Shareholders have approved Papua New Guinea’s largest bank, Bank South Pacific, listing on the Australian Securities Exchange in a bid to access more capital and improve its presence in international capital markets, according to CEO, Robin Fleming.
Analysts say the float may be worth at least $US 750 million, but Fleming has told Islands Business that the bank ‘does not intend raising new equity capital on listing date”.
A special AGM approved the listing late March, including changing the name of the company to BSP Financial Group Limited, although the bank will continue trading across the region as BSP. He says companies could not be registered in Australia with the word “bank” as part of its company name unless they were regulated by the Australian Prudential Regulatory Authority (APRA), which BSP would not be as it will not operate as a bank in Australia.
“BSP may well raise equity capital at some point in the future to fund growth initiatives but there is no intention to do so immediately,” Fleming says.
“What we’re offering potential shareholders is stable dividends.
“From 2015, BSP has delivered sustainable year-on-year profit growth, while maintaining a strong capital position well above regulatory requirements.
“Given the latter BSP has had the ability to deliver stable shareholder dividends and strong yields,” he said, pointing out the three-year average is greater than 12 per cent.
“Like most businesses, BSP has also been adversely affected by COVID-19. As per our recent 2020 financial results announcement, the Group’s profit decreased by K84m (or 9.5%) to K806m in 2020.
“The global pandemic triggered significant challenges in every Pacific market and the consequential year-on-year increase in loan impairment expenses by K102m to K201m in 2020. It went up by 102.9 per cent from 2019.
“Despite that, BSP’s 2020 financial performance was stronger than the large banks listed on the ASX.”
Listing is expected later this year.
“BSP does not anticipate any material change to operations as a result of being listed on the ASX,” he said. “BSP has already adopted governance arrangements, for example, that are consistent with the requirements of the ASX.
And he doesn’t expect the listing to diminish the bank’s role in the region.
“BSP will remain a leading Pacific bank while access to new sources of capital will allow to us to invest in growth opportunities in the region as and when they arise.”
The bank has been listed on the Port Moresby stock exchange since 2003 and operates in Solomon Islands, Fiji, Cook Islands, Samoa, Tonga, Vanuatu, Cambodia and Laos.
Its shareholders include major PNG Institutions - IPBC, Nasfund, Nambawan Super, Petroleum Resources Kutubu, Credit Corporation, MVIL, PNG Teachers Savings & Loan, Comrade Trustees, and the International Finance Corporate (IFC).
It has assets (2016) worth more than K20.8 billion (US$6.4 billion), total deposits of K16.9 billion (US$5.2 billion) and market capitalisation of US$1.3 billion. BSP also has three 100% owned subsidiaries; BSP Capital Ltd - stockbroking and funds management in PNG; BSP Finance - specialist Asset Finance company in Fiji and PNG and BSP Life - specialist Life Insurance company in Fiji.
Bank of South Pacific (BSP) plans to list on the Australian Securities Exchange (ASX). BSP has given notice of its intention to change its constitution to allow for dual listing in Australia as well as its current listing in Papua New Guinea.
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Papua New Guinea’s regional bank BSP will revisit an earlier plan to list on the Australian Stock Exchange (ASX).
In a message to shareholders last week informing them on the progress of the company, BSP Group chairman Kostas Constantinou said dual listing will be part of its strategic plan moving forward, which, after COVID-19, would likely involve expansion into Asia.
BSP is currently listed on the Port Moresby Stock Exchange (PomSox).
“As you would be aware BSP had previously pursued a dual listing on the ASX. There were various reasons as to why this did not proceed. BSP’s Board and Executive team, in conjunction with Deloitte, recently conducted a Strategy Workshop to confirm the Banks strategic intentions over the coming term. Those deliberations confirmed that when the circumstances are favourable BSP should once again pursue a dual listing,” Constantinou said.
“Unlike the previous attempt, which was primarily focused on share liquidity, a future dual listing would be used to position BSP for potential capital raisings to fund offshore growth opportunities. A dual listing in the future, accompanied by a targeted growth program in Australasia, will deliver our shareholders significant financial benefits whilst increasing the value of the bank. In summary, BSP’s well-capitalised balance sheet enables the Board to consider appropriate growth opportunities that do not pose an unacceptable risk whilst adding value to our shareholders, customers, staff and Papua New Guinea.”
BSP’s interest in ASX was widely reported in the Papua New Guinea and Australian media in 2016 but later, it revealed the plan was on hold.
“The Board of BSP is continuing its consideration of initiatives to generate greater liquidity in BSP shares. BSP has not ruled out undertaking a secondary listing on the Australian Securities Exchange (Potential Listing), but is not currently of the view that there will be a significant public offer of shares in conjunction with the Potential Listing,” Constantinou had said in a statement filed at PomSox in April 2017.
Last week, the confirmation that it would revisit the option had accompanied the result of a research it commissioned into how it fared under a number of metrics that global banks use to measure each other’s performance.
The metrics were: Return on Assets, Return on Equity, Net Interest Margin and Efficiency Ratio.
“In all four Key Performance Measures BSP, is placed in the top quartile for similar banks globally, and the Bank significantly outperforms the average and median results for its peers. These results should provide our shareholders with the confidence of knowing BSP is outperforming comparative banks and is well placed to grow from a position of operational strength,” said Constantinou.
With the drastic slowdown in the global economy due to COVID-19, Constantinou said long term thinking was now critical for survival.
“I believe long-term thinking has never been more critical than it is today. Companies and investors with a strong sense of purpose and a long-term approach will be better able to navigate the Covid-19 crisis and its aftermath. This includes taking a strategic view of our region and the role we want BSP to play in it. The economy will recover. And for those who keep their eyes not on the shaky ground at our feet, but on the horizon ahead, there will be tremendous opportunities to be had,” he said.
BSP recently announced a profit after tax of Kina381.9million (US$108.5million) for the half year ended June 2020, down from Kina434.9million (US$123m) for the same period last year.
Last week, it announced a consolidated net profit after tax of K216m (US$61.5m) for the 2020 third quarter, a 31 percent increase from Q2, 2020.
BSP has branches in Vanuatu, Tonga, Solomon Islands, Samoa, Fiji, Cook Islands and is headquartered in PNG.
BSP Life investment portfolio is now valued at $660m (USD315.29m), positioning the life and health insurance provider as one of the largest leading institutional investors in the Pacific.
And the insurance company believes its numerous public awareness campaigns held throughout Fiji’s main centres on the importance of having an insurance policy were paying off now.
Last month, BSP Life, allocated F$21.4m (USD$10.2m) in bonus to its customers.
This brings total bonus allocations for the last three years to $53.8m (USD$25.7m).
BSP Life’s Managing Director Malakai Naiyaga said they are delighted to officially announce the 2017 bonus allocation for their policyholders which was an increase from $19.8m (USD$9.47m) in 2016 and $18.7m (USD$8.94m) in 2015.
This bonus allocation will add further value to customer’s policies and will assist them with future financial plans, said Naiyaga.
The year-on-year increases demonstrate BSP Life’s strong commitment to maximising returns for policyholders.
BSP Life has more than 80,000 policyholders, over 100,000 policies and 140 professional advisors licensed by the Reserve Bank of Fiji, plus broker partners to provide tailored solutions to customer needs as well as 10 Customer Service Centres Fiji-wide.
“We will continue to seek innovative ways to sustain this to encourage all existing policyholders to maintain their life insurance policies with us and to also attract those who have never taken up life insurance policies.”
BSP Life is the only insurer in Fiji that allocates two types of bonuses; one is the reversionary bonus and the other is a terminal bonus.
Reversionary bonus is allocated from returns of BSP Life’s investment portfolio and has remained at 2% of the sum insured plus accumulated bonuses and is applied on a compounding basis. This generates better value for customers compared to simple bonuses.
Terminal Bonus on the other hand is a loyalty reward, based on the number of years the policy has been with BSP Life. The terminal bonus rate for 2017 is 0.65% increasing from 0.55% in 2016. Terminal bonus is added when the policy is paid out.
Naiyaga explained that bonuses were important for policyholders as they added value on the policies which in turn increases the payouts at maturity or in the event of untimely passing of the life insured, to beneficiaries.
“Fiji is one of a few countries in the world that still offers policies with an investment or savings benefit and we have found that these products are attractive due to the absence of a fully-fledged investment market where individuals can invest. We hope that people will continue to see their importance as vehicles for savings and capital formation,” added Naiyaga.
He commended policyholders for their loyaty to ensuring premiums were paid on time for the duration of the policy allowing it to accumulate value for them and providing valuable returns at important stages of their lives.
“It’s delightful to see many Fijian households benefiting from their bread winners’ investment in a BSP Life insurance policy. We view life and health insurance as an essential and integral part of one’s financial planning.”
“As Fiji’s leading life and health insurance provider it is our firm belief, now more than ever, that insurance is a need and no longer a want. Our view is that life and health insurance are essential components of good financial planning, providing safeguards for families in the event of untimely death, medical treatment due to a chronic illness, as well as future life needs.
“With the prevalence of NCD’s and low level of retirement funds for most of our people, BSP Life’s policies can assist in putting aside a small contribution every week, fortnight, or month to build a fund that will support those needs.”
Naiyaga further added: “We take great care to be there when our policyholders need us most. Our ability to allocate these large bonuses and benefits year-on-year is underpinned by our strong financial standing. We have a stable, balanced and growing investment portfolio, sound governance processes and internationally recognised actuarial expertise to ensure we can deliver on our promises now and in the future. We take this responsibility seriously.
“Our message is simple, it pays to have life and medical insurance and you can trust BSP Life to honour its commitments.”
BSP Life MD concluded: “We thank our policyholders for their confidence in us and can assure them and prospective new customers that we are committed to honouring this trust.”
Formerly owned by the Commonwealth Bank of Australia and operating as Colonial Life & Health, the company was acquired by Bank South Pacific of Papua New Guinea in November 2009 and rebranded BSP Life in 2011.
By Usa Koto
Haroon Ali is to be the new Country Head of Bank South Pacific in Fiji, the bank has just announced in a statement released a short while ago.
He succeeds Kevin McCarthy when he retires at the end of 2018.
Ali is currently BSP Group's chief risk officer currently based at bank headquarters in Port Moresby, Papua New Guinea, and when the changeover starts in June, he will become the first Fijian to head BSP's business in Fiji.
“As a village boy from Vunimoli in Labasa, my dream has always been to become a bank’s country head in Fiji. I have worked hard over the years since joining Bank of New Zealand in 1980 and today I am really excited to have finally realised that dream. I am very passionate about this job and would like to thank the Group Chairman, Group CEO and the BSP Board for giving me this great opportunity to lead BSP in Fiji," the BSP statement quoted Ali as saying.
"I would also like to thank Mr McCarthy firstly for recruiting me to this great organisation and secondly for his outstanding leadership at BSP that has seen the Bank grow from strength to strength," added Ali.
He has 38 years of banking experience in Fiji, Australia and Papua New Guinea, and prior to joining BSP, Ali had worked for the ANZ Banking group.