Banking
From The Report: Papua New Guinea 2016
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Papua New Guinea’s banking sector is adjusting to the slowing of economic growth and to the foreign exchange shortage that is affecting local businesses. However, despite many challenges, the institutions remain well capitalised and highly profitable, and in some cases are maintaining positive profit growth. More than just holding its own, the sector is developing in significant ways that suggest structural shifts and new industry dynamics. Maybank’s local presence was acquired by the Kina Group, bringing a long-sought-after “fourth bank” to the market and promising increased competition, especially in the undeserved mid-market. Other players have been using this time to consolidate their positions, expand their offerings and enter new markets.

This chapter contains an interview with Robin Fleming, CEO, Bank South Pacific; a viewpoint from Garry Tunstall, CEO, Nambawan Superannuation Fund; and an interview with Geoff Toone, Former Managing Director, Westpac Bank Papua New Guinea.

Articles from this Chapter

Overview

Structural shifts: The sector is well positioned to weather current challenges
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Papua New Guinea’s banking sector is adjusting to the slowing of economic growth and to the foreign exchange shortage that is affecting local businesses in the country. However, despite many challenges, the institutions remain well capitalised and highly profitable, and in some cases are maintaining positive profit growth. But more than just holding its own, the sector is developing in significant ways that suggest structural shifts and new industry dynamics. Maybank’s local presence…

Analysis

Keen on kina: A new acquisition should increase competition in the sector
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Historically, Papua New Guinea’s banking sector has been one of the most profitable in the world in terms of return on equity and interest rate spreads. In 2015 the gap between borrowing and lending rates was reported at 8.3%, down slightly from 9% in 2014, but higher than in most of its neighbours – Indonesia was at 4.3%, Malaysia at 1.5%, the Philippines at 4% and Thailand at 5.1%. Most island economies also had lower spreads, with Fiji at 3.3% and Vanuatu at 2.2%, although Solomon…

Analysis

Better branches: Mobile products and enhanced efficiency help serve rural areas
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Financial institutions are making small but significant moves that are helping the sector to evolve incrementally. To a great extent, the changes revolve around branch expansion and the reach within the community. Westpac Bank currently has 16 branches around the country, while the Australia and New Zealand Banking Group (ANZ) has 12. Bank South Pacific (BSP) has 44 branches and 44 BSP Rural branches. The banks have said that they are typically not interested in opening new outlets, as it…

Interview

Inclusive expansion: OBG talks to Robin Fleming, CEO, Bank South Pacific (BSP)
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Interview:Robin Fleming What opportunities currently exist for expanding Papua New Guinea’s banking industry into other countries in the Asia-Pacific region? ROBIN FLEMING: From BSP’s perspective there is a need to diversify revenue beyond our home markets and thereby tap into a much larger population base. Some of our regional neighbours are very similar to PNG in the sense that their retail customers either do not have access to many banking services or are simply underbanked. With…

Viewpoint

Providing access: Garry Tunstall, CEO, Nambawan Super, on the impediments in Papua New Guinea’s financial sector
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Viewpoint:Garry Tunstall The current economic slowdown highlights several opportunities to prioritise and improve processes and procedures within the PNG financial sector. We have access to the technology and tools that can increase efficiency in fundraising and in operating the financial sector. PNG as a country has never defaulted in its history, so it has a sound track record that should place it high in terms of investor confidence. Unfortunately, this is not necessarily the case, mainly…

Analysis

Big support: A range of measures to promote the growth of SMEs
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The government of Papua New Guinea has rolled out a new plan to support small and medium-sized enterprises (SMEs) by improving access to finance and training. Unveiled in February 2016, the SME Policy and Master Plan 2016-30 sets out objectives to expand the economy and create employment outside of the main population and trade hubs. The package, slated to receive PGK200m ($68.3m) worth of funding per annum, aims to create 2m jobs. To achieve this, the number of SMEs is projected to increase…

Interview

Adjust and adapt: OBG talks to Geoff Toone, Former Managing Director, Westpac Bank Papua New Guinea
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Interview:Geoff Toone How would you characterise PNG’s response to the global economic downturn that is affecting many areas of its economy? GEOFF TOONE: The world economy is in realignment and everyone is still waiting to see where the oil story is going, with very divergent forecasts. Ultimately, these are challenging times for oil-centred countries, such as Brunei, where the oil industry holds a 60% share of GDP. These developments have generated fundamental changes in PNG and in all…