Kina Securities (KSL) H2 2024 earnings summary

Executive summary

• Underlying NPAT rose 7% year-over-year to PGK 111.9 million, while statutory NPAT declined 2% to PGK 102.5 million due to a one-off tax adjustment and fraud provision.

• Loan book expanded 13%, driven by business and home lending, with net interest income up 15% and non-interest income up 33%, now 55% of total revenues.

• Digital channel revenues grew 27% year-over-year, supported by fintech partnerships and increased merchant and bill payments.

• FX income surged 68% year-over-year, driven by onboarding multinational clients and favorable market conditions.

• Leadership transition underway, with Ivan Vidovich appointed CEO and Greg Pawson supporting until July 2024.

Financial highlights

• Net interest income rose 15% year-over-year to PGK 222.2 million; total revenue up 21% to PGK 488.8 million.

• Cost-to-income ratio increased to 58.6% for FY24, but improved to 53.3% in the second half.

• Operating expenses rose 31% year-over-year to PGK 286.6 million, mainly from administrative, staff, and occupancy costs.

• Full-year dividend of AUD 0.10 per share declared, payout ratio 74%.

• Underlying ROE improved to 17.1%; capital adequacy ratio at 18.4%, well above regulatory requirements.

Outlook and guidance

• Earnings growth expected in 2025, supported by continued loan book expansion, digital and non-interest revenue growth, and PNG economic growth.

• Cost efficiency improvements targeted through budget control, process improvement, and digitization.

• Corporate tax rate for banks to decline from 45% in 2024 to 40% in 2025 and 35% in 2026.

• FX income growth expected to moderate in 2025 after extraordinary 2024 performance.

• Medium-term outlook supported by major oil and gas project agreements expected to boost economic performance.