Strong underlying business performance across the Group has resulted in increased net profit after tax, before deduction of the additional company tax of K259 million, compared to K203 million for the first quarter, 2021.
However, the new K190m Additional Company Tax (ACT), which only applies to BSP in the banking sector, has had a significant negative impact on Q1 results, with Group profit falling to K69m after expensing the tax in full in the first quarter.
According to BSP Group CEO, Robin Fleming, the pre additional company tax Q1-2022 financial results were driven by improving economic conditions and income growth, when compared to Q1-2021.
“Growth in BSP’s offshore branches and PNG Bank were the main drivers for the overall uplift in underlying Group NPAT,” said Fleming.
He said in accordance with accounting standards, BSP recognised the full K190m additional company tax in the first quarter this year, reducing Group NPAT to K69m despite our strong underlying performance.
“BSP’s share price on the PNGX finished 0.4 percent higher in the trailing 52 weeks at K12.05, with average prices of K12.21 in Mar-22.
“ASX prices reached an all-time high of A$6.00 after the K1.1 billion profit announcement, but fell to A$5.00 in the weeks following the announcement of the additional company tax in March 2022,” said Fleming.
He added that 2021 dividend yields were 14.4 percent and 13.6 percent on the PNGX and ASX respectively, and that BSP paid a record dividend to its shareholders of K626.1m on 22 April 2022.
BSP’s market capitalisation on the PNGX was K5.6bn and A$2.2b on the ASX at 31 March 2022.
Meanwhile, Fleming stated that BSP Group’s key performance ratios remained strong, with cost-to-income ratio increasing slightly to 37.8 percent but generally in line with recent levels.
He added that capital adequacy ratio decreased to 21.3 percent due to timing of the 2021 final dividend, which was declared in February, while prior years had the final dividends declared in May at the time of the company’s Annual General Meeting of shareholders.
Capital adequacy remains well above BPNG’s 12 percent requirement. Group Return on Equity (ROE) was 24.0 percent in Q1-2021, impacted by the ACT.
When presenting the first quarter results to investors and the media, Fleming concluded by stating that the additional company tax is unfair and inequitable, in that BSP is the only bank in
PNG that is targeted for this tax and our PNG shareholders are the hardest hit.
“It dissuades investor confidence in PNG and sets a dangerous precedent for arbitrary taxes. Super Funds estimate that BSP shareholders will lose K1.0 billion in value directly and indirectly as a result of the tax.
“Despite the tax, BSP has and will continue to invest heavily in PNG, with its new core banking system, more ATMs and EFTPOS terminals, and additional branches in Lae and Mt Hagen, an upgrade of Maprik to a full branch and two additional hybrid sub-branches in Telefomin and Palmalmal,” said Fleming.
The first quarter financial results also highlighted that BSP has not increased its fees since 2014 and today forgoes in excess of K90 million per annum in fee income from their fee reductions and waivers since 2014.