Banking
From The Report: Papua New Guinea 2015
View in Online Reader

The banking sector in Papua New Guinea is sound, growing and remarkably profitable. Its largest and only publicly traded institution, Bank South Pacific, reports return on equity 10 percentage points higher than the large Australian banks, which are among the most profitable in the world. Furthermore, continued expansion is expected. With 80% of the country unbanked, growth is almost assured as inclusiveness rises and more people open accounts. Unlike the various over-banked parts of the West and Asia, PNG’s sector is not saturated and has plenty of room to grow. While the central bank works to make commercial banks more competitive, institutions are pushing to expand into under-served areas. If these efforts are managed well, banks may experience significant growth and find margins largely intact. The increase in competition and the lowering of rates and fees, meanwhile, could have a positive effect on the economy and in turn create more business for the banks.

This chapter contains interviews with Loi Bakani, Governor, Bank of Papua New Guinea (BPNG); and Robin Fleming, CEO, Bank South Pacific.

Articles from this Chapter

Overview

Tech solutions extend banking to remote areas of PNG
OBG
plus

The banking sector in Papua New Guinea is sound, growing and remarkably profitable. Its largest and only publicly traded institution, BSP, reports return on equity 10 percentage points higher than the large Australian banks, which are among the most profitable in the world. Continued expansion is expected. With 80% of the country unbanked, growth is almost assured as inclusiveness rises and more people open accounts. Parts of the economy long viewed as too expensive and difficult to serve are now…

Analysis

Financial inclusiveness a key goal for PNG
OBG
plus

Financial literacy and financial inclusion are becoming pressing issues in Papua New Guinea and receiving increased attention. In part, this is a function of global trends: financial literacy is vital to sustainable development and is actively being supported by the donor community and local governments. It is also especially a focus for PNG, where a combination of topography, geography and history means understanding of money and finance is limited outside the major cities. Opening Doors "Improved…

Interview

Loi Bakani, Governor, Bank of Papua New Guinea (BPNG): Interview
OBG
plus

Interview:Loi Bakani To what extent are low oil prices affecting the PNG economy, and what stance is the Central Bank taking to counteract volatility? LOI BAKANI: GDP growth in 2014 was about 10% and the same is expected in 2015, reflecting a full year of production at the PNG liquefied natural gas (LNG) plant. Although domestically this may appear to fall short of expectations, considering outdated higher oil price predictions, it is a positive outcome, especially considering the sluggish…

Interview

Robin Fleming, CEO, Bank South Pacific: Interview
OBG
plus

Interview: Robin Fleming To what extent is the country’s first liquefied natural gas (LNG) project contributing to 2015 economic growth in Papua New Guinea? ROBIN FLEMING: The completion of the PNG LNG project has been a major factor in terms of GDP growth and improving overall business confidence in the country, given all the doubts that persisted around the project, especially at its inception. To get such a world-class project finalised ahead of time and nearly on budget was a fantastic achievement.…

Analysis

Digging up value: Banks use new methods to attract depositors
OBG
plus

Though the country may appear to lack liquidity, Papua New Guinea may have billions of kina hidden outside the banking system. According to Tony Westaway, managing director of Nationwide Microbank, residents tend to store cash at home, or hide large sums underground in bamboo pipes and in tin cans. The reasons are many: some people do not understand banking, while some do not trust banks and others simply cannot physically reach bank branches, given the topography of PNG and the limits on transportation. However,…