Papua New Guinea’s largest banking institution, BSP Financial Group Limited, began 2025 with a strong first quarter, posting notable revenue growth and a healthy bottom line despite making deliberate investments to modernize its operations and improve customer experience.
The group’s total revenue for the quarter increased by 6% year-on-year to PGK 760 million (approximately USD 217 million). This growth was mainly driven by stronger foreign exchange trading, higher customer transaction volumes, and a slight rise in net interest income. Simply put, BSP earned more from currency trading and everyday banking activities such as loan interest and fees compared to the same period last year.
Net interest income, which is the profit BSP earns from lending money after paying interest on customer deposits, rose 1% to PGK 497 million. While this increase was modest, it remains the bank’s largest source of revenue and indicates steady lending activity. Meanwhile, foreign exchange income surged 26% to PGK 147 million, highlighting increased international transactions and currency exchanges by BSP’s clients.
Fee income grew 16% to PGK 100 million, reflecting more transactions and greater use of banking services like payments and advisory fees. Insurance and other income declined slightly by 14% to PGK 16 million.
Operating expenses, which cover the costs of running the bank including salaries for over 4,700 staff, rents, and investments in new technology, rose by 18% to PGK 331 million. BSP explained this increase as a strategic move to hire specialized talent and upgrade systems with the goal of building a more resilient and customer-focused bank. These expenses are seen as essential investments that may reduce short-term profits but are intended to position BSP for long-term growth.
As a result, BSP’s operating profit before accounting for loan losses fell marginally by 1% to PGK 429 million, demonstrating that despite higher costs, the core banking business remains strong and profitable.
A key highlight was the halving of credit impairment charges—expenses set aside to cover loans that may not be repaid—to PGK 32 million from PGK 65 million in the prior year’s first quarter. This significant decline signals improved loan quality and fewer customer defaults. BSP also reversed a one-time PGK 27 million provision recorded in late 2024, which boosted profit figures this quarter.
Earnings before tax climbed 8% to PGK 396 million, while net profit after tax—the final profit after all expenses and taxes—rose 13% to PGK 243 million. This improvement underscores BSP’s operational efficiency and prudent risk management.
From a balance sheet perspective, customer deposits—the money kept in savings or checking accounts—increased slightly by 0.7%. The bank saw a small shift toward term deposits (fixed for a specific period) which grew to 11% of total deposits, up from 10%, while demand deposits (available for immediate withdrawal) decreased to 89%. This suggests customers are choosing more secure, longer-term savings options.
BSP’s capital adequacy ratio, a key safety measure showing the bank’s cushion against potential losses, stood strongly at 24.4%, well above the minimum regulatory requirement of 6%. This ratio improved by 2.5 percentage points compared to a year ago, highlighting BSP’s robust financial position to support future lending and investments. Similarly, the leverage capital ratio, which measures capital relative to total assets, increased to 9.3%, reinforcing the bank’s financial stability.
Chief Executive Officer Mark T. Robinson said BSP’s investments in technology and personnel are critical to building a “more resilient, efficient and customer-focused bank,” and emphasized the long-term vision of becoming the South Pacific’s International Bank. He expressed gratitude to shareholders, regulators, customers, and employees for their continued support during this transformative phase.
The bank’s first quarter results reveal a company adeptly balancing growth with modernization. Revenue growth is fueled by core banking activities, while planned expense increases aim to strengthen future capabilities. Improved asset quality is evident in lower loan loss provisions, and strong capital ratios provide the stability and capacity for continued expansion.
For Papua New Guinea, BSP’s performance signals confidence in the resilience of the local financial sector, as well as a commitment to digital innovation and expanding regional presence.
