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1 F U L L Y E A R R E S U L T S 2 0 2 4 28 February 2025 For personal use only
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2 Contents. Overview – Ivan Vidovich FY 24 result – Ivan Vidovich & Johnson Kalo Strategy and outlook – Ivan Vidovich For personal use only
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3 Overview. For personal use only
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4 Growth & Prosperity Resilience Delivering our strategy. • Loan book growth: 13% increase due to strong drawdown performance and active pipeline management in business lending. • Foreign exchange revenues: 68% rise from increased customer inflows, major account onboarding, and BPNG's interventions. • Digital channels and partnerships: 27% year-on-year growth, driven by merchant and bill payments, visa volumes and Kina’s strong foundational position in e-commerce. • Cybersecurity and Data Centre: Ongoing investments and improvements through the Security Operations Centre and Data Centre uplift program. • Loan impairment provisioning: Updated models with quantifiable techniques for better predictive capabilities, aligning with international financial reporting standards. • Digital Hubs: Improved accessibility with a hybrid in-person and digital, cashless banking model. • Lending customer experience: Programs being developed, leveraging out technology partner, WLTH’s, expertise and technology solutions. • Innovation recognition: Acknowledged by strategic partners such as VISA as being one of the most innovative banks in the Pacific region. Service Excellence • Employee value proposition: Ongoing training and capability development to foster a dynamic and innovative company. • People Day: Focus on succession planning to ensure business continuity, develop leaders, and minimize disruptions during transitions. Dynamic People • Strongim Komuniti Grant (SKG) program: Kina staff assisted with 14 small-scale projects across 11 provinces and the Autonomous Region of Bougainville. • Litehaus International partnership: Funded computer labs in several schools in PNG. • Youth programs: Twelve youths completed the Archer Leadership Program and graduated from the Motu Koita FODE Program, both supported by Kina. Sustainable Communities For personal use only
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5 Profitable, sustainable growth. Organic growth momentum • NPBT up 5% • Underlying NPAT up 7% • Lending up 13% • Net Interest Income up 9% Non Interest Income • FX Income up 68% • Digital Channels up 27% • Wealth Management Income up 28% Shareholder returns • Full year dividend per share of 10.0 cents (AUD), unchanged year on year For personal use only
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6 Shareholder return. 19.6% 16.8% 15.7%17.9% 16.8% 17.1% FY2022 FY2023 FY2024 ROE - Statutory ROE - Underlying Return on Equity 26.4 25.6 26.1 10.6 10.0 10.0 FY2022 FY2023 FY2024 Dividend per share DPS (PGK toea) DPS (AUD cents) 40.6 36.6 35.7 16.4 13.8 13.8 FY2022 FY2023 FY2024 Statutory Earnings per Share EPS(PGK toea) EPS (AUD cents) For personal use only
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7 Financial Results. For personal use only
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8 Financial Highlights. FY2024 FY2023 Movement % Net Interest Income (PGK m) 222.2 203.3 9% Revenue (PGK m) 488.8 404.2 21% Net Profit before Tax (PGK m) 184.1 175.5 5% Underlying NPAT (PGK m) 111.9 105.0 7% Statutory NPAT (PGK m) 102.5 105.0 (2%) Cost to income ratio (%) 58.6 54.2 8% Underlying ROE (%) 17.1 16.8 2% Ordinary Dividend (AUD cents) 10.0 10.0 - Total Capital Ratio (T1 + T2) (%) 18.4 20.0 (8%) For personal use only
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9 Statutory vs operating earnings. Statutory NPAT 1H (PGK’000) 2H (PGK’000) FY (PGK’000) FY2024 42,241 60,227 102,468 FY2023 46,367 58,598 104,965 % change (8.9%) 2.8% (2.4%) Operating NPAT 1H (PGK’000) 2H (PGK’000) FY (PGK’000) FY2024 42,241 60,227 102,468 Add back: Deferred tax adjustment - 9,403 9,403 Post tax fraud incident provision 7,141 - 7,141 Operating NPAT FY2024 49,382 69,630 119,012 Operating NPAT FY2023 46,367 58,598 104,965 % change 6.5% 18.8% 13.4% For personal use only
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10 Revenue. Investments 13% Loans 43%FX 11% Digital 14% Wealth 8% Others 11% FY2023 Investments 9% Loans 41% FX 16% Digital 15% Wealth 9% Others 10% FY2024 • FY24 revenue propelled by interest income on loans, foreign currency and digital channels. For personal use only
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11 Loan growth of 13%. 1,344 534 94 72 76 82 1,651 576 110 93 84 101 1,942 608 113 98 86 105 Business Loan Home Loan Investment Property Asset Financing Personal Loan Overdraft and Other PGK’m FY2022 FY2023 FY2024 • Solid loan growth of 13% vs PCP . • Driven by Business and Home loans. For personal use only
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12 Net Interest Margin. NIM impacted by: • Gradual lift in the 2H on treasury bill yield rates. • Solid growth in commercial and home lending • Stable growth in corporate wholesale deposits 92.5 88.7 98.1 105.2 111.6 110.6 6.2% 6.0% 5.5% 5.6% 5.6% 5.8% 6.5% 6.5% 7.0% 7.1% 7.2% 7.1% 5.5% 5.3% 3.4% 3.4% 2.8% 3.4% Jun22 HY Dec22 HY Jun23 HY Dec23 HY Jun24 HY Dec24 HY Net Interest Income (PGK'm) Net Interest Margin (%) Interest Spread - loans (%) Interest Spread - investment (%) For personal use only
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13 Digital Revenue 27% growth. 26 14 2 1 31 27 4 2 36 37 5 3 Merchant fees VISA Fees Mobile Banking fees Internet Banking fees PGK'm FY2022 FY2023 FY2024 • Improvements in distribution operating model, consistent growth in merchant and bill payments, visa volumes and e-commerce partnerships. For personal use only
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14 Kina Wealth. 17.35 17.96 19.68 880 922 958 840 860 880 900 920 940 960 980 FY2022 FY2023 FY2024 Funds under administration (FuA) FuA (PGK'bn) Member ('000) 8.92 10.00 11.57 FY2022 FY2023 FY2024 PGK'bn Funds under management (FuM) For personal use only
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15 Market share gains. 14,142 16,176 16,864 2,159 2,562 2,883 15.3% 15.8% 17.1% FY2022 FY2023 FY2024 PGK'bn Market share percentage - lending Total System Lending (Source BPNG) Kina Loan Book Kina Lending Market Share 30,018 33,106 31,256 3,879 4,345 4,352 12.9% 13.1% 13.9% FY2022 FY2023 FY2024 PGK'bn Market share percentage - deposits Total System Deposit (Source BPNG) Kina Deposit Book Kina Deposit Market Share • Capitalising on opportunities for deposit and lending market share growth in PNG. For personal use only
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16 Corporate Tax. • In December of 2024, the PNG Government announced a gradual decrease in Corporate Income Tax on Commercial Banks from 45% to 40% for 2025 and 35% for the 2026 fiscal year. • The increase in rate was effective as of 1 January 2025. • KSL’s deferred taxes at December 2024 were revalued at the new rate in line with IFRS resulting in an increase in tax expense of K9.4m in 2024 statutory NPAT. 2022 2023 2024 2025 2026 Standard rate 30% 30% 30% 30% 30% Small banks 30% 45% 45% 40% 35% KSL blend* 30% 42% 42% 39% 33% Big banks** 30% 45% 45% 44% 43% *Blended tax rate: after consolidating the tax rate for non-bank entities, KFM and KISS, which are taxed at standard rate of 30% ** Big banks: banks with annual earnings above PGK300m For personal use only
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17 Asset Quality. 0.2% 8.7% 1.9% 6.8% 1.9% 0.4% 6.3% 0.8% 5.4% 2.0% 0.7% 8.1% 1.5% 6.5% 2.3% Impairment Exp % of GLA NPL % of GLA + 90 day arrears + 180 day arrears Provision % of GLA Dec22 FY Dec23 FY Dec24 FY • Overall portfolio quality remains solid. • Elevated risk mainly in personal loan portfolio. For personal use only
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18 Deposit tenure. On Call 67% 1 month 7% 2 months 4% 3 months 3% 6 months 9% 12 months 9% 24 months 1% FY2023 On Call 1 month 2 months 3 months 6 months 12 months 24 months On Call 68% 1 month 8% 2 months 6% 3 months 2% 6 months 5% 12 months 9% 24 months 2% FY2024 On Call 1 month 2 months 3 months 6 months 12 months 24 months • Year on year, deposit profile stability. For personal use only
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19 Capital adequacy. 22.5% 20.0% 18.4% 12.0% FY2022 FY2023 FY2024 Capital Adequacy: T1 + T2 BPNG minimum total risk based capital • Capital adequacy maintained in KSL’s target range, providing capacity for growth and supporting risk weighted assets of K2.8b and total assets of K5.2b For personal use only
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20 Strategy and Outlook. For personal use only
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21 Vision. Purpose. Our Strategy. Priorities. Our Vision is to be the most dynamic, progressive and accessible financial services organisation in the Pan Pacific region. Our defining purpose is to constantly improve the prosperity of the people, communities, and markets that we serve. Prosperity for our communities is Kina’s DNA. Serving our communities, supporting the growth of Papua New Guinea and continually developing innovative customer-led solutions is at the core of our organisation. GROWTH & PROSPERITY BUILDING RESILIENCE SERVICE EXCELLENCE DYNAMIC PEOPLE SUSTAINABLE COMMUNITIES Our Values. Guides equity and justice, ensuring opportunities for all to thrive. Sparks creativity, fuels perseverance, drives change and touches hearts. Fosters trust and satisfaction by addressing peoples’ needs promptly and effectively. Embodies empathy, compassion, kindness and enriching our customers’ lives. Is a team who entrust each other. Values. For personal use only
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22 Continuity of Strategy through CEO transition. • PNG’s challenger bank • A diversified portfolio, right for PNG’s market context • Bias towards digital solutions and partnerships • Inorganic growth exploration • Opportunity and growth at the heart of culture For personal use only
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23 Efficient growth. One off costs FY24 • Fraud incident. • January 10 civil unrest. • Professional services for capability uplift in technology and risk. Management focus • Budget control. • Operating model, process improvement, and digitisation over the medium to long term. For personal use only
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24 Economy. • Global growth is projected at 3.3% in 2025 and 2026, below the historical average of 3.7% (2000-2019). • Global headline inflation is expected to decline to 4.2% in 2025 and 3.5% in 2026, converging back to target earlier in advanced economies than in emerging markets. Australian and New Zealand Central Banks have already cut interests rates this year, noting the slowing consumer demand and easing price pressures. • Policy uncertainty, trade frictions, and geopolitical tensions remain elevated, posing risks to the global economic outlook. • In emerging market and developing economies, growth in 2025 and 2026 is expected to remain steady from 2024 levels. • China's growth in 2025 is revised upward (from 4.5%) by 0.1 percentage point to 4.6%, due to carryover from 2024 and a fiscal stimulus package offsetting trade policy uncertainty and property market drag. Growth is projected to remain stable at 4.5% in 2026 as trade policy uncertainty dissipates and retirement age increase slows labour supply decline. G L O B A L O U T L O O K -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 2019 2020 2021 2022 2023 2024 2025 2026 2027 Global GDP Outlook World GDP Emerging & Developing Asia PNG Global Inflation Projections For personal use only
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25 Economy. • PNG's real GDP is projected to grow by 4.9% in 2024 and 4.7% in 2025. • The resource sector is anticipated to grow by 5.9% in 2024 and 3.4% in 2025, with higher output from major mines coinciding with historically high gold prices. • Non-resource sector output is forecasted to grow by 5.2% in 2025 with increased agriculture production, continued public infrastructure investments, and strong agriculture commodity prices. Exports will continue to be supported by a depreciating currency. • Wholesale and retail trade, coffee, cocoa, fisheries, construction, ICT, transport, and the financial and insurance sectors will experience solid growth in 2025. • Risks to the growth outlook include increasing security costs associated with law and order conditions, continued disruption at the Porgera mine site affecting resource sector output, and imported inflation risks due to the current exchange rate policy stance. • In the medium term, the finalisation of financial agreements for major oil and gas projects heading into 2026 will be a major positive underwriting economic performance going forward. D O M E S T I C O U T L O O K 5.2% 3.4% 4.7% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% Non-Resource GDP Resource GDP Total GDP Growth 2025 PNG Growth Forecasts For personal use only
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26 Appendices. For personal use only
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27 Loan portfolio by industry. 694 615 316 213 171 - 79 23 44 46 771 699 360 286 184 97 75 68 34 42 847 759 426 320 251 97 96 76 21 60 Wholesale & Retail Personal Banking Real Estate/Renting/Business Services Other Business Building and Construction Post & Telecommunication Hotel & Restaurants Transport & Storage Equipment Hire Other* PGK'm FY2024 FY2023 FY2022 *Other: Agriculture, Fishing, Forestry, Mining, Manufacturing, Utilities, Financial Intermediation For personal use only
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28 Deposit by products. 1,443 327 1,637 472 1,471 497 1,864 512 1,430 350 2,009 564 Fixed Term Cash Management Accounts Current Account Savings Account PGK'm FY2022 FY2023 FY2024 For personal use only
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29 Thank you. For personal use only