Papua New Guinea’s biggest bank had its best six months on record. It also paid far more tax, in a year the government cut the rate on big bank profits, and its results do not explain why.*
BSP Financial Group made a record profit of K620 million in the first six months of this year, up 8.4%. Its tax bill rose much faster, by 29.4% to K365 million, according to the half-year accounts the bank filed in August.
That happened in a year when the tax rate on big bank profits went down. Under a schedule set in the 2025 Budget, banks now pay 43% on profits above K300 million, down from 44% last year, BSP told the market when the change was announced.
On Exepreneur’s calculation from the accounts, about 37 toea of every kina BSP earned before tax went to the government in the first half, up from about 33 toea a year earlier. The summary filings Exepreneur reviewed do not say why.
Where the money came from
BSP’s income grew by almost 18%, twice as fast as its profit. Interest on loans, fees and charges all rose. The fastest growth came from foreign exchange, the business of helping importers and exporters buy and sell US dollars and other currencies.
That business brought in K429 million, about a quarter of the bank’s income. A year ago it was a fifth.
Chief financial officer Glen Skarott told investors the jump came from strong commodity prices and busier trade customers. He was careful not to promise more of the same.
“We do not assume that the current growth rate continues every period,” he said on the results call, according to a transcript published by Investing.com.
BSP earns that money in a tightly managed currency market. The Bank of Papua New Guinea has let the kina fall against the US dollar, and said in August it was about 20% weaker than at the start of 2023, The National reported. The central bank also said the queue of businesses waiting for foreign currency had shortened, and that restoring free exchange of the kina was a priority.
Spending on new technology
BSP’s costs rose by about a fifth. Chief executive Mark Robinson said this was planned, part of a programme to modernise the bank. Since it began, BSP says, it has installed more than 200 new ATMs and 10,000 new card machines, and signed up more than 278,000 people to its OneTouch mobile wallet.
Skarott said the spending should peak within two years, after which income should again grow faster than costs.
“We are funding our investment program from a position of earning strength,” he said.
Customers are saving more than they borrow
Money is flowing into BSP faster than the bank is lending it out. Deposits grew about twice as fast as loans, and BSP’s lending growth is fully paid for by customer deposits, Skarott said.
Borrowers are keeping up with repayments. Late payments improved during the half, and the bank says it sees no broad rise in bad loans. Its capital, the cushion against losses, is more than twice the minimum the central bank requires.
One new risk sits outside the bank’s control. In its April update, BSP noted that Papua New Guinea had been placed in February on the Financial Action Task Force’s grey list, the international list of countries under increased monitoring.
What the chief executive expects
Robinson told investors BSP was “much more bullish” about the next five to seven years. He pointed to three resource projects, Papua LNG, PNG LNG and the Wafi-Golpu copper and gold mine, which BSP estimates are worth more than K100 billion together.
Nearer term, he listed El Niño, which is already hurting coffee and some mines, fuel costs tied to the Middle East conflict, and higher living costs weighing on tourism as risks. None of it has yet hurt BSP’s loans enough to change how much it sets aside for bad debts, he said.
BSP operates in seven countries, including Fiji, Samoa, Solomon Islands and Vanuatu, and employs nearly 5,000 people.
Shareholders and a new head office
BSP declared an interim dividend of 54 toea a share, up 8%, payable on 24 September. Many of its shareholders are pension funds, which BSP says look after the retirement savings of more than 1.6 million people.
The bank also plans a new headquarters in Port Moresby, due in the early 2030s, bringing together 2,500 staff now spread across seven offices. In July it became the exclusive banking partner of the 2026 Rugby League World Cup, which Papua New Guinea co-hosts in October and November.
BSP’s next quarterly update will show whether the tax bill has settled, and whether the foreign exchange business kept up its pace.
