorded NPAT of PGK 4.4m, with revenue growth of 12%.
  • The Funds Management business grew by 5% in total funds under management (PGK 5m).

Banking – Lending growth of 5% 

The lending portfolio delivered solid results across Home and Corporate Lending. Home lending grew by PGK84.3m, representing 10% growth on the PCP with housing loans contributing 41% of loan book growth. Business lending experienced growth in Term and Asset Financing loans, Agriculture sector, with expectations for higher growth in the second half of the year – something is missing here. Deposits grew 12% over the past 6 months largely attributed to an increase in fixed term deposits resulting in a lengthening of the balance sheet duration. Net Interest Margin reduced to 6.2% due to a lower yield in government securities, strong growth in corporate deposits supporting a strong lending pipeline and acquiring additional share of customer transactional banking including FX and a deliberate strategy of participating in corporate lending.

Funds Administration - Revenue growth of 12%

Kina’s Funds Administration business recorded NPAT of PGK 4.4m, with revenue growth of 12% compared to PCP generated from improved value add services to superannuation clients. The Funds Management business grew by 5% in total funds under management (PGK 5m), maintaining Kina’s market share in this sector.

Strategy and Outlook

Kina’s purpose is to constantly improve the prosperity of the people, communities, and markets it serves. The bank achieves this by being the most dynamic, progressive, and accessible financial services organization in the Pan Pacific. To deliver on our purpose the bank developed a series of priorities.

Kina is on track to deliver against its 2025 strategic plan. The plan will continue to drive organic growth in the core banking business and a leading edge digital customer experience, focused on organisational sustainability and corporate responsibility.  Kina aims to continue its current trajectory of pursuing targeted market growth, customer service excellence, digital on-boarding and transactional processing, and strategic partnerships to extend our network coverage. These initiatives include:

  • Home loan and SME growth in key target segments
  • Digital onboarding through Electronic Know Your Customer (E-KYC)
  • Enhancing data capabilities to proactively manage risk
  • Building a workforce capability that reflects our strategic requirements.
  • Embedding our ESG strategy through our Environment and Social Management Systems.

Mr Pawson said the growth agenda remains our key focus in the second half.

“Our aspirations to be the most sustainable leader in PNG will drive our agenda. Our regional branch expansion and appointment of additional business advisors will support our growth targets, efficiency initiatives will improve our expense base and creating a dynamic workforce with a digital mindset will set Kina up to deliver prosperity for our communities”.



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Of the countries shown, only Samoa and Kiribati have a lower minimum wage than PNG when a PPP comparison is made. This is very different to the past. Raymond Goodman, Charles Lepani and David Morawetz in their 1985 report The economy of Papua New Guinea compared minimum wages in PNG with a subset of the countries above back in 1978. Then, the PNG minimum wage was about twice as big or more than the other comparators. Today (using market exchange rates, and the earlier authors do), PNG comes in the middle of the pack, as Figure 2 shows. So far, we have shown that around the time of independence minimum wages were very high in PNG by international standards, and that they no longer are. Figure 3 shows how this change came about – also, for interest, comparing trends in PNG with those in Australia. Both the PNG and Australian weekly minimum wages are shown in Figure 3 measured in Australian dollars. The PNG minimum wage is converted into Australian dollars using the current exchange rate. Both wages are then adjusted for inflation and expressed in 2021 prices. The two series follow diametrically opposed paths. The Australian minimum wage fell with the high inflation of the 1970s and industrial relations reforms of the 1980s, and by the early 1990s was little more than half its value in the 1970s. It then increased in the late 1990s and 2000s during the resource boom, and has continued to increase. Adjusting for inflation, it is now almost back to where it was in the early 1970s. The PNG minimum wage does the opposite. It increased in the 1970s and was then held stable due to indexation, until the big bang reforms of 1992. Adjusted for inflation, PNG’s minimum wage continued to fall until 2004. 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However, with regards to unskilled labour, it is no longer a high-wage economy.   Data note: The PNG Economic Database provides the weekly minimum wage of PNG going back to 1972, and the PGK-AUD exchange rate. Wikipedia provides the Australian weekly minimum wage data (hourly and weekly, on the assumption of a 38-hour week) starting from 1966. The Australian CPI is from the Australian aid tracker. There are some years where Australian minimum wage rates change more than once in a year. For such cases, we took the average as annual minimum wage rate. The data for Asia-Pacific comparisons are from the International Labour Organization and the World Bank. The different frequencies of minimum wages for each country in 2019 in the ILO’s report are adjusted to convert to weekly rates. World Bank data is used to obtain market exchange rates and PPP conversion factors. For the Goodman, et al., data go to Table 3.6 on p.61 in their report.\ Disclosure: This research was undertaken with the support of the ANU-UPNG Partnership, an initiative of the PNG-Australia Partnership, funded by the Department of Foreign Affairs and Trade. The views are those of the authors only. This article appeared first on Devpolicy Blog (devpolicy.org), from the Development Policy Centre at The Australian National University. Stephen Howes is Director of the Development Policy Centre and Professor of Economics at the Crawford School of Public Policy, at The Australian National University. Kingtau Mambon is currently undertaking a Master of International and Development Economics at the ANU Crawford School of Public Policy, for which he was awarded a scholarship through the ANU-UPNG Partnership. Kelly Samof is a lecturer in economics at the School of Business and Public Policy, University of Papua New Guinea.

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