Kina Securities (KSL) H1 2024 earnings summary

Executive summary

• Revenue increased 17–21% year-over-year, driven by growth across all key revenue streams, especially commercial lending and foreign exchange income.

• Underlying NPAT rose 7% to PGK 49.6 million, while statutory NPAT declined 9% to PGK 42.2 million due to a one-off fraud loss provision (PGK 13.5m pre-tax, PGK 7.4m post-tax).

• Deposits increased 8% and lending grew 12% year-over-year, reflecting strong organic growth.

• Digital channels and partnerships contributed to a 35% surge in digital revenue and a 71% increase in FX income.

• Directors declared a dividend of K30.57 million (AUD 4.0 cents per share), payable in October 2024.

Financial highlights

• Net interest income rose 14% to PGK 111.6 million; fee and commission income increased to K74.6 million; FX income grew to PGK 37.0 million.

• Operating expenses increased, with cost-to-income ratio rising to 58.9% (or 64.8% including fraud provision).

• Underlying ROE at 15.6%, statutory ROE at 13.2%.

• Basic EPS was 14.7 toea (AUD 0.055); interim dividend maintained at AUD 0.04 per share.

• Capital adequacy ratio at 19.3%, above regulatory minimum.

Outlook and guidance

• Management expects continued strong growth in H2 2024, leveraging investments and a robust business development pipeline.

• PNG real GDP growth forecasted at 4.6% in 2024, with headline inflation at 5% and currency adjustments ongoing.

• Cost-to-income ratio targeted at 52–54% for the full year, expected to normalize as front-loaded costs subside.

• Confident in achieving double-digit loan growth for the full year, supported by a strong pipeline and solid July/August results.

• Uncertainty remains over timing of major resource projects, with Papua LNG FID expected in late 2025 or early 2026.