Kina Securities Limited (KSL) has reported a customer fraud incident that is expected to cost an aggregate loss in the range of K12 to K15 million (on a pre-tax basis).
The company revealed that several accounts belonging to a small number of customers have been affected and are subjected to further investigation.
In a statement released earlier, KSL stated that it had conducted a thorough investigation to determine the root cause of the fraud incident and cited specific vulnerabilities in its systems that allowed the fraud to occur with the Managing Director and CEO of KSL Greg Pawson making it clear that KSL has not been hacked but is the result of fraudulent transactions.
The bank says it has taken immediate action to address and fix the vulnerabilities, ensuring that the issues are resolved and the systems are secure. Additionally, KSL is planning to make further enhancements and upgrades to its overall systems and processes to prevent similar incidents from happening in the future.
The broader financial impact of the fraud incident is currently unknown according to KSL. The bank however expects a decline in its net profit after tax (NPAT) for the half year ending 30 June 2024. The exact impact is difficult to predict, but it is expected to be between 13% to 17% lower than the level suggested by analyst estimates.
This means that instead of making a profit of K49.5 million in the half year, KSL is anticipating making a profit between K34.6 million and K42.9 million. For the full year FY24, the revised forecast NPAT is between K102.9 million and K111.2 million, which is lower than the original forecast of K117.8 million.
Mr Pawson says, “We’re treating this fraudulent activity very seriously and we’ve worked through the process to correct the underlying issues, while we also focus on recovering losses. I want to make it clear that our business takes fraudulent activities very seriously and we have worked swiftly to ensure this event is prevented from happening in the future.”
“I want to ensure the public knows that Kina was not hacked and there have been no instances of cyber-attacks or cyber fraud. The situation is connected to fraudulent bank transactions. As well as informing the ASX, PNGX, and BPNG we’ve also reported the matter to the police department and are working closely with them. Over the coming period we will continue to provide updates to BPNG and other key stakeholders,” says Greg Pawson.
As dual dual-listed bank in Australia and Papua New Guinea, KSL has ensured all financial and regulatory reporting has been updated to factor in the situation.
“I want to reassure all of our customers that the fraudulent activity is linked to a very small number of accounts that have been linked to the fraudulent transactions. Our customer data and customer accounts are safe,” says Greg Pawson.
