PNG’s largest bank to list on the Australian Stock Exchange

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.