Kina Securities Limited (ASX:KSL | PNGX:KSL) (Kina) has announced an underlying Net Profit After Tax (NPAT) of PGK 105.2m, a decrease of 0.8% by comparison to prior corresponding period (PCP) with almost 20% growth in pre-tax profit offset by the tax increase from 1 January 2023.
Kina’s FY23 results were underpinned by solid revenue growth in core banking products, notably business lending, and digital services, contributing towards the progress of the 2025 strategic plan. Kina’s underlying ROE remained at 16.8%, and regulatory capital closed the year at a risk-aligned 20.1%, inside our target operating range and above the minimum requirement. This supports Kina’s growth focus.
In addition to the strong performance of loan interest income in 2023, the results also demonstrate Kina’s ability to execute a revenue diversification strategy, with close to 50% of income derived from non-interest products.
The Board declared an unfranked final dividend for 2H23 of AUD 6.0 cents per share/PGK 15.9 toea per share. The total dividend per share for the year is AUD 10 cents / PGK 25.6 toea, with a yield still in excess of 10%. The higher tax on profit has been an important consideration, but the ability to maintain NPAT on par with prior year levels helped to keep the dividend at this level and within the range of the Board’s payout ratio.
Kina’s CEO and Managing Director, Greg Pawson said that the result continues to demonstrate Kina’s operational and execution alignment with our Strategic plan, successfully delivering diversified income streams, increased revenues in digital channels and solid growth in our core business.
The business has also shown agility to adapt when necessary to deal with variability in conditions, such as tax rate changes, foreign currency supply inconsistency, and low domestic securities yields.
“We have just passed the halfway point of our 2025 strategic plan. Executing sustainable growth on the core lending businesses through a targeted approach to segments has clearly stood out as a market winning plan in 2023. This has enabled our market share to improve by 4% in loans and 2% in deposits with a customer growth of 19%. Our digital revenues were +44% and the trajectory remains positive. We are confident that it will deliver more in the coming years. Merchant fees, online banking fees, EFTPOS usage and other digital led initiatives such as Digibankr, Niupay and Pei beta, underline this strength.”
The PNG government’s increase in Corporate Income Tax for commercial banks from 30% to 45% came into effect on 1 January 2023, and despite indications that further consultations would continue with the banking industry in the first half of 2023, the tax remained in place for the financial year.
In 2023, the impact of the higher tax rate has had an adverse impact on the bank’s results, in that near-20% increase in profit before tax for the year, has been entirely consumed by it.
Mr Pawson said in alignment with Kina’s 2025 Strategic Plan, the Group is committed to driving its strategic pillars to deliver prosperity for our communities.
“Our mission to deliver prosperity for the communities we serve remains central to our purpose, these initiatives include auditing all branch locations to ensure our service and product offerings are accessible and inclusive, revamping our flagship branch and key locations to provide a better experience for our customers, enhancing ICT infrastructure and capabilities, and expanding our footprint beyond Papua New Guinea.”
Further information on the result can be accessed online at Kina Securities Ltd – Investor Centre (kinabank.com.pg).