Bank of South Pacific posts K355 million profit

By MALUM NALU

Bank of South Pacific has announced profit after tax of K355.95 million for 2011, as revenues from ordinary activities soared to a record K1.18 million, despite testing political times.

 Board chairman Kostas Constantinou announced yesterday (Monday) that BSP Group achieved a consolidated operating profit before tax of K475 million for the 2011 financial year, a 15.6% increase on the consolidated operating profit of K410.8 million.

“Politically, PNG’s constitution has been tested,” he said.

“These events have influenced perceptions and attracted international criticism, leading to a downgrade in the country’s sovereign credit rating.

“They also impacted on the bank, with our credit rating being cut a notch by Standard and Poors.

“Nevertheless, the continuing advance of the PNG LNG project continues to dominate economic activity and forms the basis for a generally-positive outlook for the PNG economy in 2012.”

Total assets of the group increased by about K1.65 billion, to K11.68 billion.

“Bank and group achieved a milestone in 2011, with revenues from ordinary activities pushing past K1 billion for the first time,” Constantinou said.

“For the group, revenues have increased 24% during the year, building upon the trends established in the prior year.

“With interest income constrained by low bank bill rates during 2011, most of the revenue growth has come from non-interest income streams.

“Good growth has been achieved with customer transaction volumes, though major acquisition campaigns supported by product and process revisions, and accelerated growth in electronic banking channels.”

He said the bank’s achievements were strong, with pre-tax profits growing 15.9% to K466.2 million, from K402.1 million in 2010, supported by K1.02 billion of revenue net of interest expense.

Total assets of the bank at the end of 2011 were just over K10.018 billion, including the assets of the former subsidiary company, National Bank of Fiji Ltd, which was converted to bank status in March 2011.

“The 2011 results have been achieved on the back of strong domestic growth of the PNG economy, driven by continuing LNG project-related activities and other resource projects in various stages of development, despite a fractious and fickle global environment,” Constantinou said.

“Monetary policy in PNG adopted a tighter stance during 2011, with Bank of Papua New Guinea’s Kina Facility Rate increasing from 7% to 7.75% through the year.

“Strong export performance, supported by favorable global commodity prices has continued to boost liquidity levels, and this has meant interest rates on Central Bank bills have remained at the low levels where they ended 2012, maintaining significant downward pressure on net interest income.”