BSP Qtr.4/2014 Results Summary

Johnson Kalo, Deputy CEO / CFO

2

Q4/2014 Results

3

Profit & Loss (Kina ‘million)

• Group Q4 NPAT of K123m increased K1m vs.

Q3, Although Bank NPAT increased +K3m,

this was reduced by a weaker result for

BCap, and having to absorb start up costs for

BSP Finance in PNG and Fiji

• Total Q4 Revenue of K377m is similar to Q3.

Increased fx turnover contributed K8m to a

revenue increase over Q3 and Loan portfolio

growth drove a revenue increase of

K8m(+3.6%) over Q3, but these gains were

offset by weaker Q4 revenue from

subsidiaries

• Increased B&DD provisions have been driven

by Fiji B&DD provisions + normal provisioning

commensurate with portfolio growth for PNG

• Depreciation & amortisation have remained

steady. Other Operating Costs have remained

low relative to 1st half of 2014 and will

continue to be a focus in 2015.

123

377

24 31

153

0

50

100

150

200

250

300

350

400

450

Net Profit(After tax

plus Assoc.Inc.)

Revenue Bad andDoubtful

Debts

Depreciationand

Amortisation

OtherOperatingExpenses

Kin

a M

illio

ns

Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

4

Balance Sheet (Kina ‘billion)

• Growth in loans by K1.5Bn (28%) in

2014 to K6.8bn reflected in an

improved market share of over 50%

in PNG.

• Other Interest Earning assets

(mostly C-bills and T-bills) reduce

through 2014 as investments are

replaced by loans.

• Deposits increase slightly in Q4 ,

note full year growth of K0.5bn to

K12.8bn

• Total Assets of K15.9bn reduced by

K83m in Q4 (2014 inc. K116m)

Foreign Currency placements

decrease K455m in Q4, but note all

other assets increase K368m.

• Total Assets stable with Loan growth

funded by a combination of deposit

growth and reductions on other

interest earning assets.

6.8

4.8

12.8

15.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Loans Other InterestEarning Assets

Deposits Total Assets

Kin

a M

illio

ns

Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

5

Market Share

Deposits Loans

56%

24%

39%

47%

0%

10%

20%

30%

40%

50%

60%

70%

PNG Fiji SolomonIslands

Total

Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

50%

21%

28%

39%

0%

10%

20%

30%

40%

50%

60%

PNG Fiji SolomonIslands

Total

Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

6

Customers and Channels

Customers (‘000) eftPOS

1,527

257

75

1,859

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

PNG Fiji SolomonIslands

Total

Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

11,663

1,922

152

13,737

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

PNG Fiji SolomonIslands

Total

Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

7

Customers and Channels

ATMs Branches, BSP Rural (PNG)

310

112

19

441

0

50

100

150

200

250

300

350

400

450

500

PNG Fiji SolomonIslands

Total

Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

44 41

18

7

110

0

20

40

60

80

100

120

PNG PNG Rural Fiji SolomonIslands

Total

Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

8

Financial Risk Management

Capital Adequacy Provisions to Loans

19.4%

4.6%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Tier 2 Capital

Tier 1 Capital

Return BPNG requirement - 12%

4.6%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

9

Funds

Deposit Type (K ‘billion) Deposit Mix (K ‘billion)

74%

26%

0%

20%

40%

60%

80%

100%

120%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Q4-13 Q1-14 Q2-14 Q3-14 Q4-14

Kin

a B

illio

ns

Wholesale Retail

Current 10.7 Bn

84%

Term , 2.0 Bn,

16%

10

2014 Full Year Results

11

2014 Full Year Profit & Loss

Profit (K’m) Group Distribution of NPAT (K’m)

2014 2013 YoY D 5yr D

Income 1,582.7 1,522.1 60.6 627.7

Net Interest 852.9 740.9 112.0 308.9

Non Interest 729.8 781.2 (51.4) 318.8

Total Expenses (874.1) (927.4) 53.3 (330.7)

Depreciation &

Amortisation(126.8) (175.8) 49.0 (72.7)

Operating

Expenses(670.5) (658.0) (12.5) (201.8)

Impairment -

Subsidiary0.0 (15.0) 15.0 0.0

Loan Impairment (76.8) (78.6) 1.8 (56.2)

Profit Before Tax 708.6 607.0 101.6 297.8

Profit After Tax 507.3 436.8 70.5 224.2

PNG Fiji S. I %

Bank 457.3 27.3 11.4 98%

Subsidiaries 0%

BSP Capital (0.8) -0%

BSP Life 13.0 3%

BSP CN 0.0 0%

BSP Finance (0.5) (0.3) -0%

% 90% 8% 2% 100%

12

Balance Sheet as at Dec 31 2014

Assets & Liabilities (K’m) Group Distribution of Assets (K’m)

2014 2013 YoY ∆ 5yr ∆

Assets 15,877 15,761 115 5,850

Loans 6,817 5,306 1,511 2,726

Investments 118 117 2 64

Other Assets 8,941 10,338 -1,397 3,060

Liabilities 14,077 14,142 -66 5,184

Deposits 12,708 12,201 507 4,724

Other 1,368 1,941 -573 460

Equity 1,800 1,619 181 666

PNG Fiji S. I %

Bank 12,745 2,028 517 96%

Subsidiaries 0%

BSP Capital 14 0%

BSP Life 545 3%

BSP CN 19 0%

BSP Finance 5 3 0%

% 80% 16% 3% 100%

13

Performance Summary 2014 (1)

• NPAT – The Group recorded a consolidated operating profit after tax of

K507.3 million for the 2014 financial year, a 16.1% increase on the

consolidated 2013 operating profit after tax of K436.8 million.

• Revenue – Group revenues have increased 4% during the year.

– Revenue growth has come from interest income streams,

– Revenues from foreign exchange income reduced from K184.5m

for the 1st half of 2014, to K83m for the 2nd half of 2014 following

changes to the margin bands on foreign exchange.

14

Performance Summary 2014 (2)

• Operating Expenses – Group operating expenses show reductions of -4.3% and operating expenses

will continue to be a focus in 2015.

– The cost to income ratio for the bank is 46.5%, down from 51.7% in 2013.

The Group includes BSP Life operational costs, which is the main driver for a

higher cost to income ratio for the Group of 50.4%, albeit down from 54.8% in

2013.

• Balance Sheet – Total assets of the Group increased, by K116 million to K15.9 billion.

– Group Loans and Advances to Customers has seen net growth of K1.5 billion

to K6.8 billion.

– Group Customer Deposits continue to grow steadily (up 4.1% to K12.7b),

mainly in the retail and government segments in PNG, and in the corporate

segment in Fiji.

• Capital Adequacy – Q4/14 ratio of 24.0% - well above BPNG requirement of 12%

15

Strategy Update

• Growth Strategies – Establishment of BSP Finance PNG and Fiji

– Pacific expansion with acquisition of Westpac’s operations in Samoa, Cook Islands, Vanuatu, Tonga, and Solomon Islands

• Vision/Values – 2014 began with restatement of BSP’s Vision and Values

• People – iCare refresh completed in 2014, launched first cohort of BSP’s 3-year Leadership

Development Program

• Growth – loans and deposits growth and recovered market share in a competitive market

• Choice – focused on improving and extending electronic banking facilities for customers

• Cost Reduction – maintained focus on reducing costs, with cost savings initiatives, benefit realisation on

investments, and progress on implementing property strategy

16

Shares

17

Share Price

K3.46bn market Cap

K3.46bn market Cap

Share Price K7.40

27-Feb

Share Price K7.40

27-Feb

Share Price

in Kina

Share b’back introduced July 2014

Share b’back introduced July 2014

0.0

0.5

1.0

1.5

2.0

2.5

3.0

K6.20

K6.70

K7.20

K7.70

K8.20

K8.70

Volume Traded

in Millions

Consolid’d Earnings per share 108.3 toea

Share price K7.40 as at 27 Feb 2015

Interim Dividend pd. Oct’14 20 toea per share

18

Thank You