Despite a challenging year amid the global Covid-19 pandemic, the Kina Bank Group has recorded strong economic growth for the 12 months to December 31, 2020.
This was the message from Greg Pawson, Managing Director and Chief Executive Officer of Kina Bank.
“We have delivered planned business growth across all of our existing businesses this year, despite the challenges presented by Covid-19. We also achieved the integration benefits critical to the ANZ PNG acquisition. In parallel, we completed a number of strategic initiatives that were market firsts; we launched a suite of new digital products and services; and we achieved significant growth in revenue from our existing digital channels. Our disciplined approach has delivered compelling growth for the year.”
Not only that, but it has also achieved many milestones in PNG and the Pacific region and became the first bank in PNG to design and test an eKYC (electronic Know Your Customer) solution for digital account opening, with full biometric and digital document identification.
It is now working with the regulator on a scalable in-market solution, according to a statement and market report released recently.
Kina’s Funds Administration business continued to record growth in revenue. Profit increased to PGK8.3m representing nine (09) percent growth against the prior corresponding period. This is consistent with revenues arising from increased funds under administration and growth in member numbers compared to the prior year.
Prudent management, innovation and strategic investments had seen significant progress made on a series of strategic initiatives that have successfully delivered growth for the business.
Some of the achievements of the bank during the period include:
- Announced the proposed acquisition of Westpac’s Pacific businesses in PNG and Fiji which is expected to complete by 30 September 2021 to become a larger scale regional bank. The acquisition is subject to regulatory approvals by the Bank of Papua New Guinea and the ICCC (Competition regulator).
- Simplified the corporate structure and successfully conducted a 1:2 NonRenounceable Rights Issue (ANREO) ensuring strong capital adequacy for the Bank. This will position the company for further growth while creating capacity to take advantage of acquisition and growth opportunities that may arise.
- Delivered the planned revenues from new channel income of PGK 18.8m from new channels successfully launched during the year.
- Introduced a flagship new customer offering, Prime, that includes fee free Visa cards, the lowest fixed rate home loan in PNG history, and a dedicated relationship advisor for expert customer advice for all business customers.
- Invested significantly in cards fraud risk and compliance systems and processes, resulting in a 95% reduction in fraud losses. New capabilities include a fraud monitoring module, 3D Secure, SMS email and WhatsApp alerts.
- Became the first commercial bank in the Pacific to implement VISA transaction controls online, giving customers greater choice on how their cards are used, further reducing the risk of fraud.
- Launched a market leading internet payment gateway that facilitates digital payments through multiple online channels for scheme cards and local bank cards issued by Kina Bank. The gateway enables payment partnerships direct to merchants or via intermediated e-commerce providers.
Kina Bank also signed a digital partnership with a local fintech company to deliver e-government services. The Department of Lands and the Immigration and Citizenship Authority were onboarded in Q4. The partnership is a significant step forward in Kina's ambition to drive digitally enabled government services.
It also became the first bank in the Pacific to launch a Xero bankfeed API that will enable business customers to integrate their banking transaction data directly with the Xero platform, and opens up additional commercial partnership opportunities.
In addition to doubling the number of merchant POS terminals in market, implemented a fully integrated solution between Pronto terminals and Kina POS machines, with best in-market performance and superior reliability.
The Financial Results for the year were:
- Revenue up 53% on PCP to PGK 314.8m
- Non-interest income up 59% on PCP to PGK145.1m
- Return on equity 16.8%
- NPAT up 25% on PCP to PGK 76.0m
- Net interest income up 48% on PCP to PGK 169.7m
- Capital adequacy at 23.8%
- Net interest margin 7.5% • Earnings per share of AUD 11.7 cents or PGK 32.9 toea per share • Full year dividend AUD 10.0 cents or PGK 26.9 toea per share
Net Interest Income increased by 48% to PGK 169.7m compared to the prior corresponding period. This was achieved through growth in the existing loan book, incorporation of the ANZ loans and deposit portfolio and business acquisition, and lower interest expense (against total deposits) compared to the prior year. Overall gross loan book growth was up 16% against the corresponding prior period.
