Kina Securities increases profits by 10.3% in FY22, driven by revenue diversification and digital channels

By: PNG Business News March 01, 2023

Photo: Greg Pawson

Kina Securities Limited, has reported an underlying net profit after tax of K106.1 million for the financial year 2022, representing a 10.3% increase from the prior corresponding period (PCP). Kina’s CEO, Greg Pawson, said that the result was "pleasing" and demonstrated the company's commitment to its strategic plan. He also highlighted the diversified income streams, increased revenues in digital channels, and solid growth in Kina’s core business as contributing factors to the company's success.

In addition, Pawson noted that Kina's underlying return on equity remained above 15%, at 17.9%, and that the company maintained a robust balance sheet, with regulatory capital at 22.5%, well above the minimum requirement. He emphasized that the strong results demonstrated Kina’s ability to execute a revenue diversification strategy, with 50% of income derived from non-interest products.

Despite the challenging business environment in Papua New Guinea, Kina's overall lending increased by 11% against PCP, with the overall balance exceeding K2.1 billion. Commercial lending was up 9.6%, which included a strong year-on-year SME growth of 25% and home lending up 19%. However, in December 2022, the PNG government announced an increase in corporate income tax on commercial banks from 30% to 45% for the 2023 fiscal year. The increase in the rate took effect on January 1, 2023.

Kina’s deferred taxes at December 2022 were revalued at the new rate in line with IFRS, resulting in a tax credit of K10.4 million in 2022 statutory net profit after tax (NPAT). Kina’s FY2022 statutory NPAT was K116.5 million (including tax credit), while the underlying NPAT was K106.1 million. Pawson stated that Kina continues to engage with the government regarding possible alternative tax treatments that will support economic growth in PNG.

In summary, Kina Securities' FY22 financial results were strong, demonstrating the company's ability to execute its strategic plan, despite challenging business conditions. Pawson’s comments highlight Kina's commitment to revenue diversification, solid growth, and maintaining a robust balance sheet to navigate changing market conditions.

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