Across all levels of the Bank we con(cid:415) nue to promote Our Vision and Core
Values - Integrity, Professionalism, Leadership, Quality, People, Teamwork
and Community. These form an integral part of what we do and everyone at
BSP is commi(cid:425) ed to service and delivery aligned to these values.
- Robin Fleming, Group CEO
Our Core Values
INTEGRITY
We are honest, commi(cid:425) ed, trustworthy and reliable in our dealings with
our customers and each other.
PROFESSIONALISM We commit ourselves to con(cid:415) nual self - development to achieve standards
of excellence in our performance.
LEADERSHIP
We inspire, we change, and we live our values, and lead by example.
QUALITY
We are commi(cid:425) ed to excellence whilst striving for con(cid:415) nuous improvement
in products and services.
PEOPLE
We respect and value our people and our customers.
TEAMWORK
We work with, and for, each other; we progress together.
COMMUNITY
We respect, value and support the communi(cid:415) es in which we operate.
2
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
Team BSP , Cook Islands.
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
3
CHAIRMAN’S REPORT
I am pleased to report to the market, another successful year for Bank of South Pacifi c (BSP) Group. The majority of our
businesses have performed well during a challenging year. Strategically also, a major business acquisi(cid:415) on and transi(cid:415) on has
been undertaken, and a core system upgrade was completed for the Fiji banking opera(cid:415) ons.
BSP Group audited profi t was PGK531.9 million, an increase of 4.8% from
2014. Total assets have grown 16% to PGK18.2 billion.
Macroeconomic condi(cid:415) ons have been (cid:415) ght in the economies in which BSP
operates, refl ec(cid:415) ng the general weakness in the global economy that has
prevailed over the period. Slowing growth in emerging markets in Asia,
led by China, has been a major factor. This has resulted in a reduc(cid:415) on in
demand for metals and other manufacturing materials. Oil prices have
remained depressed due to con(cid:415) nuing oversupply.
PNG’s export economy has therefore been directly exposed to low export
revenues and low foreign direct investment, a(cid:332) er the conclusion of the
major construc(cid:415) on phase of the PNG LNG project.
In the non - PNG economies, the prolonged period of low global growth has
had a general dampening eff ect on local economic ac(cid:415) vity. Tourism ac(cid:415) vity
has been moderate, as has agriculture. Remi(cid:425) ances are also nega(cid:415) vely
impacted by the state of developed markets aff ec(cid:415) ng the capacity of
remi(cid:425) ers, as well as changing regulatory rules impac(cid:415) ng counterparty
banks in source markets.
The latest Standard and Poors assessment of BSP con(cid:415) nues to be at the
maximum ra(cid:415) ng possible for a Papua New Guinea based en(cid:415) ty (B, nega(cid:415) ve
outlook).
BSP has con(cid:415) nued to pursue a strategy of diversifi ca(cid:415) on, to balance the
exis(cid:415) ng dependence on the strength of the PNG business. Consistent
with the strategy, a(cid:332) er announcing its inten(cid:415) ons earlier in the year, BSP
successfully completed the acquisi(cid:415) ons of Westpac’s businesses in the
Cook Islands, Samoa, and Tonga in July 2015. This was followed by the
comple(cid:415) on of the transac(cid:415) on for Westpac’s Solomon Islands opera(cid:415) ons
at the end of October.
BSP is set to acquire the Vanuatu branch of Westpac in mid- 2016. What
is par(cid:415) cularly sa(cid:415) sfying about this exercise is that the opera(cid:415) onal and
administra(cid:415) ve transi(cid:415) on of the businesses from Westpac to BSP was
directed and undertaken by a project team of BSP staff , calling only on
external service providers where necessary.
Following the addi(cid:415) on of these businesses to BSP’s balance sheet,
27.2% of BSP Group assets are based outside of PNG. As stated in earlier
announcements, this transac(cid:415) on truly marks BSP as a South Pacifi c Bank,
commi(cid:425) ed to partnering with people, businesses and governments in the
region to deliver economic development.
With recent business acquisi(cid:415) ons, and with the level of sustained growth
that has been experienced by BSP over a period of (cid:415) me, systems, and
processes need to adapt to ensure opera(cid:415) onal and strategic needs are
sa(cid:415) sfi ed into the future, and this is also part of the strategic brief subject
to regular considera(cid:415) on by BSP, as is the development of its people.
This is why a pleasing aspect of BSP’s strategic progress has been the
successful core banking system cutover in the Fiji banking opera(cid:415) ons
in September - from an older version to the modern, current version –
achieved in virtually one weekend, but prepared and planned, for over
three years.
In 2015, BSP was the major sponsor of the very successful Pacifi c Games
hosted in Port Moresby PNG, in July 2015, a(cid:425) ended by 24 countries. The
event brought out the best in the city of Port Moresby, and galvanised
the family spirit of Papua New Guinea. The event also gave BSP the
opportunity to bring to life its Core Values of Community, Professionalism,
Teamwork, People, Leadership, Quality and Integrity, as a select number of
staff and the general public volunteered in various areas of opera(cid:415) ons and
administra(cid:415) on, to help stage a spor(cid:415) ng event on an unprecedented scale
for the Pacifi c Island region.
BSP Group has managed to produce record results in 2015 despite a
slowdown in economic ac(cid:415) vity generally across its major markets and
results that outperform its major compe(cid:415) tors. Our key metrics of Return
on Equity (ROE), Return on Assets (ROA) and cost to income also showed
posi(cid:415) ve movements. This has also been achieved in the same year as a
major business acquisi(cid:415) on has been undertaken with very li(cid:425) le external
support.
The coming year will no doubt be a diffi cult one, as most observers predict
con(cid:415) nued contrac(cid:415) on in global condi(cid:415) ons. PNG’s economic fortunes will
again be driven to a large extent by the tone of the global economy, and
the resultant demand-price performance of commodi(cid:415) es. Even with these
uncertain(cid:415) es, I remain confi dent that the resilience and discipline of all
of BSP’s stakeholders, compe(cid:415) (cid:415) ve opera(cid:415) ons, and the con(cid:415) nual review
of strategy by BSP Group, will enable BSP to produce another successful
year in 2016.
BSP’s strategic inten(cid:415) ons for diversifi ca(cid:415) on and expansion into other
markets is con(cid:415) nually reviewed and considered by the Board and
management. BSP also has a strategic mandate to diversify its business in
other related lines of fi nancial services.
Sir Kostas Constan(cid:415) nou, OBE
Chairman
BSP commenced asset fi nance opera(cid:415) ons in Fiji late in 2014, and in PNG at
the start of 2015. Both businesses were start - ups from zero market share,
but in 2015, have performed above expecta(cid:415) on, with plans to con(cid:415) nue
the growth trajectory in 2016 and beyond into the next cycle of growth
ac(cid:415) vity.
4
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
5
Livikonimo Koki,
Branch Manager, Goroka, Papua New Guinea.
Pictured with his nephew Enoch Tonny.
A BRIEF HISTORY OF BSP
Bank South Pacifi c Limited opened its doors in 1957 in Port Moresby as a branch of the Na(cid:415) onal Bank of Australasia Limited. In 1995 a consor(cid:415) um of
Papua New Guinea businesses acquired the bank crea(cid:415) ng the fi rst PNG private sector owned bank.
Bank South Pacifi c purchased the State Owned - Papua New Guinea Banking Corpora(cid:415) on (PNGBC - formerly CBA PNG) in 2002 crea(cid:415) ng the largest Bank
in PNG. Other acquisi(cid:415) ons followed: Na(cid:415) onal Bank of Solomon Islands 2007, Habib Bank in Fiji in 2006, Colonial Group of Companies (Banking & Life
Businesses) in Fiji in 2010.
Bank South Pacifi c rebranded to become “BSP” in 2009. Our shareholders include major PNG Ins(cid:415) tu(cid:415) ons – IPBC, Nasfund, Nambawan Super, Petroleum
Resources Kutubu, Credit Corpora(cid:415) on, MVIL, PNG Teachers Savings & Loan, Comrade Trustees, and the Interna(cid:415) onal Finance Corporate (IFC).
In 2012, BSP’s account opening process employing a tablet computer and instant card issuance, won the award for the world’s Best Bank Led Mobile
Money Program at the 2012 Connected World Global Awards.
In 2014, BSP Group achieved loan growth of 28%, and a 4% reduc(cid:415) on in opera(cid:415) ng costs, suppor(cid:415) ng growth in annual profi t to over K507 million. There
were no increases in fees during the year, but fee income grew as the volume of customer transac(cid:415) ons con(cid:415) nued to increase, par(cid:415) cularly through the
electronic banking channels, which now represent more than 80% of total customer transac(cid:415) ons. Launch of the new subsidiary company BSP Finance
in PNG and Fiji in 2014. BSP has been interna(cid:415) onally recognised for its underlying liquidity and capital strength, including “The Banker” 2014 Top 1000
Banks, ranked:
#1 Top 5 Returns on Capital (ROC) in the Asia Pacifi c (excluding Japan & China).
#1 Top 5 Returns on Assets (ROA) in the Asia Pacifi c (excluding Japan & China).
#14 Top 25 Return on Capital (%).
2015 was very much a milestone year for BSP in many ways. Despite economic condi(cid:415) ons BSP recorded a profi t of K531.9 million, represen(cid:415) ng a 4.8%
increase on 2014, for its shareholders. The expansion of BSP across the pacifi c also entered a new phase with the acquisi(cid:415) on of the former Westpac busi-
nesses in Cook Islands, Samoa, Solomon Islands and Tonga, with Vanuatu to complete on July 1st, 2016. During 2015 PNG celebrated its 40th anniversary
of independence and the country successfully hosted the Pacifi c Games in Port Moresby of which BSP was the Offi cial Sponsor.
Bank South Pacifi c con(cid:415) nues to be a dominant force in the market leading the way with innova(cid:415) on and technology.
Total Assets
Net Profi t A(cid:332) er Tax
13.33
11.68
n
o
i
l
l
i
B
a
n
K
i
18.20
15.76
15.88
507.339
531.879
407.744
436.828
355.947
n
o
i
l
l
i
M
a
n
K
i
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Net Loans and Advances
8.62
Dividends Paid
6.76
5.31
4.30
4.80
369.810
309.141
258.975
271.686
223.526
n
o
i
l
l
i
M
a
n
K
i
n
o
i
l
l
i
M
a
n
K
i
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
6
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
7
BOARD OF DIRECTORS
SIR KOSTAS CONSTANTINOU, OBE | Chairman. Director since April 2009. Appointed Chairman February 2011.
SIR NAGORA BOGAN, KBE, LLB | Non - Execu(cid:415) ve Director. Director since June 2003.
Sir Kostas Constan(cid:415) nou, OBE is a prominent business fi gure in Papua New Guinea, holding a number of high level public
and private sector appointments. He is a Chairman of various companies, including Airways Hotel Limited and Airways
Residences Limited, Lamana Hotel Limited, Lamana Development Limited, Alotau Interna(cid:415) onal Hotel and Gazelle
Interna(cid:415) onal Hotel. He is a Director of Heritage Park Hotel, Honiara, and Grand Pacifi c Hotel, Fiji. Sir Kostas is a Director
of listed company: Oil Search Limited. He was Chairman of 2015 Pacifi c Games Authority from 2011 to 2015, Deputy
President of Employers Federa(cid:415) on of Papua New Guinea, Honorary Consul for Greece in Papua New Guinea and Trade
Commissioner of Solomon Islands to Papua New Guinea.
Sir Nagora Bogan graduated with a Bachelor of Law from the University of Papua New Guinea in 1978. In 1992, Sir Nagora
was appointed Commissioner General of the PNG Internal Revenue Commission. In 1996, he was appointed as PNG’s
Ambassador to the United States with accredita(cid:415) on as Ambassador to Mexico and High Commissioner to Canada. In 2002,
Sir Nagora became a private business entrepreneur. He is Chairman and CEO of In Touch Media Limited, a mul(cid:415) media/
record label company and Director on several private company boards. Sir Nagora received his knighthood during 1997 in
recogni(cid:415) on of his dis(cid:415) nguished public service.
ROBIN FLEMING, CSM, MBA, MMGT | Chief Execu(cid:415) ve Offi cer. Director since June 2013.
AUGUSTINE MANO, BEcon, MSc | Non - Execu(cid:415) ve Director. Director since August 2014.
Robin Fleming was appointed CEO of Bank of South Pacifi c Limited in June 2013. Before his appointment as CEO, he had
been Deputy CEO and Chief Risk Offi cer since 2009. Prior to that, Mr Fleming held senior execu(cid:415) ve roles as Chief Risk
Offi cer, General Manager Corporate & Interna(cid:415) onal, and Head of Risk Management with BSP. Prior to the merger of Bank
of South Pacifi c Limited and PNGBC Limited, Robin held senior management roles with PNGBC. He has worked in PNG for
over 30 years and holds a MBA and a Master of Management from Charles Sturt University.
Augus(cid:415) ne Mano is an economist and has been the Managing Director of the Mineral Resource Development Corpora(cid:415) on
(MRDC) for the last 7 years. MRDC is the en(cid:415) ty responsible for managing landowner investments and Mr Mano has lead
the organisa(cid:415) on in undertaking some major investments such as the PNG LNG project and property development and
hospitality within PNG, Fiji and Samoa. He has extensive skills and experience in the mining and petroleum sector. He is
also involved with construc(cid:415) on, transporta(cid:415) on and Insurance industry. He holds a Master of Science Petroleum Economics
from the Dundee University, Scotland and Bachelor degrees in Economics and Environmental Science from the University
of PNG. Mr Mano currently holds Chairman and Directorship in a number of en(cid:415) (cid:415) es, including MRDC and its subsidiaries
companies, Hevili(cid:332) Group, Insurance Pacifi c and Pearl Resort, PNG Air, GFS and Handy Group.
TOM FOX, OBE, BEc | Deputy Chairman, Non - Execu(cid:415) ve Director. Director since June 1993.
FREDA TALAO, LLM, MPHIL, MAICD | Non - Execu(cid:415) ve Director. Director since April 2012.
Tom Fox holds a Bachelor of Economics degree from the University of Papua New Guinea. He commenced his career with
the Reserve Bank of Australia, and gained experience in senior management roles within semi-government ins(cid:415) tu(cid:415) ons,
and private sector companies, including serving as the Managing Director of the Investment Corpora(cid:415) on of Papua New
Guinea for eight years. His other current directorships include: Teyo No. 1 Limited, Akura Limited, BSP Capital Ltd, BSP
Finance (Fiji) Ltd, BSP Life (Fiji) Ltd and BSP Healthcare Ltd. Mr Fox is also a trustee for the Ins(cid:415) tute of Na(cid:415) onal Aff airs, and
a founda(cid:415) on member and Fellow of the PNG Ins(cid:415) tute of Directors.
GEREA AOPI, CBE, MBA | Non - Execu(cid:415) ve Director. Director since April 2002.
Gerea Aopi has achieved several ter(cid:415) ary degrees in Papua New Guinea, and a Masters of Business Administra(cid:415) on from
the University of Queensland. Mr Aopi has substan(cid:415) al public service and business experience in PNG, including Secretary
of Finance and Planning and Managing Director of Telikom PNG Limited. He presently holds the posi(cid:415) on of Execu(cid:415) ve
General Manager, Stakeholder Engagement at Oil Search Limited. He was previously the Chairman of Telikom PNG Limited
and Independent Public Business Corpora(cid:415) on (IPBC). Mr Aopi is a Director of Oil Search Limited, Steamships Trading
Company Limited and is involved in a number of other private sector and charitable organisa(cid:415) ons in Papua New Guinea.
DR ILA TEMU, PhD, MEc | Non - Execu(cid:415) ve Director. Director since June 2003.
Dr Ila Temu was appointed to his current role as Country Manager Barrick PNG in June 2011. Prior to this, he held senior
execu(cid:415) ve roles in Placer Dome Niugini both overseas and in PNG. He has also held senior posi(cid:415) ons in a number of other
public organisa(cid:415) ons including Senior Lecturer in Economics at UPNG, Director of the Na(cid:415) onal Research Ins(cid:415) tute and
Managing Director of Mineral Resources Development Company (MRDC). Dr Temu held director and membership roles
in Dome Resources, Kina Finance Ltd, PNG Chamber of Mines and Petroleum, IPBC, PNG Employers Federa(cid:415) on and was
Chairman of PNG Ports Corpora(cid:415) on Ltd for 5 years. He is currently a Director of Kumul Petroleum Holdings Ltd, Kina
Petroleum Ltd and a member of the Governing body of the Divine Word University. Dr Temu holds a Bachelor of Economics
(Hons) from the University of Papua New Guinea, a Masters in Agricultural Development Economics from the Australian
Na(cid:415) onal University, Canberra, Australia and a Ph.D in Agricultural Economics from the University of California, Davis, USA.
Freda is a lawyer and development specialist. She holds a Law Degree from University of Papua New Guinea, Masters in
Law (LLM) from Bond University, a Master of Philosophy in Law (MPHIL) from University of Queensland and a Diploma
in Business from Southern Cross University. Currently, she is Head of the PNG Prac(cid:415) ce for Oceanie Lawyers in Brisbane,
Australia and a member of the External Stakeholders Advisory Panel (ESAP) to the Hidden Valley Joint Venture (HVJV) Mine
in Wau, Morobe Province. Freda was Director on several boards previously including the former Civil Avia(cid:415) on Authority
(CAA), the Papua New Guinea Mama Graun Conserva(cid:415) on Trust Fund, the Na(cid:415) onal Airports Corpora(cid:415) on, the Airport City
Development Authority, and the Individual and Community Advocacy Forum (ICRAF). She has also held senior execu(cid:415) ve
management roles including Deputy Registrar of the Na(cid:415) onal Court, Execu(cid:415) ve Director of PEACE Founda(cid:415) on and was a
senior development specialist with AusAID. She was one of six PNG women nominated for the Nobel Peace Prize as part of
the 1,000 Peace Women for the Nobel Peace Prize Project in 2005 and was awarded an Independence Award for services
to women, children and community in 2000.
GEOFFREY J. ROBB, BA, MBA, OAM | Non - Execu(cid:415) ve Director. Director since April 2012.
Geoff rey Robb is a highly qualifi ed and experienced banker having occupied several senior Execu(cid:415) ve posi(cid:415) ons including
Head of Resource Finance at Bank of America, and Global Head of Acquisi(cid:415) on Finance and Head of Complex and Strategic
Transac(cid:415) ons with ANZ Banking Group. As Head of Bank of America in Melbourne, he led resource fi nancings with BHP,
CRA, Elders Resources, Bougainville Copper, Ok Tedi and Porgera. He holds MBAs from the Interna(cid:415) onal Management
Ins(cid:415) tute Geneva and Macquarie University. Mr Robb has travelled extensively in emerging markets and has received the
Medal of the Order of Australia for his services to mountaineering and charity. He is also on the Board of BSP Capital Ltd,
Bank of South Pacifi c Tonga Ltd. He is Chairman of the Board Audit, Risk and Compliance Commi(cid:425) ee.
ERNEST BRIAN GANGLOFF, CPA, MAICD | Non - Execu(cid:415) ve Director. Director since November 2013.
Ernest Gangloff is an Accountant and registered with CPA PNG and the Accountants’ Registra(cid:415) on Board. Mr Gangloff has
extensive experience in the areas of risk management, internal audit and corporate governance. He has over 30 years
professional experience with over 15 years in Senior Management posi(cid:415) ons. Mr Gangloff re(cid:415) red as Partner with Deloi(cid:425) e
in May 2013 and established Gangloff Consul(cid:415) ng in June 2013. He is also a director of Gangloff Consul(cid:415) ng Ltd, Laurabada
Investments Ltd and New Britain Palm Oil Ltd. Mr Gangloff is a Council Member of the of the Ins(cid:415) tute of Na(cid:415) onal Aff airs
and the Vice President of the Business Council of PNG and member of Australian Ins(cid:415) tute of Company Directors. He is also
Adjunct Professor of the School of Business, UPNG.
8
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
9
GROUP CEO’S REPORT
2015 was very much a milestone year for BSP in many ways. Despite economic condi(cid:415) ons that became more challenging as the
year progressed BSP was able to report another record profi t of K531.9 million, represen(cid:415) ng a 4.8% increase on 2014, for its
shareholders.
The expansion of BSP across the Pacifi c also entered a new phase with our
acquisi(cid:415) on of the former Westpac businesses in Cook Islands, Samoa, Solo-
mon Islands and Tonga, with Vanuatu to complete on July 1st, 2016. During
2015 PNG celebrated its 40th anniversary of independence and the country
successfully hosted the Pacifi c Games in Port Moresby of which BSP was the
Offi cial Sponsor.
Our Solomon Islands business also contributed posi(cid:415) vely in 2015 with a
profi t of S$43.2 million being S$9.7 million above 2014. The Corporate and
Retail teams both delivered on their growth targets with ongoing focus on
our echannels capabili(cid:415) es and sales. The team in Solomon Islands also suc-
cessfully merged the BSP and former Westpac teams following the comple-
(cid:415) on of the acquisi(cid:415) on of the Westpac business at the end of October 2015.
PNG’s economy grew by approximately 9.9% throughout 2015 with the
growth driven predominantly by revenues associated by the PNG LNG proj-
ect. This growth was down somewhat on the 2014 outcome of 13.3% but
nevertheless remained well above its South Pacifi c neighbours and also
many of its emerging market peers.
Commodity prices in general and energy prices in par(cid:415) cular strongly infl u-
enced the PNG economy at a macro level. With signifi cant reduc(cid:415) ons in
oil and LNG prices worldwide, revenues associated with resource projects
such as PNG LNG, which had been expected to be strong contributors to
Government revenues, contracted substan(cid:415) ally.
This was exacerbated to some degree by the onset of El Nino drought con-
di(cid:415) ons in the second half of 2015. The drought aff ected the opera(cid:415) ons of
the Ok Tedi mine in Western Province with the mine being closed from
August 2015 with impact on many local businesses and foreign exchange in
fl ows. Ok Tedi is expected to re-commence opera(cid:415) ons in March 2016 with
rainfall an(cid:415) cipated to permit cargo and copper/gold extracts to move up
and down the Fly River. Barrick’s Porgera mine was also closed for a short
period.
Notwithstanding a realignment of PNG’s GDP outcomes to more nor-
malised levels, BSP was able to improve its profi t performance in key mar-
ket segments. Our Corporate Banking team in PNG leveraged its strong re-
la(cid:415) onships with our customers, and BSP’s capabili(cid:415) es geographically in all
areas of PNG, as well as our reach across all market segments to maximise
lending opportuni(cid:415) es and cross sell our full range of products and services
to these customers. As a result BSP’s lending market share in PNG by year
end was 55%, an increase from 51.5% at the beginning of the year, with
Corporate being the major driver of this growth.
Our Retail team in PNG con(cid:415) nued to maximise the retail sales opportuni(cid:415) es
off ered by our extensive and comprehensive network across PNG. There
was ongoing emphasis on fi nancial inclusion with almost 200,000 banking
accounts opened in 2015, of which 40,000 were fee free for children and
students, and 60,000 fee free designated savings accounts. Retail lending,
par(cid:415) cularly our personal loan and housing loan products were also well
promoted and sold by our Retail lending sales teams, and whilst lower full
(cid:415) me employment levels had an impact on delinquencies, the performance
of this product was s(cid:415) ll be(cid:425) er than plan. A crucial dependency for broader
access to housing loans, which is key to wealth crea(cid:415) on for individuals, is
availability of land and Government ini(cid:415) a(cid:415) ves for land availability in the
major urban area of Port Moresby should come to frui(cid:415) on in 2016.
BSP’s Smart Business SME product off erings were well promoted in all ma-
jor centres of PNG. Our focus on the SME market segment is unparalleled
in PNG and prospects for con(cid:415) nued growth in this segment are strong. Stra-
tegic focus on development and promo(cid:415) on of our echannels capabili(cid:415) es
resulted in increased transac(cid:415) onal ac(cid:415) vity across our extensive network of
ATM’s merchant terminals, and mobile phone banking.
BSP Fiji maintained its growth trajectory with a profi t of F$31 million which
was an increase of F$9.4 million on 2014 in the most compe(cid:415) (cid:415) ve market in
the South Pacifi c. The team in Fiji also successfully delivered a core banking
system upgrade in September 2015 ahead of (cid:415) me and under budget which
was a great achievement for the project team. BSP Life also performed well
with a profi t of F$13.7 million, an improvement of F$2.7 million on the prior
year. The core system upgrade for BSP Life is s(cid:415) ll progressing and there is
renewed focus for comple(cid:415) on in 2016.
What is more pleasing from a group perspec(cid:415) ve is that these excep(cid:415) onal
profi t outcomes were achieved despite key management and staff in all
businesses in PNG being heavily involved in the acquisi(cid:415) on of Westpac’s
businesses in Cook Islands, Samoa, Solomon Islands and Tonga, and their
successful transi(cid:415) on to BSP. The response from staff in our new countries
was posi(cid:415) ve and engaged and we look forward to their contribu(cid:415) ons to BSP
in coming years.
BSP Finance con(cid:415) nued its penetra(cid:415) on of the markets in PNG and Fiji, with
be(cid:425) er than planned fi nancial outcomes. Our expansion plans for BSP Fi-
nance con(cid:415) nue in 2016 and posi(cid:415) ve profi t contribu(cid:415) ons are expected this
year.
Across all levels of the Bank we con(cid:415) nued to promote BSP’s Vision and Core
Values – Integrity, Professionalism, Leadership, Quality, People, Teamwork,
Community. Our Vision and Values were also integral to our integra(cid:415) on ac-
(cid:415) vi(cid:415) es for Cook Islands, Samoa, Solomon Islands and Tonga. The accompa-
nying icare program con(cid:415) nues and everyone at BSP is commi(cid:425) ed to service
and delivery aligned to our values and icare.
Our successful Leadership Development Program (LDP) was extended in
2015 with a further 20 staff being added to the program including 2 staff
each from Fiji, Solomon Islands, Samoa and 1 each from Cook Islands and
Tonga. The LDP for our 35 par(cid:415) cipants involves in house training, internal
secondments, overseas secondments, post graduate courses and manage-
ment training. This con(cid:415) nues to be a signifi cant investment, in terms of
both (cid:415) me and money, to develop and groom our staff for the future lead-
ership opportuni(cid:415) es that will con(cid:415) nue to arise for all our staff across the
Pacifi c.
Special thanks also go to the President and senior management of the Bank
of Philippine Islands who facilitate our secondment program. Six staff par-
(cid:415) cipated in 12 week secondment with Bank of Philippine Islands during
2015. This program is benefi cial in the professional and personal develop-
ment of our staff in the LDP.
The outlook for BSP remains posi(cid:415) ve notwithstanding some more challeng-
ing global economic condi(cid:415) ons, our board led by our Chairman Sir Kostas
Constan(cid:415) nou con(cid:415) nues to provide management with support to achieve
the boards strategic objec(cid:415) ves for BSP which are directed to con(cid:415) nuous
improvement of customer service outcomes, achieving organic growth
targets and maximising non organic growth opportuni(cid:415) es aligned to our
vision.
I wish to thank all staff in BSP, in all our businesses and each of the countries
in which we operate, for their eff orts and support in delivering these record
results for our shareholders, and I look forward to their ongoing commit-
ment in 2016.
Robin Fleming, CSM
Robin Fleming, CSM
Group Chief Execu(cid:415) ve Offi cer
10
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
11
Strategic
Business Unit
Reports
The daily execu(cid:415) on of the BSP’s business opera(cid:415) ons is the responsibility of the Strategic Business Units (SBUs). The SBUs
are Retail Banking, Corporate, Treasury, Paramount Banking, Group Risk Management, Human Resources, Opera(cid:415) ons and
Informa(cid:415) on Technology, and Finance & Planning. Here are reports and highlights of each SBU performance in 2015.
RETAIL BANKING
BSP’s Retail SBU is responsible for the delivery of banking services via
the bank’s extensive urban and rural branch network in PNG, the agency
network, and electronic banking channels to the Retail segment of the
market, including Small and Medium Enterprises (SMEs). It also drives the
bank’s very ac(cid:415) ve par(cid:415) cipa(cid:415) on in fi nancial inclusion programs. The SBU
also provides opera(cid:415) onal support and oversight to the branches in the
Cook Islands, Samoa, Solomon Islands, and Tonga (and Vanuatu when the
transac(cid:415) on completes in mid 2016).
In 2015, Retail con(cid:415) nued its focus on be(cid:425) er access to services for
customers, and growth in customer numbers con(cid:415) nued.
Services at Kerema, Higaturu, Maprik, Gusap and Banz sub branches were
upgraded with BSP’s loan origina(cid:415) on system being made available so that
consumer borrowers could apply for loans at these loca(cid:415) ons rather than
traveling to a branch in the provincial centres. Where loan applica(cid:415) ons are
approved, the documenta(cid:415) on and funding is now arranged at the same
sub branch. More complex cheque deposit transac(cid:415) ons were also enabled
at these loca(cid:415) ons where access to the Kina Automated Transfer (KATs)
system was introduced.
Banking services for SMEs were also enhanced during the year and the
fi rst dedicated SME Business Centre in PNG was opened by BSP at the
Waterfront shopping centre, Port Moresby. The SME Business Centre has
dedicated SME loan offi cers and dedicated tellers assigned to service SME
customers.
During 2015 BSP began the process of replacing our VeriFone EFTPoS
terminal fl eet with new Ingenico EFTPoS terminals. Addi(cid:415) onal func(cid:415) onality
will be added to the Ingenico terminals during the course of 2016.
Customer account numbers con(cid:415) nued to grow during 2015 with nearly
200,000 new accounts opened. 30% of this growth was in savings products
while a further 20% was growth in Kids and Student accounts. The
remaining 50% related to growth in the number of day-to-day transac(cid:415) on
accounts. The growth in Kids and Student accounts complemented BSP’s
ongoing commitment and eff ort in banking educa(cid:415) on.
Our eff orts with fi nancial inclusion and providing be(cid:425) er access to banking
services saw the con(cid:415) nued growth of our Mobile Banking channel.
Transac(cid:415) ons for 2015 were 35 million, an increase of 20% growth over the
2014 ac(cid:415) vi(cid:415) es.
BSP also took a major step forward in improving fi nancial system access by
making our ATMs and EFTPoS network available to customers of MiBank,
a licensed micro bank. Through this arrangement we have assisted MiBank
to issue debit cards to their clients, who can now use BSP ATMs or EFTPoS
devices in PNG.
Despite a more challenging environment for consumer fi nance, our
personal loan growth was strong again in 2015. New lending under the
First Home Ownership Scheme also started to gain some trac(cid:415) on as more
land was released for development.
CORPORATE
sell of electronic solu(cid:415) ons and a signifi cant upli(cid:332) in Kina lending market
share to 56.5%.
Deposits from our Corporate clients grew 28%, well above PNG system,
exceeding K700 million during the year.
Customer sa(cid:415) sfac(cid:415) on remains the cornerstone of Corporate Banking’s
strategy and we con(cid:415) nue to ac(cid:415) on required changes to improve our
customer-service culture. During 2015 we completed our third customer
sa(cid:415) sfac(cid:415) on survey, through an independent market research fi rm, who
surveyed over 340 customers. The overall survey results highlighted certain
improvements that need to be made to increase customer sa(cid:415) sfac(cid:415) on
across some key drivers of service including Rela(cid:415) onship Management,
and Product and Service; and in the coordina(cid:415) on of our ac(cid:415) vi(cid:415) es with
Retail and Treasury and foreign exchange. Each rela(cid:415) onship team has
developed ac(cid:415) on plans to address their individual customers service and
collabora(cid:415) on issues.
Consistent with BSP’s approach to credit risk, we maintain a strong credit
culture across Corporate Banking with focus on prudent credit risks and
con(cid:415) nue a strong partnership with the Group Risk Management team.
Together we proac(cid:415) vely monitor and control the quality of the loan
por(cid:414) olio; promptly responding to any sector or customers demonstra(cid:415) ng
stress in the slowing economic and currency liquidity environment.
BSP’s “whole of bank” solu(cid:415) on incorporates dedicated rela(cid:415) onship
management, extensive product suite, electronic solu(cid:415) ons, and access
to the largest retail branch networks. This makes BSP one of the leading
business partners in PNG and across the South Pacifi c. The Strategic
Customer Support team con(cid:415) nues to work with internal business partners
in Retail, Treasury, and Opera(cid:415) ons, our key customers and interna(cid:415) onal
targets in the oil and gas and mining sectors delivering strong cross
business unit and regional engagement, which cannot be matched by our
compe(cid:415) tors.
TREASURY
The BSP Group operates across the Pacifi c in six jurisdic(cid:415) ons now. Each
country has their own discrete foreign exchange regula(cid:415) ons and operates
in fi nancial markets where foreign exchange (FX) liquidity is derived from
a narrow base of export industries and sources, and the dependence on
imports are rela(cid:415) vely high.
The role of BSP Treasury remains to:
1.
foster and enhance rela(cid:415) onships with clients to provide Financial
Markets services; and
2. manage market risk, funding balance sheet opera(cid:415) ons, manage
liquidity risk, capital and capital planning, in line with pruden(cid:415) al
requirements, ALCO direc(cid:415) ves and delegated Board authori(cid:415) es.
PNG Treasury foreign exchange (FX) earnings were above plan for the year.
2015 was challenging, as import demand far exceeded export supply of
foreign currency. Lower commodity prices, reduced produc(cid:415) on aff ected by
El Nino and temporary mine closures placed severe pressure on levels of
available foreign currency liquidity and the offi cial rate of exchange.
In 2015 Corporate Banking again achieved strong results, improving
market share, customer sa(cid:415) sfac(cid:415) on and growing profi ts. We believe our
people in Corporate Banking across PNG and the Pacifi c are our defi ning
compe(cid:415) (cid:415) ve advantage; and during the year we con(cid:415) nued to invest in
a(cid:425) rac(cid:415) ng, retaining and mo(cid:415) va(cid:415) ng the best rela(cid:415) onship teams.
The offi cial Bank of Papua New Guinea (BPNG) rate of exchange fell steadily,
by 13.75%, from US38.55 cents to US33.25 cents, throughout 2015. A
stable Kina versus the Australian dollar, had the eff ect of amplifying the
currency imbalance. The Kina fell marginally 2.97% against the Australian
dollar from AUD47.06 cents to AUD45.66 cents.
Our people con(cid:415) nue their commitment to our Vision, as a team, to help
our customers and communi(cid:415) es prosper.
This year Corporate Banking in PNG con(cid:415) nued to deliver strong fi nancial
performance. The major drivers of this performance were growth in
lending, par(cid:415) cularly in the area of infrastructure projects, improved cross-
The Bank’s FX market share in PNG increased from 31.22% in 2014 to
33.29% in 2015. The Bank’s FX turnover fell 4.49%, while PNG FX market
turnover reduced by 10.64%. Market share gained came predominantly
from the Oil, Mining and Agricultural sectors.
12
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
13
STRATEGIC BUSINESS UNIT REPORTS
The Bank con(cid:415) nued to invest surplus funds in government securi(cid:415) es.
Government debt yield curves steepened over the course of the year,
refl ec(cid:415) ng evolving fi scal condi(cid:415) ons. 28 day Central Bank Bills fell from 1.92%
to 1.32%, 91 day Treasury Bills fell from 2.95% to 2.44%, 182 day Treasury
Bills were unchanged at 4.65%, whilst 1 year Treasury rose 0.18% to 7.6%.
Yields on longer dated Government issued Inscribed Stock increased 0.55%
across the board for all series with maturi(cid:415) es between 2017 & 2031.
Opera(cid:415) onally, PNG Treasury con(cid:415) nues to mi(cid:415) gate risk in line with world’s
best prac(cid:415) ce and is ac(cid:415) vely focused on providing technical training,
empowering staff to con(cid:415) nue their development journey. Treasury dealing
staff all sat the Australian Financial Markets Associa(cid:415) on Foreign Exchange
Markets Accredita(cid:415) on examina(cid:415) ons in November 2015, and will con(cid:415) nue
further technical training in Foreign Exchange and Money Markets in 2016.
The customer centric Treasury team con(cid:415) nue to strive to provide the
best fi nancial market solu(cid:415) ons to sa(cid:415) sfy customer needs, within the PNG
regulatory framework.
PARAMOUNT
In 2015, Paramount Banking con(cid:415) nued to play a signifi cant role in managing
49% of BSP’s liquidity por(cid:414) olio (which is 27% of the PNG fi nancial system)
against another challenging year with lower commodity prices and the
temporary closure of Ok Tedi mine.
Key to Paramount Banking’s performance is its strategic alliance with the
Na(cid:415) onal Government and its key line agencies. Despite the decline in State
Revenue, budget cuts and the slowdown of the economy impacted by
the fall in commodity prices; Paramount Banking was able to maintain its
liquidity por(cid:414) olio at K5.4 billion.
Paramount Banking par(cid:415) cipated in the Provincial and District Treasurer’s
and Administrator’s Conference “Wok Bung Wantaim” held in Lae, where
various per(cid:415) nent aspects of Financial Intelligence Unit (FIU) and Proceeds
of Crime Act (POCA) were emphasised to address con(cid:415) nuous fraudulent
ac(cid:415) vi(cid:415) es on Government accounts.
Paramount Banking Community Rela(cid:415) ons Offi cers have also taken
Financial Literacy training to landowners in the resources extrac(cid:415) on and
development areas, in partnership with Retail Banking.
In 2016, Paramount Banking will remain focused to improve our market
share by maintaining a strong service culture to our segment base,
par(cid:415) cularly to the overall Government segments, while maintaining strong
risk management prac(cid:415) ces by developing staff further with internal and
external training courses.
GROUP RISK MANAGEMENT
Risk management within the BSP Group is independently overseen by
various Business Units within the Group Risk Management strategic
business unit. BSP has a Board approved Risk Appe(cid:415) te Statement (RAS)
that refl ects the level of aggregated risk that BSP is willing to assume and
manage in the pursuit of its business objec(cid:415) ves. The RAS refl ects BSP’s
business and risk strategies which are measured by internal risk - return
benchmarks.
Credit
Credit undertakes key ac(cid:415) vi(cid:415) es to manage credit risk. It is responsible
for the overall credit quality of BSP’s loan por(cid:414) olio, implemen(cid:415) ng and
reviewing credit policies and industry underwri(cid:415) ng standards, monitoring
sector concentra(cid:415) on limits and por(cid:414) olio management responsibili(cid:415) es
Credit risk is defi ned as the poten(cid:415) al failure of a borrower or counter
party to meet its contractual obliga(cid:415) ons. Within BSP Group, credit risk is
managed by developing and undertaking an ongoing review of a credit risk
strategy that iden(cid:415) fi es our target market acceptance providing a pla(cid:414) orm
to grow the business within defi ned parameters to build a quality loan
por(cid:414) olio across a broad range of sectors and countries where BSP operates.
Senior BSP Management has the responsibility to implement credit risk
strategy including developing policies and procedures for iden(cid:415) fying,
14
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
measuring, mi(cid:415) ga(cid:415) ng, monitoring, controlling and on a con(cid:415) nuous basis
reviewing the eff ec(cid:415) veness of the credit risk strategy and inherent credit
culture.
Good lending growth across all sectors of the PNG economy was achieved
in 2015. Diversifi ca(cid:415) on of the loan por(cid:414) olio across key economic sectors
con(cid:415) nues to be closely monitored, providing a mi(cid:415) gant to the overall
loan por(cid:414) olio exposures, to ensure that no signifi cant concentra(cid:415) on risk
develops that may impact the stability of the asset por(cid:414) olio performance.
The property market con(cid:415) nues to be a sector that experienced a re-
adjustment with supply outstripping demand leading to lower rental yields
and capital growth. BSP con(cid:415) nues to monitor the exposure to the property
sector undertaking appropriate periodic stress tes(cid:415) ng of the property loan
por(cid:414) olio.
Overall performance of the loan por(cid:414) olio remains sound in PNG with
solid growth achieved in both the corporate and retail sectors. The Bank’s
market share has increased in a compe(cid:415) (cid:415) ve market to 54%. Loan growth
in Fiji and Solomon Islands has been sound as well with Fiji outperforming
overall market growth.
In 2015, overall retail delinquency rates increased with higher losses
experienced in the Personal Loans por(cid:414) olio primarily from job losses
refl ec(cid:415) ng the subdued market condi(cid:415) ons. However, this remains under
constant monitoring and within acceptable tolerance levels. The loan
por(cid:414) olio weighted average risk ra(cid:415) ng is considered to be sound.
The successful implementa(cid:415) on of the automated loan origina(cid:415) on system
for unsecured personal loans, has resulted in a more consistent origina(cid:415) on
process and improved turnaround (cid:415) mes for approval and funding. The
loan origina(cid:415) on process is being expanded to all retail loan products
including secured personal loans, housing loans, small to medium business
sector loans incorpora(cid:415) ng a credit scorecard that will provide a consistent
loan decision and automated origina(cid:415) on process providing improved
turnaround (cid:415) mes for our retail and small business customers.
Lending policies and procedures con(cid:415) nue to be reviewed on an ongoing
basis to remain relevant to changes in the banking, regulatory and industry
sectors. These reviews are due to con(cid:415) nuing changing market and product
trends focusing on improving controls and repor(cid:415) ng in order to keep
the Bank aligned with industry best prac(cid:415) ce for credit risk management
standards.
Training remained a key focus in 2015 and will con(cid:415) nue into 2016. The
Moody’s online training introduced in 2012 and completed for circa 90% of
Credit and Corporate staff was con(cid:415) nued in 2015 with 31 staff to complete
the online training in 2016. The online training was complemented with
Moody’s conduc(cid:415) ng formal classroom training sessions in Port Moresby.
In addi(cid:415) on, Credit Management provides weekly in house training sessions
with 24 specifi c credit related learnings conducted during 2015 for Credit
and Corporate staff .
Opera(cid:415) onal Risk
The Opera(cid:415) onal Risk BU has broad opera(cid:415) onal risk management
responsibili(cid:415) es across the Group. Opera(cid:415) onal risk is defi ned as the risk
of direct or indirect impacts resul(cid:415) ng from human factors, inadequate or
failed internal processes and systems or external events. Opera(cid:415) onal risks
are inherent in the Bank’s business ac(cid:415) vi(cid:415) es. The Bank has independent
Opera(cid:415) onal Risk func(cid:415) ons in PNG, Fiji (both the Bank and Life Insurance
opera(cid:415) ons), Solomon Islands and the newly acquired businesses in Samoa,
Tonga and Cook Islands.
The PNG Opera(cid:415) onal Risk Business Unit has been restructured to
accommodate its “Group” func(cid:415) ons in terms of maintaining oversight and
repor(cid:415) ng requirements in all countries where BSP operates. A new senior
posi(cid:415) on as Head of Compliance and AML for the Group has been created
repor(cid:415) ng directly to Head of Group Opera(cid:415) onal Risk and Compliance
with two other new suppor(cid:415) ng roles to further strengthen the Bank’s
capabili(cid:415) es on compliance and AML. In alignment to this strategy, the
Bank’s Compliance func(cid:415) on has been moved from the Company Secretary’s
offi ce to Opera(cid:415) onal Risk.
Some of the key highlights during 2015 included:
•
•
•
•
•
•
•
Con(cid:415) nual staff reinforcement on opera(cid:415) onal risks, an(cid:415) -money
laundering and fraud detec(cid:415) on through risk awareness workshops
across the Bank;
Implementa(cid:415) on of new AML monitoring systems;
Undertaking regular risk and control analysis and where required
develop risk mi(cid:415) ga(cid:415) on plans for key BSP processes;
Training of Risk and Compliance Offi cers in other South Pacifi c
countries where BSP operates;
Reviewing risk registers for each business unit to help them regularly
monitor their key risks and the eff ec(cid:415) veness of their internal controls;
Reviewing the Top Enterprise Wide Risks across the Bank, as well
as, the suppor(cid:415) ng controls to ensure that the risks are eff ec(cid:415) vely
mi(cid:415) gated and regularly monitored; and
Assis(cid:415) ng execu(cid:415) ve management with analysis and regular repor(cid:415) ng
of opera(cid:415) onal risk issues.
Asset Management
Asset Management manages the non-performing asset por(cid:414) olio. During
2015, the easing of the rental returns in the real estate market con(cid:415) nued
from the previous year with a few property investment loans migra(cid:415) ng to
non-accrual status. Whilst the rental returns have eased this ini(cid:415) ally did
not refl ect in the property prices however this is now having some impact
par(cid:415) cularly with development proper(cid:415) es where premium for poten(cid:415) al
development has diminished considerably.
Non - accrual loans volume saw an increase in 2015 represen(cid:415) ng circa
1.4% of the Bank’s overall lending volumes in PNG. There is evidence
of the market slowdown with the LNG project going from construc(cid:415) on
to produc(cid:415) on phase and the scaling back of work forces and business
contracts.
We have seen an increase in defaul(cid:415) ng consumer loans for 2015.
Delinquencies are closely monitored and managed and together with a
new automated collec(cid:415) on system introduced in early 2015, the process
between Retail and Asset Management has been streamlined for be(cid:425) er
management of delinquent loans.
A careful watch is being maintained on business/corporate loan segment
and immediate remedial ac(cid:415) on being undertaken for any businesses/
companies showing signs of stress. Early warning signs and adverse
account pa(cid:425) erns are iden(cid:415) fi ed early with remedial plans in place for Watch
List customers.
Credit Inspec(cid:415) on
Credit Inspec(cid:415) on provides an independent assessment of credit policy
compliance and por(cid:414) olio quality assurance. The primary role of the Credit
Inspec(cid:415) on Business Unit is to provide a professional, independent risk
management func(cid:415) on of the best prac(cid:415) ce standard and por(cid:414) olio quality
assurance which assists members of senior management and the Board
via the Board Audit Risk & Compliance Commi(cid:425) ee (BARCC) in the eff ec(cid:415) ve
discharge of their responsibili(cid:415) es.
The Credit Inspec(cid:415) on Business Unit provides BARCC with independent
analysis, objec(cid:415) ve opinions and recommenda(cid:415) ons on the quality of credit
risk assessment, credit approval, credit risk management, compliance, risk
control and credit por(cid:414) olio repor(cid:415) ng concerning the ac(cid:415) vi(cid:415) es reviewed.
•
This Unit is responsible for the day to day execu(cid:415) on of “on-site” inspec(cid:415) ons
(and where applicable “off -site” inspec(cid:415) ons) of the credit risk por(cid:414) olio
within the Bank and related en(cid:415) (cid:415) es, in all jurisdic(cid:415) ons. The main aim is
to achieve an early detec(cid:415) on of material shortcomings of credit risk and
compliance with Group policies.
In 2015, Credit Inspec(cid:415) on completed 11 monthly reports for Retail Banking
(Personal Lending) and 12 reports for Corporate and Commercial Banking
STRATEGIC BUSINESS UNIT REPORTS
Rela(cid:415) onship Por(cid:414) olios. For Corporate Banking including Commercial,
approximately 44% of the Corporate Rela(cid:415) onship Loan Por(cid:414) olios were
reviewed by Credit Inspec(cid:415) on.
Audit
Audit undertakes regular internal audits of processes and procedures
to maintain compliance with regula(cid:415) ons and BSP standards and retains
an independent and direct repor(cid:415) ng line to the BARCC. The Group Risk
Management Unit structure was implemented to allow a clear oversight
of all the three risk lines of defence including Audit as the third and last
defence in the risk management framework.
BSP has independent internal audit func(cid:415) ons for the Group repor(cid:415) ng
through the Head of Group Internal Audit, func(cid:415) onally to the BARCC and
Group CEO and administra(cid:415) vely to the Group Chief Risk Offi cer.
Key audits during 2015 included Informa(cid:415) on Security, An(cid:415) -Virus Protec(cid:415) on
and Support Services Units. The Internal Audit team also upgraded its audit
so(cid:332) ware in the second half of 2015.
Legal
Legal Services provides the legal services and advice required for the
opera(cid:415) on of the business.
The Legal Unit provides or sources the legal services and advice required
by the Bank in conduc(cid:415) ng its business, principally in the area of banking,
commercial and securi(cid:415) es law, li(cid:415) ga(cid:415) on (both for and against the Bank)
and regulatory compliance. To the extent possible, these services are
provided by the fi ve in house lawyers with external lawyers being engaged
where deemed necessary or prudent.
HUMAN RESOURCES
The Human Resources SBU con(cid:415) nued to support the opera(cid:415) ons of
Bank through its core HR Management func(cid:415) ons in 2015. The following
ini(cid:415) a(cid:415) ves were implemented in collabora(cid:415) on with the respec(cid:415) ve SBUs in
the Bank:
Recruitment
•
Secured the con(cid:415) nued services of all staff in the Westpac opera(cid:415) ons
in Tonga, Samoa, Cook Islands and Solomon Islands, which BSP
acquired.
•
•
Facilitated the secondment of two senior offi cers to BSP Solomon
Islands to fi ll the roles of Head of Retail and Finance Manager,
repor(cid:415) ng to the Country Manager.
Con(cid:415) nued our career choice workshops and recruitment fairs with
Universi(cid:415) es and recruited twenty six (26) graduate trainees for the
2015 Graduate Development Program.
Learning & Development
•
The 2015 Leadership Development Program (LDP) cohorts, numbering
15 a(cid:425) ended the General Management Program, Strategic Awareness
& Business Acumen and Implemen(cid:415) ng Strategy courses with
Melbourne Business School as part of their development. Each of the
LDP cohorts also a(cid:425) ended two sessions of the Banks EXCO mee(cid:415) ng in
the year, and par(cid:415) cipated in a number of Bank Strategic Impera(cid:415) ves
project commi(cid:425) ees to develop their project management and
business opera(cid:415) ons skills/knowledge in the Banking and Financial
industry.
Seconded six LDP staff members out of the fi (cid:332) een 2015 LDP cohorts
to Bank of Philippines Island (BPI) for a period of three months. The
par(cid:415) cipants were given the opportunity to present to the Board one
key learning ini(cid:415) a(cid:415) ve they have iden(cid:415) fi ed/ agreed with the respec(cid:415) ve
SBU General Manager for implementa(cid:415) on in BSP in 2016.
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
15
STRATEGIC BUSINESS UNIT REPORTS
Ongoing staff training ini(cid:415) a(cid:415) ves for 2015 included:
•
Held a range of so(cid:332) and technical skills in customer service,
presenta(cid:415) on skills, (cid:415) me management, communica(cid:415) on strategy and
Microso(cid:332) Offi ce training at the founda(cid:415) on level.
•
Conducted the iCare Customer fi rst and Performance Management
System training for employees in Solomon Islands, Cook Islands,
Samoa and Tonga as part of the induc(cid:415) on program.
Remunera(cid:415) on and Benefi ts
•
Par(cid:415) cipated in the PNG Hay Market salary/benefi t survey.
•
•
•
•
Assisted in the development of Long Term Incen(cid:415) ve scheme for the
Execu(cid:415) ve Management replacing the Share Op(cid:415) on scheme.
Con(cid:415) nued to market the Bank’s Na(cid:415) onal Staff Home Ownership
Scheme and 150 loans were approved and construc(cid:415) on of their
houses are proceeding. We have set an eligible employee database,
for all Na(cid:415) onal staff and will con(cid:415) nue to market the product to eligible
employees in 2016.
Assisted several staff (ci(cid:415) zens/non-ci(cid:415) zens) seek overseas medical
treatment, mainly in the Philippines, Singapore and India through the
Medical Insurance Scheme.
Facilitated Life Insurance benefi ts payments to deceased employees
nominated benefi ciaries under the Bank’s Life Insurance Policy.
HR Opera(cid:415) ons
•
Conducted the annual employee engagement survey .
•
Administra(cid:415) on procedures for HR processes were reviewed to
increase produc(cid:415) vity and improve effi ciency.
Total staff in BSP Group is 4,073. PNG has 2,802, Fiji - 803, Solomon Islands
- 256, Cook Islands - 56, Samoa - 79 and Tonga - 77. Staff turnover in 2015
was 8% compared to 12% in 2014.
Total training mandays for 2015 was 9,185 equa(cid:415) ng to 3.0 mandays per
employee.
OPERATIONS AND INFORMATION TECHNOLOGY
In addi(cid:415) on to support and project ac(cid:415) vi(cid:415) es which the SBU undertakes to
support the ac(cid:415) vi(cid:415) es of the Bank, 2015 was characterised with signifi cant
tasks related to the purchase of Westpac opera(cid:415) ons in Solomon Island,
Cook Islands, Samoa and Tonga.
Immediately following the announcement for the prospec(cid:415) ve purchase of
Westpac’s businesses in January, planning and coordina(cid:415) on commenced
with both Westpac and our communica(cid:415) ons and technology partners to
enable BSP to take control of the opera(cid:415) onal infrastructures as soon as
possible with least possible impact to the business.
Given the planned immediate transfer of the business post se(cid:425) lement,
a Transi(cid:415) onal Services Agreement (TSA) was nego(cid:415) ated. This covered a
myriad of ac(cid:415) vi(cid:415) es such that the day to day opera(cid:415) onal processing could
con(cid:415) nue using Westpac infrastructure whilst BSP worked with vendors to
deliver new or amended technologies.
The an(cid:415) cipated dura(cid:415) on of the TSA support from Westpac was planned
to last at least six months. However, through careful planning and
implementa(cid:415) on, the
larger components of the TSA support were
terminated with the corresponding ac(cid:415) vi(cid:415) es being managed directly by
BSP in PNG within an average dura(cid:415) on of less than four months.
From an opera(cid:415) onal perspec(cid:415) ve, whereas Westpac fully supported
these Pacifi c Island Countries from their central base in Fiji, our selected
opera(cid:415) ng model was to rebuild the banking knowledge in country as much
as possible but to retain central control over some support ac(cid:415) vi(cid:415) es where
risk reduc(cid:415) on and economies of scale made signifi cant impact. As such,
the PNG opera(cid:415) on is providing support for all technological day to day
processing, scheme card processing, reconcilia(cid:415) ons and some aspects of
16
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
Interna(cid:415) onal Opera(cid:415) ons.
FINANCE & PLANNING
Changes have been implemented to our opera(cid:415) ons, to cater specifi cally
for the Pacifi c Islands Countries which, in some cases such as IT, require
work shi(cid:332) s to ensure that assistance is immediately available during their
opera(cid:415) ng (cid:415) me zones.
The end to end migra(cid:415) on ac(cid:415) vi(cid:415) es above took signifi cant (cid:415) me and eff ort
by a large group within the SBU, beginning in January and mostly ending
at (cid:415) me of the migra(cid:415) on of the TSA ac(cid:415) vi(cid:415) es between September and
November. This was largely accomplished alongside their normal day to
day tasks, demonstra(cid:415) ng the level of dedica(cid:415) on of BSP’s employees to
strategic objec(cid:415) ves.
In PNG, this year saw the implementa(cid:415) on of the third segment of the
Kina Automated Transfer (KATS) Project namely Credit Transfers enabling
smaller value payments to be processed electronically thereby obvia(cid:415) ng
the need to issue cheques. In the case of BSP, we have interfaced this to
the internet banking applica(cid:415) on such that any credit transfer captured
using the channel is immediately processed without the need for manual
interven(cid:415) on.
Further development has been made to BSP’s Lendfast loan processing
applica(cid:415) on such that, in addi(cid:415) on to the automated processing of unsecured
personal lending, we have expanded the products supported by the system
to include Savings Secured, SME and Housing Loans. This has resulted in
much faster turnaround on transac(cid:415) ons as well as greater control and
auditability. We have also supported the introduc(cid:415) on of a new Collec(cid:415) ons
system which facilitates the management of retail collec(cid:415) ons including
priori(cid:415) sa(cid:415) on of cases using predetermined fi ltering criteria, full details of
all customer contact as well as automated genera(cid:415) on of account pos(cid:415) ngs.
Within the Interna(cid:415) onal Opera(cid:415) ons area, the business has experienced a
four - fold increase in transac(cid:415) onal volumes during the past 18 months.
Combined with new BPNG Opera(cid:415) onal Guidelines issued in March 2015
and related compliance requirements, this has resulted in a much greater
workload for the team.
In order to be(cid:425) er manage fi xed assets we have implemented a new Asset
Management System covering the full life cycle of assets from ini(cid:415) al
issuance of purchase order to deployment, maintenance and deprecia(cid:415) on
on a fully automated basis including accoun(cid:415) ng interface to our general
ledger. This has not only allowed for greater effi ciency and control of the
asset but has also reduced turnaround (cid:415) me and resource requirements on
the invoice approval and payment process.
In terms of construc(cid:415) on projects, signifi cant ac(cid:415) vity has con(cid:415) nued
throughout this year. Despite construc(cid:415) on delays beyond our control, the
new Security Building and new Data Centre were delivered during Q4 2015.
The former has already been occupied whereas the la(cid:425) er will be ac(cid:415) vated
during Q1 2016.
The aforemen(cid:415) oned construc(cid:415) on delays have also aff ected the comple(cid:415) on
of our new Waigani Head Offi ce (previously referred to as Pacifi c
Opera(cid:415) ons) which we now expect to be delivered by the end of Q3 2016
with occupa(cid:415) on to take place by end of year.
Several sub branches have been delivered including in Banz and Kerevat;
Tabubil Branch has been refurbished; Lending Centres have been created
within the branch confi nes of Wewak, Bulolo and Lae Market; a new kiosk
has been built within the redevelopment at Jackson’s Airport Interna(cid:415) onal
Terminal and a mini branch was created at the Athletes’ Village for the
dura(cid:415) on of the Pacifi c Games.
As part of our eff orts to implement a property strategy where only strategic
assets are owned directly by the Bank, we have disposed of our ownership
of Boroko Banking Centre and the shareholding in the property company
which owns BSP Haus. In both cases we have retained long term leases for
our retail branches opera(cid:415) ng in these loca(cid:415) ons.
2015 was a con(cid:415) nua(cid:415) on of the constant improvement of key deliverables
of repor(cid:415) ng for the Group. It was also a demanding but exci(cid:415) ng year for the
Finance & Planning team with signifi cant resources allocated to successfully
acquire and integrate the Westpac businesses into BSP, being involved in
due diligence ac(cid:415) vi(cid:415) es right through to processing of se(cid:425) lement entries
and incep(cid:415) on of repor(cid:415) ng protocols.
Also in 2015, a key strategic deliverable was to take ownership of all
balance sheet reconcilia(cid:415) ons to ensure high standards of internal controls
in the accoun(cid:415) ng and repor(cid:415) ng system as the BSP group grows in size and
complexity.
Westpac Acquisi(cid:415) on and Integra(cid:415) on
The Finance & Planning team provided solid support for this major strategic
ini(cid:415) a(cid:415) ve during 2015.
BSP delegated authori(cid:415) es were rolled out to each of the new en(cid:415) (cid:415) es.
Insurance policies for the business and employees were acquired and
upgraded where needed, in line with BSP Group standards and the new
members of the BSP family now enjoy the full suite of medical benefi ts that
BSP Group off ers to its employees.
Func(cid:415) ons which were previously performed by Westpac in Fiji, were
transferred to BSP PNG, a key one being the payroll process. Payroll
staff members worked with the Westpac Fiji team to adopt the payroll
resources, ensuring a smooth transi(cid:415) on with all personnel paid correctly
and on (cid:415) me from the fi rst pay run. Dividend and Head Offi ce alloca(cid:415) on
policies and calcula(cid:415) ons were fi nalised.
Balance dates for the acquired en(cid:415) (cid:415) es have been converted from
September to December for the fi rst set of audited accounts for the newly
acquired en(cid:415) (cid:415) es under BSP accoun(cid:415) ng policies.
Management Repor(cid:415) ng
The acquisi(cid:415) on of banking opera(cid:415) ons in Cook Islands, Samoa, Tonga and
the Solomon Islands placed addi(cid:415) onal repor(cid:415) ng requirements on those
countries and on BSP’s head offi ce repor(cid:415) ng team. To manage the increasing
repor(cid:415) ng needs and complexity of the Group, a new consolida(cid:415) on and
repor(cid:415) ng database was developed.
Smarter planning and diligent task execu(cid:415) on allowed the team to meet
(cid:415) ght deadlines, reduce month end repor(cid:415) ng (cid:415) melines, and increase
subject coverage, improving report format and content for management
and key stakeholders.
Strategy and Planning Team
The Strategy and Planning team expanded with the addi(cid:415) on of an
economist into its ranks in 2015, allowing the produc(cid:415) on of a Quarterly
Economic Bulle(cid:415) n, from June 2015. The team played a more ac(cid:415) ve role in
2015 in the budge(cid:415) ng and strategic planning and repor(cid:415) ng cycles, not just
in PNG, but also across the new acquisi(cid:415) ons in the Pacifi c.
Data Control and Analy(cid:415) cs
In 2015, Data Control and Analy(cid:415) cs implemented training it received through
its Business Intelligence vendors. This allowed the team to design data
STRATEGIC BUSINESS UNIT REPORTS
structures that improve processing (cid:415) me and allow improved segmenta(cid:415) on
analysis in data warehouse; update data structures in fi nancial models to
allow for more accurate repor(cid:415) ng; and create interac(cid:415) ve dashboards for
Retail SBU allowing relevant Branch KPI data to be reported.
In addi(cid:415) on to Retail, other SBUs have also been supported especially with
regards to compliance repor(cid:415) ng. Improved systems knowledge has allowed
Data Control & Analy(cid:415) cs to improve (cid:415) meliness and accuracy of repor(cid:415) ng
for the middle offi ce and governance teams in Finance & Planning, for
Treasury, ALCO and BPNG repor(cid:415) ng.
Data Analy(cid:415) cs and Control has also taken on the administra(cid:415) on of Tech
One, the Bank’s procurement, accounts payable and asset management
system that was implemented in July 2015, featuring an integrated
workfl ow system and document image management.
Consolida(cid:415) on
With the increasing number of related en(cid:415) (cid:415) es, Finance & Planning, as
part of its process improvement ini(cid:415) a(cid:415) ves worked on fully automa(cid:415) ng
the consolida(cid:415) on process. Benefi ts of this new consolida(cid:415) on structure
include eff ec(cid:415) ve and effi cient month end process and more importantly,
a controlled process with the capacity to audit and track data fl ow
throughout the consolida(cid:415) on process.
Further benefi ts include the ability to centralise consolida(cid:415) ons with easy
data collec(cid:415) on and, ease of managing and integra(cid:415) ng ledger informa(cid:415) on
across group enterprises.
People
Finance & Planning’s nominee in BSP’s Leadership Development Program
a(cid:425) ended courses at the Melbourne Business School, and spent three
months at the Bank of Philippine Islands on a secondment with their
accoun(cid:415) ng and corporate planning sec(cid:415) on, obtaining valuable insights into
planning and repor(cid:415) ng processes. Key members of the PNG team were
deployed to relieve a senior fi nance and planning role vacancies which
arose in the Solomon Islands.
Late in 2015, addi(cid:415) onal resources have been engaged in the repor(cid:415) ng and
strategy sec(cid:415) ons, to increase the capacity of Finance & Planning to deliver
on the substan(cid:415) al repor(cid:415) ng and strategic challenges that accompany BSP’s
growth and complexity.
Finance & Planning will con(cid:415) nue to:
•
•
Invest in staff skill and knowledge through training and mentorship
and scholarships and achieve demonstrable acquisi(cid:415) on of new or
addi(cid:415) onal professional exper(cid:415) se, with a corresponding reduc(cid:415) on of
reliance on external consul(cid:415) ng resources.
Recruit high quality people, whilst retaining and promo(cid:415) ng high
performers within the team.
• Meet the challenge to deliver a higher quality service, keep up
professional development, and set goals that extend its people and
benefi t the business.
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
17
STRATEGIC BUSINESS UNIT REPORTS
STRATEGIC BUSINESS UNIT REPORTS
BSP and PNG Ports Corpora(cid:415) on limited closed the fi nancing of the State’s PGK300 Million investment in the development and expansion of the State’s new Port at Motukea
Island. Image Courtesy : PNG Ports Ltd
BSP staff are members of various professional groups and the Bank is fully suppor(cid:415) ve of membership and other sponsorships such as conferences or workshops.
Busy year in construc(cid:415) on. Including new Sub Branches. This is the Higaturu Sub Branch in the Northern Province.
BSP SME Centre, Waterfront Foodworld, Port Moresby. The Smart Business SME product off erings were well promoted in all major centres and our focus on the SME market
segment is unparalleled in PNG.
18
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
19
STRATEGIC BUSINESS UNIT REPORTS
STRATEGIC BUSINESS UNIT REPORTS
In 2015 PNG celebrated its 40th anniversary of independence.
BSP Corporate team promote ‘whole of bank’ solu(cid:415) ons during a forum in Lae,
Morobe Province.
ATM Support team during the Pacifi c Games in Port Moresby.
BSP has a Suma(cid:415) n Account for school students.
There was increased transac(cid:415) onal ac(cid:415) vity across our extensive network of ATM’s,
EFTPoS devices and Mobile Banking.
BSP partnered with BPNG to roll out fi nancial literacy training.
BSP Leadership Management Development Program par(cid:415) cipants.
There was ongoing emphasis on fi nancial inclusion with almost 200,000 banking accounts opened in 2015, of which 40,000 were fee free for children and students, and 60,000
fee free designated savings accounts.
HR team receives BSP’s Best Private Sector Employer award.
Locals celebrate Kerevat Sub Branch opening in East New Britain.
20
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
21
Fred Osifelo,
Manager Point Cruz Branch, BSP Solomon Islands.
Pictured here with Rowan Williams, a kid from his community.
Corporate
Governance
22
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
23
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
BSP has adopted an approach to Corporate Governance that is underpinned by our Core Values of Integrity,
Leadership, People, Professionalism, Quality, Teamwork and Community.
This approach is supported by a comprehensive framework of Corporate
Governance principles and policies. The BSP Board has demonstrated
its commitment to developing and maintaining a standard of corporate
governance that seeks to match global prac(cid:415) ce.
The Board ensures that it complies with the requirements of BSP’s home
exchange, Port Moresby Stock Exchange (POMSOX). It also closely monitors
developments in corporate governance principles and prac(cid:415) ce within
Australia and has benchmarked itself against:
•
•
•
Directors’ remunera(cid:415) on via the Remunera(cid:415) on & Nomina(cid:415) on Commi(cid:425) ee;
selec(cid:415) ng, with the assistance of the Audit, Risk and Compliance
Commi(cid:425) ee, and recommending to shareholders, the appointment of
external auditors;
approving fi nancial statements.
A number of these responsibili(cid:415) es have been delegated by the Board to
various commi(cid:425) ees. The commi(cid:425) ees and their responsibili(cid:415) es are detailed
in Sec(cid:415) on 2, Board Commi(cid:425) ees.
•
•
•
ASX Corporate Governance Council ‘Corporate Governance
and Best Prac(cid:415) ce Recommenda(cid:415) ons’.
Australian Pruden(cid:415) al Regulatory Authority Pruden(cid:415) al Standard APS
510.
Standard Australia AS 8000-2003 Good Governance Principles.
BSP is mindful of the advantages of demonstra(cid:415) ng to investors that its
corporate governance standards meet the requirements expected of
companies listed in countries such as Australia. This Corporate Governance
Statement therefore compares BSP’s corporate governance prac(cid:415) ces to the
ASX Corporate Governance Council and Best Prac(cid:415) ce Recommenda(cid:415) ons.
BSP manages in excess of half the banking market in Papua New Guinea, and
is predominantly owned by ins(cid:415) tu(cid:415) ons and individuals in Papua New Guinea.
The Board, management and staff of BSP are very much aware of their
responsibili(cid:415) es to the people of Papua New Guinea. The set of Corporate
Governance principles developed by BSP is intended to provide a framework
that will help to ensure that BSP deals fairly and openly with all its stakeholders
– shareholders, customers and staff alike.
BSP publishes its corporate governance prac(cid:415) ces on its website. This is
available at www.bsp.com.pg in the shareholders sec(cid:415) on.
THE BOARD OF DIRECTORS
Role and Responsibility of the Board
The roles and responsibili(cid:415) es of the Board are defi ned in the Board Charter.
This document also details the ma(cid:425) ers reserved for the Board and ma(cid:425) ers
that have been delegated to management.
The Board, with the support of its commi(cid:425) ees, is responsible to the
shareholders for the overall performance of the company including its
strategic direc(cid:415) on; establishing goals for management; and monitoring the
achievement of those goals with a view to op(cid:415) mising company performance
and increasing shareholder
value.
•
•
•
•
•
•
•
•
•
•
•
•
overall strategy of the company, including opera(cid:415) ng, fi nancing,
dividends, and risk management;
appoin(cid:415) ng the Group Chief Execu(cid:415) ve Offi cer and se(cid:427) ng an appropriate
remunera(cid:415) on package;
appoin(cid:415) ng General Managers and se(cid:427) ng appropriate remunera(cid:415) on
packages;
appoin(cid:415) ng the Company Secretary and se(cid:427) ng an appropriate
remunera(cid:415) on package;
endorsing appropriate policy se(cid:427) ngs for management;
reviewing Board composi(cid:415) on and performance;
reviewing the performance of management;
approving an annual strategic plan and an annual budget for the
company and monitoring results on a regular basis;
ensuring that appropriate risk management systems are in place, and
are opera(cid:415) ng to protect the company’s fi nancial posi(cid:415) on and assets;
ensuring that the company complies with the law and relevant
regula(cid:415) ons, and conforms with the highest standards of fi nancial and
ethical behaviour;
acquisi(cid:415) ons and disposals material to the business;
establishing authority levels;
24
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
The Board has delegated to management responsibility for:
•
•
•
•
•
developing the annual opera(cid:415) ng and capital expenditure budgets for
Board approval, and monitoring performance against these budgets;
developing and implemen(cid:415) ng strategies within the framework approved
by the Board, and providing the Board with recommenda(cid:415) ons on key
strategic issues;
appoin(cid:415) ng management below the level of General Manager and
preparing and maintaining succession plans for these senior roles;
developing and maintaining eff ec(cid:415) ve risk management policies and
procedures;
keeping the Board and the market fully informed of material developments.
Membership, Exper(cid:415) se, Size and Composi(cid:415) on of the Board
The Corporate Governance Principles affi rm that the majority of the Board
should be independent. As is typical of small fi nancial markets generally in
Papua New Guinea, there are very considerable demands on the rela(cid:415) vely
small numbers of people with the skills and experience to fi ll the demanding
role of Non-execu(cid:415) ve Director on the Boards of the Na(cid:415) on’s larger corporate
ins(cid:415) tu(cid:415) ons.
In these circumstances it is inevitable that a number of the Non - execu(cid:415) ve
Directors of BSP will also have roles on the Boards, or in Senior Management,
of ins(cid:415) tu(cid:415) ons that may be signifi cant shareholders in, or substan(cid:415) al
customers of the Bank.
Directors of BSP are me(cid:415) culous in handling situa(cid:415) ons where there could
poten(cid:415) ally be confl icts of interest, by declaring their interests in advance,
and absen(cid:415) ng themselves from any considera(cid:415) on of ma(cid:425) ers where a confl ict
might arise. The Bank’s Corporate Governance Principles require Directors to
disclose any new Directorships and equity interests at each Board mee(cid:415) ng.
The maximum number of Directors, as prescribed by the Cons(cid:415) tu(cid:415) on
approved by shareholders, is ten. At the date of this report there are ten
Directors, with nine Non - execu(cid:415) ves designated as independent, plus the
Group CEO. Under the Cons(cid:415) tu(cid:415) on, at each annual general mee(cid:415) ng one-third
of the company’s Directors, in addi(cid:415) on to any Director appointed during
the year, excluding the Group CEO, must off er themselves for re-elec(cid:415) on
by the shareholders.
Normally, Non - execu(cid:415) ve Directors are expected to serve a maximum of
four three-year terms, da(cid:415) ng from the AGM at which the newly elected
Director is fi rst confi rmed by shareholders.
This provision has eff ect from the date the Bank took its present form,
following the merger of BSP with the Papua New Guinea Banking Corpora(cid:415) on
in April 2002. In certain instances it may be considered that a director may
bring valuable exper(cid:415) se, independent judgement and an ability to act which
may determine that it is in the best interests of the Company for a director
to serve beyond a fi xed term.
The Board has a broad range of skills, experience and exper(cid:415) se that enables
it to meet its objec(cid:415) ves. Details of the Directors’ business backgrounds
and experience are provided on pages 8 - 9. The Board accepts that it has
a responsibility to shareholders to ensure that it maintains an appropriate
mix of skills and experience (without gender bias) within its membership.
Consequently the Board gives careful considera(cid:415) on to se(cid:427) ng criteria for
new appointments it may recommend to shareholders in accordance with
the BSP Cons(cid:415) tu(cid:415) on. It has delegated the ini(cid:415) al screening process involved
to its Remunera(cid:415) on and Nomina(cid:415) on Commi(cid:425) ee which, in accordance with
its Charter, may seek independent advice on possible new candidates for
Directorships. All Directors must be sa(cid:415) sfi ed that the best candidate has
been selected.
Nominees of the Board and/or shareholders must meet the ‘fi t and proper
person’ criteria established by the Bank of Papua New Guinea before they
can take their place on the Board. The Board does not accept that any offi ce
bearer and/or employee of an ins(cid:415) tu(cid:415) onal shareholder, by virtue only of
his/her posi(cid:415) on within that organisa(cid:415) on, have an automa(cid:415) c right to be
appointed to the Board.
On joining the Board, new Directors will be provided with a comprehensive
orienta(cid:415) on programme.
Role and Selec(cid:415) on of the Chairman
The Chairman is elected by the Directors every two years and holds the
posi(cid:415) on for a maximum of three terms. His role includes:
•
•
•
•
•
•
ensuring all new Board members are fully aware of their du(cid:415) es and
responsibili(cid:415) es;
providing eff ec(cid:415) ve leadership on the company’s strategy;
presen(cid:415) ng the views of the Board to the public;
ensuring the Board meets regularly throughout the year, and that
minutes are taken and recorded accurately;
se(cid:427) ng the agenda of mee(cid:415) ngs and maintaining proper conduct during
mee(cid:415) ngs;
reviewing the performance of Non-execu(cid:415) ve Directors;
BSP Board of Directors
The Chairman is not permi(cid:425) ed to occupy the role of Chief Execu(cid:415) ve Offi cer.
Sir Kostas Constan(cid:415) nou, OBE, who sits on the Board as an independent
Non-execu(cid:415) ve Director, is the current Chairman.
Director Independence and Confl ict of Interest
The Bank of Papua New Guinea sets pruden(cid:415) al limits on loans to ‘associated
persons’: Bank South Pacifi c fully complies with these requirements.
Related Party Transac(cid:415) ons are summarised in Financial Note 30. Director’s
Informa(cid:415) on on page 88 provides details of the Director’s Interests.
Mee(cid:415) ngs of the Board and A(cid:425) endance
Scheduled mee(cid:415) ngs of the Board are held six (cid:415) mes a year, and the Board
meets on other occasions as necessary to deal with ma(cid:425) ers requiring a(cid:425) en(cid:415) on.
Mee(cid:415) ngs of Board Commi(cid:425) ees are scheduled regularly during the year. The
Board has a policy of rota(cid:415) ng its mee(cid:415) ngs between loca(cid:415) ons where the
Group has a signifi cant presence. On these occasions the Board also visits
company opera(cid:415) ons and meets with local management and key customers.
The Chairman, in consulta(cid:415) on with the Chief Execu(cid:415) ve Offi cer, determines
mee(cid:415) ng agendas. Mee(cid:415) ngs provide regular opportuni(cid:415) es for the Board to
assess BSP’s management of fi nancial, strategic and major risk areas. To
help ensure that all Directors are able to contribute meaningfully, papers
are provided to Board members one week in advance of the mee(cid:415) ng. Broad
ranging discussion on all agenda items is encouraged, with healthy debate
seen as vital to the decision making process.
Financial Note 27, Directors’ and Execu(cid:415) ve remunera(cid:415) on, provides a(cid:425) endance
details of Directors at Board mee(cid:415) ngs during 2015.
Review of Board Performance
The Remunera(cid:415) on and Nomina(cid:415) on Commi(cid:425) ee reviews the processes by
which the Board regularly assesses its own performance in mee(cid:415) ng its
responsibili(cid:415) es. It is intended to extend the assessment of the Board as
a whole to include an assessment of the contribu(cid:415) on of each individual
Director. The Board is cognisant of the need to con(cid:415) nually iden(cid:415) fy areas for
improvement; to ensure that it meets the highest standards of corporate
governance; and for the Board and each Director to make an appropriate
contribu(cid:415) on to the Group’s objec(cid:415) ve of providing value to all its stakeholders.
The performance review is conducted annually, and may involve assistance
from external consultants.
Directors are determined to be independent if they are judged to be free
from any material or other business rela(cid:415) onship with the Bank that would
compromise their independence.
Board Access to Informa(cid:415) on and Advice
Prior to appointment Directors designated are required to provide informa(cid:415) on
to the Board for it to assess their independence.
All Directors have unrestricted access to company records and informa(cid:415) on
and receive regular detailed fi nancial and opera(cid:415) onal reports to enable
them to carry out their du(cid:415) es.
In assessing the independence of Directors, the Board will consider a number
of criteria including:
The General Managers make regular presenta(cid:415) ons to the Board on their
areas of responsibility.
•
•
•
•
•
•
the Director is not an execu(cid:415) ve of the bank;
the Director is not a substan(cid:415) al shareholder of the bank or otherwise
associated directly with a substan(cid:415) al shareholder of the bank;
the Director has not within the last three years been a material consultant
or a principal of a material professional adviser to the Bank or a group
member, or an employee materially associated with a service provided;
the Director is not a material supplier to, or customer of the Bank or
other group member, or a material consultant to the Bank or other
group member, or an employee materially associated with a material
supplier or customer;
the Director has no material contractual rela(cid:415) onship with the Bank or
other group member other than as a Director of the bank;
the Director is free from any interest and any business or other rela(cid:415) onship
which could, or could reasonably be perceived to, materially interfere
with the Director’s ability to act in the best interests of the Bank.
This informa(cid:415) on is assessed by the Board to determine whether on balance
the rela(cid:415) onship could, or could reasonably be perceived to, materially
interfere with the exercise of the Director’s responsibili(cid:415) es. Materiality is
assessed on a case-by-case basis.
As noted earlier, the Board is cognisant of the need to avoid confl icts of
interest and it has in place policies and procedures for the repor(cid:415) ng of any
ma(cid:425) er, which may give rise to a confl ict between the interests of a Director
and those of the Group. These arrangements are designed to ensure that
the independence and integrity of the Board are maintained.
The Chairman and the other Non-execu(cid:415) ve Directors have the opportunity
to meet with the Chief Execu(cid:415) ve Offi cer and the General Managers for
further consulta(cid:415) on, and to discuss issues associated with the fulfi lment
of their roles as Directors.
The Board recognises that in certain circumstances individual Directors
may need to seek independent professional advice, at the expense of the
company, on ma(cid:425) ers arising in the course of their du(cid:415) es. Any advice so
received is made available to other Directors. Any Director seeking such
advice is required to give prior no(cid:415) ce to the Chairman of his or her inten(cid:415) on
to seek independent professional advice.
BOARD COMMITTEES
Board Commi(cid:425) ees and Membership
The Board has established two commi(cid:425) ees whose func(cid:415) ons and powers
are governed by their respec(cid:415) ve charters. These commi(cid:425) ees are the Board
Audit Risk and Compliance Commi(cid:425) ee (BARCC), and the Remunera(cid:415) on and
Nomina(cid:415) on Commi(cid:425) ee. Membership of the commi(cid:425) ees and a record of
a(cid:425) endance at commi(cid:425) ee mee(cid:415) ngs during the year is detailed in table below.
Remunera(cid:415) on details are provided in Financial Note 27.
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
25
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Membership of Board Commi(cid:425) ees as at 31/12/2015:
---------------------------------------------------------------------------------------------------------
In the course of fulfi lling its mandate, the commi(cid:425) ee meets with both the
internal and external auditors without management present.
Board Audit Risk &
Compliance Commi(cid:425) ee
Remunera(cid:415) on &
Nomina(cid:415) on
Commi(cid:425) ee
Annual Financial Statements
---------------------------------------------------------------------------------------------------------
6/6 Chair
Geoff Robb
4/6
Sir Nagora Bogan, KBE
2/2
Gerea Aopi
Arthur Sam1
6/6
Freda Talao2
2/2
Sir Kostas Constan(cid:415) nou, OBE 2/2*
2/2*
Tom Fox
2/2*
Ila Temu
6/6
Ernest Gangloff
Augus(cid:415) ne Mano
0/0
---------------------------------------------------------------------------------------------------------
4/4 Chair
4/4
4/4
4/4
1 Arthur Sam is a non-execu(cid:415) ve, non-director, appointed by the board for
board development purposes. 2Freda Talao a(cid:425) ends as an observer director.
*Board members who a(cid:425) end the BARCC mee(cid:415) ng to discuss the year end
and half year accounts.
Commi(cid:425) ee Charters
The Commi(cid:425) ee Charters are available in the shareholders informa(cid:415) on sec(cid:415) on
of the BSP website www.bsp.com.pg.
The BARCC reviews the annual fi nancial statements to determine whether
they are complete and consistent with the informa(cid:415) on known to commi(cid:425) ee
members and to assess whether the fi nancial statements refl ect appropriate
accoun(cid:415) ng principles. In par(cid:415) cular it:
•
•
pays a(cid:425) en(cid:415) on to complex and/or unusual transac(cid:415) ons;
focuses on judgmental areas, for example those involving valua(cid:415) on
of assets and liabili(cid:415) es; provisions; li(cid:415) ga(cid:415) on reserves; and other
commitments and con(cid:415) ngencies;
• meets with management and the external auditors to review the
fi nancial statements and the results of the audit;
•
•
reviews the other sec(cid:415) ons of the Annual Report before its release and
considers whether the informa(cid:415) on is understandable and consistent
with members’ knowledge about the bank and its opera(cid:415) ons;
sa(cid:415) sfi es itself as to the accuracy of the fi nancial accounts, reconciles
them with management accounts presented to the commi(cid:425) ee, and
signs off on the fi nancial accounts of the bank before they are submi(cid:425) ed
to the Board.
Commi(cid:425) ee Structure
External Audit
Commi(cid:425) ee members are chosen for the skills, experience and other quali(cid:415) es
they bring to the commi(cid:425) ee. At the next Board mee(cid:415) ng following each
commi(cid:425) ee mee(cid:415) ng, the Board is given a report by the Chairman of the
respec(cid:415) ve commi(cid:425) ee and minutes of the mee(cid:415) ng are tabled.
The BARCC is responsible for making recommenda(cid:415) ons to the Board on
appointment and terms of engagement of BSP external auditors. The
selec(cid:415) on is made from appropriately qualifi ed companies in accordance
with Board policy.
The BARCC is comprised of three Non - execu(cid:415) ve Directors, a majority of
whom should be independent, and who are duly appointed by the Board.
The Chairman of the BARCC must be one of the independent Directors,
other than the Chairman of the Board. Each member should be capable
of making a valuable contribu(cid:415) on to the commi(cid:425) ee and membership is
reviewed annually by the BSP Board.
The Remunera(cid:415) on and Nomina(cid:415) on Commi(cid:425) ee comprises three Non-execu(cid:415) ve
Directors, the majority of whom should be independent, and who are duly
appointed by the Board.
The Chairman of the Remunera(cid:415) on and Nomina(cid:415) on Commi(cid:425) ee must be
one of the independent Directors, other than the Chairman of the Board.
Each member should be capable of making a valuable contribu(cid:415) on to the
commi(cid:425) ee, and membership is reviewed annually by the BSP Board.
A review of the performance of commi(cid:425) ee members will form part of the
Board’s performance review.
Board Audit Risk & Compliance Commi(cid:425) ee
The BARCC is delegated by the Board with responsibility for reviewing and
monitoring the:
•
integrity of the fi nancial statements and the fi nancial repor(cid:415) ng and
audit process;
external auditor’s qualifi ca(cid:415) ons, performance and independence;
performance of the internal audit func(cid:415) on of the bank;
performance of the opera(cid:415) onal risk func(cid:415) on of the bank;
systems of internal control and management of all risks;
systems for ensuring opera(cid:415) onal effi ciency and cost control;
systems for approval and monitoring of expenditure including capital
expenditure;
processes for monitoring compliance with laws and regula(cid:415) ons (both
in Papua New Guinea and overseas);
implementa(cid:415) on of Board decisions by management and making
recommenda(cid:415) ons to the Board for the appointment of the
external auditor;
annual internal audit plan and its ongoing review.
•
•
•
•
•
•
•
•
•
•
The Board submits the name of the recommended appointee to shareholders
for ra(cid:415) fi ca(cid:415) on. In line with the policy of the BPNG, the signing partner in the
external audit fi rm must be rotated at least every three years.
The commi(cid:425) ee reviews annually the performance of the external auditors
and makes recommenda(cid:415) ons to the Board regarding the con(cid:415) nua(cid:415) on or
otherwise of their appointment, consistent with the BPNG’s Pruden(cid:415) al
Standard No. 7/2005 - External Auditors, while ensuring their independence
is in line with Board policy.
There is a review of the external auditor’s proposed audit scope and approach,
to ensure there are no unjus(cid:415) fi ed restric(cid:415) ons. Mee(cid:415) ngs are held separately
with the external auditors to discuss any ma(cid:425) ers that the commi(cid:425) ee or the
external auditors believe should be discussed privately. The external auditor
a(cid:425) ends mee(cid:415) ngs of the BARCC at which the external audit and half yearly
review are agenda items.
The commi(cid:425) ee ensures that signifi cant fi ndings and recommenda(cid:415) ons
made by the external auditors are received and discussed promptly, and
that management responds to recommenda(cid:415) ons by the external auditors
in a (cid:415) mely manner.
The duly appointed external audit fi rm may not be engaged by the Group to
provide specialist consultancy services rela(cid:415) ng to fi nancial, strategic and/
or taxa(cid:415) on ma(cid:425) ers.
The external auditor is invited to the Annual General Mee(cid:415) ng of shareholders
and is available to answer relevant ques(cid:415) ons from shareholders.
The BPNG Pruden(cid:415) al Standards provide for a tri-par(cid:415) te mee(cid:415) ng between
BPNG, the external auditors, and the Bank, if required.
Internal Audit
The BARCC approves, on the recommenda(cid:415) on of management, the
appointment of Head of Internal Audit. The commi(cid:425) ee meets regularly
with Head of Internal Audit.
Reviews are undertaken of the scope of the work of the internal audit func(cid:415) on
to ensure no unjus(cid:415) fi ed restric(cid:415) ons or limita(cid:415) ons have been placed upon
Audit and Risk Departments. The BARCC also reviews the qualifi ca(cid:415) ons
of internal audit personnel and endorses the appointment, replacement,
reassignment or dismissal of the internal auditors.
An independent review by an expert consultant is made regularly as to the
eff ec(cid:415) veness of the internal audit and risk func(cid:415) on.
These reports are presented to the BARCC, and the Board.
The BARCC meets separately with the internal auditors to discuss any ma(cid:425) ers
that the commi(cid:425) ee, or the internal auditors, believe should be discussed
privately. The Internal Auditor has direct access to the BARCC and to the full
Board. The commi(cid:425) ee ensures that signifi cant fi ndings and recommenda(cid:415) ons
made by the internal auditors are received and discussed promptly, and
that management responds to recommenda(cid:415) ons by the internal auditors
on a (cid:415) mely basis.
Internal Audit meets with the external auditors half yearly, to review the
scope and fi ndings of internal audit’s annual audit plan, and the extent of
the external audit plan, having regard to internal audit’s fi ndings.
Compliance
recruitment procedures are followed;
•
•
•
•
•
•
review and make recommenda(cid:415) ons to the Board on the appointment
and terms and condi(cid:415) ons of employment to all Senior Execu(cid:415) ve
Management posi(cid:415) ons;
review and approve all termina(cid:415) on arrangements for such Senior
Execu(cid:415) ves;
review transac(cid:415) ons between the Group and any of the Directors or
relevant Senior Execu(cid:415) ves;
review and make recommenda(cid:415) ons to the Board on employee;
remunera(cid:415) on and benefi ts policies and prac(cid:415) ces generally;
engage external consultants as and when deemed appropriate to
benchmark remunera(cid:415) on packages for Execu(cid:415) ves and Senior Management;
•
review Board performance, tenure, and succession planning.
The Board has in place a review process, led by the Chairman, that involves a
peer review of performance based on a broad range of criteria. A performance
review has been performed every year since 2010.
The BARCC reviews the eff ec(cid:415) veness of the systems for monitoring compliance
with all legal and regulatory obliga(cid:415) ons and the Cons(cid:415) tu(cid:415) on of BSP. It also
reviews the results of management’s inves(cid:415) ga(cid:415) on and follow-up (including
disciplinary ac(cid:415) on) of any fraudulent acts, or non-compliance.
RISK MANAGEMENT
Approach to Risk Management
The commi(cid:425) ee obtains regular updates from management and the bank’s
legal offi cers regarding compliance ma(cid:425) ers, and sa(cid:415) sfi es itself that all
regulatory compliance ma(cid:425) ers have been considered in the prepara(cid:415) on of
the fi nancial statements.
Reviews of the fi ndings of any examina(cid:415) ons by regulatory agencies are
undertaken and the Chairman of the BARCC has the right to approach a
regulator directly in the event of a pruden(cid:415) al issue arising.
Risk Management
The Group’s Risk Management ac(cid:415) vi(cid:415) es are aligned to the achievement
of the Group’s Objec(cid:415) ves, Goals and Strategy. The Board, in consulta(cid:415) on
with the Execu(cid:415) ve Commi(cid:425) ee, determines the Group’s risk appe(cid:415) te and
risk tolerance. These benchmarks are used in the risk iden(cid:415) fi ca(cid:415) on, analysis
and risk evalua(cid:415) on processes.
BSP dis(cid:415) nguishes the following major risks:
Credit Risk: The poten(cid:415) al for fi nancial loss where a customer or counter
party fails to meet their fi nancial obliga(cid:415) on to the Group.
The commi(cid:425) ee’s role in the Bank’s risk management processes are detailed
in the next sec(cid:415) on on Risk Management.
Market Risk: The poten(cid:415) al fi nancial loss arising from the Group’s ac(cid:415) vi(cid:415) es in
fi nancial, including foreign exchange, markets. More detailed commentary on
fi nancial risk management is provided in the Notes to the Financial Accounts.
Board Remunera(cid:415) on and Nomina(cid:415) on Commi(cid:425) ee
The Remunera(cid:415) on and Nomina(cid:415) on Commi(cid:425) ee has been established to
assist the Board in fulfi lling its oversight responsibili(cid:415) es in respect of Board
and Senior Execu(cid:415) ve Management selec(cid:415) on, appointment, review and
remunera(cid:415) on.
The responsibili(cid:415) es of the Remunera(cid:415) on and Nomina(cid:415) on Commi(cid:425) ee are:
•
•
•
•
oversee the selec(cid:415) on and appointment of a CEO and recommend an
appropriate remunera(cid:415) on and benefi ts package to the full Board;
determine and review appropriate remunera(cid:415) on and benefi ts of
Directors for recommenda(cid:415) on to the full Board, and subsequently to
the shareholders;
iden(cid:415) fy and maintain a clear succession plan for the Execu(cid:415) ve
Management Team, ensuring an appropriate mix of skills and experience
as well as appropriate remunera(cid:415) on and benefi ts packages are in place
and reviewed regularly;
ensure that the Board itself maintains an appropriate mix of skills and
experience necessary to fulfi l its responsibili(cid:415) es to shareholders while
maintaining a world class Corporate Governance regime; receive and
endorse posi(cid:415) ons/(cid:415) tles recommended by the CEO from (cid:415) me to (cid:415) me
as applying to designated Senior Execu(cid:415) ve Management posi(cid:415) ons;
•
review the procedures in place to ensure that all new Senior Execu(cid:415) ve
appointees are adequately qualifi ed and experienced, and that proper
Liquidity Risk: The risk of failure to adequately meet cash demand in the
short term.
Interest Risk: Risk to earnings from movement in interest rates.
Opera(cid:415) onal Risk: The risk of loss resul(cid:415) ng from inadequate or failed internal
processes, people, or from external events, including legal and compliance risk.
The Group’s Asset and Liability Commi(cid:425) ee monitors market risk, interest
risk, and liquidity risk, and the Credit Commi(cid:425) ee monitors credit risk.
Opera(cid:415) onal risk is monitored by the Opera(cid:415) onal Risk Commi(cid:425) ee, including
the maintenance of a risk register system that has been implemented across
the Group. The Execu(cid:415) ve Commi(cid:425) ee and the Board overview the highest
(cid:415) er of risks within these risk registers.
The Group’s Risk Management Policy ensures that the Group has in place
acceptable limits for the risks iden(cid:415) fi ed by employees. The risk management
approach encompasses the following:
•
•
defi ning the types of risks that will be addressed by each func(cid:415) onal or
policy area (i.e. credit risk, interest rate risk, liquidity risk, opera(cid:415) onal
risk, etc.);
ensuring that mechanisms for managing (iden(cid:415) fying, measuring,
and controlling) risk are implemented and maintained to provide for
organisa(cid:415) on-wide risk management;
26
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
27
CORPORATE GOVERNANCE
•
•
•
•
•
developing informa(cid:415) on systems to provide early warning, or immediate
alert, of events or situa(cid:415) ons that may occur, or already exist, that could
create one or more types of risk for the Group;
crea(cid:415) ng and maintaining risk management tools, including those
requested by the Board, such as policies, procedures, risk registers,
controls and independent tes(cid:415) ng, personnel management and training,
and planning;
ins(cid:415) tu(cid:415) ng and reviewing risk measurement techniques that Directors
and management may use to establish the Group’s risk tolerance,
risk iden(cid:415) fi ca(cid:415) on approaches, risk supervision or controls, and risk
monitoring processes;
•
•
•
•
Addi(cid:415) onally all General Managers provide bi-annual statements a(cid:425) es(cid:415) ng that;
they have assessed and documented the risks and internal control
procedures in their Strategic Business Unit;
they have iden(cid:415) fi ed any changes in business, opera(cid:415) ons and computer
systems and the risks that may arise from those changes;
the risk management and internal compliance and control systems are
appropriate and opera(cid:415) ng effi ciently and eff ec(cid:415) vely;
Group, subject to the foregoing insider trading restric(cid:415) ons, during each of
the eight weeks following the announcements of half yearly profi t and yearly
profi t or the date of issue of a prospectus. Management should discuss
proposed share trades with the Chief Execu(cid:415) ve Offi cer in advance, who in
turn will keep the Chairman of the Board appraised of management ac(cid:415) vi(cid:415) es.
Directors should discuss proposed share trades with the Chairman in advance.
In addi(cid:415) on Directors and management must not trade in any other en(cid:415) ty if
inside informa(cid:415) on on such en(cid:415) ty comes to the a(cid:425) en(cid:415) on of the Director or
management by virtue of holding offi ce as an Offi cer of the Group.
any weaknesses in the risk management and internal compliance and
control systems have been iden(cid:415) fi ed and remedial ac(cid:415) on taken.
MARKET DISCLOSURE
developing processes for those areas that represent poten(cid:415) al risks;
ETHICAL BEHAVIOUR
establishing appropriate management repor(cid:415) ng systems regarding
these risks so individual managers are provided with a suffi cient level
of detail to adequately manage and control the Group’s risk exposures.
BSP acknowledges the need for Directors and employees at all levels to
observe the highest standards of ethical behaviour when undertaking BSP
business. To this end, the Board has adopted:
CORPORATE GOVERNANCE
Our shareholder communica(cid:415) on policy is built around compliance with
disclosure obliga(cid:415) ons and aspiring to be at the forefront of best prac(cid:415) ce
in disclosure. Our framework for communica(cid:415) ng with shareholders is to
concisely and accurately communicate:
•
•
•
•
our strategy;
how we implement that strategy; and
the fi nancial results consequent upon our strategy
and its implementa(cid:415) on.
The Group uses shareholder forums such as the Annual General Mee(cid:415) ng,
and group mee(cid:415) ngs with larger shareholders, within disclosure policies, to
communicate fi nancial performance and strategies.
REMUNERATION
BSP remunera(cid:415) on policy for senior management is comprised of a fi xed
component and an at risk component that is a combina(cid:415) on of short term
rewards and long term incen(cid:415) ves. The remunera(cid:415) on packages of General
Managers and the Chief Execu(cid:415) ve Offi cer are approved by the Remunera(cid:415) on
and Nomina(cid:415) on Commi(cid:425) ee, and details are provided by the commi(cid:425) ee to
the Board.
Fixed remunera(cid:415) on of senior management is reviewed at the (cid:415) me of contract
renewal taking into account the nature of the role, the pay posi(cid:415) on rela(cid:415) ve
to comparable market pay levels, and individual and business performance.
Non-execu(cid:415) ve Directors are remunerated on a fi xed basis within an aggregate
Directors’ fee pool approved periodically by shareholders. The shareholders
in 2014 approved an increase in the pool to K2.5 million. During 2015 K1.74
million of the pool was u(cid:415) lised (2014: K1.66 million).
A table of fees paid to Directors during 2015 is produced on page 68.
Non-execu(cid:415) ve Directors are not paid any re(cid:415) rement or superannua(cid:415) on
benefi ts, nor do they par(cid:415) cipate in any share op(cid:415) on programmes.
The Group’s con(cid:415) nuous disclosure regime is fundamental to the rights
of shareholders to receive informa(cid:415) on concerning their securi(cid:415) es. The
most important aspect of the Group’s shareholder communica(cid:415) on policy
is to comply with the con(cid:415) nuous disclosure regime and to implement best
prac(cid:415) ce disclosure policy.
Market announcements are posted to BSP’s website immediately a(cid:332) er
release to the market. All market announcements made by the bank since
its lis(cid:415) ng in August 2003 are currently available on the website. Where BSP
provides fi nancial results’ briefi ngs to analysts or media, these briefi ngs are
published on the website as soon as possible a(cid:332) er the event. In any event, no
material informa(cid:415) on which has not been previously released to the market
is covered in such briefi ngs. The material upon which the briefi ng is based
(such as slides or presenta(cid:415) ons) is released to the market prior to the briefi ng.
The Group’s insider trading rules are important adjuncts to the con(cid:415) nuous
disclosure regime in ensuring that shareholders are given fair access to
material informa(cid:415) on regarding securi(cid:415) es. BSP seeks to limit the opportunity
for insider trading in its own securi(cid:415) es through its con(cid:415) nuous disclosure
policies and the dealing rules applying to its employees and Directors.
SHAREHOLDER COMMUNICATIONS
BSP’s Code of Conduct requires its employees to act with high standards of
honesty, integrity, fairness and equity in all aspects of their employment
with BSP.
With this in mind, BSP commits to dealing fairly, transparently and openly
with both current and prospec(cid:415) ve shareholders using available channels
and technologies to communicate widely and promptly. BSP commits to
facilita(cid:415) ng par(cid:415) cipa(cid:415) on in shareholder mee(cid:415) ngs, and dealing promptly
with shareholder enquiries.
•
•
a Code of Conduct for both Directors and members of the Execu(cid:415) ve
Management team of the Group and s(cid:415) pulated that each Director, and
relevant employees, acknowledge in wri(cid:415) ng having read, understood
and agreed to abide by the Code; and
a Corporate Mission, Objec(cid:415) ves, and Core Values Statement which
establishes principles to guide all employees in the day to day performance
of their individual func(cid:415) ons within the Group.
To ensure the maintenance of high standards of corporate behaviour on
an ongoing basis, the Board further s(cid:415) pulates that senior management
periodically undertake an appropriate communica(cid:415) on programme to reinforce
both the Code and Core Values Statements. All Directors are encouraged
to maintain membership of an appropriate Directors’ Associa(cid:415) on to keep
abreast of current trends in Directors’ du(cid:415) es, responsibili(cid:415) es and corporate
governance issues.
BSP is commi(cid:425) ed to a culture in which it is safe and acceptable for employees,
customers and suppliers to raise concerns about poor or unacceptable
prac(cid:415) ces, irregulari(cid:415) es, corrup(cid:415) on, fraud and misconduct.
The Group has adopted a whistle-blowing policy that is designed to support
and encourage staff to report in good faith ma(cid:425) ers such as:
•
•
•
•
•
•
•
unacceptable prac(cid:415) ces;
irregulari(cid:415) es or conduct which is an off ence or a breach of laws of the
countries in which BSP operates in (ac(cid:415) ons and decisions against the
laws of relevant countries including non-compliance);
corrup(cid:415) on;
fraud;
•
•
• misrepresenta(cid:415) on of facts;
•
•
•
• misuse of Group assets;
•
•
decisions made and ac(cid:415) ons taken outside established BSP policies &
procedures;
sexual harassment;
abuse of Delegated Authori(cid:415) es;
disclosures related to miscarriages of jus(cid:415) ce;
health and safety risks, including risks to the public as well as other
employees;
damage to the environment;
other unethical conduct;
failure to comply with appropriate professional standards;
abuse of power, or use of the Group’s powers and authority for any
unauthorised purpose or personal gain;
breach of statutory codes of prac(cid:415) ce.
Risk Management Roles and Responsibili(cid:415) es
The Board accepts responsibility for ensuring it has a clear understanding of
the types of risks inherent in the Group’s ac(cid:415) vi(cid:415) es. Therefore responsibility
for overall risk management in BSP is vested with the Board. However
every employee from Execu(cid:415) ve Management to the newest recruit has a
responsibility and a part to play in the process.
There is a formal system of fi nancial and opera(cid:415) onal delega(cid:415) ons from
the Board to the CEO, and from the CEO to the General Managers. These
delega(cid:415) ons refl ect the Group’s risk appe(cid:415) te, and are cascaded down to
managers who have skills and experience to exercise them judiciously.
The Board defi nes the accountabili(cid:415) es (including delegated approval/
control authori(cid:415) es/limits) and repor(cid:415) ng/monitoring requirements for
the risk management process. The severity of risks iden(cid:415) fi ed in the risk
iden(cid:415) fi ca(cid:415) on, analysis and evalua(cid:415) on processes, and noted in the SBU Risk
Registers, is used to determine the approval/control authori(cid:415) es/limits. The
Board reviews these risk limits annually along with an annual review of the
Group’s signifi cant risks.
The Board has adopted guidelines, with the help of management analysis,
covering the maximum loss exposure the Group is able and willing to assume.
These guidelines are detailed in the Group’s Risk Policy and Procedures
Manual which has been externally reviewed and approved by the Board.
The Board has also delegated to the BARCC responsibility for overview of
loss control and for overseeing the risk management func(cid:415) on.
The BARCC is responsible for providing regular reports and recommenda(cid:415) ons
to the Board on the risk management ac(cid:415) vi(cid:415) es of the Group, especially
rela(cid:415) ng to risk issues that are outside of the authority of the Group’s
Execu(cid:415) ve Commi(cid:425) ee to approve.
The Group’s Execu(cid:415) ve Commi(cid:425) ee is responsible for delibera(cid:415) ng on risk
management issues which are outside of the delegated authori(cid:415) es/limits
of the Credit Commi(cid:425) ee, Asset and Liability Commi(cid:425) ee (ALCO) and General
Managers, with escala(cid:415) on of these issues to the BARCC, and the Board
itself, in case of need.
Management Assurance
The Board is provided with regular reports about BSP’s fi nancial condi(cid:415) on
and its opera(cid:415) ng performance. Annually, the CEO and the Chief Financial
Offi cer cer(cid:415) fy to the Board that:
•
•
•
the fi nancial records of the Group have been properly maintained and
that they accurately record the true fi nancial posi(cid:415) on of the Group;
the fi nancial statements and notes meet all appropriate accoun(cid:415) ng
standards;
there are sound systems of risk management and control that are
opera(cid:415) ng eff ec(cid:415) vely;
28
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
Directors and management of the Group are subject to Securi(cid:415) es Act 1997
restric(cid:415) ons for buying, selling or subscribing for securi(cid:415) es in the Group if they
are in possession of inside informa(cid:415) on, i.e. informa(cid:415) on which is not generally
available and, if it were generally available, a reasonable person would expect
to have a material eff ect on the price or value of the securi(cid:415) es of the Group.
Further, Directors and management may only trade in the securi(cid:415) es of the
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
29
HISTORICAL SUMMARY
CONTRIBUTIONS BY BSP TO PNG
All Amounts are expressed in K'000
2011
2012
2013
2014
2015
Company income taxes paid to PNG Government
Other taxes paid to PNG Government
(IWT,FCWT,BWT)
GST paid and not able to be recouped
Dividends Paid
Payments to PNG Based Suppliers/Creditors
Payments to PNG Training Ins(cid:415) tu(cid:415) ons
Superannua(cid:415) on Payments
119,590
10,091
10,703
223,526
240,402
2,133
5,176
212,081
6,204
12,836
258,975
489,754
8,076
5,873
155,391
4,989
14,082
271,686
440,331
6,076
6,509
188,627
2,568
11,024
309,141
314,699
3,787
6,475
249,210
3,701
16,793
367,239
229,985
4,231
6,955
Salaries, bonuses and allowances paid
144,808
166,064
174,349
162,735
154,943
Commercial Rental Payments
Residen(cid:415) al Rental Payments
Water
Power
Telecommunica(cid:415) on
Dona(cid:415) ons and Sponsorships
Total
13,094
10,396
144
5,544
8,507
3,879
12,621
33,445
693
8,771
13,498
4,192
12,637
36,219
1,069
10,517
17,016
9,267
16,159
28,294
721
8,539
15,243
9,358
13,743
25,822
1,208
9,403
14,993
8,218
797,993
1,233,083
1,160,138
1,077,370
1,106,444
Profi t and Loss (K’000)
Net interest income
Non interest income
Bad and doub(cid:414) ul debt (expense)/recovery
2011
597,479
584,867
(25,234)
2012
681,554
671,870
(70,952)
2013
740,857
781,217
(78,573)
2014
884,761
603,737
(76,796)
2015
1,006,251
539,290
(89,905)
Other opera(cid:415) ng expenses
(688,621)
(748,346)
(833,849)
(703,085)
(691,084)
Opera(cid:415) ng Profi t
468,491
534,126
Impairment of non-current asset
Share of profi ts from associates
Profi t before tax
Income tax (expense)
Profi t/(loss) a(cid:332) er tax
Dividends (toea)
Dividends paid per share
1
Balance Sheet (K’000)
Net loans and advances
Total assets
Deposits
Capital
Performance Ra(cid:415) os
Return on Assets
Return on Equity
Expense/Income
Key Pruden(cid:415) al Ra(cid:415) os
Capital adequacy
Liquid Asset Ra(cid:415) o
Leverage ra(cid:415) o
Exchange rates (One (1) PNG Kina buys):
US Dollar
AUS Dollar
-
6,496
474,986
-
11,170
545,296
609,652
(14,967)
12,270
606,955
708,617
764,552
-
10,233
718,850
-
1,598
766,150
(119,039)
(137,552)
(170,127)
(211,511)
(234,271)
355,947
407,744
436,828
507,339
531,879
47.3
55.0
58.0
66.0
79.0
4,300,913
4,804,626
5,306,362
6,756,997
8,621,514
11,681,293
13,333,102
15,761,420
15,816,507
18,196,303
9,366,281
10,860,522
12,200,999
12,708,383
14,595,374
1,344,188
1,465,893
1,619,060
1,800,193
2,029,176
3.3%
28.7%
58.2%
24.2%
43.6%
10.0%
0.4665
0.4591
3.3%
29.0%
55.3%
22.3%
38.9%
9.0%
0.4755
0.458
2.8%
28.3%
54.8%
18.0%
41.8%
7.6%
0.3905
0.4369
3.2%
29.7%
47.2%
24.0%
34.3%
9.0%
0.3855
0.4708
2.9%
27.8%
44.7%
23.1%
31.5%
8.9%
0.3325
0.4552
Dividends per share has been adjusted for 10/1 share consolida(cid:415) on in 2011. In 2011, BSP paid a full and fi nal dividend for the 2010 year in
June, and an interim dividend for 2011 year, in October. In 2012, BSP paid a fi nal dividend for the 2011 year in June, and an interim dividend
for 2012 year in October. In 2013, BSP paid a fi nal dividend for the 2012 year in June, and an interim dividend for 2013 year in October. In
2014, BSP paid a fi nal dividend for the 2013 year in June, and an interim dividend for 2014 year in October. In 2015, BSP paid a fi nal dividend
for the 2014 year in June, and an interim dividend for 2015 year in October.
30
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
31
Flag raising ceremony, Downtown Port Moresby. BSP staff throughout PNG celebrated Independence Day on September 16th, 2015. The country turned 40.
Teretahi(cid:415) Isaaka,
Customer Service Representa(cid:415) ve, BSP Cook Islands.
She is pictured here with her niece Ngaoa Boaza.
Overseas
Branches
& Subsidiaries
32
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
33
•
Nine staff trained as trainers for the rollout of the new Financial Literacy
Course. This course will be rolled out to the people of the Solomon
Islands in 2016
training and coaching, from both internal and external sources. This has
culminated in improved produc(cid:415) vity across our business as seen in the
annualised revenue per employee having risen by 12%.
OVERSEAS BRANCHES & SUBSIDIARIES
FIJI
The fi nal GDP growth rate for 2015 is expected to be above 4%. This now
shows six consecu(cid:415) ve years of posi(cid:415) ve economic growth. The 2015 growth
is expected to be broad based led by transport and storage, fi nancial and
insurance ac(cid:415) vi(cid:415) es, tourism, wholesale and retail trade and construc(cid:415) on.
Investment and consump(cid:415) on indicators remain strong.
Infl a(cid:415) on remains low at 1.8%. With the recent reduc(cid:415) on in VAT from 15%
to 9%, it is expected infl a(cid:415) on will reduce further. Foreign reserves remain
comfortable at F$1.95 billion and 5.9 months import cover.
Monetary condi(cid:415) ons remained accommoda(cid:415) ve with system liquidity
hovering around F$500 million. Credit growth grew by 13%. This was led
by an increase in consump(cid:415) on lending and also an increase in lending for
investment purposes.
Financial results for 2015 showed a net profi t a(cid:332) er tax of $31 million compared
to the 2013 result of $20.6 million. This is an increase of just over 50%.
The Corporate area performed strongly with por(cid:414) olio growth of 22% in
a highly compe(cid:415) (cid:415) ve marketplace. A(cid:332) er a challenging start to the year in
the foreign exchange market with new entrants to the market pricing very
aggressively, we were able to achieve a growth of 26% above 2014.
The Retail bank con(cid:415) nued to perform strongly with substan(cid:415) al growth in
personal loans, car loan and housing loans. Revenues from our electronic
channels – ATM’s, EFTPoS, SMS and Internet Banking con(cid:415) nue to grow and
provide our clients with convenience and world class op(cid:415) ons for their banking.
One of our most pleasing achievements was the successful implementa(cid:415) on
of Project BEST, our core banking system upgrade. This project was delivered
on September 7th. The project was delivered ahead of (cid:415) me and below
budget. Our customers are remarking on the signifi cant changes in customer
experience.
SOLOMON ISLANDS
2015 has certainly been a year of excitement and change for BSP Solomon
Islands. Early 2015 brought the news that BSP was acquiring the Westpac
opera(cid:415) ons in the Solomon Islands along with the banking businesses in
Vanuatu, Cook Islands, Tonga, and Samoa.
With BSP already opera(cid:415) ng in the Solomon Islands, the acquisi(cid:415) on presents
some unique challenges for all staff concerned. One of these challenges
will involve the integra(cid:415) on of two banking systems and related opera(cid:415) onal
procedures, including the merging of back offi ce processes, as quickly as
possible in the post-acquisi(cid:415) on period.
The much an(cid:415) cipated se(cid:425) lement occurred on October 30th, 2015. The
conversion of the appearance and physical branding of the branch from
Red to BSP Green was completed over that weekend and all staff involved
are to be commended for their eff orts.
The transac(cid:415) on went rela(cid:415) vely smoothly and was preceded by various
planning ac(cid:415) vi(cid:415) es involving both BSP and Westpac staff to ensure a joint
eff ort in the transi(cid:415) on of products and services for customers.
2015 has been a very good fi nancial year for BSP Solomon Islands with a
NPAT of SBD$43.2 million which is up 29% on 2014. The result also takes
into account approximately SBD$8 million of costs related to the acquisi(cid:415) on
of the Westpac branch. Major growth areas of 2015 have been in the Loan
por(cid:414) olio (75%% up on 2014 including SBD$308 million acquired from
Westpac) and Foreign Exchange income (55% up on 2014).
Excluding Westpac acquisi(cid:415) on costs, expenses for 2015 were generally in line
with prior year. All of these combined together has resulted in an excellent
year for BSP Solomon Islands Mobile Banking and Financial Inclusion remains a
great focus for BSP Solomon Islands. During 2015 the following was achieved:
Agencies have increased from 31 to 67. Con(cid:415) nued improvement of
•
the Telecommunica(cid:415) ons GPRS signal will enable us to increase this
number further.
Financial Literacy has now been delivered to over 23,000 par(cid:415) cipants
•
34
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
2015 has seen, for the fi rst (cid:415) me, two Solomon Island staff placed on BSP
Leadership Development Programme and also we introduced our own
Development Programme for two junior staff , which will see them fast
tracked through all areas of banking and into senior roles. Our staff are the
future of BSP Solomon Islands and we must con(cid:415) nue to develop their skills.
While offi cial reports on the Solomon Islands Economy shows growth of
2.9%, the business community remains very buoyant and it is expected BSP
Solomon Islands will con(cid:415) nue to grow in 2016.
All staff are to be congratulated on a very successful 2015.
COOK ISLANDS
2015 has been challenging but rewarding year for BSP in the Cook Islands.
Contrary to the scep(cid:415) cism of the local community the transi(cid:415) on from Westpac
in July 2015 was an outstanding success. The public and our customers have
warmed to the BSP brand which is indica(cid:415) ve of the hard work put in by
staff prior to and post transi(cid:415) on. The results are pleasing and all staff are
commended for their eff orts.
Central to the success of the transi(cid:415) on was our ac(cid:415) ve community engagement
and local branding showcasing our commitment to the Cook Islands. In
November of 2015 we commissioned over 100 professional photographs
featuring our long serving local staff and loyal businesses in iconic Cook Islands
loca(cid:415) ons. The best 25 photographs were turned into canvases which were
launched at our annual client Christmas func(cid:415) on and now adorn the walls
of our branch in Rarotonga. The local photos will be used in our branding,
adver(cid:415) sing and marke(cid:415) ng ini(cid:415) a(cid:415) ves into the future which will be well
received by our local community.
BSP Cook Islands has achieved NPAT of NZD0.997 million in the period of
opera(cid:415) ons under BSP ownership. The balance sheet has grown 5.7%, with
loans increasing to NZD87.5 million and deposits increasing to NZD100.8
million. The fi nancial results refl ect a successful transi(cid:415) on, with the customer
base intact, minimal disrup(cid:415) ons to channel ac(cid:415) vi(cid:415) es and customer services,
(cid:415) mely rebranding, and systems and communica(cid:415) ons capabili(cid:415) es maintained
throughout.
SAMOA
The 2015 fi nancial period has delivered a strong fi nancial performance,
since the BSP acquired the Westpac Bank Corpora(cid:415) on and other Minority
shareholdings in Westpac Bank Samoa Limited.
This performance has been achieved against a fl at but stable local economic
environment, that has seen BSP Samoa perform above system growth in its
key revenue sectors. Pleasingly the Bank has also con(cid:415) nued to strengthen
its Balance Sheet through a prudent growth strategy whilst at the same (cid:415) me
managing stressed assets.
Financial Results showed NPAT of WST4.3 million for the period since
acquisi(cid:415) on, largely driven by strong Balance Sheet opera(cid:415) onal performance
as evidenced by increased income levels and signifi cant reduc(cid:415) on in total
expenditure.
Both the corporate commercial and consumer areas performed strongly, with
por(cid:414) olio growth above system performance. Despite a highly compe(cid:415) (cid:415) ve
marketplace, loans increased by 10% over the period. This has been done
whilst the Bank has maintained its focus on credit quality and customer
reten(cid:415) on following transi(cid:415) oning from Westpac Bank Corpora(cid:415) on.
Customer growth has con(cid:415) nued during the period with the Bank now having
over 40,000 clients. We have con(cid:415) nued our focus on making banking easier
for customers which has seen us expand our Agents to 23 na(cid:415) onwide, with
good growth experienced in the number of transac(cid:415) ons conducted via this
channel.
Our emphasis this year for our people has been development through
Our BSP Scholarships to support children from disadvantaged backgrounds
remains one of our key community ini(cid:415) a(cid:415) ves, with this year BSP sponsoring
40 school children throughout the year. Addi(cid:415) onally for the 6th year in a
row we have supported the women of Samoa by covering the educa(cid:415) onal
costs of 10 Samoan women in secondary school.
The economic outlook for the year ahead is expected to remain stable with a
moderate upli(cid:332) in the tourism and agricultural sectors. The business is well
placed with good forward momentum across its key areas and is underpinned
by a disciplined approach to how we manage the business.
Our balance sheet is strong and we have an energe(cid:415) c and commi(cid:425) ed staff .
We will con(cid:415) nue to build a high performing culture and subsequently look
to embed the core BSP values in all our ac(cid:415) ons.
OVERSEAS BRANCHES & SUBSIDIARIES
BSP CAPITAL LIMITED
Our results for 2015 were mixed compared to 2014. Global markets and
vola(cid:415) lity contributed to nega(cid:415) ve investor sen(cid:415) ment and tough market
condi(cid:415) ons throughout most of 2015. Nevertheless we saw modest growth
in our Funds Management business; we remain the largest broker by
market share and fi nally we have par(cid:415) cipated in several Corporate Advisory
transac(cid:415) ons at a (cid:415) me when compe(cid:415) (cid:415) on is intense and client and investor
ac(cid:415) vity is subdued.
We con(cid:415) nue to provide an integrated solu(cid:415) on to clients alongside our BSP
colleagues in Corporate and Retail Banking, Paramount and Treasury.
Fund Management
•
Our total Funds Under Management (FUM) grew by 10.5% to K1.315
billion as at end December 2015. This growth is very pleasing in that
we have had steady growth now for 3 years from quite modest levels
of below K400m (FUM) as at end December 2012.
The Bank has a long and proud history of being ac(cid:415) ve in the community,
with a par(cid:415) cular focus on health, educa(cid:415) on and environmental ini(cid:415) a(cid:415) ves.
•
Of par(cid:415) cular signifi cance is the growth of our retail Funds Under
Management by 38% within the overall business during the year.
All of our employees are to be commended for their ongoing dedica(cid:415) on
and commitment to our business despite the challenges of transi(cid:415) on from
Westpac Bank to BSP. Our customers and shareholders also deserve special
men(cid:415) on for their con(cid:415) nuous support and loyalty. We look forward to a
successful 2016.
TONGA
It has been a very exci(cid:415) ng and successful year for BSP Tonga. On July 10th
2015 the sale of Westpac to BSP took place and our branches in Tongatapu
and Vava’u were transformed over the weekend and BSP Tonga was born.
Overall the transi(cid:415) on went smoothly, with some minor teething issues
in rela(cid:415) on to overseas payments, which were quickly resolved, working
together with the PNG team. BSP has been very well received by customers
and staff alike.
The offi cial opening of BSP Tonga took place on July 27th 2015 with the
ribbon cut by their Royal Highnesses Crown Prince ‘Ulukalala Tupouto’a
and Princess Sinaitakala Tuku’aho. BSP CEO Robin Fleming also offi ciated
at the ceremony.
Since the transi(cid:415) on to BSP, the business has achieved some key achievements:
•
•
•
•
•
•
Customer number increased by 12%.
Over 1,000 people par(cid:415) cipated in our fi nancial literacy program.
Go Green School Clean Up at 10 schools.
Loan book growth of 5%.
BSP’s icare training rolled out to all staff .
Instant card facility introduced.
A profi t of TOP2.9 million has been achieved in the period since the acquisi(cid:415) on
by BSP. Loans have increased to TOP104.5 million, and deposits are at TOP
146.7 million. The bank’s total assets stand at TOP219.9 million. Staff
have worked diligently in this ini(cid:415) al period, and are to be commended for
their eff orts.
Share Broking
• Whilst we retained our posi(cid:415) on as the largest broker in PNG, our
brokerage volume fell by 30% in 2015 compared to the results of 2014.
However it needs to be said that overall volumes in the en(cid:415) re market
were down by about 70% year-on year.
• We con(cid:415) nue to explore opportuni(cid:415) es to grow this business with
con(cid:415) nued investor educa(cid:415) on seminars in PNG as well as our partnership
with counterparty brokers in Australia and the USA.
Corporate Advisory
•
2015 was a subdued year for our Corporate Advisory business in
terms of revenue. A number of assignments were put on hold due to
tough market condi(cid:415) ons whilst in some cases assignments that had
commenced were not completed during the year and were expected
to reach conclusion during 2016.
•
Our work now covers clients and assignments in PNG as well as the
South Pacifi c.
BSP LIFE FIJI
The 2015 achievements in both fi nancial and strategic ac(cid:415) ons were pleasing
overall but not without challenges. Our strong fi nancial performance recorded
in 2014 in our Life business con(cid:415) nued into 2015 with results exceeding
targets. The Health business however experienced diffi cul(cid:415) es, aff ected by
high claims experienced towards the end of the year. Progress was made
with our key strategic ini(cid:415) a(cid:415) ves.
2015 saw the on-going execu(cid:415) on of major ini(cid:415) a(cid:415) ves planned for the year
including:
•
•
•
•
The Health func(cid:415) onality of the new system implemented in 2014
underwent a post implementa(cid:415) on review with fi xes fully resolved in
2015. The Life func(cid:415) onali(cid:415) es implementa(cid:415) on is currently underway.
Progress is being made towards comple(cid:415) on of business and data
migra(cid:415) on requirements.
The con(cid:415) nued aggressive quality growth stance on both Life and Health
New Business through the Agency and the Broker Channels respec(cid:415) vely
and distribu(cid:415) on through the Bank. ‘Bula Secure’ the new Unsecured
Personal Loan insurance product launched through the Bank channel,
con(cid:415) nues to do well.
The successful launch of the Bula Smart product, the fi rst non -
underwri(cid:415) ng Life product in Fiji, reached projected sales an(cid:415) cipated
in its fi rst year in the market.
The focus on business quality and conserva(cid:415) on eff orts which saw strong
inforce growth and stable persistency rate.
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
35
OVERSEAS BRANCHES & SUBSIDIARIES
OVERSEAS BRANCHES & SUBSIDIARIES
•
•
The con(cid:415) nued progress on the gated community accommoda(cid:415) on
project in Suva, ‘The Domain’. The development consists of a 10 - unit
townhouse and 5 execu(cid:415) ve homes in a gated community is expected
to be completed by end of March 2016.
The con(cid:415) nued focus on investments subsidiaries’ performances resul(cid:415) ng
in the marked improvements in their performances and values. Signifi cant
progresses were also made in developing strategic partners for certain
subsidiaries and further investments planned for others.
BSP Finance Ltd target market is small to medium enterprises (SMEs) and
in certain cases individual borrowers. It off ers commercial loans, fi nance
lease and term deposits at a(cid:425) rac(cid:415) ve interest rates, and fast turnaround,
adop(cid:415) ng a prudent approach to risk. It aims to develop its branding through
superior customer service, and being very compe(cid:415) (cid:415) ve on this basis against
its compe(cid:415) tors.
BSP Finance (PNG) Ltd operates two branches: one in Port Moresby and
one in Lae. Its marke(cid:415) ng team also covers Mount Hagen, Wabag, Kundiawa,
Madang, Mendi, Alotau, Poponde(cid:425) a, Kokopo, Kavieng and Kimbe.
We had a very strong 49% growth in Health new business and a 24% growth
in Life new business. The focus on conserva(cid:415) on saw the Life inforce por(cid:414) olio
increasing by F$6 million to F$63.1 million. The 13th month persistency rate
of 75% is at pleasing similar level as last year.
In 2015, BSP Finance (PNG) Ltd entered the PNG asset fi nance market and has
proven to be a serious compe(cid:415) tor with the leaders of the industry despite
a slowdown in market growth consequent to the comple(cid:415) on of PNG LNG.
Financial Performance
The Insurance Group NPAT for 2015 was FJD$13.3m, 34% above NPAT for 2014.
A(cid:332) er adjustment for non-opera(cid:415) ng items NPAT is FJD$13.7 million, ahead
of expecta(cid:415) ons. The Life business achieved very strong profi t performance,
while the Health business favourable experience for the fi rst half of the year
was off set by high claims towards the end of the year.
BSP Finance (Fiji) Ltd operates two branches: one in Suva and another
one in Nadi. Its marke(cid:415) ng team also covers Nausori, Navua, Lautoka, Ba,
Sigatoka and Tavua.
By the end of 2015, BSP Finance (Fiji) Ltd had already achieved a market
share of 6.25% announcing its compe(cid:415) (cid:415) ve inten(cid:415) ons to the major players
of the sector.
Like BSP, in 2015 BSP Finance Ltd contributed to the development of
communi(cid:415) es with community project ini(cid:415) a(cid:415) ves for the Saint Christopher’s
Home, an orphanage in Fiji and with the Harmony Chris(cid:415) an Academy in
Papua New Guinea.
In the near future BSP Finance Ltd plans to open in other countries of the
South Pacifi c where BSP already operates. The business also has inten(cid:415) ons
to expand its opera(cid:415) ons in South East Asia.
BSP FINANCE LIMITED
BSP Finance is the asset fi nance subsidiary of BSP. It owns and operates
two subsidiaries in PNG and Fiji respec(cid:415) vely, off ering commercial loans,
fi nance leases and term deposit products predominantly to SME and small
commercial businesses in both countries.
The establishment of BSP Finance Ltd has enabled BSP to extend its fi nancial
and lending ac(cid:415) vi(cid:415) es into broader sectors of the local economy throughout
Papua New Guinea and the South Pacifi c region. The fi nance company was
offi cially launched on 8th October 2014 by the BSP Board Chairman, Sir
Kostas Constan(cid:415) nou during a Board mee(cid:415) ng in Fiji.
In November 2014 BSP Finance Ltd opened its fi rst branch in Suva, Fiji. This
was subsequently followed in December with the opening of its PNG offi ce in
Port Moresby. BSP is Papua New Guinea’s leader in innova(cid:415) ve banking and
fi nancial solu(cid:415) ons and it uses its current brand to build the BSP Finance Brand.
BSP is already well regarded in the Pacifi c market and it is keen to build on
this posi(cid:415) on to assist all its clients achieve their fi nancial objec(cid:415) ves.
ATM’s, EFTPoS, SMS and Internet Banking con(cid:415) nue to grow and provide our clients in Fiji with convenient solu(cid:415) ons. Customers in the Nadi Highlands.
36
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
37
Agents in Solomon Islands have increased from 31 to 67 in 2015. Launching of Dadave Branchless Banking Agent early on in the year.
OVERSEAS BRANCHES & SUBSIDIARIES
OVERSEAS BRANCHES & SUBSIDIARIES
The rebranding of branches, signages, vehicles and staff uniforms was done swi(cid:332) ly following acquisi(cid:415) on - Tonga.
Having a bit of fun with the new look BSP Pacifi Card - Cook Islands.
Proudly modelling their new corporate wear - Samoa.
38
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
Visi(cid:415) ng a local EFTPoS merchant - Tonga.
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
39
Michelle Lemesio,
Business Manager, BSP Samoa.
She is pictured with her niece Nanise Asora.
Consolidated
Financial
Statements
40
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
41
STATEMENT BY THE DIRECTORS
for the Year Ended 31 December 2015
The Directors declare that:
(a)
(b)
in the Directors’ opinion, there are reasonable grounds to believe that the Bank and the Group will be able to pay their debts as and
when they become due and payable; and
in the Directors’ opinion, the a(cid:425) ached fi nancial statements and notes thereto are in accordance with the PNG Companies Act 1997,
including compliance with accoun(cid:415) ng standards and give a true and fair view of the fi nancial posi(cid:415) on and performance of the Bank
and the Group.
Addi(cid:415) onal Statutory Informa(cid:415) on
The results of the Bank and the Group’s opera(cid:415) ons during the fi nancial year have, in the opinion of the Directors, not been materially aff ected by items
of an abnormal nature, other than those disclosed in the fi nancial statements.
In the opinion of the Directors, no circumstances have arisen that make adherence to the exis(cid:415) ng method of valua(cid:415) on of assets or liabili(cid:415) es of the Bank
and the Group misleading or inappropriate.
At the date of this report the Directors are not aware of any circumstances that would render the values a(cid:425) ributed to current assets in the fi nancial
statements misleading.
No con(cid:415) ngent liability other than that disclosed in the notes to the a(cid:425) ached fi nancial statements has become enforceable, or is likely to become
enforceable, within a period of twelve months from the date of this report, that will materially aff ect the Bank and the Group in its ability to meet
obliga(cid:415) ons as and when they fall due.
Dated and signed in accordance with a resolu(cid:415) on of the Directors at Port Moresby this 11th day of March 2016.
Sir Kostas Constan(cid:415) nou, OBE
Chairman
Robin Fleming, CSM
Group Chief Execu(cid:415) ve Offi cer/Director
DIRECTORS’ REPORT
for the Year Ended 31 December 2015
The Directors take pleasure in presen(cid:415) ng the Financial Statements of the Bank of South Pacifi c Limited and its subsidiaries
(Bank and the Group) for the year ended 31 December 2015. In order to comply with the provision of the Companies Act 1997,
the Directors report as follows:
Principal Ac(cid:415) vi(cid:415) es
The principal ac(cid:415) vity of the Bank of South Pacifi c Limited (BSP) is the provision of commercial banking and fi nance services. The Group’s ac(cid:415) vi(cid:415) es also
include stock broking, fund management and life business services throughout Papua New Guinea and the Pacifi c region. BSP is a Bank listed on the
Port Moresby Stock Exchange (POMSoX), incorporated under the Companies Act of Papua New Guinea, and is an authorised Bank under the Banks and
Financial Ins(cid:415) tu(cid:415) ons Act of Papua New Guinea. The Bank and the Group are licensed to operate in the Solomon Islands, Fiji Islands, Cook Islands, Samoa
and Tonga. The registered offi ce is at Douglas Street, Port Moresby.
Review of Opera(cid:415) ons
For the year ended 31 December 2015, Group’s profi t a(cid:332) er tax was K531.879 million (2014: K507.339 million). The Bank’s profi t a(cid:332) er tax was K505.749
million (2014: K512.892 million which included a dividend income of K19.221 million received from BSP Life (Fiji) Limited).
Dividends
Dividend payment totaling K369.810 million was paid in 2015 (2014: K309.141 million). A detailed breakup of this is provided in Note 23.
Directors and Offi cers
The following were directors of the Bank of South Pacifi c Limited at 31 December 2015:
Sir K Constan(cid:415) nou, OBE
Mr. T E Fox, OBE, BEc
Mr. E B Gangloff , CPA, MAICD Mr. A Mano, BEcon, MSc
Mr. R Fleming, CSM, MBA, MMGT
Dr. I Temu, PhD, MEc
Ms. F Talao, LLM, MPHIL, MAICD
Sir. N Bogan, KBE, LLB
Mr. G Aopi, CBE, MBA
Mr. G Robb, OAM, BA, MBA
Details of directors’ tenure and directors and execu(cid:415) ves’ remunera(cid:415) on during the year are provided in Note 27 of the Notes to the Consolidated Financial
Statements. The CEO Robin Fleming remains the only execu(cid:415) ve director.
The company secretary is Mary Johns.
Independent Audit Report
The fi nancial statements have been audited and should be read in conjunc(cid:415) on with the independent audit report on page 83. Details of amounts paid to
the auditors for audit and other services are shown in Note 42 of the Notes to the Financial Statements.
Dona(cid:415) ons and Sponsorships
Dona(cid:415) ons and sponsorship by the Group during the year amounted to K9,091,256 (2014: K9,357,564).
Change in Accoun(cid:415) ng Policies
No changes in accoun(cid:415) ng policies signifi cantly impacted the Group during the year.
For, and on behalf of, the Directors.
Dated and Signed in accordance with a resolu(cid:415) on of the Directors in Port Moresby this 11th day of March 2016.
Sir Kostas Constan(cid:415) nou, OBE
Chairman
Robin Fleming, CSM
Group Chief Execu(cid:415) ve Offi cer/Director
42
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
43
STATEMENT OF COMPREHENSIVE INCOME
for the Year Ended 31 December 2015
All amounts are expressed in K’000
Interest income
Interest expense
Net interest income
Fee and commission income
Other income
Net banking opera(cid:415) ng income
Net insurance premium income
Investment revenue
Increase in policy liabili(cid:415) es
Policy maintenance & investment expenses
Share of profi ts from associates and jointly controlled en(cid:415) (cid:415) es
Claims, surrender and maturi(cid:415) es
Net insurance opera(cid:415) ng income
Net opera(cid:415) ng income
Impairment expense
Impairment on subsidiary
Opera(cid:415) ng expenses
Profi t before income tax
Income tax expense
Net profi t for the year
Other comprehensive income
Items that may be subsequently reclassifi ed to profi t or loss
Transla(cid:415) on of fi nancial informa(cid:415) on of foreign opera(cid:415) ons to
presenta(cid:415) on currency
Items that will not be reclassifi ed to profi t or loss:
Recogni(cid:415) on of deferred tax on asset revalua(cid:415) on reserve
Net movement in asset revalua(cid:415) on
Other comprehensive income, net of tax
Total comprehensive income for the year
Earnings per share - basic & diluted (toea)
Note
2
2
3
4
Consolidated
Bank
2015
1,100,866
(94,615)
1,006,251
310,468
209,175
2014
947,340
(62,579)
884,761
305,031
293,255
2015
2014
1,083,281
947,309
(93,098)
(63,640)
990,183
301,232
200,425
883,669
296,773
312,477
1,525,894
1,483,047
1,491,840
1,492,919
94,322
93,405
90,330
69,092
39(b)
(34,984)
(17,491)
9
39(a)
(67,488)
1,598
(65,608)
21,245
(66,076)
10,233
(70,404)
15,684
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,547,139
1,498,731
1,491,840
1,492,919
(89,905)
(76,796)
-
-
(86,657)
(11,068)
(76,796)
-
(691,084)
(703,085)
(665,979)
(693,671)
766,150
718,850
728,136
722,452
(234,271)
(211,511)
(222,387)
(209,560)
531,879
507,339
505,749
512,892
48,839
(24,354)
31,912
(18,082)
1,301
21,450
71,590
603,469
113.7
(35,762)
44,330
(15,786)
491,553
108.3
4,592
14,304
50,808
(35,762)
44,330
(9,514)
556,557
503,378
108.1
109.5
13
8
5
6
24
24
24
23
STATEMENT OF FINANCIAL POSITION
As at 31 December 2015
All amounts are expressed in K’000
Note
2015
2014
2015
2014
Consolidated
Bank
ASSETS
Cash and balances with Central Bank
Treasury & Central Bank bills
Amounts due from other banks
Statutory deposits with Central Banks
Other fi nancial assets
Loans, advances and other receivables from
customers
Assets held for sale
Property, plant and equipment
Assets subject to opera(cid:415) ng lease
Investment in associates and joint ventures
Investment in subsidiaries
Intangible assets
Investment proper(cid:415) es
Deferred tax assets
Other assets
Total assets
LIABILITIES
Amounts due to other banks
Customer deposits
Subordinated debt securi(cid:415) es
Other liabili(cid:415) es
Provision for income tax
Other provisions
Total liabili(cid:415) es
SHAREHOLDERS EQUITY
Ordinary shares
Retained earnings
Other reserves
Total shareholders’ equity
Total equity and liabili(cid:415) es
10
11
12
25
16
13
14
14
14
9
8
7
15
6
17
18
19
20
21
6
22
23
24
24
1,202,466
2,503,109
695,280
1,359,606
2,308,926
8,621,514
35,135
686,325
52,857
117,316
-
110,226
101,019
147,389
255,135
1,355,469
2,183,237
380,653
1,251,582
2,361,649
6,756,997
65,052
662,313
53,783
118,389
-
110,374
70,684
111,677
334,648
1,010,856
2,501,256
572,400
1,341,650
2,074,124
8,181,227
35,135
597,373
52,857
29,447
259,869
99,601
-
159,290
206,558
1,262,306
2,183,237
380,653
1,251,582
2,188,067
6,688,147
65,052
629,682
53,783
38,520
108,635
104,210
-
115,552
285,093
18,196,303
15,816,507
17,121,643
15,354,519
344,346
259,892
344,877
259,879
14,595,374
12,708,383
14,248,296
12,804,555
75,525
969,179
39,005
143,698
75,525
756,548
63,022
152,944
75,525
353,252
36,168
132,535
75,525
257,674
62,738
147,800
16,167,127
14,016,314
15,190,653
13,608,171
374,621
1,399,490
255,065
2,029,176
379,297
1,219,436
201,460
1,800,193
374,621
1,340,000
216,369
379,297
1,183,505
183,546
1,930,990
1,746,348
18,196,303
15,816,507
17,121,643
15,354,519
The a(cid:425) ached notes form an integral part of these consolidated fi nancial statements.
The a(cid:425) ached notes form an integral part of these consolidated fi nancial statements.
44
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
45
STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
for the Year Ended 31 December 2015
Bank
Share capital
Reserves
Note
381,498
181,446
All amounts are expressed in K’000
Balance as at 1 January 2014
Net profi t
2013 fi nal dividend paid
2014 interim dividend paid
Share buyback
BSP Life policy reserve
Transfer from Asset Revalua(cid:415) on Reserve
Other comprehensive income
Balance at 31 December 2014
Net profi t
2014 fi nal dividend paid
2015 interim dividend paid
Share buyback
Transfer from Asset Revalua(cid:415) on Reserve
BSP Life policy reserve
Other comprehensive income
Balance at 31 December 2015
Consolidated
Balance as at 1 January 2014
Net profi t
2013 fi nal dividend paid
2014 interim dividend paid
BSP Life policy reserve
Prior year consolida(cid:415) on adjustment
Transfer from Asset Revalua(cid:415) on Reserve
Share buyback
Other comprehensive income
Balance at 31 December 2014
Net profi t
2014 fi nal dividend paid
2015 interim dividend paid
Share buyback
Transfer from asset revalua(cid:415) on reserve
BSP Life policy reserve
Other Comprehensive income
Balance at 31 December 2015
Retained
earnings
991,368
512,892
(215,476)
(93,665)
-
(24,055)
12,441
-
1,183,505
505,749
(262,021)
(105,218)
-
22,103
(4,118)
-
Total
1,554,312
512,892
(215,476)
(93,665)
(2,201)
-
-
(9,514)
1,746,348
505,749
(262,021)
(105,218)
(4,676)
-
-
50,808
-
-
-
(2,201)
-
-
-
379,297
-
-
-
(4,676)
-
-
-
-
-
-
-
24,055
(12,441)
(9,514)
183,546
-
-
-
-
(22,103)
4,118
50,808
374,621
216,369
1,340,000
1,930,990
381,498
202,272
1,035,290
-
-
-
-
-
-
(2,201)
-
379,297
-
-
-
(4,676)
-
-
-
-
-
-
24,055
3,360
(12,441)
-
(15,786)
201,460
-
-
-
-
(22,103)
4,118
71,590
507,339
(215,476)
(93,665)
(24,055)
(2,438)
12,441
-
-
1,219,436
531,879
(263,872)
(105,938)
-
22,103
(4,118)
-
1,619,060
507,339
(215,476)
(93,665)
-
922
-
(2,201)
(15,786)
1,800,193
531,879
(263,872)
(105,938)
(4,676)
-
-
71,590
374,621
255,065
1,399,490
2,029,176
23
23
23
24
24
23
23
23
24
24
23
23
24
24
24
23
23
23
23
24
24
STATEMENT OF CASH FLOW
for the Year Ended 31 December 2015
All amounts are expressed in K’000
Note
2015
2014
2015
2014
Consolidated
Bank
CASH FLOW FROM OPERATING ACTIVITIES
Interest received
Fees and other income
Interest paid
Amounts paid to suppliers and employees
1,095,363
559,043
(73,977)
911,236
816,898
(61,185)
1,077,459
420,288
(76,268)
911,236
638,786
(61,844)
(536,708)
(662,045)
(433,083)
(497,431)
Opera(cid:415) ng cash fl ow before changes in opera(cid:415) ng assets
28
1,043,721
1,004,904
988,396
990,747
Increase in loans, advances and other receivables from customers
(1,983,852)
(1,563,291)
(1,579,065)
(1,555,657)
Increase in statutory deposits with the Central Banks
Decrease in bills receivable and other assets
Increase in customer deposits
(Decrease)/increase in bills payable and other liabili(cid:415) es
Net cash fl ow from opera(cid:415) ons before income tax
Income taxes paid
Net cash fl ow from opera(cid:415) ng ac(cid:415) vi(cid:415) es
CASH FLOW FROM INVESTING ACTIVITIES
Decrease/(increase) in government securi(cid:415) es
Expenditure on property, plant & equipment
Proceeds from disposal of property, plant & equipment
Proceeds from other investments
Purchase of controlled en(cid:415) (cid:415) es, net of cash acquired
40
Addi(cid:415) onal funding of subsidiaries
Net cash fl ow from inves(cid:415) ng ac(cid:415) vi(cid:415) es
CASH FLOW FROM FINANCING ACTIVITIES
Share buyback
Dividends paid
Net cash fl ow from fi nancing ac(cid:415) vi(cid:415) es
23
23
Net Increase/(decrease) in cash and cash equivalents
Eff ect of exchange rate movements on cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and Cash Equivalents at the end of the year
28
(108,024)
145,398
1,886,991
180,266
1,164,500
(282,784)
881,716
(384,565)
(154,540)
36,088
27,332
-
-
(185,002)
42,649
(90,068)
65,851
468,351
1,443,741
(123,960)
(356,349)
(212,870)
(569,219)
915,226
(192,269)
13,900
9,895
-
-
58,021
886,876
(282,837)
604,039
(533,611)
(111,508)
36,088
27,332
176,524
(16,251)
(475,685)
746,752
(421,426)
(185,002)
41,540
508,329
(121,086)
(321,129)
(212,556)
(533,685)
836,664
(186,162)
14,218
-
-
(11,706)
653,014
(2,201)
(309,141)
(311,342)
(4,676)
(369,810)
(374,486)
31,545
45,625
1,476,230
1,553,400
(2,201)
(4,676)
(309,141)
(311,342)
(367,239)
(371,915)
(133,809)
(189,302)
(192,013)
(13,345)
44,601
1,623,384
1,383,080
1,476,230
1,238,379
(10,461)
1,585,554
1,383,080
The a(cid:425) ached notes form an integral part of these consolidated fi nancial statements.
The a(cid:425) ached notes form an integral part of these consolidated fi nancial statements.
46
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
47
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
1. ACCOUNTING POLICIES
The principal accoun(cid:415) ng policies adopted in the prepara(cid:415) on of these
consolidated fi nancial statements are set out below. These policies have
been consistently applied to all the periods presented unless otherwise
stated. The assets and liabili(cid:415) es are presented in order of liquidity on the
statement of fi nancial posi(cid:415) on.
A. Basis of Presenta(cid:415) on & General Accoun(cid:415) ng Policies
The consolidated fi nancial statements of the Bank of South Pacifi c Limited
(the Bank) and the Group are prepared in accordance with Interna(cid:415) onal
Financial Repor(cid:415) ng Standards as issued by the Interna(cid:415) onal Accoun(cid:415) ng
Standards Board and interpreta(cid:415) ons of these standards issued by the
Interna(cid:415) onal Financial Repor(cid:415) ng Interpreta(cid:415) ons Commi(cid:425) ee. They are
prepared on the basis of the historical cost conven(cid:415) on, as modifi ed by
the revalua(cid:415) on of certain non-current assets, fi nancial instruments and
liabili(cid:415) es.
28 “Investments in associates and joint ventures” (original eff ec(cid:415) ve date
of 1 January 2016 now postponed ) in rela(cid:415) on to the sale or contribu(cid:415) on
of assets between an investor and its associate or joint venture.
The main consequence of the amendments is that a full gain or loss is
recognised when a transac(cid:415) on involves a business (whether it is
housed in a subsidiary or not). A par(cid:415) al gain or loss is recognised when
a transac(cid:415) on involves assets that do not cons(cid:415) tute a business, even if
these assets are housed in a subsidiary.
• Annual improvements 2014 (eff ec(cid:415) ve 1 January 2016) makes minor
changes to IFRS 5, IFRS 7, IAS 19, and IAS 34.
• Amendments to IAS 1 “Presenta(cid:415) on of Financial Statements” (eff ec(cid:415) ve
1 January 2016) clarify guidance in IAS 1 on materiality and aggrega(cid:415) on,
the presenta(cid:415) on of subtotals, the structure of fi nancial statements
and the disclosure of accoun(cid:415) ng policies. The amendments form a part
of the IASB’s Disclosure Ini(cid:415) a(cid:415) ve, which explores how fi nancial
statement disclosures can be improved.
Es(cid:415) mates and assump(cid:415) ons have been used to achieve conformity with
generally accepted accoun(cid:415) ng principles in the prepara(cid:415) on of these
fi nancial statements. These assump(cid:415) ons and es(cid:415) mates aff ect balances of
assets and liabili(cid:415) es, con(cid:415) ngent liabili(cid:415) es and commitments at the end of
the repor(cid:415) ng period, and amounts of revenues and expenses during the
repor(cid:415) ng period. Whilst the es(cid:415) mates are based on management’s best
knowledge of current events and condi(cid:415) ons, actual results may ul(cid:415) mately
diff er from those es(cid:415) mates.
•
•
The fi nancial statements are presented in Papua New Guinea Kina,
expressed in thousands of Kina, as permi(cid:425) ed by Papua New Guinea
Accoun(cid:415) ng Standards.
model.
Standards, amendment and interpreta(cid:415) ons eff ec(cid:415) ve in the
year ended 31 December 2015
•
IFRS 15 “Revenue from contracts with customers” (eff ec(cid:415) ve 1 January
2018) is a converged standard from the IASB and FASB on revenue
recogni(cid:415) on. The standard will improve the fi nancial repor(cid:415) ng of
revenue and improve comparability of the top line in fi nancial
statements globally.
IFRS 9, ‘Financial Instruments” (eff ec(cid:415) ve 1 January 2018) replaces
the guidance in IAS 39 with a standard that is less complex and principles
based. The new standard addresses the classifi ca(cid:415) on, measurement
and derecogni(cid:415) on of fi nancial assets and fi nancial liabili(cid:415) es, relaxes
the requirements for hedge accoun(cid:415) ng and introduces an expected
credit losses model that replaces the current incurred loss impairment
The following new standards and amendments were applicable for the fi rst
(cid:415) me during the accoun(cid:415) ng period beginning 1 January 2015:
•
•
Annual improvements 2012 (eff ec(cid:415) ve 1 July 2014) makes minor
changes to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 37 and IAS 39.
Annual improvements 2013 (eff ec(cid:415) ve 1 July 2014) makes minor
changes to IFRS 1, IFRS 3, IFRS 13 and IAS 40.
Other standards, amendments and interpreta(cid:415) ons which were released
during the accoun(cid:415) ng period beginning 1 January 2015 are not relevant or
material to the Group.
Standards, amendments and interpreta(cid:415) ons issued but not
yet eff ec(cid:415) ve for the year ended 31 December 2015 or adopted
early.
The following standards, amendments and interpreta(cid:415) ons to exis(cid:415) ng
standards have been published and are mandatory for the en(cid:415) ty’s
accoun(cid:415) ng periods beginning on or a(cid:332) er 1 January 2016 or later periods,
but the en(cid:415) ty has not early adopted them:
IFRS 16, “Leases” (eff ec(cid:415) ve 1 January 2019) replaces the guidance in
IAS 17 and will have a signifi cant impact on accoun(cid:415) ng by lessees. The
previous dis(cid:415) nc(cid:415) on under IAS 17 between fi nance leases and opera(cid:415) ng
leases for lessees has been removed and IFRS 16 will require a lessee to
recognise a lease liability represen(cid:415) ng future lease payments and
a ‘right-of-use asset’ for virtually all lease contracts. There is an
op(cid:415) onal exemp(cid:415) on for certain short-term leases and leases of low-
value assets. For lessees who previously entered into opera(cid:415) ng leases,
one of the main impacts will be an increase in debt on the balance
sheet.
B. Consolida(cid:415) on
incorporate the assets and
The consolidated fi nancial statements
liabili(cid:415) es of all controlled en(cid:415) (cid:415) es of the Bank and the Group as at 31
December 2015, and their results for the year then ended.
Controlled en(cid:415) (cid:415) es are those over which the Group has the power
to govern fi nancial and opera(cid:415) ng policies, generally accompanied
by a shareholding that commands the majority of vo(cid:415) ng rights, and are
commonly referred to as subsidiaries.
Subsidiaries are accounted for at acquisi(cid:415) on under the acquisi(cid:415) on cost
method of accoun(cid:415) ng, where:
•
•
Amendment to IFRS 11 “Joint arrangements” on acquisi(cid:415) on of an
interest in a joint opera(cid:415) on (eff ec(cid:415) ve 1 January 2016). These
amendments provide new guidance on how to account for the
acquisi(cid:415) on of an interest in a joint opera(cid:415) on that cons(cid:415) tutes a
business.
Amendments to IAS 27 “Separate fi nancial statements” on the equity
method (eff ec(cid:415) ve 1 January 2016). These amendments allow en(cid:415) (cid:415) es
to use the equity method to account for investments in subsidiaries,
joint ventures and associates in their separate fi nancial statements.
•
•
•
•
acquisi(cid:415) on cost is measured at fair value of assets transferred,
equity issued, liabili(cid:415) es assumed and any directly a(cid:425) ributable
costs of the transac(cid:415) on;
iden(cid:415) fi able net assets are recorded ini(cid:415) ally at acquisi(cid:415) on, at
their fair values;
any excess of the acquisi(cid:415) on cost over the relevant share of
iden(cid:415) fi able net assets acquired is treated as goodwill, and
any defi ciency is recognised directly in the statement of
comprehensive income;
All intercompany transac(cid:415) ons and balances are eliminated.
• Amendments to IFRS 10 “Consolidated fi nancial statements” and IAS
C. Investment in Associates and Joint Arrangements
Investments in Associates
Associates are en(cid:415) (cid:415) es over which the Group has signifi cant, but not
controlling infl uence, generally accompanied by a shareholding conferring
between 20% - 50% of vo(cid:415) ng rights.
Long term insurance contracts
These contracts insure human life events (for example death, survival,
disability or cri(cid:415) cal illness) over a long dura(cid:415) on. Guaranteed benefi ts
paid on occurrence of the specifi ed insurance event are fi xed or linked
to the level of bonus declared on the policy. Most of the policies have
maturity and surrender benefi ts.
In the consolidated fi nancial statements, these investments are accounted
for under the equity method.
For all these contracts, premiums are recognised as revenue when
they become payable by the contract holder. Premiums are shown
before deduc(cid:415) on of commission.
Interests In Joint Arrangements
The Group applies IFRS 11 to all joint ventures. Under IFRS 11
investments in joint arrangements are classifi ed as either joint ventures
or joint opera(cid:415) ons depending on the contractual rights and obliga(cid:415) ons
of each investor.
Joint ventures are accounted for using the equity method in the
consolidated fi nancial statements. Under the equity method of
accoun(cid:415) ng, interests in joint ventures are ini(cid:415) ally recognised at cost and
adjusted therea(cid:332) er to recognise the Group’s share of the post -
acquisi(cid:415) on profi ts or losses and movements in other comprehensive
income. When the Group’s share of losses in a joint venture equals or
exceeds its interests in the en(cid:415) ty (which includes any long - term interests
that, in substance, form part of the group’s net investment in the joint
ventures), the Group does not recognise further losses, unless it has
incurred obliga(cid:415) ons or made payments on behalf of the joint ventures.
Interests in joint ventures classifi ed as held for sale are accounted for under
IFRS 5 Non-current Assets Held for Sale and Discon(cid:415) nued Opera(cid:415) ons.
D. Revenue
income and expense are recognised
Interest income and expense
Interest
in the statement of
comprehensive income on an accrual basis using the eff ec(cid:415) ve yield
method. The income arising from the various forms of instalment
credit has been determined using the eff ec(cid:415) ve interest method.
Interest income includes coupons earned on inscribed stock, accrued
discount and premium on Treasury and Central Bank bills.
Short term insurance contracts
These contracts are the Term Life, Medical and Travel policies
sold and underwri(cid:425) en by BSP Health Care (Fiji) Limited.
These contracts protect the Group’s customers from the consequences
of events such as death, medical emergency or loss on travel. Guaranteed
benefi ts paid on occurrence of the specifi ed insurance event are either fi xed
or linked to the extent of the economic loss suff ered by the policyholder.
There are no maturity or surrender benefi ts.
For all these contracts, premiums are recognised as revenue (earned
premiums) propor(cid:415) onally over the period of coverage. The por(cid:415) on of
premium received on in-force contracts that relates to unexpired risks
at the Statement of Financial Posi(cid:415) on date is reported as the unearned
premium liability. Premiums are shown before deduc(cid:415) on of commission.
include direct and
Claims and loss adjustment expenses are charged to income as incurred
based on the es(cid:415) mated liability for compensa(cid:415) on owed to contract
holders or benefi ciaries. They
indirect claims
se(cid:425) lement costs and arise from events that have occurred up to the
Statement of Financial Posi(cid:415) on date even if they have not yet been
reported to the Group. The Group does not discount its liabili(cid:415) es for
unpaid claims. Liabili(cid:415) es for unpaid claims are es(cid:415) mated using the
input of assessments for
individual cases reported to the Group
and sta(cid:415) s(cid:415) cal analyses for the claims incurred but not reported, and to
es(cid:415) mate the expected ul(cid:415) mate cost of more complex claims that may
be aff ected by external factors (such as court decisions).
Approximately 90% of the above contracts in the Group’s por(cid:414) olio contain
a Discre(cid:415) onary Par(cid:415) cipa(cid:415) on Feature (DPF). This feature en(cid:415) tles the holder
to receive, as a supplement to generated benefi ts, addi(cid:415) onal benefi ts in
the form of reversionary bonuses.
for
liability
long term
The
(principally Life
Insurance) has been determined in accordance with LPS 1.04 Valua(cid:415) on
of Policy Liabili(cid:415) es, issued by the Australian Pruden(cid:415) al Regula(cid:415) on
Authority.
insurance contracts
The policy liability is calculated in a way that allows for the systema(cid:415) c
release of planned profi t margins as services are provided to policy
owners and the revenues rela(cid:415) ng to those services are received
to determine
(Margin on Services methodology).Services used
profi t recogni(cid:415) on include the cost of expected insurance claims and
the alloca(cid:415) on of future bonuses. The liability is generally determined
as the present value of all future expected payments, expenses, taxes
and profi t margins reduced by the present value of all future expected
premiums and take
into considera(cid:415) on projected future bonuses.
The liabili(cid:415) es are recalculated at each balance date using best es(cid:415) mate
assump(cid:415) ons. These assump(cid:415) ons are revisited regularly and adjusted
for actual experiences on claims, expense, mortality and investment
returns. The policy liability also includes policy owner retained earnings.
Insurance policy liabili(cid:415) es are further detailed in Note 39.
E. Fee and commission income
Fees and commissions are generally recognised on an accrual basis when
the service has been provided. All other risk related fees that cons(cid:415) tute
cost recovery are taken to income when levied. Loan origina(cid:415) on fees are
deferred over the expected term of the fi nancial instrument according to
the eff ec(cid:415) ve interest method. The eff ec(cid:415) ve interest method uses the rate
that exactly discounts es(cid:415) mated future payments and receipts through the
expected life of the instrument or when appropriate, a shorter period to
the net carrying amount of the fi nancial asset.
F. Borrowing expenses
Expenses associated with the borrowing of funds are charged to the
statement of comprehensive income in the period in which they are
incurred.
G. Provision for loan impairment
Loans are originated by providing funds directly to the borrower and are
recognised when cash is advanced to borrowers.
All loans, advances and other receivables from customers are subject to
con(cid:415) nuous management review. A specifi c provision for loan impairment
is established if there is objec(cid:415) ve evidence that the Bank and the Group
will not be able to collect all amounts due under the terms of loans. The
amount of the provision approximates the diff erence between the carrying
amount and the recoverable amount, which is the current best es(cid:415) mate of
the present value of expected future cash fl ows arising from the asset. All
bad debts are wri(cid:425) en off against the specifi c provision for loan impairment
in the period in which they are classifi ed as irrecoverable.
48
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
49
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
Subsequent recoveries are credited to the provision for loan losses in the
statement of comprehensive income.
The following basis and method of deprecia(cid:415) on is used:
Class of asset
Method
Rate
General provisions for impairment are maintained to cover incurred losses
uniden(cid:415) fi ed at balance date in the overall por(cid:414) olio of loans, advances
and other receivables from customers. The provisions are determined
having regard to the level of risk weighted assets, economic condi(cid:415) ons,
the general risk profi le of the credit por(cid:414) olio, past loss experience and
a range of other criteria. The amount necessary to bring the provisions
to their assessed levels, a(cid:332) er write-off s, is charged to the statement of
comprehensive income.
Property
(excluding land)
Plant and
equipment
Equipment under
opera(cid:415) ng lease
Straight line basis
2 - 3% p.a
Straight line basis
10 - 25% pa
Straight line basis
6 - 20% pa
H. Goodwill
Goodwill represents the excess of the cost of any acquisi(cid:415) on over the
acquirer’s interest in the fair value of the iden(cid:415) fi able assets and liabili(cid:415) es
acquired as at the exchange transac(cid:415) on. Goodwill is reported in the
statement of fi nancial posi(cid:415) on as an intangible asset.
In determining goodwill, management considers various factors including
net selling price of the acquired business, exis(cid:415) ng market share, poten(cid:415) al
growth opportuni(cid:415) es, and other factors inherent in the acquired business.
This assessment is reviewed at each balance date, so that any indica(cid:415) on
of impairment with implica(cid:415) ons for the recoverability of goodwill can be
tested, and adjustments to the carrying value of goodwill made if necessary.
I. Computer systems development costs
Costs incurred to develop and enhance the Bank and the Group’s computer
systems are capitalised to the extent that benefi ts do not relate solely to
revenue that has already been brought to account and will contribute to the
future earning capacity of the economic en(cid:415) ty. These costs are amor(cid:415) sed
over the es(cid:415) mated economic life of four years using the straight-line
method. Costs associated with maintaining computer so(cid:332) ware programs
are recognised as an expense when incurred.
J. Property, plant and equipment
Land and buildings are measured at fair value. Fair value is determined on
the basis of regular independent valua(cid:415) on prepared by external valua(cid:415) on
experts, based on discounted cash fl ows or capitalisa(cid:415) on of net income (as
appropriate). The fair values are recognised in the consolidated fi nancial
statements of the consolidated en(cid:415) ty, and are reviewed at the end of each
repor(cid:415) ng period to ensure that the carrying value of land and buildings is
not materially diff erent from their fair values.
Any revalua(cid:415) on increase arising on the revalua(cid:415) on of land and buildings
is credited to the asset revalua(cid:415) on reserve, except to the extent that it
reverses a revalua(cid:415) on decrease for the same asset previously recognised
as an expense in profi t or loss, in which case the increase is credited to
the statement of comprehensive income to the extent of the decrease
previously charged. A decrease in carrying amount arising on the
revalua(cid:415) on of land and buildings is charged as an expense in the statement
of comprehensive income to the extent that it exceeds the balance, if any,
held in the asset revalua(cid:415) on reserve rela(cid:415) ng to a previous revalua(cid:415) on
of that asset. Buildings under construc(cid:415) ons are referred to as work in
progress and are accounted for at cost and subsequently reclassifi ed to
building (Premises) upon comple(cid:415) on.
Deprecia(cid:415) on is provided on property, plant and equipment, including
freehold buildings but excluding land. Deprecia(cid:415) on is calculated on a
straight line basis so as to write off the net cost or other revalued amount
of each asset over its expected useful life to its es(cid:415) mated residual value.
Leasehold improvements are depreciated over the period of the lease
or es(cid:415) mated useful life, whichever is the shorter, using the straight line
method. The es(cid:415) mated useful life, residual value and deprecia(cid:415) on method
is reviewed at the end of each annual repor(cid:415) ng period.
Gains or losses on disposals (being the diff erence between the carrying
value at the (cid:415) me of sale or disposal and the proceeds received) are taken
into account in determining opera(cid:415) ng profi t for the year. Where the
carrying value of an asset is greater than its es(cid:415) mated recoverable amount,
it is wri(cid:425) en down immediately to its recoverable amount. Repairs and
maintenance are taken into account in determining opera(cid:415) ng profi t when
the expenditure is incurred.
K. Leases
Bank is lessee
All leases entered into by the Bank and the Group are opera(cid:415) ng leases.
Total payments made are charged to the statement of comprehensive
income refl ec(cid:415) ng the pa(cid:425) ern of benefi ts derived from the leased assets.
Bank is lessor
Finance leases are included in Loans, Advances and Other Receivables
from Customers and are accounted for under the fi nance method whereby
income is taken to account over the life of the lease in propor(cid:415) on to the
outstanding investment balance.
Assets subject to opera(cid:415) ng leases are separately disclosed in the statement
of fi nancial posi(cid:415) on, according to the nature of the asset. These assets are
stated at cost or revalued amount less accumulated deprecia(cid:415) on. The
assets are depreciated on a straight line basis over the life of the opera(cid:415) ng
lease. Lease income is recognised on a straight line basis over the term of
the lease.
L. Cash and cash equivalents
For the purpose of the cash fl ow statement, cash and cash equivalents
comprise notes and coins, and balances due to and from other banks with
original maturi(cid:415) es of less than three months.
M. Financial assets
The Group classifi es its fi nancial assets in the following categories: at fair
value through profi t or loss, loans and receivables, and available for sale.
The classifi ca(cid:415) on depends on the purpose for which the fi nancial assets
were acquired. Management determines the classifi ca(cid:415) on of its fi nancial
assets at ini(cid:415) al recogni(cid:415) on.
a)
Financial assets at fair value through profi t or loss
Financial assets at fair value through profi t or loss are fi nancial
assets held for trading. A fi nancial asset is classifi ed in this
category if acquired principally for the purpose of selling in the
short term. Deriva(cid:415) ves are also categorised as held for trading
unless they are designated as hedges. Assets in this category
are classifi ed as current assets if expected to be se(cid:425) led within 12
months, otherwise they are classifi ed as non-current. The
Group’s fi nancial assets at fair value through profi t or loss
comprise certain equity securi(cid:415) es included under other fi nancial
assets in the statement of fi nancial posi(cid:415) on.
50
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
b)
Loans and receivables
Loans and receivables are non-deriva(cid:415) ve fi nancial assets with
fi xed or determinable payments that are not quoted in an ac(cid:415) ve
market. They are included in current assets, except for maturi(cid:415) es
greater than 12 months a(cid:332) er the end of the repor(cid:415) ng period.
These are classifi ed as non-current assets. The Group’s loans
and receivables comprise ‘trade and other receivables’ and ‘cash
and cash equivalents’ in the statement of fi nancial posi(cid:415) on.
c) Held to maturity investments
investments
to maturity
includes non-deriva(cid:415) ve
Held
fi nancial assets with fi xed or determinable payments
and fi xed maturi(cid:415) es that the Group has both the inten(cid:415) on
and ability to hold to maturity. Management determines the
classifi ca(cid:415) on of investment securi(cid:415) es held to maturity at their
ini(cid:415) al recogni(cid:415) on and reassesses the appropriateness of that
classifi ca(cid:415) on at the end of each repor(cid:415) ng period. Investment
securi(cid:415) es held to maturity are carried at amor(cid:415) sed cost. The
Group’s held to maturity investments comprise securi(cid:415) es issued
by Governments and Central Banks of respec(cid:415) ve countries
(Treasury and Central Bank Bills) and certain debt securi(cid:415) es
included under other fi nancial assets in the statement of fi nancial
posi(cid:415) on.
Recogni(cid:415) on and measurement
Regular purchases and sales of fi nancial assets are recognised on the trade-
date – the date on which the group commits to purchase or sell the asset.
Investments are ini(cid:415) ally recognised at fair value plus transac(cid:415) on costs for
all fi nancial assets not carried at fair value through profi t or loss. Financial
assets carried at fair value through profi t or loss are ini(cid:415) ally recognised at
fair value, and transac(cid:415) on costs are expensed in the income statement.
Financial assets are derecognised when the rights to receive cash fl ows
from the investments have expired or have been transferred and the group
has transferred substan(cid:415) ally all risks and rewards of ownership. Available-
for-sale fi nancial assets and fi nancial assets at fair value through profi t
or loss are subsequently carried at fair value. Loans and receivables are
subsequently carried at amor(cid:415) sed cost using the eff ec(cid:415) ve interest method.
Gains or losses arising from changes in the fair value of the ‘fi nancial assets
at fair value through profi t or loss’ category are presented in the income
statement within ‘Other banking income’ in the period in which they arise.
Dividend income from fi nancial assets at fair value through profi t or loss
is recognised in the income statement as part of other income when the
group’s right to receive payments is established.
Off se(cid:427) ng fi nancial instruments
Financial assets and liabili(cid:415) es are off set and the net amount reported in
the balance sheet when there is a legally enforceable right to off set the
recognised amounts and there is an inten(cid:415) on to se(cid:425) le on a net basis
or realise the asset and se(cid:425) le the liability simultaneously. The legally
enforceable right must not be con(cid:415) ngent on future events and must be
enforceable in the normal course of business and in the event of default,
insolvency or bankruptcy of the company or the counterparty.
N. Provisions
Provisions are recognised when the Company has a present obliga(cid:415) on
(legal or construc(cid:415) ve) as a result of a past event, it is probable that the
Company will be required to se(cid:425) le the obliga(cid:415) on, and a reliable es(cid:415) mate
can be made of the amount of the obliga(cid:415) on. The amount recognised as
a provision is the best es(cid:415) mate of the considera(cid:415) on required to se(cid:425) le
the present obliga(cid:415) on at repor(cid:415) ng date, taking into account the risks and
uncertain(cid:415) es surrounding the obliga(cid:415) on. Where a provision is measured
using the cash fl ows es(cid:415) mated to se(cid:425) le the present obliga(cid:415) on, its carrying
amount is the present value of those cash fl ows.
When some or all of the economic benefi ts required to se(cid:425) le a provision are
expected to be recovered from a third party, the receivable is recognised
as an asset if it is virtually certain that reimbursement will be received and
the amount of the receivable can be measured reliably.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
O. Employee benefi ts
A liability is required for benefi ts accruing to employees in respect of
wages and salaries, annual leave, and long service leave when it is probable
that se(cid:425) lement will be required and they are capable of being measured
reliably.
Liabili(cid:415) es recognised in respect of employee benefi ts expected to be
se(cid:425) led within 12 months, are measured at their nominal values using the
remunera(cid:415) on rate expected to apply at the (cid:415) me of se(cid:425) lement.
Liabili(cid:415) es recognised in respect of employee benefi ts which are not
expected to be se(cid:425) led within 12 months are measured as the present value
of the es(cid:415) mated future cash ou(cid:414) lows to be made by the consolidated
en(cid:415) ty in respect of services provided by employees up to repor(cid:415) ng date.
Post - employment benefi ts - defi ned contribu(cid:415) on plans
A defi ned contribu(cid:415) on plan is a pension plan under which the Bank
and the Group pays fi xed contribu(cid:415) ons into a separate fund, and there
is no recourse to the Bank and the Group for employees if the fund has
insuffi cient assets to pay employee benefi ts rela(cid:415) ng to service up to the
balance sheet date.
The Bank and the Group pays contribu(cid:415) ons to publicly or privately
administered superannua(cid:415) on plans on a mandatory, contractual or
voluntary basis in respect of services rendered up to balance sheet date
by all staff members other than non-ci(cid:415) zen contract staff for whom there
is no legal obliga(cid:415) on to do so. The contribu(cid:415) ons are at the current rate of
employees’ gross salary. Once the contribu(cid:415) ons have been paid, the Bank
and the Group have no further payment obliga(cid:415) ons for post-employment
benefi ts from the date an employee ceases employment with the Bank and
the Group.
P. Income tax
Current Tax
Current tax is calculated by reference to the amount of income taxes
payable or recoverable in respect of the taxable profi t or tax loss for the
period. It is calculated using tax rates and tax laws that have been enacted
or substan(cid:415) vely enacted by the repor(cid:415) ng date. Current tax for current and
prior periods is recognised as a liability (or asset) to the extent that it is
unpaid (or refundable).
Deferred tax
Deferred tax is accounted for using the balance sheet liability method.
Temporary diff erences are diff erences between the tax base of an asset
or liability and its carrying amount in the statement of fi nancial posi(cid:415) on.
The tax base of an asset or liability is the amount a(cid:425) ributed to that asset or
liability for tax purposes.
In principle, deferred tax liabili(cid:415) es are recognised for all taxable temporary
diff erences. Deferred tax assets are recognised to the extent that it is
probable that suffi cient taxable amounts will be available against which
deduc(cid:415) ble temporary diff erences or unused tax losses and tax off sets can
be u(cid:415) lised. However, deferred tax assets and liabili(cid:415) es are not recognised
if the temporary diff erences giving rise to them arise from the ini(cid:415) al
recogni(cid:415) on of assets and liabili(cid:415) es which aff ects neither taxable income
nor accoun(cid:415) ng profi t.
Deferred tax assets and liabili(cid:415) es are measured at the tax rates that are
expected to apply to the period(s) when the asset and liability giving rise to
them are realised or se(cid:425) led, based on tax rates (and tax laws) that have been
enacted or substan(cid:415) vely enacted by the repor(cid:415) ng date. The measurement
of deferred tax liabili(cid:415) es and assets refl ects the tax consequences that
would follow from the manner in which the Bank expects, at the repor(cid:415) ng
date, to recover or se(cid:425) le the carrying amount of its assets and liabili(cid:415) es.
Deferred tax assets and liabili(cid:415) es are off set when they relate to income
taxes levied by the same taxa(cid:415) on authority and the Bank intends to se(cid:425) le
its current tax assets and liabili(cid:415) es on a net basis.
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
51
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the
statement of comprehensive income, except when it relates to items
credited or debited directly to equity, in which case the deferred tax is also
recognised directly in equity.
Q. Foreign currency
The consolidated fi nancial statements of the Bank are presented in
the currency of the primary economic environment in which the en(cid:415) ty
operates (its func(cid:415) onal currency). For the purpose of these consolidated
fi nancial statements, the results and fi nancial posi(cid:415) on of the Bank are
expressed in Papua New Guinea kina, which is the Bank’s func(cid:415) onal and
presenta(cid:415) on currency.
In preparing the consolidated fi nancial statements, transac(cid:415) ons
in
currencies other than the en(cid:415) ty’s func(cid:415) onal currency (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the
transac(cid:415) ons. At each balance sheet date, monetary items denominated
in foreign currencies are retranslated at the rates prevailing at the
balance sheet date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing
on the date when the fair value was determined. Non-monetary items
that are measured in terms of historical cost in a foreign currency are not
retranslated.
Foreign opera(cid:415) ons
On consolida(cid:415) on, the assets and liabili(cid:415) es of the consolidated en(cid:415) ty’s
overseas opera(cid:415) ons are translated at exchange rates prevailing at the
repor(cid:415) ng date. Income and expense items are translated at the average
exchange rates for the period unless exchange rates fl uctuate signifi cantly.
Exchange diff erences arising, if any, are recognised in the foreign currency
transla(cid:415) on reserve, and recognised in profi t or loss on disposal of the
foreign opera(cid:415) on.
been adjusted.
Y. Compara(cid:415) ves
If the recoverable amount of an asset (or cash-genera(cid:415) ng unit) is es(cid:415) mated
to be less than its carrying amount, the carrying amount of the asset (cash-
genera(cid:415) ng unit) is reduced to its recoverable amount. An impairment
loss is recognised in profi t or loss immediately, unless the relevant asset
is carried at fair value, in which case the impairment loss is treated as a
revalua(cid:415) on decrease.
Where an impairment loss subsequently reverses, the carrying amount
of the asset (cash-genera(cid:415) ng unit) is increased to the revised es(cid:415) mate
of its recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the asset
(cash-genera(cid:415) ng unit) in prior years. A reversal of an impairment loss is
recognised in profi t or loss immediately, unless the relevant asset is carried
at fair value, in which case the reversal of the impairment loss is treated as
a revalua(cid:415) on increase.
T. Non-current assets held for sale
Non-current assets (and disposal groups) classifi ed as held for sale are
measured, with certain excep(cid:415) ons, at the lower of carrying amount and
fair value less costs to sell.
Non-current assets and disposal groups are classifi ed as held for sale if their
carrying amount will be recovered principally through a sale transac(cid:415) on
rather than through con(cid:415) nuing use. This condi(cid:415) on is regarded as met only
when the asset (or disposal group) is available for immediate sale in its
present condi(cid:415) on subject only to terms that are usual and customary for
such a sale and the sale is highly probable. The sale of the asset (or disposal
group) must be expected to be completed within one year from the date of
classifi ca(cid:415) on, except in the circumstances where sale is delayed by events
or circumstances outside the Company’s control and the Company remains
commi(cid:425) ed to a sale.
Compara(cid:415) ve fi gures have been adjusted to conform to changes in
presenta(cid:415) on in the current year.
Z. Cri(cid:415) cal accoun(cid:415) ng es(cid:415) mates and judgments
The applica(cid:415) on of the Group’s accoun(cid:415) ng policies requires the use of
es(cid:415) mates and assump(cid:415) ons. If diff erent assump(cid:415) ons or es(cid:415) mates were
applied, the resul(cid:415) ng values would change, impac(cid:415) ng the net assets and
income of the Group.
Individually assessed provisions
Provisions for impairment of fi nancial assets are raised where there is
objec(cid:415) ve evidence of impairment at an individual or collec(cid:415) ve basis, at
an amount adequate to cover assessed credit related losses. Credit losses
arise primarily from loans, but also from other credit instruments such as
bank acceptances, con(cid:415) ngent liabili(cid:415) es, guarantees and other fi nancial
instruments.
Specifi c provisions
Individually assessed provisions are raised where there is objec(cid:415) ve
evidence of impairment (where the Group does not expect to receive all
of the cash fl ows contractually due). Individually assessed provisions are
made against individual risk rated credit facili(cid:415) es other than retail personal
loans. The provisions are established based primarily on es(cid:415) mates of the
realisable (fair) value of collateral taken and are measured as the diff erence
between a fi nancial asset’s carrying amount and the present value of the
expected future cash fl ows (excluding future credit losses that have not
been incurred), discounted at the fi nancial asset’s original eff ec(cid:415) ve interest
rate. Short term balances are not discounted.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
Collec(cid:415) ve assessed provisions
All other loans and receivables that do not have specifi cally assessed
provision are assessed collec(cid:415) vely for impairment (Collec(cid:415) vely Assessed
Provision).
The collec(cid:415) vely assessed provision is maintained to reduce the carrying
amount of por(cid:414) olios of similar loans and receivables to their es(cid:415) mated
recoverable amounts at the Balance Sheet date. The Group has established
a risk grading system which groups loan accounts with similar risk
characteris(cid:415) cs. A periodic credit review is undertaken by management
on a collec(cid:415) ve and individual basis to ascertain whether the risk grades
are s(cid:415) ll appropriate in considera(cid:415) on of economic developments, industry
specifi c and borrower specifi c circumstances. A provision rate applied for
each risk grade segment which takes into account the frequency of default
and loss given default rates for the par(cid:415) cular segment.
The risk grading and provision rates require a series of es(cid:415) mates and
judgments. Changes in these es(cid:415) mates could have a direct impact on
the level of provision determined. The amount required to bring the
collec(cid:415) ve provision to the level assessed is recognised in the statement of
comprehensive income.
Individually and collec(cid:415) vely assessed provisions are detailed in Note 13.
R. Share capital
U. Fiji class shares
Share issue costs
External costs directly a(cid:425) ributable to the issue of new shares are deducted
from equity net of any related income taxes.
Fiji Class Shares issued by BSP Conver(cid:415) ble Notes (Fiji) Limited, a subsidiary
of the Bank incorporated in Fiji, are classifi ed as equity of the subsidiary.
Dividends on ordinary shares
Dividends on ordinary shares are recognised in equity in the period in
which they are declared.
Dividends for the year, declared a(cid:332) er the balance sheet date, are dealt with
in the subsequent events note.
S. Asset impairment
At each repor(cid:415) ng date, the Bank and the Group reviews the carrying
amounts of its tangible and intangible assets to determine whether there
is any indica(cid:415) on that those assets have suff ered an impairment loss. If any
such indica(cid:415) on exists, the recoverable amount of the asset is es(cid:415) mated in
order to determine the extent of the impairment loss (if any). Where the
asset does not generate cash fl ows that are independent from other assets,
the Bank and the Group es(cid:415) mates the recoverable amount of the cash-
genera(cid:415) ng unit to which the asset belongs.
Goodwill, intangible assets with indefi nite useful lives and intangible assets
not yet available for use are tested for impairment annually and whenever
there is an indica(cid:415) on that the asset may be impaired. An impairment of
goodwill is not subsequently reversed.
Recoverable amount is the higher of fair value less cost of disposal and
value in use. In assessing value in use, the es(cid:415) mated future cash fl ows are
discounted to their present value using a pre-tax discount rate that refl ects
current market assessments of the (cid:415) me value of money and the risks
specifi c to the asset for which the es(cid:415) mates of future cash fl ows have not
52
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
V. Deriva(cid:415) ve fi nancial instruments and acceptances
Forward foreign exchange contracts entered into for trading purposes are
ini(cid:415) ally recognised at cost and subsequently re-measured at fair value
based upon the forward rate. Gains and losses on such contracts are taken
to the statement of comprehensive income.
Acceptances comprise undertakings by the Bank and the Group to pay bills
of exchange drawn on customers. The Bank and the Group expects most
acceptances to be se(cid:425) led simultaneously with the reimbursement from the
customers. Customer acceptances are accounted for as off -balance sheet
transac(cid:415) ons and are disclosed as con(cid:415) ngent liabili(cid:415) es and commitments.
The Bank and the Group does not ac(cid:415) vely enter into or trade in complex
forms of deriva(cid:415) ve fi nancial instruments such as currency and interest rate
swaps and op(cid:415) ons.
W. Segment repor(cid:415) ng
Segments are reported in a manner consistent with the internal repor(cid:415) ng
provided to the Group’s chief opera(cid:415) ng decision maker.
X. Earnings per share
Earnings per share is determined by dividing the profi t or loss a(cid:425) ributable
to owners of the Bank by the weighted average number of par(cid:415) cipa(cid:415) ng
shares outstanding during the repor(cid:415) ng year.
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
53
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
2. NET INTEREST INCOME
All amounts are expressed in K’000
Interest income
Cash and balances with Central Bank
Treasury bills
Central Bank Bills
Other fi nancial assets - Inscribed Stock
Loans, advances and other receivables from customers
Other
Less:
Interest expense
Customer deposits
Other banks
Subordinated debt securi(cid:415) es
Consolidated
Bank
2015
2014
2015
2014
All amounts are expressed in K’000
5. OPERATING EXPENSES
9,069
88,366
8,269
210,270
782,619
2,273
1,100,866
73,660
12,647
8,308
94,615
1,006,251
10,867
67,392
18,544
189,229
658,807
2,501
947,340
39,420
14,851
8,308
62,579
884,761
9,954
88,366
8,269
210,270
763,984
2,438
1,083,281
72,650
12,140
8,308
93,098
990,183
10,867
67,392
18,544
189,229
658,776
2,501
947,309
40,481
14,851
8,308
63,640
883,669
Administra(cid:415) on
Compu(cid:415) ng
Deprecia(cid:415) on
Amor(cid:415) sa(cid:415) on of computer development
Non-execu(cid:415) ve Directors costs
Non-lending losses
Fixed asset impairment expenses
Premises and equipment
Staff costs
Defi ned contribu(cid:415) on plans
Statutory benefi t contribu(cid:415) ons
Wages and salaries
Other staff benefi ts
6. INCOME TAX
Income tax expense
Current tax
Deferred tax
Current year
Income tax under provided
Loan origina(cid:415) on fees recognised in the Statement of Comprehensive Income in accordance with the Group’s accoun(cid:415) ng policy detailed in Note 1(e) have
now been classifi ed under ‘net interest income’ as required by IFRS. Compara(cid:415) ve fi gures have been adjusted to conform to changes in presenta(cid:415) on in
the current year.
3. FEE AND COMMISSION INCOME
Fee and commission income
Product related
Trade and interna(cid:415) onal related
Electronic banking related
Other
Less:
Fee and commission expenses
Agencies
Interna(cid:415) onal Finance Corpora(cid:415) on fees
4. OTHER INCOME
Foreign exchange related
Opera(cid:415) ng lease rentals
Other
186,258
186,356
14,377
87,813
25,483
14,675
84,765
26,876
313,931
312,672
532
2,931
3,463
735
6,906
7,641
184,445
14,373
86,213
19,506
304,537
374
2,931
3,305
186,356
14,675
84,765
18,618
304,414
735
6,906
7,641
310,468
305,031
301,232
296,773
178,943
10,104
20,128
209,175
267,497
10,146
15,612
293,255
170,839
10,104
19,482
200,425
267,497
10,146
34,834
312,477
Foreign Exchange related income includes gains and losses from spot and forward contracts and translated foreign currency assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
Consolidated
Bank
2015
126,095
48,307
70,007
44,713
2,249
17,496
44,666
62,857
2014
111,893
46,407
76,707
46,116
1,772
25,891
50,397
65,916
2015
108,591
47,307
67,607
44,224
1,713
28,328
44,666
60,656
2014
104,001
46,403
76,707
46,116
1,445
25,056
50,397
65,829
416,390
425,099
403,092
415,954
11,463
(676)
209,189
54,718
274,694
691,084
260,995
(35,712)
225,283
8,988
234,271
10,262
7,577
202,691
57,456
277,986
703,085
247,754
(40,082)
207,672
3,839
211,511
11,079
(784)
199,766
52,826
262,887
665,979
257,544
(43,738)
213,806
8,581
222,387
10,262
7,577
202,691
57,187
277,717
693,671
244,991
(40,092)
204,899
4,661
209,560
Tax calculated at 30% of profi t before tax (2014:30%)
218,441
216,736
218,441
216,736
Tax calculated at respec(cid:415) ve subsidiary tax rates
Expenses not deduc(cid:415) ble for tax
Tax loss not recognised
Deduc(cid:415) ble expenses not recognised for accoun(cid:415) ng purposes
Income tax under provided
Provision for income tax
At 1 January
Income tax provision
Income tax under/over provided
Foreign tax paid
Tax payments made
At 31 December
6,510
5,175
2,617
(7,460)
8,988
234,271
(63,022)
(260,995)
2,228
35,198
247,586
(39,005)
3,355
477
1,347
(14,243)
3,839
211,511
(33,395)
(247,754)
5,257
12,130
200,740
(63,022)
-
2,825
-
(7,460)
8,581
222,387
(62,738)
(257,544)
1,277
33,627
249,210
(36,168)
-
2,406
-
(14,243)
4,661
209,560
(33,222)
(244,991)
2,919
11,816
200,740
(62,738)
54
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
55
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
6. INCOME TAX (con(cid:415) nued)
7. INTANGIBLE ASSETS
All amounts are expressed in K’000
2015
2014
2015
2014
All amounts are expressed in K’000
2015
2014
2015
2014
Consolidated
Bank
Consolidated
Bank
Deferred taxes
Specifi c allowance for losses on loans, advances and other receivables
from customers
General allowance for losses on loans, advances and other receivables
from customers
32,603
11,173
32,118
11,173
95,541
86,953
92,262
86,953
Employee related provisions
Prepaid expenses
Other provisions
Property, plant and equipment
Unrealised foreign exchange gains
Accruals
At 31 December
Represented by:
Deferred tax asset
Deferred tax liability
At 31 December
Deferred taxes movement
At 1 January
Current year movement
Revalua(cid:415) on recognised in equity
Income tax under/over provided
Other movements
At 31 December
17,955
(1,396)
14,028
(32,676)
(3,626)
24,960
147,389
199,444
(52,055)
147,389
111,677
35,712
4,441
(2,999)
(1,442)
147,389
19,350
(1,253)
22,711
(44,469)
(908)
18,120
111,677
161,926
(50,249)
111,677
87,002
40,082
(11,048)
-
(4,359)
111,677
16,378
(1,396)
25,502
(31,240)
(3,626)
29,292
159,290
195,553
(36,263)
159,290
115,552
43,738
4,441
(2,999)
(1,442)
159,290
19,267
(1,253)
26,191
(43,991)
(908)
18,120
115,552
161,703
(46,151)
115,552
88,453
40,092
(11,048)
-
(1,945)
115,552
7(a) Goodwill
At 1 January
Net movement
Gross carrying amount
7(b) Computer development costs
At 1 January
Addi(cid:415) ons
Disposals
Amor(cid:415) sa(cid:415) on expense
At 31 December
Total intangible assets
8. INVESTMENTS IN SUBSIDIARIES
All amounts are expressed in K’000
Name of Subsidiary
BSP Capital Limited
BSP Life Limited
BSP Conver(cid:415) ble Notes Limited
BSP Finance Limited
Bank of South Pacifi c Tonga Ltd
Bank South Pacifi c (Samoa) Ltd
At 31 December
21,271
21,103
42,374
89,103
34,511
(11,049)
(44,713)
67,852
110,226
21,271
-
21,271
133,198
20,368
(18,347)
(46,116)
89,103
110,374
18,267
17,405
35,672
85,943
33,257
(11,047)
(44,224)
63,929
99,601
18,267
-
18,267
133,198
18,788
(19,927)
(46,116)
85,943
104,210
Principal
ac(cid:415) vity
Place of
Incorpora(cid:415) on &
Opera(cid:415) on
Ownership
%
Share brokerage/Fund Management/
Capital Raising
Life Insurance
Capital Rising
Credit Ins(cid:415) tu(cid:415) on
Bank
Bank
PNG
100%
Fiji
Fiji
PNG
Tonga
100%
100%
100%
100%
Samoa
98.7%
Balance of Investment
2015
2,000
2014
8,959
87,599
87,653
371
27,958
71,610
70,331
317
11,706
-
-
259,869
108,635
During the year the Bank acquired two subsidiaries as part of its acquisi(cid:415) on of interests in regional banks (refer to note 40).
Provision of impairment of the investment in BSP Capital Limited
The directors determined that the investment in BSP Capital Limited had been materially impaired as the carrying amount of the investment was
greater than its net book value. As of the repor(cid:415) ng date, the investment amount is wri(cid:425) en down to its net book value.
Represented by:
All amounts are expressed in K’000
Opening Balance
Addi(cid:415) onal capital
Provision for Impairment
At 31 December
2015
8,959
4,109
(11,068)
2014
8,959
-
-
2,000
8,959
56
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
9. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
11. TREASURY AND CENTRAL BANK BILLS
En(cid:415) ty
Joint
Venture/
Associate
Principal ac(cid:415) vity
Place of
incorpora(cid:415) on
and opera(cid:415) on
Suva Central Ltd
Richmond Ltd
Joint Venture
Property rental
Joint Venture
Hotel opera(cid:415) on
Williams and Gosling Ltd
Associate
Freight forwarding
Carpark Ltd
Malagan Ltd
Joint Venture
Joint Venture
Property
Property
Fiji
Fiji
Fiji
PNG
PNG
Propor(cid:415) on of ownership and vo(cid:415) ng power held
Consolidated
Bank
2015
50%*
2014
50%*
61.3%**,50%***
61.3%**, 50%***
27.7%*
_
_
27.7%*
33.33%
33.33%
All amounts are expressed in K’000
2015
2014
2015
2014
Treasury and Central Bank bills – face value
2,541,571
2,210,743
2,539,719
2,210,743
Discount for interest receivable
At 31 December
(38,462)
2,503,109
(27,506)
2,183,237
(38,463)
2,501,256
(27,506)
2,183,237
Treasury and Central Bank bills are debt securi(cid:415) es issued by Central Banks. These bills are classifi ed as assets held for trading and carried at fair value by
the Insurance business and assets held to maturity by the Banking businesses.
The investments above are accounted for using the equity method in the consolidated fi nancial statements except for Carpark Ltd and Malagan Ltd
which are accounted for at cost less impairment. Carpark Ltd and Malagan Ltd interests were disposed of during the year.
12. AMOUNTS DUE FROM OTHER BANKS
*Both ownership and vo(cid:415) ng power held, **ownership, ***vo(cid:415) ng power held.
All amounts are expressed in K’000
2015
2014
2015
2014
Consolidated
Bank
Items in the course of collec(cid:415) on
Placements with other banks
At 31 December
80,076
615,204
695,280
85,803
294,850
380,653
80,077
492,323
572,400
85,803
294,850
380,653
Associates
Investment in associate - equity
Transla(cid:415) on movement
Share of profi t for the year
Net investment at 31 December
Summarised fi nancial informa(cid:415) on of associate:
Total assets
Total liabili(cid:415) es
Net assets
Net profi t
Share of associate’s profi t
Joint Ventures & Associates
Share of associate’s net assets - equity
Shares held in jointly owned en(cid:415) ty - at cost less impairment
Total investments in associates and joint ventures
10. CASH AND BALANCES WITH CENTRAL BANK
Notes, coins and cash at bank
Balances with Central Bank other than statutory deposit
Total cash and balances with Central Bank
79,718
6,553
1,598
87,869
147,013
(41,380)
105,633
10,341
1,598
87,869
29,447
117,316
72,900
(3,415)
10,233
79,718
180,637
(34,705)
145,932
17,085
10,233
79,718
38,671
118,389
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13. LOANS, ADVANCES AND OTHER RECEIVABLES FROM CUSTOMERS
Overdra(cid:332) s
Lease fi nancing
Term loans
Mortgages
Policy loans
Gross loans, advance and other receivables due from customers net of
reserved interest
Less allowance for losses on loans, advances and other receivables from
customers
583,436
792,580
557,746
792,580
245,153
7,059,098
273,194
4,821,727
230,487
6,710,903
273,194
4,792,132
1,137,938
1,157,855
1,110,619
1,157,328
42,761
39,678
-
-
9,068,386
7,085,034
8,609,755
7,015,234
(446,872)
(328,037)
(428,528)
(327,087)
At 31 December
8,621,514
6,756,997
8,181,227
6,688,147
29,447
29,447
38,520
38,520
The spread of the loans are detailed in the maturity analysis table on Note 34. The loans are diversifi ed across various sectors and are further analysed
on Note 33.
Lease fi nancing
The Group and the bank provide lease fi nancing to a broad range of clients to support fi nancing needs in acquiring movable assets such as motor vehicles
and plant and equipment. Finance lease receivables are included within loans, advances and other receivables from customers and are analysed as
follows:
468,712
733,754
479,818
875,651
1,202,466
1,355,469
403,269
386,655
607,587
1,010,856
875,651
1,262,306
58
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
13. LOANS, ADVANCES AND OTHER RECEIVABLES FROM CUSTOMERS (cid:904)con(cid:415) nued(cid:905)
14. PROPERTY, PLANT AND EQUIPMENT
All amounts are expressed in K’000
2015
2014
2015
2014
All amounts are expressed in K’000
2015
2014
2015
2014
Consolidated
Bank
Consolidated
Bank
Gross investment in fi nance lease receivable
Not later than 1 year
Later than 1 year and not later than 5 years
Unearned future fi nance income
Not later than 1 year
Later than 1 year and not later than 5 years
Present value of minimum lease payment receivable
Present value of minimum lease payment receivable is analysed
as follows:
Not later than 1 year
Later than 1 year and not later than 5 years
At 31 December
Provision for impairment
Movement in allowance for losses on loans, advances and other
receivables from customers:
Balance at 1 January
Net new and increase provisioning
Loans wri(cid:425) en off against provisions/(Write back of provisions no
longer required)
56,733
215,911
272,644
(4,963)
(22,528)
(27,491)
245,153
51,770
193,383
245,153
20,523
282,168
302,691
(14,291)
(15,206)
(29,497)
273,194
20,523
252,671
273,194
49,816
201,049
250,865
(1,803)
(18,575)
(20,378)
230,487
48,013
182,474
230,487
20,523
282,168
302,691
(14,291)
(15,206)
(29,497)
273,194
20,523
252,671
273,194
328,037
74,410
44,425
277,081
62,096
(11,140)
327,087
71,201
30,240
275,788
62,096
(10,797)
At 31 December
446,872
328,037
428,528
327,087
Provision for impairment is represented by:
Collec(cid:415) ve provision
Individually assessed or specifi c provision
At 31 December
Loan impairment expense
Net collec(cid:415) ve provision funding
Net new and increase individually assessed provisioning
Total new and increase provisioning
Recoveries during the year
Net write back/(write off )
At 31 December
329,641
117,231
446,872
(51,406)
(23,004)
(74,410)
60,155
(75,650)
(89,905)
290,200
37,837
328,037
(50,812)
(11,284)
(62,096)
33,204
(47,904)
(76,796)
321,468
107,060
428,528
(48,656)
(22,545)
(71,201)
59,713
(75,169)
(86,657)
289,845
37,242
327,087
(50,812)
(11,284)
(62,096)
33,204
(47,904)
(76,796)
Carrying value
Capital work in progress
Premises
Accumulated deprecia(cid:415) on
Equipment
Accumulated deprecia(cid:415) on
At 31 December
Assets held for sale (premises)
Net assets at 31 December
158,621
578,832
(109,247)
469,585
281,633
(188,379)
93,254
721,460
(35,135)
686,325
Reconcilia(cid:415) on of carrying value of property, plant & equipment is set out below:
Capital work in progress
At 1 January
Addi(cid:415) ons
Transfers
At 31 December
Premises
At 1 January
Addi(cid:415) ons
Disposals
Deprecia(cid:415) on expense
Revalua(cid:415) on gains/ (losses)
At 31 December
Equipment
At 1 January
Addi(cid:415) ons
Disposals
Deprecia(cid:415) on expense
At 31 December
180,694
127,472
(149,545)
158,621
453,677
77,426
(41,383)
(27,535)
7,400
469,585
92,994
50,174
(10,928)
(38,986)
93,254
180,694
546,600
(92,923)
453,677
256,832
151,589
527,023
(104,351)
422,672
209,931
176,719
522,769
(85,812)
436,957
221,749
(163,838)
(151,684)
(140,691)
92,994
727,365
(65,052)
662,313
117,253
172,826
(109,385)
180,694
385,195
90,108
(35,573)
(22,882)
36,829
453,677
120,912
29,192
(6,983)
(50,127)
92,994
58,247
632,508
(35,135)
597,373
176,719
112,205
(137,335)
151,589
436,957
66,934
(41,383)
(26,330)
(13,506)
422,672
81,058
21,672
(10,928)
(33,555)
58,247
81,058
694,734
(65,052)
629,682
113,744
169,297
(106,322)
176,719
368,091
89,860
(35,573)
(22,250)
36,829
436,957
107,788
26,097
(6,092)
(46,735)
81,058
60
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
14. PROPERTY, PLANT AND EQUIPMENT (cid:904)con(cid:415) nued(cid:905)
15. INVESTMENT PROPERTIES
Consolidated
Bank
Consolidated
Bank
2015
2014
2015
2014
All amounts are expressed in K’000
All amounts are expressed in K’000
Assets subject to opera(cid:415) ng lease
Carrying value
Aircra(cid:332)
Accumulated deprecia(cid:415) on
At 31 December
Reconcilia(cid:415) on of carrying value of aircra(cid:332) is set out below:
Aircra(cid:332)
At 1 January
Deprecia(cid:415) on
Revalua(cid:415) on net increase
At 31 December
Future minimum lease receipts
Not later than 1 year
Later than 1 year and not later than 5 years
At 31 December
130,122
(77,265)
52,857
123,326
(69,543)
53,783
130,122
(77,265)
52,857
123,326
(69,543)
53,783
53,783
(7,722)
6,796
52,857
10,104
5,219
15,323
61,505
(7,722)
-
53,783
10,104
15,323
25,427
53,783
(7,722)
6,796
52,857
10,104
5,219
15,323
25,987
128,935
21,834
176,756
61,505
(7,722)
-
53,783
10,104
15,323
25,427
24,301
108,844
26,396
159,541
The carrying amount of land and buildings and aircra(cid:332) had they been recognised under the cost model are as follows:
Freehold land
Buildings
Aircra(cid:332)
At 31 December
25,987
132,727
21,834
180,548
24,301
108,844
26,396
159,541
Freehold land and buildings carried at fair value
Independent valua(cid:415) ons of the Bank’s land and buildings were performed by Countrywide Realty Limited and The Professional Valuers of PNG Limited to
determine the fair value of the land and buildings. The valua(cid:415) ons, which conform to Interna(cid:415) onal Valua(cid:415) on Standards, were determined by reference to
capitalisa(cid:415) on of the no(cid:415) onal income stream approach on the Market Value basis. The most recent valua(cid:415) on was dated 31 December 2014.
Assets subject to opera(cid:415) ng lease – aircra(cid:332)
An independent valua(cid:415) on of the Bank’s aircra(cid:332) s was performed by Ascend Advisors to determine the current realis(cid:415) c fair value for each of the aircra(cid:332) .
The valua(cid:415) on, which conforms to Interna(cid:415) onal Valua(cid:415) on Standards, takes into considera(cid:415) on the current global market varia(cid:415) ons for the specifi c types
of aircra(cid:332) s. The eff ec(cid:415) ve date of the valua(cid:415) on was 31 March 2014 and was extrapolated to 31 December 2015 based on expected fair values per the
aircra(cid:332) lease contracts.
Opening net book value
Addi(cid:415) ons
Transla(cid:415) on movement
Gain on revalua(cid:415) on
At 31 December
16. OTHER FINANCIAL ASSETS
Securi(cid:415) es – held to-maturity:
2015
70,684
10,325
5,736
14,274
101,019
2014
65,429
4,856
(3,053)
3,452
70,684
2015
2014
-
-
-
-
-
-
-
-
Inscribed stock – issued by Central Bank
2,227,847
2,297,935
2,074,124
2,188,067
Financial assets carried at fair value through profi t and loss:
Equity securi(cid:415) es
At 31 December
17. OTHER ASSETS
Funds in transit and other assets
Accrued interest income
Intercompany account
Outstanding premiums
Inventory
Prepayments
Accounts receivable
At 31 December
18. AMOUNTS DUE TO OTHER BANKS
Vostro account balances
Other borrowings
At 31 December
19. CUSTOMER DEPOSITS
On demand and short term deposits
Term deposits
At 31 December
81,079
2,308,926
63,714
-
-
2,361,649
2,074,124
2,188,067
115,258
83,814
-
30,831
6,896
15,311
3,025
208,069
78,311
-
21,447
6,830
12,224
7,767
255,135
334,648
39,185
305,161
344,346
201,192
58,700
259,892
107,147
78,763
4,614
-
-
14,706
1,328
206,558
38,789
306,088
344,877
187,035
78,311
6,478
-
-
12,224
1,045
285,093
201,179
58,700
259,879
11,589,377
3,005,997
14,595,374
10,725,060
11,390,548
10,765,038
1,983,323
2,857,748
2,039,517
12,708,383
14,248,296
12,804,555
The majority of the amounts are due to be se(cid:425) led within twelve months of the balance sheet date as shown in the maturity analysis table on note 34.
The deposits are diversifi ed across industries and region.
62
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
20. SUBORDINATED DEBT SECURITIES
At 31 December, there is K75.525 million of debt securi(cid:415) es outstanding, expected to be se(cid:425) led more than 12 months a(cid:332) er the balance sheet date. The
notes were issued during 2009, with a maturity date in 2019, and interest is payable semi-annually at 11% per annum. They are valued at amor(cid:415) sed cost.
There have been no defaults of interest or other breaches with respect to these debt securi(cid:415) es since issue.
21. OTHER LIABILITIES
All amounts are expressed in K’000 Note
Creditors and accruals
Items in transit and all other liabili(cid:415) es
Policy liabili(cid:415) es 39(b)
Premiums received in advance
Outstanding claims
Claims incurred but not reported (IBNR)
At 31 December
22. OTHER PROVISIONS
Staff related
Provision for non-lending loss
Provisions – other
At 31 December
Staff related provisions movement:
At 1 January
Provisions charge
Payouts
At 31 December
Consolidated
Bank
2015
115,785
269,958
563,441
5,969
12,462
1,564
969,179
62,205
47,762
33,731
143,698
67,665
34,969
(40,429)
62,205
2014
94,804
175,849
473,753
293
10,534
1,315
756,548
67,665
41,691
43,588
2015
95,900
257,352
-
-
-
-
2014
66,925
190,749
-
-
-
-
353,252
257,674
55,274
47,743
29,518
62,547
41,666
43,587
152,944
132,535
147,800
62,191
36,203
(30,729)
67,665
62,547
30,535
(37,808)
55,274
57,170
36,106
(30,729)
62,547
23. ORDINARY SHARES
Number of shares in '000s, Book value in K'000
At 31 December 2013/1 January 2014
Share buyback
At 31 December 2014/1 January 2015
Share buyback
At 31 December 2015
Number of shares
Book value
468,429
(292)
468,137
(612)
467,525
381,498
(2,201)
379,297
(4,676)
374,621
In May 2014, the Directors agreed to introduce a share-buyback scheme of up to K15 million. The share-buyback commenced in July 2014 and was
extended to such (cid:415) me when the allocated K15 million buyback was u(cid:415) lised, or if the Board wishes, any(cid:415) me before that.
All amounts are expressed in K’000
Earnings per ordinary share
Consolidated
Bank
2015
2014
2015
2014
Net profi t a(cid:425) ributable to shareholders (K’000)
Weighted average number of ordinary shares in use (‘000)
531,879
467,831
507,339
468,278
505,749
467,831
512,892
468,278
Basic and diluted earnings per share (expressed in toea)
113.7
108.3
108.1
109.5
Basic earnings per ordinary share is calculated by dividing the net profi t a(cid:425) ributable to shareholders by the weighted average number of ordinary
shares in issue during the year. Bank of South Pacifi c Limited has no dilu(cid:415) ve poten(cid:415) al ordinary shares. Consequently, basic earnings per ordinary share
equals diluted earnings per share.
Dividend paid on ordinary shares
Interim ordinary dividend (2015: 22.5 toea; 2014: 20 toea)
Final ordinary dividend (2014: 56 toea; 2013: 46 toea)
105,938
263,872
369,810
93,665
215,476
309,141
105,218
262,021
367,239
93,665
215,476
309,141
64
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
65
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
24. RETAINED EARNINGS AND OTHER RESERVES
24. RETAINED EARNINGS AND RESERVES (con(cid:415) nued)
All amounts are expressed in K’000
2015
2014
2015
2014
All amounts are expressed in K’000
2015
2014
2015
2014
Consolidated
Bank
Consolidated
Bank
Retained earnings
At 1 January
Net profi t for the year
Dividend paid
Disposal of assets – Asset revalua(cid:415) on
Prior year consolida(cid:415) on adjustment
BSP Life policy reserve
At 31 December
Other reserves comprise:
Revalua(cid:415) on reserve
Capital reserve
Equity component of Fiji Class Shares
General reserve
Exchange reserve
At 31 December
Movement in reserves for the year:
Revalua(cid:415) on reserve
At 1 January
Asset revalua(cid:415) on increment
Transfer assets revalua(cid:415) on reserve to retained earnings
Deferred tax on disposal of proper(cid:415) es
Deferred tax on asset revalua(cid:415) on – prior year
Deferred tax on asset revalua(cid:415) on – current year
At 31 December
Capital reserve
At 1 January
At 31 December
General reserve
At 1 January
BSP Life policy reserve
At 31 December
1,219,436
531,879
(369,810)
22,103
-
(4,118)
1,399,490
1,035,290
507,339
(309,141)
12,441
(2,438)
(24,055)
1,219,436
1,183,505
505,749
(367,239)
22,103
-
991,368
512,892
(309,141)
12,441
-
(4,118)
(24,055)
1,340,000
1,183,505
166,878
166,230
163,023
166,230
635
21,578
31,048
34,926
255,065
166,230
21,450
(22,103)
6,631
-
(5,330)
166,878
635
635
26,930
4,118
31,048
635
21,578
26,930
(13,913)
201,460
170,103
44,330
(12,441)
-
(23,051)
(12,711)
166,230
635
635
2,875
24,055
26,930
635
-
31,048
21,663
216,369
166,230
14,304
(22,103)
6,631
-
(2,039)
163,023
635
635
26,930
4,118
31,048
635
-
26,930
(10,249)
183,546
170,103
44,330
(12,441)
-
(23,051)
(12,711)
166,230
635
635
2,875
24,055
26,930
Exchange reserve
At 1 January
Movement during the year
At 31 December
Equity component of conver(cid:415) ble notes
(13,913)
48,839
34,926
10,441
(24,354)
(13,913)
(10,249)
31,912
21,663
7,833
(18,082)
(10,249)
On 20 April 2010, the Group issued 3,064,967 Fiji Dollars (FJD) denominated mandatory conver(cid:415) ble notes through its wholly owned subsidiary BSP
Conver(cid:415) ble Notes Limited (BSP CN) at an issue price of FJD5.25 (K7.30) per note.
The notes mandatorily converted to Fiji Class Shares on 20 April 2013 based on a conversion ra(cid:415) o of 1:1. Key rights of Fiji Class Shareholders are as
follows:
The right to receive dividend equal to the amount of dividend to be paid on BSP Ordinary Share.
(i)
(ii) The same vo(cid:415) ng rights as a BSP Ordinary Share and eff ected through a special vo(cid:415) ng share held by the Chairman of BSP.
(iii) The Fiji Class Share may be exchanged on a one for one basis into BSP Ordinary Shares at a subsequent date and at the op(cid:415) on of BSP
on the occurrence of certain prescribed events.
25. CONTINGENT LIABILITIES AND COMMITMENTS
Off balance sheet fi nancial instruments
Standby le(cid:425) ers of credit
Guarantees and indemni(cid:415) es issued
Trade le(cid:425) ers of credit
Commitments to extend credit
At 31 December
Legal Proceedings
31,164
304,086
46,139
1,224,744
1,606,133
24,797
293,853
20,091
1,009,943
1,348,684
31,164
299,857
45,255
1,223,746
1,600,022
24,797
292,489
20,091
1,008,952
1,346,329
A number of legal proceedings against the Bank and the Group were outstanding as at 31 December 2015. Based on informa(cid:415) on available at 31
December 2015, the Bank and the Group es(cid:415) mates a con(cid:415) ngent liability of K8.9 million (2014: K37.4 million) in respect of these proceedings.
Statutory deposits with the Central Bank
Cash reserve requirement: requisite reserve requirements of
respec(cid:415) ve countries
Commitments for capital expenditure
Amounts with fi rm commitments, and not refl ected in the
accounts
Opera(cid:415) ng lease commitments
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
At 31 December
1,359,606
1,251,582
1,341,650 1,251,582
29,505
74,105
20,631
65,315
22,466
36,421
16,797
75,684
19,918
38,116
15,621
73,655
22,466
36,421
16,797
75,684
19,704
37,486
15,621
72,811
66
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
26. FIDUCIARY ACTIVITIES
27. DIRECTORS AND EXECUTIVE REMUNERATION (con(cid:415) nued)
The Group especially through BSP Capital Limited conducts investment fund management, stock broking and other fi duciary ac(cid:415) vi(cid:415) es as responsible
en(cid:415) ty, trustee, custodian or manager for investment funds and trusts, including superannua(cid:415) on. These funds are not consolidated as the Group does
not have direct or indirect control. Where the funds incurs liabili(cid:415) es in respect of these ac(cid:415) vi(cid:415) es, and the primary obliga(cid:415) on is incurred in an agency
capacity, for the fund or clients rather than its own account, a right of indemnity exists against the assets of the applicable fund or trust. As these assets
are suffi cient to cover the liabili(cid:415) es and it is therefore not probable that the Group will be required to se(cid:425) le the liabili(cid:415) es, the investments in the assets
and liabili(cid:415) es of these ac(cid:415) vi(cid:415) es are not included in the consolidated fi nancial statements.
27. DIRECTORS AND EXECUTIVE REMUNERATION
Directors remunera(cid:415) on
Directors of the company received remunera(cid:415) on including benefi ts during 2015 as detailed below:
All amounts in Kina
Name of Director
Sir K. Constan(cid:415) nou, OBE
T. E. Fox, OBE, BEc
Dr. I. Temu, PhD, MEc
Sir N. Bogan, KBE, LLB
R. Fleming*, CSM, MBA, MMGT
G. Aopi, CBE, MBA
G. Robb, OAM, BA, MBA
F. Talao, LLM, MPHIL
E. B Gangloff , CPA, GAICD
A. Mano, BEc, MSc
Total remunera(cid:415) on
Mee(cid:415) ngs a(cid:425) ended/total held
Appointed/(Resigned)
8/8
7/8
7/8
5/8
8/8
8/8
7/8
8/8
7/8
7/8
-
-
-
-
-
-
-
-
-
29/08/14
2015
293,105
251,351
133,966
139,000
-
147,872
376,039
137,950
142,119
122,855
2014
277,759
243,492
123,904
127,083
-
126,934
363,283
115,121
116,771
26,250
1,744,257
1,664,608
Directors Sir Kostas Constan(cid:415) nou, OBE, Freda Kanek Talao and Geoff rey John Robb re(cid:415) red by rota(cid:415) on in accordance with Clause 15.3 of the Company’s
Cons(cid:415) tu(cid:415) on and being eligible, off ered themselves for re-elec(cid:415) on by the shareholders on 25 May 2015 Annual General Mee(cid:415) ng. Augus(cid:415) ne Mano was
elected by the shareholders at the same Annual Mee(cid:415) ng on 25 May 2015.
Non-execu(cid:415) ve Board Members of the Board - Constan(cid:415) nou, Fox and Robb received an allowance of K60,000 as Directors of BSP Capital Ltd which forms
part of the Group.
*Managing Director/Chief Execu(cid:415) ve Offi cer receives no fees for his services as Director during the year. Other members of BSP execu(cid:415) ve management
who serve as directors of subsidiaries of BSP Group receive no fees for their services as Director.
Execu(cid:415) ve remunera(cid:415) on
The number of employees or former employees whose income from the Bank was equal to or greater than K100,000 during the year, are classifi ed in
income bands of K10,000 as follows:
Remunera(cid:415) on
K’000
100 – 110
110 – 120
120 - 130
130 - 140
140 - 150
150 - 160
160 – 170
170 – 180
180 – 190
190 – 200
200 – 210
210 – 220
220 – 230
230 – 240
240 – 250
250 – 260
260 – 270
270 – 280
280 – 290
290 – 300
300 - 310
310 – 320
320 – 330
330 – 340
340 – 350
350 – 360
360 – 370
2015
No.
36
29
21
17
17
12
7
13
9
3
3
3
4
2
2
5
4
8
8
3
3
3
4
3
3
1
5
2014
Remunera(cid:415) on
No.
35
25
22
25
16
8
9
7
2
2
4
3
4
7
8
5
2
5
8
3
2
5
3
1
1
2
5
K’000
370 – 380
380 - 390
390 - 400
410 - 410
410 - 420
420 - 430
430 – 440
440 – 450
450 – 460
460 – 470
490 – 500
500 – 510
510 – 520
520 – 530
540 – 550
560 – 570
570 - 580
590 - 600
600 – 610
610 - 620
620 – 630
630 – 640
640 – 650
650 – 660
660 – 670
680 - 690
690 - 700
2015
No.
-
3
0
1
-
2
-
2
1
4
-
-
1
2
2
5
1
3
1
3
-
2
1
2
2
3
3
2014
Remunera(cid:415) on
No.
1
-
5
2
2
1
1
2
1
1
-
1
-
-
1
1
1
2
2
2
4
2
2
1
1
3
2
K’000
700 - 710
710 - 720
720 - 730
730 - 740
750 – 760
770 – 780
780 – 790
800 -810
820 – 830
830 – 840
850 – 860
880 – 890
890 – 900
910 – 920
950 - 960
980 - 990
1090 - 1100
1100 – 1100
1170 - 1180
1190 -1200
1230 -1240
1270 - 1280
1630 - 1640
1660 - 1670
1730 - 1740
1840 - 1850
3560 - 3570
2015
No.
2014
No.
2
2
2
1
-
1
-
2
2
-
1
1
-
1
-
1
1
1
1
-
-
-
2
1
1
-
1
-
1
-
3
3
1
8
-
-
2
3
-
1
-
1
-
-
1
1
1
1
1
1
-
-
1
1
Total
296
291
The specifi ed execu(cid:415) ves during the year were:
Robin Fleming, CSM
Johnson Kalo
Aho Baliki, OBE
Robert Loggia
Peter Beswick
Giau Duruba
Haroon Ali
Paul Thornton
Rohan George
Richard Borysiewicz
Edward Ruha
Christophe Michaud
Specifi ed execu(cid:415) ves’ remunera(cid:415) on in aggregate (K’000)
Year
2015
2014
Salary
11,478
11,302
Primary
bonus
Non -
monetary
2,443
3,128
397
207
Super
222
193
Post-employment
prescribed benefi ts
-
-
Other
-
-
Equity
op(cid:415) ons
Other
benefi ts
-
-
375
710
Total
14,915
15,540
68
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
28. RECONCILIATION OF OPERATING CASH FLOW
29. SEGMENT INFORMATION
All amounts are expressed in K’000
2015
2014
2015
2014
Consolidated
Bank
Reconcilia(cid:415) on of opera(cid:415) ng profi t a(cid:332) er tax to opera(cid:415) ng cash
fl ow before changes in opera(cid:415) ng assets
Opera(cid:415) ng profi t a(cid:332) er tax
Add: Tax Expense
Opera(cid:415) ng profi t before income tax
Major non cash amounts
Deprecia(cid:415) on
Amor(cid:415) sa(cid:415) on of deferred acquisi(cid:415) on and computer development
costs
Net (profi t)/loss on sale of fi xed assets
Movement in foreign exchange income accrual
Movement in provision for doub(cid:414) ul debts
Movement in payroll provisions
Impairment of subsidiary
Impairment of fi xed assets
Net eff ect of other accruals
531,879
234,271
766,150
74,243
44,713
(2,621)
45,625
89,905
(5,460)
-
44,666
(13,500)
507,339
211,511
718,850
80,731
46,116
1,210
(13,344)
112,076
2,821
-
50,397
6,047
Opera(cid:415) ng cash fl ow before changes in opera(cid:415) ng assets
1,043,721
1,004,904
505,749
222,387
728,136
67,607
44,224
(2,621)
44,601
86,657
(7,273)
11,068
44,666
(28,669)
988,396
512,892
209,560
722,452
76,707
46,116
1,210
(10,461)
112,076
2,821
-
50,397
(10,571)
990,747
Cash and cash equivalents
For the purposes of the cash fl ow statement, cash and cash equivalents comprise the following balances with less than 90 days maturity.
Cash and balances with Central Banks (note 10)
Amounts due from other banks (note 12)
Amounts due to other banks (note 18)
At 31 December
1,202,466
695,280
(344,346)
1,553,400
1,355,469
380,653
(259,892)
1,476,230
1,010,856
1,262,306
572,400
(344,877)
1,238,379
380,653
(259,879)
1,383,080
Bank of South Pacifi c Limited and Group comprises various segments, these being the provision of banking services and products, stock broking and
insurance services and asset fi nancing. For management purposes, segment informa(cid:415) on determina(cid:415) on is based on the risks involved with the provision
of core banking services and products and the Bank and Group’s management repor(cid:415) ng system. The main business lines for management purposes are
core banking segments of retail bank, wholesale bank which includes corporate and paramount strategic business units, insurance opera(cid:415) ons in Fiji, and
BSP Capital’s stock broking and fund management ac(cid:415) vi(cid:415) es. The Bank of South Pacifi c Limited and Group’s business segments operates in Papua New
Guinea, Fiji, Solomon Islands, Cook Islands, Tonga and Samoa. Inter segment adjustments refl ects elimina(cid:415) on entries in respect of inter segment income
and expense alloca(cid:415) ons included funds transfer pricing.
All amounts are in K’000
Analysis by segments
Year ended 31 December 2015
Net interest income
Other income
Net insurance income
Total opera(cid:415) ng income
Opera(cid:415) ng expenses
Impairment expenses
Profi t before income tax
Income tax
Net profi t a(cid:332) er income tax
Year ended 31 December 2014
Net interest income
Other income
Net insurance income
Total opera(cid:415) ng income
Opera(cid:415) ng expenses
Impairment expenses
Profi t before income tax
Income tax
Net profi t a(cid:332) er income tax
PNG
Retail
Bank
PNG
Wholesale
Bank
PNG Bank
Other
Non PNG
Bank
Non Bank
En(cid:415) (cid:415) es
Adjust Inter
Segments
Total
234,523
252,402
-
443,477
209,970
112,624
139,125
3,540
119,780
-
-
-
486,925
582,602
213,510
232,404
5,657
7,468
21,245
34,370
-
1,006,251
(2,672)
519,643
-
21,245
(2,672)
1,547,139
(288,946)
(64,837)
(206,598)
(128,324)
(15,102)
12,723
(691,084)
(41,874)
156,105
(24,324)
493,441
(47,735)
(154,270)
108,370
339,171
(6,912)
(14,194)
-
-
-
89,886
(23,063)
66,823
(2,601)
16,667
(9,203)
-
(89,905)
10,051
766,150
-
(234,271)
7,464
10,051
531,879
188,478
256,047
-
454,082
145,849
219,457
44,702
-
-
95,260
89,012
-
444,525
673,539
190,551
184,272
31
1,061
884,761
8,572
(19,504)
598,286
15,684
24,287
-
15,684
(18,443)
1,498,731
(376,859)
(55,361)
(153,472)
(108,072)
(10,847)
1,526
(703,085)
(20,986)
5,685
(37,079)
(24,416)
-
-
(76,796)
46,680
623,863
(12,759)
(183,498)
33,921
440,365
-
-
-
51,784
13,440
(16,917)
718,850
(13,303)
(1,951)
-
(211,511)
38,481
11,489
(16,917)
507,339
70
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
30. RELATED PARTY TRANSACTIONS
31. BANK OPERATIONS, RISKS AND STRATEGIES IN USING FINANCIAL INSTRUMENTS
Related par(cid:415) es are considered to be enterprises or individuals with whom the Bank and the Group is especially related because either they or the Bank are
in a posi(cid:415) on to signifi cantly infl uence the outcome of transac(cid:415) ons entered into with the Bank and the Group, by virtue of being able to control, dominate
or par(cid:415) cipate in a fi duciary capacity, in decision-making func(cid:415) ons or processes. The Bank and the Group conducted transac(cid:415) ons with the following
classes of related par(cid:415) es during the year:
All business opera(cid:415) ons must deal with a variety of opera(cid:415) onal and fi nancial risks. The business ac(cid:415) vi(cid:415) es of a bank expose it to very cri(cid:415) cal and specifi c
risks, which are principally related to the Bank and the Group’s primary fi nancial intermediary role in the fi nancial markets, including the use of fi nancial
instruments including deriva(cid:415) ves. These market risks (risk of an advance event in the fi nancial markets that may result in loss of earnings) include liquidity
risk, foreign exchange risk, interest rate risk and credit risk.
•
•
Directors and/or par(cid:415) es in which the director has signifi cant infl uence
Key management personnel and other staff and/or par(cid:415) es in which the individual offi cer has signifi cant infl uence
A number of banking transac(cid:415) ons are entered into with these related par(cid:415) es in the normal course of business, and include loans, deposits, property
rentals, share transfers and foreign currency transac(cid:415) ons. These transac(cid:415) ons are carried out on commercial terms and market rates. For the year ended
31 December 2015, balances and transac(cid:415) ons of accounts for Directors, including companies in which directorships were held by BSP directors, were as
follows:
All amounts are expressed in K’000
Customer deposits
Opening balances
Net movement
Closing balance
Interest paid
Loans, advances and other receivables from customers
Opening balances
Loans issued
Interest
Charges
Loan repayments
Closing balance
2015
142,812
(39,872)
102,940
1,967
599,994
73,272
43,000
6,656
(103,937)
618,985
2014
192,446
(49,634)
142,812
2,350
384,321
304,949
35,721
4,450
(129,447)
599,994
Incen(cid:415) ve-based transac(cid:415) ons are provided for staff . Such transac(cid:415) ons include marginal discounts on rates, and specifi c fee concessions. These incen(cid:415) ves
are mainly percentage-based on market rates and fees, and as such, staff accounts are always subject to underlying market trends in interest rates and
fees. As at 31 December 2015, staff account balances were as follows:
All amounts are expressed in K’000
Housing loans
Other loans
At 31 December
Cheque accounts
Foreign currency accounts
Savings accounts
At 31 December
2015
87,090
34,929
122,019
8,920
1
11,399
20,320
2014
54,711
30,889
85,600
10,630
487
11,023
22,140
The Bank and the Group accepts deposits from customers at both fi xed and fl oa(cid:415) ng rates and for various periods and seeks to earn above average interest
margins by inves(cid:415) ng these funds in high quality assets. These margins are achieved and increased by consolida(cid:415) ng short - term funds and lending for
longer periods at higher rates whilst maintaining suffi cient liquidity to meet all claims that might fall due.
The Bank and the Group also seeks to op(cid:415) mise its interest margins by obtaining above average returns, net of provisions, through lending to commercial
and retail borrowers with a range of credit standing. In addi(cid:415) on to directly advancing funds to borrowers, the Bank and the Group also enters into
guarantees and other commitments such as le(cid:425) ers of credit, performance bonds, and other bonds.
The Bank and the Group also enters into transac(cid:415) ons denominated in foreign currencies. This ac(cid:415) vity generally requires the Bank and the Group to take
foreign currency posi(cid:415) ons in order to exploit short term movements in the foreign currency market. The Board places limits on the size of these posi(cid:415) ons.
The Bank and the Group also has a policy of using off se(cid:427) ng commitments for foreign exchange contracts, eff ec(cid:415) vely minimising the risk of loss due to
adverse movements in foreign currencies.
Risk in the Bank and the Group is managed through a system of delegated limits. These limits set the maximum level of risk that can be assumed by each
opera(cid:415) onal unit and the Bank and the Group as a whole. The limits are delegated from the Board of Directors to execu(cid:415) ve management and hence to the
respec(cid:415) ve opera(cid:415) onal managers.
The risk management framework establishes roles, responsibili(cid:415) es and accountabili(cid:415) es of the Asset and Liability Commi(cid:425) ee, the Credit Commi(cid:425) ee, the
Opera(cid:415) onal Risk Commi(cid:425) ee and the Execu(cid:415) ve Commi(cid:425) ee, the specifi c management commi(cid:425) ees charged with the responsibility for ensuring the Bank
and the Group has appropriate systems, policies and procedures to measure, monitor and report on risk management. The framework also includes
policies and procedures which detail formal feedback processes to these management commi(cid:425) ees, to the Audit, Risk and Compliance Commi(cid:425) ee of the
Board, and ul(cid:415) mately to the Board of Directors.
32. CAPITAL ADEQUACY
The Bank and the Group is required to comply with various pruden(cid:415) al standards issued by the Bank of Papua New Guinea (BPNG), the offi cial authority
for the pruden(cid:415) al supervision of banks and similar fi nancial ins(cid:415) tu(cid:415) ons in Papua New Guinea. Addi(cid:415) onally, subsidiaries and branches in Fiji, Solomon
Islands, Cooks Islands, Samoa and Tonga are required to adhere to pruden(cid:415) al standards issued by the Reserve Bank of Fiji (RBF), Central Bank of Solomon
Islands (CBSI), The Financial Supervisory Commission (FSC), Central Bank of Samoa (CBS) and Na(cid:415) onal Reserve Bank of Tonga (NRBT) respec(cid:415) vely. One of
the most cri(cid:415) cal pruden(cid:415) al standards is the capital adequacy requirement. All banks are required to maintain at least the minimum acceptable measure
of capital to risk-weighted assets to absorb poten(cid:415) al losses. The BPNG follows the pruden(cid:415) al guidelines set by the Bank of Interna(cid:415) onal Se(cid:425) lements
under the terms of the Basel Accord. The BPNG revised pruden(cid:415) al standard 1/2003, Capital Adequacy, prescribes ranges of overall capital ra(cid:415) os to
measure whether a bank is under, adequately, or well capitalised, and also applies the leverage capital ra(cid:415) o. The Bank and the Group complies with the
prevailing pruden(cid:415) al requirements for total capital and leverage capital. As at 31 December 2015, the Bank and the Group’s total capital adequacy ra(cid:415) o
and leverage capital ra(cid:415) o sa(cid:415) sfi ed the capital adequacy criteria for a ‘well-capitalised’ bank. The minimum capital adequacy requirements set out under
the standard are: Tier 1 8%, total risk based capital ra(cid:415) o 12% and the leverage ra(cid:415) o 6%.
The measure of capital used for the purposes of pruden(cid:415) al supervision is referred to as base capital. Total base capital varies from the balance of
capital shown on the statement of fi nancial posi(cid:415) on and is made up of (cid:415) er 1 capital (core) and (cid:415) er 2 capital (supplementary). Tier 1 capital is obtained
by deduc(cid:415) ng from equity capital and audited retained earnings (or losses), intangible assets including deferred tax assets. Tier 2 capital cannot exceed
the amount of (cid:415) er 1 capital, and can include subordinated loan capital, specifi ed asset revalua(cid:415) on reserves, un-audited profi ts (or losses) and a small
percentage of general loan loss provisions. The leverage capital ra(cid:415) o is calculated as Tier 1 capital divided by total assets on the balance sheet.
Risk weighted assets are derived from on-balance sheet and off -balance sheet assets. On balance sheet assets are weighted for credit risk by applying
weigh(cid:415) ngs (0, 20, 50 and 100 per cent) according to risk classifi ca(cid:415) on criteria set by the BPNG. Off -balance sheet exposures are risk weighted in the same
way a(cid:332) er conver(cid:415) ng them to on-balance sheet credit equivalents using BPNG specifi ed credit conversion factors.
The Bank and the Group’s capital adequacy level is as follows:
All amounts are expressed in K’000
Balance sheet assets (net of provisions)
Currency
Loans, advances and other receivables from customers
Investments and short term securi(cid:415) es
All other assets
Off balance sheet items
Total
Balance sheet/No(cid:415) onal amount
Risk weighted amount
2015
2014
2015
2014
2,562,072
8,621,514
4,812,035
2,200,682
1,606,133
2,607,051
6,756,997
4,544,886
1,907,573
1,348,684
-
-
6,693,220
5,726,934
-
-
1,415,736
1,301,840
271,380
194,548
19,802,436
17,165,191
8,380,336
7,223,322
72
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
32. CAPITAL ADEQUACY (cid:904)con(cid:415) nued(cid:905)
33. CREDIT RISK AND ASSET QUALITY (con(cid:415) nued)
Capital Ra(cid:415) os
Capital (K’000)
All amounts are expressed in K’000
a) Tier 1 capital
Tier 1 + Tier 2 capital
b) Leverage Capital Ra(cid:415) o
33. CREDIT RISK AND ASSET QUALITY
2015
1,603,825
1,952,807
-
2014
1,412,838
1,746,292
-
Capital Adequacy
Ra(cid:415) o (%)
2015
19.0%
23.1%
8.9%
2014
19.4%
24.0%
9.0%
The Bank incurs risk with regard to loans, advances and other receivables due from customers and other monies or investments held with fi nancial
ins(cid:415) tu(cid:415) ons. Credit risk is the likelihood of future fi nancial loss resul(cid:415) ng from the failure of clients or counter-par(cid:415) es to meet contractual obliga(cid:415) ons to
the Bank and the Group as they fall due.
Credit risk is managed by analysing the risk spread across various sectors of the economy and by ensuring risk is diversely spread by personal and
commercial customer. Individual exposures are measured using repayment performance, reviews and sta(cid:415) s(cid:415) cal techniques. Comprehensive credit
standards and approval limits have been formulated and approved by the Credit Commi(cid:425) ee. The Credit Commi(cid:425) ee (which reports to the Board through
the Execu(cid:415) ve and Chief Execu(cid:415) ve Offi cer) is responsible for the development and implementa(cid:415) on of credit policy and loan por(cid:414) olio review methodology.
The Credit Commi(cid:425) ee is the fi nal arbiter of risk management and loan risk concentra(cid:415) on.
As indicated in Accoun(cid:415) ng Policy G – Loans and provision for loan impairment, the Bank and the Group has in place processes that iden(cid:415) fy, assess and
control credit risk in rela(cid:415) on to the loan por(cid:414) olio, to assist in determining the appropriateness of provisions for loan impairment. These processes also
enable assessments to be made of other classes of assets that may carry an element of credit risk. The Bank and the Group assigns quality indicators to
its credit exposures to determine the asset quality profi le.
Large credit exposures are also monitored as part of credit risk management. These are classifi ed as the largest 25 individual accounts or groups of related
counter-par(cid:415) es. As at 31 December 2015, the 25 largest exposures totaled K4.6 billion, accoun(cid:415) ng for over 53% of the Bank and 50% of the Group’s total
loan por(cid:414) olio (2014: K4.1 billion, accoun(cid:415) ng for over 58% and 57% respec(cid:415) vely).
The Bank of Papua New Guinea has maintained a revised pruden(cid:415) al standard for asset quality since October 2003. The revised standard specifi es more
detailed criteria for the classifi ca(cid:415) on of loans into various grades of default risk and corresponding loss provision levels as a consequence of those
grading’s.
An analysis by credit quality of loans outstanding at 31 December 2015 is as follows:
2015
Overdra(cid:332) s
Term loans
Mortgages
Lease fi nancing
Policy loans
Total
Neither past due nor impaired
501,022
6,781,727
910,964
222,097
42,761
8,458,571
Past due but not impaired
- Less than 30 days
- 30 to 90 days
- 91 to 360 days
Individually impaired loans
- Less than 30 days
- 30 to 90 days
- 91 to 360 days
- More than 360 days
Total gross loans, advances and
other receivables from customers
Less impairment provisions
Net loans and advances
65,606
3,417
2,815
71,838
123
-
5,820
4,633
10,576
583,436
139,621
63,060
19,524
222,205
4,780
3,011
28,862
18,513
55,166
99,990
55,027
12,918
167,935
6,398
1,600
20,234
30,807
59,039
7,059,098
1,137,938
2,584
4,783
820
8,187
-
-
14,610
259
14,869
245,153
-
-
-
-
-
-
-
-
-
307,801
126,287
36,077
470,165
11,301
4,611
69,526
54,212
139,650
42,761
9,068,386
(446,872)
8,621,514
Credit Related Commitments
These instruments are used to ensure that funds are available to a customer as required. The Bank and the Group deals principally in the credit related
commitments set out below.
Guarantees and standby le(cid:425) ers of credit, which represent irrevocable assurances that the Bank and the Group will make payments in the event that a
customer cannot meet its obliga(cid:415) ons to third par(cid:415) es, carry the same risk as loans.
Documentary and trade le(cid:425) ers of credit are wri(cid:425) en undertakings by the Bank and the Group on behalf of a customer, authorising a third party to draw
dra(cid:332) s on the Bank and the Group for specifi ed amounts under specifi ed terms and condi(cid:415) ons. They are collateralised by the underlying shipments of
goods to which they relate and therefore carry less risk than a conven(cid:415) onal loan.
Commitments to extend credit represent undrawn por(cid:415) ons of authorisa(cid:415) ons to extend credit in the form of loans, guarantees or le(cid:425) ers of credit.
Whilst the poten(cid:415) al exposure to loss equates to the total undrawn commitments, the likely amount of loss is less than the total commitment since
the commitments to extend credit are con(cid:415) ngent upon customers maintaining specifi c credit standards. The Bank and the Group monitors the term to
maturity of these commitments because longer term commitments generally carry a greater degree of credit risk than shorter term commitments.
Economic sector risk concentra(cid:415) ons
Economic sector risk concentra(cid:415) ons within the customer loan por(cid:414) olio are as follows:
All amounts are expressed in K'000
As at 31 December
Commerce, fi nance and other business
Private households
Government and public authori(cid:415) es
Agriculture
Transport & communica(cid:415) on
Manufacturing
Construc(cid:415) on
Net loan por(cid:414) olio balance
Ownership risk concentra(cid:415) ons
Ownership risk concentra(cid:415) ons within the customer loan por(cid:414) olio are as follows:
Corporate/Commercial
Government
Retail
Net loan por(cid:414) olio balance
34. LIQUIDITY RISK
2015
%
2014
5,136,578
60
3,665,694
1,669,618
19
948,957
126,141
405,766
582,835
244,371
456,205
1
5
7
3
5
81,873
322,532
792,809
298,307
646,825
%
54
14
1
5
12
4
10
8,621,514
100
6,756,997
100
4,625,570
2,110,014
1,885,930
54
24
22
4,309,941
1,149,503
1,297,553
64
17
19
8,621,514
100
6,756,997
100
Liquidity risk is the risk of being unable to meet fi nancial obliga(cid:415) ons as they fall due. The Board, through the Asset and Liability Commi(cid:425) ee, sets liquidity
policy to ensure that the Bank and the Group has suffi cient funds available to meet all its known and poten(cid:415) al obliga(cid:415) ons.
The matching and controlled mismatching of the maturi(cid:415) es and interest rates of assets and liabili(cid:415) es is fundamental to the management of banking
ac(cid:415) vi(cid:415) es. An unmatched posi(cid:415) on poten(cid:415) ally enhances profi tability, but can also increase the risk of losses.
Short-term mismatch of asset and liability maturity at 31 December 2015
The maturity profi le of material Assets and Liabili(cid:415) es as at 31 December 2015 is shown in the following schedule. The mismatching of maturity of
assets and liabili(cid:415) es indicates an apparent nega(cid:415) ve net “current” asset posi(cid:415) on. However, as stated in the preceding paragraph, mismatched posi(cid:415) ons
are established and managed to achieve profi t opportuni(cid:415) es that arise from them, par(cid:415) cularly in a normal yield curve environment. Accordingly, this
mismatched maturity posi(cid:415) on is considered manageable by the Bank and the Group, and does not impair the ability of the Bank and the Group to meet
its fi nancial obliga(cid:415) ons as they fall due. The Directors are also of the view that the Bank and the Group is able to meet its fi nancial obliga(cid:415) ons as they fall
due for the following addi(cid:415) onal reasons:
•
The Bank complies with the Cash Reserve Requirement (“CRR”) set by the regulatory authori(cid:415) es of the jurisdic(cid:415) ons that the Bank operates in. The
CRR specifi es that a bank must hold an amount equal to a percentage of its total customer deposits in the form of cash in an account maintained by
the respec(cid:415) ve Central Bank. The Bank complies with this daily requirement on an ongoing basis. The balance of the CRR account is shown in Note
25, Statutory Deposits with the Central Bank.
74
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
34. LIQUIDITY RISK (con(cid:415) nued)
Maturity of assets and liabili(cid:415) es
All amounts are expressed in K'000
As at 31 December 2015
Up to 1 month
1 - 3 months 3 - 12 months
1 - 5 years
Over 5
years
Total
Assets
Cash and balances with Central Bank
Treasury & Central Bank bills
Amounts due from other banks
Loans, advances and other receivables from
customers
Other fi nancial assets
Total assets
Liabili(cid:415) es
2,562,072
645,928
630,079
-
-
624,880
1,222,753
27,731
37,470
-
-
-
-
9,548
2,562,072
2,503,109
-
695,280
1,058,463
403,714
1,061,606
3,248,162
2,849,569
8,621,514
16,534
157,000
175,395
1,317,947
642,050
2,308,926
4,913,076
1,213,325
2,497,224
4,566,109
3,501,167
16,690,901
Amounts due to other banks
291,616
11,743
40,841
146
-
344,346
Customer deposits
Other liabili(cid:415) es
Other provisions
Total liabili(cid:415) es
Net liquidity gap
As at 31 December 2014
Total assets
Total liabili(cid:415) es
Net liquidity gap
35. OPERATIONAL RISK
11,178,740
546,155
1,533,035
146,407
1,191,037
14,595,374
957,047
182,703
397
-
1,621
-
2,984
82,655
1,044,704
-
-
182,703
12,610,106
558,295
1,575,497
149,537
1,273,692
16,167,127
(7,697,030)
655,030
921,727
4,416,572
2,227,475
523,774
5,692,609
568,496
1,608,423
3,148,690
3,271,369
14,289,587
12,799,244
309,789
709,421
122,125
75,735
14,016,314
(7,106,635)
258,707
899,002
3,026,565
3,195,634
273,273
Opera(cid:415) onal risk is the poten(cid:415) al exposure to unexpected fi nancial or non-fi nancial losses arising from the way in which the Bank and the Group conducts
its business. Examples of opera(cid:415) onal risks include employee errors, systems failures, fi re, fl oods, or similar losses to physical assets, fraud, or criminal
ac(cid:415) vity. Opera(cid:415) onal risk is managed through formal policies, documented procedures, business prac(cid:415) ces and compliance monitoring.
An opera(cid:415) onal risk management func(cid:415) on is responsible for the maintenance of these policies, procedures prac(cid:415) ces and monitoring the organisa(cid:415) on’s
compliance with them. The Opera(cid:415) onal Risk Commi(cid:425) ee coordinates the management process across the organisa(cid:415) on.
An independent internal audit func(cid:415) on also conducts regular reviews to monitor compliance with approved BPNG standards and examines the general
standard of control.
The Opera(cid:415) onal Risk Commi(cid:425) ee and the internal audit func(cid:415) on mandatorily report to the Board Audit, Risk and Compliance Commi(cid:425) ee.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
36. FOREIGN EXCHANGE RISK
Foreign exchange risk is the risk to earnings caused by a change in foreign exchange rates on open currency posi(cid:415) ons. The objec(cid:415) ve of foreign exchange
risk management within the Bank and the Group is to minimise the impact on earnings of any such movement.
The Bank and the Group accepts foreign currency denominated transac(cid:415) ons and therefore has exposure to movements in foreign currency. The Bank and
the Group has a policy to off set these transac(cid:415) ons to minimise daily exposure. As foreign exchange contracts generally consist of off se(cid:427) ng commitments,
they involve only limited foreign exchange risk to the Bank and the Group and material loss is not envisaged.
Currency concentra(cid:415) on of assets, liabili(cid:415) es, and off -balance sheet items.
All amounts are expressed in K'000
As at 31 December 2015
PGK
FJD
SBD
USD
Other
Total
Assets
Cash and balances with Central Bank
Treasury & Central Bank bills
Amounts due from other banks
Loans, advances and other receivables from
customers
Other fi nancial assets
Other assets
Total assets
Liabili(cid:415) es
1,492,074
2,284,741
117,296
444,596
35,620
58,986
5,851,464
1,733,203
2,074,124
1,278,357
234,802
125,968
214,083
180,896
26,423
183,451
-
54,988
2,727
-
135,140
164,301
-
-
408,592
1,852
357,435
689,095
-
46,089
2,562,072
2,503,109
695,280
8,621,514
2,308,926
1,505,402
13,098,056
2,633,175
659,841
302,168
1,503,063
18,196,303
Amounts due to other banks
(230,615)
(59,545)
(54)
(29,776)
(24,356)
(344,346)
Customer Deposits
Other liabili(cid:415) es
Total liabili(cid:415) es
(10,258,953)
(2,073,203)
(724,148)
(677,256)
(861,814)
(14,595,374)
(1,035,729)
(76,104)
(50,184)
-
(65,390)
(1,227,407)
(11,525,297)
(2,208,852)
(774,386)
(707,032)
(951,560)
(16,167,127)
Net on - balance sheet posi(cid:415) on
1,572,759
424,323
(114,545)
(404,864)
551,503
2,029,176
Off - balance sheet net no(cid:415) onal posi(cid:415) on
(45)
-
Credit commitments
1,259,124
338,854
-
4,352
(1,562)
-
6,159
3,802
4,552
1,606,131
31 December 2014
Total Assets
Total Liabili(cid:415) es
12,495,902
2,067,893
534,191
202,444
516,077
15,816,507
(10,808,958)
(1,897,941)
(432,807)
(281,774)
(594,834)
(14,016,314)
Net on - balance sheet posi(cid:415) on
1,686,944
169,952
101,384
(79,330)
Off - balance sheet net no(cid:415) onal posi(cid:415) on
-
-
-
Credit commitments
1,065,452
266,152
14,725
9,977
-
(78,757)
(10,713)
1,800,193
(736)
-
1,346,329
The following table presents sensi(cid:415) vi(cid:415) es of profi t or loss and equity to possible changes in exchange rates applied at the end of the repor(cid:415) ng period,
rela(cid:415) ve to the func(cid:415) onal currency of the respec(cid:415) ve Group en(cid:415) (cid:415) es, with all other variables held constant:
All amounts are expressed in K'000
USD strengthening by 1% (2014 – 1%)
USD dollar weakening by 1% (2014 – 1%)
AUD strengthening by 1% (2014 – 1%)
AUD dollar weakening by 1% (2014 – 1%)
At 31 December 2015
At 31 December 2014
Impact on profi t or loss
Impact on equity
Impact on profi t or loss
Impact on equity
1,372
(1,345)
7
(7)
1,372
(1,345)
7
(7)
903
(885)
(25)
24
903
(885)
(25)
24
76
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
37. INTEREST RATE RISK
38. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
Interest rate risk in the balance sheet arises from the poten(cid:415) al for a change in interest rate to have an adverse eff ect on the revenue earnings in the
current repor(cid:415) ng period and future years. As interest rates and yield curves change over (cid:415) me the Bank and the Group may be exposed to a loss in
earnings due to the eff ects of interest rates on the structure of the balance sheet. Sensi(cid:415) vity to interest rates arises from mismatches in the re-pricing
dates, cash fl ows and other characteris(cid:415) cs of the assets and their corresponding liability funding. These mismatches are ac(cid:415) vely managed as part of the
overall interest rate risk management process governed by the Assets and Liabili(cid:415) es Commi(cid:425) ee (ALCO), which meets regularly to review the eff ects of
fl uctua(cid:415) ons in the prevailing levels of market interest rates on the fi nancial posi(cid:415) on and cash fl ows of the Bank and the Group. The objec(cid:415) ve of interest
rate risk control is to minimise these fl uctua(cid:415) ons in value and net interest income over (cid:415) me, providing secure and stable sustainable net interest earnings
in the long term. The table below illustrates the interest sensi(cid:415) vity of assets and liabili(cid:415) es at the balance date.
Given the profi le of assets and liabili(cid:415) es as at 31 December 2015 and prevailing rates of interest, a 1% increase in markets rates will result in a K32.3
million increase in net interest income, whilst a 1% decrease in rates will result in a K47.8 million decrease in net interest income.
Interest sensi(cid:415) vity of assets, liabili(cid:415) es and off balance sheet items – re-pricing analysis
Amounts due to other banks
270,943
32,749
36,559
-
All amounts are expressed in K'000
At 31 December 2015
Assets
Cash & Central Bank assets
Treasury & Central Bank bills
Amounts due from other banks
Statutory deposits - Central Bank
Loans, advances and other
receivables from customers
Investments
Other assets
Total assets
Liabili(cid:415) es
Customer deposits
Other liabili(cid:415) es
Other provisions
Total liabili(cid:415) es
Up to 1
month
-
441,264
630,079
-
-
157,000
27,731
-
1-3 months
3-12 months
1-5 years
Over 5 years
Non-interest
bearing
-
-
-
1,202,466
175,395
1,087,400
642,050
37,470
-
-
-
-
-
7,512,150
150,807
535,575
294,081
128,901
1,657
157,000
175,395
1,251,744
840,446
219,023
-
-
-
-
8,804,173
492,538
923,835
2,633,225
1,611,397
6,847,265
536,520
1,501,362
167,803
103,068
-
-
-
-
-
-
-
-
154,177
75,525
-
-
-
1,359,606
-
-
1,169,063
3,731,135
4,095
5,388,247
866,111
182,703
7,221,276
569,269
1,537,921
167,803
229,702
6,441,156
Interest sensi(cid:415) vity gap
1,582,897
(76,731)
(614,086)
2,465,422
1,381,695
(2,710,021)
At 31 December 2014
Assets
Cash & Central Bank assets
Treasury & Central Bank Bills
Amounts due from other banks
Statutory deposits - Central Bank
Loans, advances and other
receivables from customers
Investments
Other assets
Total assets
Liabili(cid:415) es
-
985,499
320,993
-
-
370,203
29,365
-
-
821,872
30,295
-
-
5,663
-
-
5,959,668
138,167
338,406
317,912
-
-
-
-
-
-
1,684
-
323,213
1,126,131
1,030,694
1,684
7,578
12,139
-
7,267,844
539,419
1,521,364
1,461,845
1,030,694
Amounts due to other banks
259,892
-
-
-
Customer deposits
Other liabili(cid:415) es
Other Provisions
Total liabili(cid:415) es
6,988,751
490,623
751,546
127,461
-
-
-
-
-
-
-
-
7,248,643
490,623
751,546
127,461
Interest sensi(cid:415) vity gap
19,201
48,796
769,818
1,334,384
-
210
75,525
-
75,735
954,959
1,355,469
-
-
1,251,582
2,844
-
1,385,446
3,995,341
-
4,349,792
756,548
215,966
5,322,306
(1,326,965)
There is no material diff erence between the fair value and carrying value of the fi nancial assets and liabili(cid:415) es of Bank of South Pacifi c Limited and the
Group. The table below analyses the Group’s fi nancial instruments carried at fair value, by levels in the fair value hierarchy.
The diff erent levels have been defi ned as follows:
•
•
Level 1 - quoted prices (unadjusted) in ac(cid:415) ve markets for iden(cid:415) cal assets or liabili(cid:415) es.
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).
•
All amounts are expressed in K'000
At 31 December 2015
Financials assets
Equity securi(cid:415) es
Non-fi nancial assets
Asset held for sale
Property, plant & equipment
Total
Financial liabili(cid:415) es
Policy liabili(cid:415) es
At 31 December 2014
Financial assets
Equity securi(cid:415) es
Non - fi nancial assets
Assets held for sale
Property, plant & equipment
Total
Financial liabili(cid:415) es
Policy liabili(cid:415) es
Level 1
Level 2
Level 3
Total
-
-
-
-
-
-
-
-
-
-
79,544
1,535
81,079
-
-
79,544
35,135
686,325
722,995
35,135
686,325
802,539
-
563,441
563,441
62,430
1,284
63,714
-
-
62,430
65,052
662,313
728,649
65,052
662,313
791,079
-
473,753
473,753
There were no changes in valua(cid:415) on technique for Level 3 recurring fair value measurements during the year ended 31 December 2015 (2014 – none).
Property, plant and equipment and assets held for sale represents commercial land and buildings that the Group based on valua(cid:415) ons provided by
independent valuers. Disposal cost for proper(cid:415) es classifi ed as held for sale is not expected to be material.
In the normal course of trading, the Bank and the Group enters into forward exchange contracts. The Bank and the Group does not ac(cid:415) vely enter into or
trade in, complex forms of deriva(cid:415) ve fi nancial instruments such as currency and interest rate swaps and op(cid:415) ons.
Exposures in foreign currencies arise where the Bank and the Group transacts in foreign currencies. This price risk is minimised by entering into
counterbalancing posi(cid:415) ons for material exposures as they arise. Forward and spot foreign exchange contracts are used.
78
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
38. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES (con(cid:415) nued)
39. INSURANCE (con(cid:415) nued)
Forward exchange contracts outstanding at 31 December 2015 stated at the face value of the respec(cid:415) ve contracts are:
All amounts are expressed in respec(cid:415) ve FCY'000 AND K’000
At 31 December 2015
Selling
Buying
At 31 December 2014
Selling
Buying
USD
(9,979)
(45)
9,459
-
USD
(42,143)
110,701
41,773
(108,795)
FCY
Kina
FCY
Kina
FCY
Kina
FCY
Kina
AUD
-
-
12,780
-
AUD
-
-
-
-
39. INSURANCE
(a) Net insurance opera(cid:415) ng income
All amounts are expressed in K’000
Net insurance income
EURO
(200)
GBP
JPY
(4,050)
(11,000)
-
-
EURO
(971)
4,058
-
-
-
GBP
(2,450)
3,830
1,000
(4,057)
Other
(2,681)
-
820
-
-
3000
-
JPY
Other
-
-
-
-
-
-
-
-
Total
-
(45)
-
Total
-
118,589
-
(112,852)
Consolidated
Bank
2015
21,245
2014
15,684
2015
-
2014
-
Presenta(cid:415) on of insurance business results in the statement of comprehensive income has been regrouped to more accurately refl ect the insurance
business contribu(cid:415) on to shareholder profi ts. Compara(cid:415) ve fi gures have been adjusted to conform to changes in presenta(cid:415) on in the current year.
(b) Policy liabili(cid:415) es
Key assump(cid:415) ons used in determining this liability are as follows:
Discount rates
For contracts in Statutory Fund 1 which have a Discre(cid:415) onary Par(cid:415) cipa(cid:415) ng Feature (DPF), the discount rate used is linked to the assets which back those
contracts. At 31 December 2015 this was 5.04% per annum (2014: 4.84% per annum), based on current 10 year government bond yields and expected
earnings from the investment por(cid:414) olio. For contracts without DPF and Accident Business, a rate of 4.2% per annum was used at 31 December 2015 (2014:
3.9% per annum). These rates were based on the 10 year government bond rate as published by the Reserve Bank of Fiji.
Investment and maintenance expenses
Future maintenance and investment expenses are based on the budgeted expenses. Future infl a(cid:415) on has been assumed to be 3.5% per annum (2014: 3.5%
per annum) for determining future expenses.
Whole of Life and Endowment Insurance
Term Insurance
Accident Insurance
2015
15%
18%
14%
2014
15%
18%
14%
Basis of calcula(cid:415) on of surrender values
Surrender values are based on the provisions specifi ed in the policy contracts. There have been no changes to surrender bases during the period (or the
prior periods) which have materially aff ected the valua(cid:415) on result.
Discre(cid:415) onary Par(cid:415) cipa(cid:415) ng Business
For most par(cid:415) cipa(cid:415) ng business, bonus rates are set such that, over long periods, the returns to contract holders are commensurate with the investment
returns achieved on the pool of assets which provide security for the contract, together with other sources of profi t arising from this business. Profi ts
from these policies are split between contract holders and shareholders in accordance with the policy condi(cid:415) ons which allow for shareholders to share
in alloca(cid:415) ons at a maximum rate of 20%. For business wri(cid:425) en between 1995 and 1998 the shareholder receives 11% of profi ts.
In applying the contract holders’ share of profi ts to provide bonuses, considera(cid:415) on is given to equity between genera(cid:415) ons of policyholders and equity
between the various classes and sizes of contracts in force. Assumed future bonus rates included in the liability for the long term insurance contracts
were set such that the present value of the liabili(cid:415) es equates to the present value of assets suppor(cid:415) ng the business together with assumed future
investment returns, allowing for the shareholder’s right to par(cid:415) cipate in distribu(cid:415) ons.
Reinsurance
Contracts entered into by the Group with Reinsurers under which the Group is compensated for losses on one or more contracts issued by the Group,
are classifi ed as reinsurance contracts.
As the reinsurance agreements provide for indemnifi ca(cid:415) on by the Reinsurers against loss or liability, reinsurance income and expenses are recognised
separately in profi t or loss when they become due and payable in accordance with the reinsurance agreements.
Reinsurance recoveries are recognised as claim recoveries under profi t or loss. This is ne(cid:425) ed off against the claim expenses. Reinsurance premiums are
recognised as Reinsurance Expenses.
All amounts are expressed in K’000
2015
2014
Policy Liabili(cid:415) es
Opening balance
Transla(cid:415) on movement
Release provisions to claims & opera(cid:415) ng expenses
Release provision to fund advance premium
Release provision to fund nega(cid:415) ve Regional Shareholder to Retained Earnings
Increase in policy liabili(cid:415) es
Increase in policy liabili(cid:415) es on revalua(cid:415) on of land
Total policy liabili(cid:415) es
473,753
40,319
-
-
-
34,984
14,385
563,441
481,087
(23,346)
(1,394)
(5)
(80)
17,491
-
473,753
% Acquired
100.0
98.70
100.0
100.0
Taxa(cid:415) on
The rates of taxa(cid:415) on enacted or substan(cid:415) ally enacted at the date of the valua(cid:415) on (20%) are assumed to con(cid:415) nue into the future.
40. BUSINESS COMBINATIONS
Mortality and morbidity
Projected future rates of mortality for insured lives are based on the Fiji Mortality Sta(cid:415) s(cid:415) cs table FJ90-94 Male. These are then adjusted for the Group’s
own experience. The mortality rates used was 70% of the FJ90-94 Male table for par(cid:415) cipa(cid:415) ng business in Statutory Fund 1.
Rates of discon(cid:415) nuance
Best es(cid:415) mate assump(cid:415) ons for the incidence of withdrawal and discon(cid:415) nuance vary by product and dura(cid:415) on and are based on the Group’s experience
which is reviewed regularly. Rates used for the long term insurance contracts are as follows:
(a) Summary of Acquisi(cid:415) on
During the year the Bank acquired the opera(cid:415) ons of the following en(cid:415) (cid:415) es:
Acquisi(cid:415) on date
9 July 2015
10 July 2015
10 July 2015
30 October 2015
En(cid:415) ty
Westpac Banking Corpora(cid:415) on Cook Islands branch
Westpac Bank of Samoa Limited
Westpac Bank of Tonga Limited
Westpac Banking Corpora(cid:415) on Solomon Islands branch
80
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the Year Ended 31 December 2015
40. BUSINESS COMBINATIONS (con(cid:415) nued)
Acquisi(cid:415) on amount
Cash
Due from other fi nancial ins(cid:415) tu(cid:415) on and regulatory deposits
Loans and advances
Investment securi(cid:415) es
Other assets and intergroup balances
Property, plant & equipment
Tax receivables and deferred tax assets
Deposits
Due to other fi nancial ins(cid:415) tu(cid:415) ons
Provisions and other liabili(cid:415) es
Net iden(cid:415) fi able assets acquired
Add: goodwill
Net assets acquired for cash considera(cid:415) on
(1) Acquired loans and advances
K’000
28,444
388,151
573,162
3,080
21,834
19,380
15,772
(785,902)
(34,231)
(10,722)
218,968
21,103
240,071
The fair value of acquired loans and advances is K573.162m. The gross contractual amount for loans and advances due is K605.028m of which
K31.866m is expected to be uncollec(cid:415) ble.
(2) Accoun(cid:415) ng policy choice for non-controlling interests
The group recognises non-controlling interests in an acquired en(cid:415) ty either at fair value or at the non-controlling interest’s propor(cid:415) onate share of
the acquired en(cid:415) ty’s net iden(cid:415) fi able assets.
(3)
Profi t Contribu(cid:415) on of acquired businesses
The acquired businesses contributed revenue of K35.2m and net profi t of K11.7m to the Group for the period from 10 July 2015( Cook Islands,
Samoa and Tonga) and 30 October 2015 (Solomon Islands) to 31 December 2015. If the acquisi(cid:415) ons had occurred on 1 January 2015, consolidated
pro-forma revenue and profi t for the year ended 31 December 2015 would have been K84.6m and K28.6m respec(cid:415) vely.
(b)
Purchase considera(cid:415) on - cash ou(cid:414) low
Ou(cid:414) low of cash to acquire subsidiary and branches, net of cash acquired
Cash considera(cid:415) on
Less: cash balances acquired
Net infl ow of cash – inves(cid:415) ng ac(cid:415) vi(cid:415) es
K’000s
240,071
(416,595)
(176,524)
Acquisi(cid:415) on-related costs of K8.336m that were not directly a(cid:425) ributable to the issue of shares are included in other opera(cid:415) ng expenses in the statement
of comprehensive income and in opera(cid:415) ng cash fl ows in the statement of cash fl ows.
41. EVENTS OCCURRING AFTER BALANCE SHEET DATE
There have been no adjus(cid:415) ng events a(cid:332) er the end of the repor(cid:415) ng period.
42. REMUNERATION OF AUDITORS
All amounts are expressed in K’000
Financial statement audits
Other services
Consolidated
Bank
2015
2,372
997
3,369
2014
1,919
936
2,855
2015
1,934
900
2,834
2014
1,568
929
2,497
The external auditor PricewaterhouseCoopers is also engaged in providing other services to the Bank and Group as required and as permi(cid:425) ed by pruden(cid:415) al
standards. The provision of other services included taxa(cid:415) on services and general training.
Independent Auditor’s Report
to the shareholders of Bank of South Pacifi c Limited
Report on the fi nancial statements
We have audited the accompanying fi nancial statements of Bank of South Pacifi c Limited (the Company), which comprise the statements
of fi nancial position as at 31 December 2015, the statements of comprehensive income, statements of changes in shareholders’ equity and
statements of cash fl ows for the year then ended, and the notes to the fi nancial statements that include a summary of signifi cant accounting
policies and other explanatory information for both the Company and the Group. The Group comprises the Company and the entities it
controlled at 31 December 2015 or from time to time during the fi nancial year.
Directors’ responsibility for the fi nancial statements
The Directors are responsible for the preparation of these fi nancial statements such that they give a true and fair view in accordance with
generally accepted accounting practice in Papua New Guinea and the Companies Act 1997 and for such internal controls as the Directors
determine are necessary to enable the preparation of fi nancial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s responsibility
Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with
International Standards on Auditing. These standards require that we comply with relevant ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal controls relevant to the
Company and the Group’s preparation of fi nancial statements that give a true and fair view of the matters to which they relate, in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Company and the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates, as well as evaluating the overall presentation of the fi nancial statements.
We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the accompanying fi nancial statements:
1.
2.
comply with International Financial Reporting Standards and other generally accepted accounting practice in Papua New Guinea; and
give a true and fair view of the fi nancial position of the Company and the Group as at 31 December 2015, and their fi nancial performance
and cash fl ows for the year then ended.
Report on other legal and regulatory requirements
The Companies Act 1997 requires that in carrying out our audit we consider and report on the following matters. We confi rm in relation to
our audit of the fi nancial statements for the year ended 31 December 2015:
1. we have obtained all the information and explanations that we have required;
2.
in our opinion, proper accounting records have been kept by the Company as far as appears from an examination of those records; and
3. we have no relationship with, or interests in, the Company or any of its subsidiaries other than in our capacities as auditor, and provider
of audit-related and taxation services. These services have not impaired our independence as auditor of the Group.
Restriction on distribution or use
This report is made solely to the Group’s shareholders, as a body, in accordance with the Companies Act 1997. Our audit work has been
undertaken so that we might state to the Company’s shareholders those matters which we are required to state to them in an auditor’s report
and for no other purpose. We do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders, as
a body, for our audit work, for this report or for the opinions we have formed.
PricewaterhouseCoopers
J. C. Seeto
Registered under the Accountants Registration Act 1996
Partner
Port Moresby
11 March 2016
PricewaterhouseCoopers, Level 6, Harbour City, Konedobu, Port Moresby
PO Box 484, Port Moresby, Papua New Guinea
T: +675 321 1500, F:+675 321 1428, www.pwc.com/pg
82
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
83
Shareholder
Informa(cid:415) on
The following is a summary of per(cid:415) nent issues rela(cid:415) ng to shareholding in the Group. The Cons(cid:415) tu(cid:415) on of BSP may be inspected
during normal business at the Registered Offi ce.
RIGHTS ATTACHING TO ORDINARY SHARES
Partly paid shares
The rights a(cid:425) aching to shares are set out in Bank of South Pacifi c Limited’s
Cons(cid:415) tu(cid:415) on and in certain circumstances, are regulated by the Companies
Act 1997, the POMSoX Lis(cid:415) ng Rules and general law. There is only one class
of share. All shares have equal rights. Other rights a(cid:425) ached to ordinary
shares include:
The Directors may, subject to compliance with BSP’s cons(cid:415) tu(cid:415) on, the
Companies Act and the POMSoX Lis(cid:415) ng Rules, issue partly paid shares
upon which there are outstanding amounts payable. These shares will have
limited rights to vote and to receive dividends.
General mee(cid:415) ng and no(cid:415) ces
Each member is en(cid:415) tled to receive no(cid:415) ce of, and to a(cid:425) end and vote at,
general mee(cid:415) ngs of BSP and to receive all no(cid:415) ces, accounts and other
documents required to be sent to members under BSP’s cons(cid:415) tu(cid:415) on, the
Companies Act or the Lis(cid:415) ng Rules.
Vo(cid:415) ng rights
At a general mee(cid:415) ng of shareholders, every holder of fully paid ordinary
shares present in person or by an a(cid:425) orney, representa(cid:415) ve or proxy has one
vote on a show of hands (unless a member has appointed two proxies) and
one vote per share on a poll.
A person who holds a share which is not fully paid is en(cid:415) tled, on a poll, to a
frac(cid:415) on of a vote equal to the propor(cid:415) on which the amount paid bears to
the total issue price of the share.
Where there are two or more joint holders of a share and more than one
of them is present at a mee(cid:415) ng and tenders a vote in respect of the share,
the Company will count only the vote cast by the member whose name
appears fi rst in BSP’s register of members.
Dividends
The Directors may from (cid:415) me to (cid:415) me determine dividends to be distributed
to members according to their rights and interests. The Directors may fi x
the (cid:415) me for distribu(cid:415) on and the methods of distribu(cid:415) on. Subject to the
terms of issue of shares, each share in a class of shares in respect of which
a dividend has been declared will be equally divided. Each share carries the
right to par(cid:415) cipate in the dividend in the same propor(cid:415) on that the amount
for the (cid:415) me being paid on the share (excluding any amount paid in advance
of calls) bears to the total issue price of the share.
Dividend payouts over the last six years are disclosed in the schedule of
Historical Financial Performance elsewhere in this Annual Report.
Liquida(cid:415) on
Subject to the terms of issue of shares, upon liquida(cid:415) on assets will be
distributed such that the amount distributed to a shareholder in respect
of each share is equal. If there are insuffi cient assets to repay the paid-up
capital, the amount distributed is to be propor(cid:415) onal to the amount paid-
up.
Directors
Issues of further shares
BSP’s cons(cid:415) tu(cid:415) on states that the minimum number of directors is three
and the maximum is ten.
The Directors may, on behalf of BSP, issue, grant op(cid:415) ons over, or otherwise
dispose of unissued shares to any person on the terms, with the rights,
and at the (cid:415) mes that the Directors decide. However, the Directors must
act in accordance with the restric(cid:415) ons imposed by BSP’s cons(cid:415) tu(cid:415) on, the
POMSoX Lis(cid:415) ng Rules, the Companies Act and any rights for the (cid:415) me being
a(cid:425) ached to the shares in any special class of those shares.
Varia(cid:415) on of rights
Appointment of directors
Directors are elected by the shareholders in general mee(cid:415) ng for a term of
three years. At each general mee(cid:415) ng, one third of the number of directors
(or if that number is not a whole number, the next lowest whole number)
re(cid:415) re by rota(cid:415) on. The Board has the power to fi ll casual vacancies on the
Board, but a director so appointed must re(cid:415) re at the next annual mee(cid:415) ng.
Unless otherwise provided by BSP’s cons(cid:415) tu(cid:415) on or by the terms of issue
of a class of shares, the rights a(cid:425) ached to the shares in any class of shares
may be varied or cancelled only with the wri(cid:425) en consent of the holders
of at least three-quarters of the issued shares of that class, or by special
resolu(cid:415) on passed at a separate mee(cid:415) ng of the holders of the issued shares
of the aff ected class.
Powers of the Board
Except otherwise required by the Companies Act, any other law, the
POMSoX Lis(cid:415) ng Rules or BSP’s cons(cid:415) tu(cid:415) on, the Directors have the power
to manage the business of BSP and may exercise every right, power or
capacity of BSP to the exclusion of the members.
Transfer of shares
Share buy backs
Subject to BSP’s cons(cid:415) tu(cid:415) on, the Companies Act and the POMSoX Lis(cid:415) ng
Rules, ordinary shares are freely transferable.
The shares may be transferred by a proper transfer eff ected in accordance
with the POMSoX Business Rules, by any other method of transferring or
dealing with shares introduced by POMSoX and as otherwise permi(cid:425) ed by
the Companies Act or by a wri(cid:425) en instrument of transfer in any usual form
or in any other form approved by either the Directors or POMSoX that is
permi(cid:425) ed by the Companies Act.
The Directors may decline to register a transfer of shares (other than a
proper transfer in accordance with the POMSoX Business Rules) where
permi(cid:425) ed to do so under the POMSoX Lis(cid:415) ng Rules or the transfer would
be in contraven(cid:415) on of the law. If the Directors decline to register a transfer,
BSP must give no(cid:415) ce in accordance with the Companies Act and the
POMSoX Lis(cid:415) ng rules, give the party lodging the transfer wri(cid:425) en no(cid:415) ce
of the refusal and the reason for refusal. The Directors must decline to
register a transfer of shares when required by law, by the POMSoX Lis(cid:415) ng
Rules or by the POMSoX Business Rules.
Subject to the provisions of the Companies Act and the POMSoX Lis(cid:415) ng
Rules, BSP may buy back shares by itself on terms and at (cid:415) mes determined
by the Directors.
Offi cers’ indemni(cid:415) es
BSP, to the extent permi(cid:425) ed by law, indemnifi es every offi cer of BSP (and may
indemnify any auditor of BSP) against any liability incurred by the person,
in the relevant capacity, to another person unless the liability arises out of
conduct involving lack of good faith.
BSP may also make a payment in rela(cid:415) on to legal costs incurred by these
persons in defending an ac(cid:415) on for a liability, or resis(cid:415) ng or responding to
ac(cid:415) ons taken by a government agency or a liquidator.
84
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
85
SHAREHOLDER INFORMATION
Interest in shares in the Bank
Directors hold the following shares in the Bank:
Director
Shares Held
T. E. Fox
Gerea Aopi
R Fleming
44,744
10,000
93,000
%
0.00
0.00
0.00
Registered Offi ce
Share Registry
Website
Bank of South Pacifi c Limited
PO Box 78,
PORT MORESBY
Na(cid:415) onal Capital District
PAPUA NEW GUINEA
Telephone: +675 322 9700
www.bsp.com.pg
PNG Registries Limited
PO Box 1265,
PORT MORESBY
Na(cid:415) onal Capital District
PAPUA NEW GUINEA
Telephone: +675 321 6377
Home Exchange for BSP Shares
Home Exchange for BSP Conver(cid:415) ble Notes
Port Moresby Stock Exchange Ltd (POMSOX)
PO Box 1531
PORT MORESBY
Na(cid:415) onal Capital District
PAPUA NEW GUINEA
Telephone: +675 320 1980
South Pacifi c Stock Exchange
GPO Box 11689
SUVA
FIJI
Telephone: +679 330 4130
SHAREHOLDER INFORMATION
Twenty largest registered fully paid ordinary shareholders
At the 31 December 2015, the twenty largest registered fully paid shareholders of the Company were:
1
2
3
4
5
Kumul Consolidated Holdings Limited
Nambawan Super Limited
Petroleum Resources Kutubu Limited
NASFUND
Credit Corpora(cid:415) on (PNG) Limited
6 Motor Vehicles Insurance Limited
7
8
9
PNG Sustainable Development Program Limited
IFC Capitaliza(cid:415) on (Equity) Fund LP
Interna(cid:415) onal Finance Corpora(cid:415) on
10 Teachers Savings and Loans Society
11 Comrade Trustee Services Limited
12 Lamin Trust Fund
13 Capital Nominees Limited
14 Credit Corpora(cid:415) on (PNG) Limited [CC Finance Ltd]
15 Mineral Resources OK Tedi No. 2 Limited
16 Solomon Islands Na(cid:415) onal Provident Fund
17 Nominees Niugini Limited
18 Catholic Diocese of Kundiawa
19 Southern Highlands Provincial Government
20 Mineral Resources Star Mountains Ltd
Other shareholders
Share Held
84,311,597
57,592,261
46,153,840
45,318,417
35,843,425
31,243,736
29,202,767
22,796,644
22,796,644
15,317,366
14,456,052
3,518,132
3,375,849
3,000,000
2,890,000
2,500,001
2,369,495
2,165,688
2,000,000
1,975,799
38,697,351
%
18.03%
12.32%
9.87%
9.69%
7.67%
6.68%
6.25%
4.88%
4.88%
3.28%
3.09%
0.75%
0.72%
0.64%
0.62%
0.53%
0.51%
0.46%
0.43%
0.42%
8.28%
467,525,064
100.00%
Distribu(cid:415) on of Shareholding
At the 31 December 2015, the Company had 6,098 shareholders. The distribu(cid:415) on of shareholdings is as follows:
Range (number)
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100, 001 and above
Number of Shareholders
Number of Shares
5,122
627
95
170
84
6,098
1,313,787
1,276,729
671,813
6,235,689
373,715,449
467,525,064
86
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
87
DIRECTORS’ INFORMATION
Name
Nature of Interest
Sir K. Constan(cid:415) nou, OBE
Director
Shareholder
Member
T. E. Fox, OBE, BEc
Director
1
, BSP Capital Ltd
1
, Airways Hotel & Apartment Ltd, Lamana
Bank of South Pacifi c Ltd
Hotel Ltd, Lamana Development Ltd, Heritage Park Hotel Ltd, Gazelle Interna(cid:415) onal
Hotel Ltd, Oil Search Ltd, Alotau Interna(cid:415) onal Hotel Ltd, Kimbe Bay Hotel Ltd, Grand
Pacifi c Hotel Ltd, City Centre Development Ltd, Coastwatchers Court Ltd,
Waigani Assets Ltd, Southern Seas Investments Ltd, Texas Chicken South Pacifi c Ltd.
BSP Finance Ltd, Bank of South Pacifi c Tonga Ltd, Bank South Pacifi c (Samoa) Ltd.
Airways Hotel & Apartment Ltd, Lamana Hotel Ltd, Lamana Development Ltd, Texas
Chicken South Pacifi c Ltd.
Australian Ins(cid:415) tute of Company Directors, PNG Ins(cid:415) tute of Directors, Pacifi c Games
Authority
. Anglicare Founda(cid:415) on
1
.
1,6
2
, BSP Capital Ltd , Teyo No. 1 Ltd
Bank of South Pacifi c Ltd
Ltd, BSP Health Care (Fiji) Ltd, BSP Finance (Fiji) Ltd, Future Farms Ltd, Feel Good
Investments Ltd.
, Akura Ltd, BSP Life (Fiji)
5
Shareholder
Bank of South Pacifi c Ltd, Teyo No.
1
Ltd, FeelGood Investment Ltd and Akura Ltd.
Trustee/Member
Ins(cid:415) tute of Na(cid:415) onal Aff airs
8
, PNG Ins(cid:415) tute of Directors.
R. Fleming, CSM, MBA, MMGT
Director
9
, BSP Capital Ltd, BSP Conver(cid:415) ble Notes Ltd, BSP Rural Ltd,
Bank of South Pacifi c Ltd
BSP Life (Fiji) Ltd, BSP Capital Ltd, BSP Capital Securi(cid:415) es Ltd, Capital Nominees Ltd,
BSP Nominees Ltd, BSP Finance Ltd, BSP Finance (PNG) Ltd, BSP Finance (Fiji) Ltd,
BSP Services (Fiji) Ltd, BSP Health Care (Fiji) Ltd, Credit & Data Bureau Ltd, Bank of
South Pacifi c Tonga Ltd, Bank South Pacifi c (Samoa) Ltd.
Shareholder
Bank of South Pacifi c Ltd.
Trustee/Member
Australian Ins(cid:415) tute of Company Directors, PNG Ins(cid:415) tute of Directors, Anglicare
Founda(cid:415) on.
G. Aopi, CBE, MBA
Director
Shareholder
Member/Trustee
Dr. I. Temu, PhD, MEc
Director
Shareholder
Employee
Member
Bank of South Pacifi c Ltd, Oil Search Ltd
Marsh Ltd, Hirad Ltd, Wahinemo Ltd, FM Morobe Ltd, CDI Founda(cid:415) on.
7
, Steamships Trading Co Ltd, POMSoX Ltd,
Bank of South Pacifi c Ltd, Oil Search Ltd
Highlands Pacifi c Ltd, Melanesian Trustees (ICPNG), Kumul Asset Management.
7
, Hirad Ltd, Wahinemo Ltd, Newcrest Ltd,
Ins(cid:415) tute of Na(cid:415) onal Aff airs, Business Council of PNG, PNG Chamber of Mines &
Petroleum, Oil Search Health Founda(cid:415) on, PNG Cancer Founda(cid:415) on
1
.
Bank of South Pacifi c Ltd, Telemu Ltd, Kina Petroleum Ltd, Kumul
Petroleum Holdings Ltd, Savi-Tec Ltd.
Telstra Ltd, Nau(cid:415) lus Minerals Niugini Ltd.
Barrick Gold Ltd.
Divine Word University.
Name
Nature of Interest
Sir N. Bogan, KBE, LLB
Director
G. Robb, BA, MBA, OAM
F. Talao, LLM, MPHIL
Shareholder
Member
Director
Member
Director
Member
E. B. Gangloff , CPA
Director
Member
A. Mano, BEcon, MSc.
(Appointed 29 August 2014)
Director
Bank of South Pacifi c Ltd, In Touch Media Ltd
Holdings Ltd, Mapai Transport Ltd, Ahi Holdings Ltd.
1
, Coprez Communica(cid:415) ons Ltd
1
, Coprez
In Touch Media Ltd, Coprez Holdings Ltd.
1
Chancellor University of Technology, PNG Tax Review Commi(cid:425) ee
Bank of South Pacifi c Ltd, BSP Capital Ltd, Bank of South Pacifi c Tonga Ltd.
Australian Ins(cid:415) tute of Company Directors.
Bank of South Pacifi c Ltd, BSP Finance Ltd, Bank of South Pacifi c Ltd, BSP Finance
Ltd, Chayil Investment Ltd, Partnership Pacifi c Ltd, Human Rights PNG Inc.
External Stakeholders Advisory Panel to Morobe Mining Joint Venture, Australian
Ins(cid:415) tute of Company Directors, External Stakeholders Advisory Panel to Morobe
Mining Joint Venture, Australian Ins(cid:415) tute of Company Directors.
Bank of South Pacifi c Ltd, Gangloff Consul(cid:415) ng Ltd, Laurabada Investments Ltd, Borneo
Pharmaceu(cid:415) cals Ltd, New Britain Palm Oil Ltd, Dubara Holdings Ltd, Sir Theophilus
Constan(cid:415) nou Founda(cid:415) on. BSP Finance (Fiji) Ltd.
PNG Ins(cid:415) tute of Directors, Cer(cid:415) fi ed Prac(cid:415) cing Accountants of Papua New Guinea,
Business Council of PNG, Ins(cid:415) tute of Na(cid:415) onal Aff airs, Australian Ins(cid:415) tute of Com-
pany Directors.
1
, Handy Group Ltd
1
, Speedy Hero Limited
1
, SMA Investments Ltd
3
,
1
1
, Insurance Pacifi c Limited
, Civpac
1
Hevi Li(cid:332) Group Limited, PNG Air
Bank of South Pacifi c Ltd, Mineral Resources Development Company Limited
Pearl Resort (Fiji) Ltd
Ltd
Ltd, Leisure Holidays Ltd, Gobe Freight Ltd, Mineral Resource Ok Tedi Ltd, Mineral
Resources Star Mountain Ltd, Petroleum Resources Kutubu Ltd, Petroleum
Resources Moran Ltd, Petroleum Resources Gobe Ltd, Mineral Petroleum Resources
Madang Ltd, Mineral Resources Ramu Ltd, Gas Resources Hides Ltd, Gas Resources
Hides 4 Ltd, Gas Resource Angore Ltd, Gas Resource Juha Ltd, Bank South Pacifi c
(Samoa) Ltd.
Shareholder
Member
SMA Investments Limited. INSPAC Limited.
Mendi Muruks Rugby League Commi(cid:425) ee, Patron SHP Cultural Show Society, Cham-
ber of Mines & Petroleum.
1Chairman, 2Deputy Chairman, 3Managing Director, 4Execu(cid:415) ve Director, 7General Manager, 8Councillor, 5Company is shareholder of Bank of South Pacifi c Limited, or
shareholder of company that is shareholder, 6Company has commercial banking facili(cid:415) es with Bank of South Pacifi c Limited, 9Chief Execu(cid:415) ve Offi cer
88
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
89
Vulisere Tawaqa,
Manager Mobile Lending, BSP Fiji.
He is pcitured with his niece, Anareta Sigabalavu, who is named a(cid:332) er his wife.
His wife also works with BSP.
Management
Teams
& Directory
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BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
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MANAGEMENT TEAMS
SENIOR MANAGEMENT
SOLOMON ISLANDS
MANAGEMENT TEAMS
Top (L - R): Robin Fleming - Group CEO, Johnson Kalo - Group Chief Financial Offi cer/Deputy CEO, Robert Logia - Group Chief Opera(cid:415) ng Offi cer, Haroon
Ali - Group Chief Risk Offi cer, Paul Thornton - Group General Manager Retail Banking. Bo(cid:425) om (L - R): Peter Beswick - Group General Manager Corporate,
Eddie Ruha - Chief Financial Offi cer PNG, Rohan George - General Manager Treasury, Aho Baliki, OBE - General Manager Paramount Banking, Giau
Duruba - General Manager Human Resources.
Standing (L - R): Theresa Kalivakoyo - Financial Controller, Joyce Nukumuna - Relieving Manager Retail Banking Services, Giddings Qiqo - Manager
Interna(cid:415) onal Business and Opera(cid:415) ons, Alphonse Toa(cid:415) - Manager Electronic & Branchless Banking, Joan Ramo - Manager Interna(cid:415) onal Opera(cid:415) ons,
Temreke Ngira - Transac(cid:415) onal Business Manager. Seated (L - R): Janet Marau - Manager Retail Opera(cid:415) ons, Christopher Robertson - Head of
Rela(cid:415) onship Banking, David Anderson - Country Manager, Lyn Toa(cid:415) - Manager Credit Administra(cid:415) on.
FIJI
COOK ISLANDS
Standing (L-R): Rajeshwar Singh - Chief Financial Offi cer, Howard Poli(cid:415) ni - GM Human Resource, William Wakeham - Chief Opera(cid:415) ng Offi cer,
Omid Saberi - Chief Informa(cid:415) on Offi cer, Ravindra Singh - GM Retail Bank. Seated (L - R): Alvina Ali - GM Legal, Kevin McCarthy - Country
Manager, Cecil Browne - GM Corporate & Interna(cid:415) onal, Ashleigh Matheson - Chief Risk Offi cer.
Standing (L - R): Chris Doran - Head of Business Banking, Tokoa Harmon - Branch Manager, Henry Napa - Opera(cid:415) ons Manager.
Seated (L - R): Aniva Manu - Ac(cid:415) ng Finance Manager, Janet Samuel - Business Manager, David Street - Country Manager, Massey Mateariki -
Manager Risk and Compliance.
92
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
93
PNG BRANCH DIRECTORY
MANAGEMENT TEAMS
SAMOA
BSP CAPITAL LTD
MANAGEMENT TEAMS
Standing (L - R): Michelle Lemisio - Business Manager, Shirley Greed - Head of Retail, Maryann Lameko-Vaai - Country Manager, Pe(cid:415) Leiataua -
Opera(cid:415) onal Risk & Compliance Manager. Seated (L - R): Rod Greed - Project Manager, Nick Rous - Regional Finance Manager, Edward Yee - Head
of Business Banking.
Standing (L - R): Gheno Minia – Head of Equi(cid:415) es, Yokin Kipie – Head of Opera(cid:415) ons, Igo Douna- Senior System Analyst.
Seated (L - R): Willie Konga – Manager Fund Management, Richard Borysiewicz – General Manager, Gerlie Tana- System Administrator.
TONGA
BSP FINANCE - PAPUA NEW GUINEA
Standing (L - R): Josiah Kalfabun - Manager Opera(cid:415) onal Risk, Mele’ana Fifi ta - Manager Global Transac(cid:415) onal Solu(cid:415) on, Salesi Fineanganofo -
Business Manager. Seated (L - R): Linita Tu’ihalangingie - Manager Opera(cid:415) ons, Daniel Henson - Country Manager, Emele Hia - Branch Manager,
Viliami Vailea - Manager Finance.
Standing (L - R): Sharon Andoiye - Manager Risk and Compliance, Jodi Herbert - PNG Country Manager, Barbara Tolaget - Manager Lending
Support, Aloysius Ori - Manager Finance and Opera(cid:415) ons, Stephen Taera - Senior Lending Offi cer, Imelda Samba - Senior Lending Offi cer, Anna
Puri - Manager Credit, Freda Willyman - Manager Administra(cid:415) on. Seated (L - R): Ranjani Naidu - Business Controller, Christophe Michaud -
General Manager, Shauna Paike - Senior Lending Offi cer.
94
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
95
MANAGEMENT TEAMS
BSP FINANCE - FIJI
L-R: Anal Sen - Collec(cid:415) ons Supervisor, Sudeshwas Ram - Senior Lending Offi cer, Animul Sheryn Khan - Se(cid:425) lement/Conveyancing Offi cer,
Krishna Raju General Manager, Lalesh Kumar - Funds Manager, Vimal Raj - Senior Lending Offi cer.
BSP LIFE - FIJI
OVERSEAS BRANCH DIRECTORY
Fiji
Country Manager
Ba Branch
Damodar City Branch
Labasa Branch
Nadi Branch
Namaka Branch
Nausori Branch
Pacifi c Harbour Branch
Pacifi c House Sales Centre
Rakiraki Branch
Samabula Sales Centre
Suva Central Branch
Sigatoka Branch
Savusavu Branch
Tavua Branch
Taveuni Branch
Thomson St Branch
Valelevu Sales Centre
Wes(cid:414) ield Branch
Kevin McCarthy
Anupa Kumar
Manjila Goundar
Eka Seduadua
Devendran Pillay
Madhur Kumar
Shailendra Roy
Jennifer Morris
Shalit Kumar
Ronica Prakash
Semi(cid:415) Cakacaka
Mereani Peters
Reginald Kumar
Vineeta Prasad
Sanjeev Sumer
Marica Mara
Mohammed Arif
Ilai(cid:415) a Waqa
Josefa Tuitubou
Mobile Lending Manager
Mobile Lending Manager
Senior Manager Rural
Area Manager: West
Manager Service: West
Area Mgr Central & Northern
Mgr Service Central & Northern
Manager Compliance Retail
Head of Branch Network
Vulisere Tawaqa
Anand Nair
Isikeli Taoi
Viliame Varasikete
Shalini Kumar
Susie Fesaitu
Avishek Singh
Parveen Chand
Kamini Mani
679 321 4454
679 667 4599
679 334 2333
679 881 1888
679 670 5111
679 672 8950
679 347 8499
679 345 2030
679 331 4400
679 669 4200
679 338 7999
679 331 4400
679 650 0900
679 885 0199
679 668 1507
679 888 0433
679 331 4400
679 334 2333
679 666 2466
679 321 4947
679 321 4233
679 321 4922
679 662 7330
679 662 7331
679 323 4235
679 323 4795
679 321 2113
679 323 4236
Solomon Islands
Country Manager
Auki Branch
Gizo Branch
Heritage Park Branch
Honiara Central
Munda Branch
Noro Branch
Point Cruz Branch
Ranadi Branch
Cook Islands
David Anderson
Gordon Ifuimae
Clo(cid:415) lda Londeka
Joy Vave
Glennise Kuper
Veronica Analau
Tewia Laore
Fred Osifelo
Tricia Tura
Country Manager
Head of Business Banking
Branch Manager: Medium
Branch Manager: Small
David Street
Chris Doran
Tokoa Harmon
Rosa Henry
677 21874
677 40484
677 60539
677 21814
677 21222
677 62177
677 61222
677 21874
677 39403
682 22014
682 22014
682 22014
682 22014
Samoa
Country Manager
Retail Head
Savaii Branch
Vaitele Branch
Tonga
Country Manager
Nuku’alofa Branch
Vava’u Branch
Maryanne Lameko - Vaai 685 66115
685 66170
Shirley Greed
685 51208
Taialofa Toala
685 23005
Amelia Iakopo
Daniel Henson
Emilio Tapueluelu
Sosefi na Tangitau
676 23540
676 20827
676 71268
Standing (L - R): Munendra Naidu - Chief Financial Offi cer, Michael Nacola - General Manager Distribu(cid:415) on & Marke(cid:415) ng, Vandhna Narayan - General
Manager Legal & Compliance, Pramesh Sharma - General Manager Investments. Seated: Malakai Naiyaga - Managing Director.
96
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
97
PAPUA NEW GUINEA BRANCH MANAGERS
PAPUA NEW GUINEA BRANCH DIRECTORY
Agnes Mark
Lae Top Town
Albert Burua
NGI Manager
Albert Seri
Wewak
Alex Kuna
Harbour City
Alex Wafi mbi
Aitape
Antonia Dru
Gordons
Be(cid:425) y Posangat
Alotau
Bevilon Homuo
Bulolo
Billy Veveloga
Mendi
Dennis Lamus
Momase Manager
Diana Guria
Port Moresby
Donna Gavu
BSP First Gordons
Eileen Goviro
Popondetta
Emily Basil
BSP First POM
Gabriel Ak
Tari
Ivy David
Daru
Jacqueline Mileng
Vanimo
Jeff rey Singer
Waigani BC
Joe Makinta
Kokopo
John Basanu
Madang
Josephine Komuru
Lae Market
Julie Warren
Buka
Kalat Tiriman
Lihir
Karen George
Arawa
Lillian Doyango
SME Centre
Livikonimo Koki
Goroka
Madeleine Leka
Kavieng
Marco Hamen
Kainantu
Mary Koi
Bialla
Mary Kundi
Mt Hagen
Mathias Manawo
Waigani Drive
Maureen Wanu
Boroko
Meck Kaum
Moro
Nelson Kerua
BSP First HC
Nuni Kulu
Southern Manager
Peter Tikot
Rabaul
Quillan Nongi
Lorengau
Ruben Elizah
Highlands Manager
Rita Singut
Kundiawa
Robinson Panako
Lae Commercial
Ruby Patu
Kimbe
Sibona Kema
Vision City
Stanerd Wai
NCD Manager
Suya Yopahafo
Porgera
Tau Kwarujambi
Motukea
Theresa Pilamp
Wabag
Thomas Tembil
Kiunga
Tony Waningu
Tabubil
Julie Warren
Premium
Poni Tukily
Aitape
Alotau
Arawa
Bialla
Boroko
Branch
Premium
Buka
Branch
Bulolo
Daru
Goroka
Gordons
BSP First
Premium
Harbour City
Branch
Premium
BSP First
Kainantu
Kavieng
Kimbe
Kiunga
Kokopo
Branch
Premium
Alex Wafi mbi
Be(cid:425) y Posangat
Karen George
Mary Koi
457 2042
641 1284
276 9244
983 1095
Maureen Wanu
Sheila John
303 4333
303 4354
973 9042
7202 9203
973 9087
7202 9202
474 5366
645 9062
532 1633
Bevilon Homuo
Ivy David
Livikonimo Koki
Donna Gavu
Antonia Dru
302 5245
302 5271
Alex Kuna
Bau Kiso
Nelson Kerua
Marco Hamen
Madeleine Leka
Ruby Patu
Thomas Tembil
305 6151
305 6189
305 6560
537 1065
984 2066
983 5166
649 1073
Joe Makinta
Jennifer Tiolam
982 9088
982 9068
Kundiawa
Rita Singut
535 1025
Lae
Top Town
Main Market
Commercial
BSP First
Agnes Mark
Josephine Komoru
Robinson Panako
Elizabeth Gavul
Premium
Wendy Poka
473 9820
473 9606
473 9877
478 4949
478 4930
478 4923
SUB BRANCH DIRECTORY
Aiyura
Banz
Buin
Chuave
Daulo
Gembogl
Gusap
Henganofi
Higaturu
Hoskins
Ialibu
Kabwum
Kamtai
Kerema
Kerevat
Kerowagi
Kinim
Kikori
Komo
Konos
Kupiano
Cribia Albert
Kessy Elly
Melchior Tania
Koiya Kupa
Merolyn Sirifave
William Koima
Michael Yakep
Emos James
Stephanie Orovo
Ruddy Samson
Be(cid:425) y Goraiye
Rachael Watu
Robert Kom
Aisi Aua
Kilala Kindau
Leah Taia
Malapun Bannick
Leah Kimave
Lobe Arawi
Maureen Nick
Andrew Baine Jnr
7230 8313
7100 9078
7100 7855
7197 6001
7100 6763
7313 4177
7091 1396
7100 7859
7275 1365
7031 2627
7906 0599
7346 1426
7017 5870
7243 4695
7091 2298
648 1530
7190 8231
7100 9077
7100 7861
7290 7057
7163 0597
7362 0760
7197 6006
7288 4140
Lihir
Lorengau
Madang
Branch
Premium
Mendi
Moro
Motukea
Mt Hagen
Branch
Premium
Poponde(cid:425) a
Porgera
Port Moresby
Branch
Premium
BSP First
Rabaul
Tabubil
Tari
Vanimo
Vision City
Branch
Premium
BSP First
Kalat Tiriman
Quillan Nongi
986 4052
970 9050
John Basanu
Ruth Makel
Billy Veveloga
Meck Kaum
Tau Kwarujambi
Mary Kundi
Beverly Elizah
Eileen Goviro
Suya Yopahafo
Diana Guria
Lina Popal
Emily Basil
Peter Tikot
Tony Waningu
Gabriel Ak
Jacqueline Mileng
Sibona Kema
Damaris Toran
Dianne Sawala
422 2477
422 2621
549 1070
276 1566
321 7699
542 1877
542 1877
629 7171
547 6900
305 7790
305 7943
305 7731
982 1744
649 9179
276 1650
457 1209
300 9100
300 9103
300 9109
Wabag
Theresa Pilamp
547 1176
Waigani Banking Centre
Branch
Premium
Jeff ery Singer
Lorraine Siaoa
Waigani Drive
Wewak
SME Business Centre
Mathias Manowo
Albert Seri
Lillian Doyango
300 9600
300 9645
302 5300
456 2344
305 6400
Laba
Lakurumau
Lousia
Lufa
Maprik
Minj
Mutzing
Namatanai
Ningerum
Okapa
Padipadi
Palmalmal
Pangia
Tambul
Telefomin
Wakunai
Walium
Auda Morea
Chris(cid:415) ne Gawi Frank
Lorna Solomon
Vida Kama(cid:415)
Chris(cid:415) an Tatu
Kui Tai
Gordon Robert
Mathew Tabakas
Mathew Tware
Arafat Tovari
Alfred Robert
Freda Nablup
Philemon Kambu
Joseph Paul
Donna Yarkin
Melvin Kusa
Brenda Igusam
Wapenamanda
Yangoru
Feta Isin
Brendon Iromo
Yonki
Usik Asino
7197 6008
7197 6005
7031 2617
7100 6761
7168 7815
7020 6834
7100 9076
7100 2488
7197 6007
7031 8497
7374 5623
7090 4463
7323 9181
7197 6003
7100 7863
7255 8421
7100 7856
7106 8357
7024 7330
7100 7862
7127 0000
7180 3933
7185 5768
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Melaia Tu’ipulotu,
Manager Personal Business, BSP Tonga.
She is pictured with her grand daughter Heilala Tu’ipulotu.
Corporate
Social
Responsibility
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BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
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CORPORATE SOCIAL RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY
We are part of the communi(cid:415) es in which we operate.
Our Corporate Banking and Finance & Planning team hand over a renovated Hohola basketball court to the custodians.
At BSP, giving back to the community is part of our culture. We respect, value and support the communi(cid:415) es in which we operate.
In everything we do, we strive to be a good corporate ci(cid:415) zen and encourage all employees to volunteer and lend a helping hand where and when they
can. Our commitment to the community is evident in a variety of ways.
We deliver Community Projects, we sponsor worthy organisa(cid:415) ons and ini(cid:415) a(cid:415) ves, we donate to causes that make a diff erence, we teach children to Go
Green and we also go out and teach people, young and old, how to manage money be(cid:425) er. We also bring banking a step closer to communi(cid:415) es. We are
not just a Bank and not just a Brand. We are people, we are culture, we are friends, we are changing lives. We are BSP. We are Community.
Quick Facts about BSP Community Projects
Thankyou very much BSP for the refurbishment of the Hohola Basketball Courts. The new back boards,
rings and sea(cid:415) ng are much appreciated. Including the fl ood lights for night games. - Nick Daroa, President,
PNG Basketball Federa(cid:415) on.
In 2015 we focused on sports related projects, as BSP was Offi cial Sponsor of the 2015 Pacifi c Games, Port Moresby.
14 Basketball Courts refurbished across PNG.
• Sports items and merchandise also donated.
• Some courts also had seats/grandstands upgraded.
09
5.7
39
Is the year BSP introduced the Community Project concept where every branch chose a project in conjunc(cid:415) on with local leaders.
Other sport focused projects include:
Amount in Kina (Million) BSP has invested in community project throughout PNG since 2009. BSP fully funds these projects
focusing on Educa(cid:415) on, Health and Sports.
The number of Community Projects delivered by BSP throughout Papua New Guinea in 2015. The majority were sports courts
or grounds as it was the year of the Pacifi c Games.
• Volleyball court, Raba Field, Lihir, New Ireland.
• Sports fi eld grandstand, Daru, Western Province.
• New Grandstand, Manus Secondary School.
• Volleyball & Basketball courts, UPNG, Port Moresby.
• Grandstand at PNGFA Sports Field, Bulolo, Morobe.
• Basketball & Tennis courts, PNGDF base, Vanimo, WSP.
• Tennis & Squash courts, Cameron Club, Alotau, Milne Bay.
• Volleyball & Basketball courts, Malaguna Technical School, ENB.
• Basketball & Volleyball courts, Bishop Leo Secondary, Wewak, ESP.
100 BSP is 100% commi(cid:425) ed to the people of PNG and the Pacifi c. We go Beyond Banking and contribute signifi cantly back into the
communi(cid:415) es in which we operate.
Our Community Projects typically include:
237
The number of individual projects delivered in PNG from 2009 – 2015.
•
•
32 in 2009
35 in 2010
•
•
36 in 2011
29 in 2012
•
•
33 in 2013
33 in 2014
•
39 in 2015
Building new and renova(cid:415) ng libraries, classrooms & school bus stops.
Renova(cid:415) ng spor(cid:415) ng facili(cid:415) es & giving sport equipment.
Renova(cid:415) ng ablu(cid:415) on blocks or providing water tanks at schools.
Renova(cid:415) ng or building parks & playgrounds for children.
Renova(cid:415) ng, rebuilding hospitals & health facili(cid:415) es or providing medical equipment.
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CORPORATE SOCIAL RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY
Helping shelter women in need. Our Boroko and Port Moresby Branches helped the City Mission.
New playground at the Port Moresby General Hospital , built by our two Waigani Branches in Port Moresby. Playing and laughing is good therapy.
Thank you BSP, your support will certainly boost our work in the community and with women. We value the great
rela(cid:415) onship we have with such corporate organisa(cid:415) ons like BSP and individuals who support our work each year.
- Pastor Ronald Brown, CEO, City Mission.
City Mission Project by our Boroko & Port Moresby Branches.
Haus Ruth: Renovated and repainted Kitchen.
Haus Ruth: New footpaths + material to sew curtains for common hall.
Haus Ruth: Cooking utensils, pots + rice cookers.
Haus Ruth: New washing machine, 6 burner gas stove + refrigerators.
Koki Base: New water tank + pump.
Mirigida Farm: Vegetable seeds for plan(cid:415) ng.
New Hall at PNG Scout Headquarters Konedobu, Port Moresby
•
•
•
Old colonial, run - down Scout Hall demolished.
New Scout Hall built for scouts to u(cid:415) lise.
Ac(cid:415) vi(cid:415) es at Scouts Hall, keeps boys and youth off the streets.
HANDOVER
In Port Moresby, our Strategic Business Units, and our subsidiary companies BSP Finance and BSP Capital also took part in our community projects.
•
•
•
•
•
BSP Finance: A new shaded lunch area at Hohola Chris(cid:415) an School.
BSP Capital, Retail and Paramount gi(cid:332) ed Boy Scouts with a brand new Hall.
Corporate, Finance/Planning teams renovated the Hohola Basketball courts
HR and Risk Management renovated a sec(cid:415) on of the St Johns Gerehu Clinic.
Opera(cid:415) ons & IT team extended the outpa(cid:415) ent area, at Tokarara Clinic.
More Community Projects...
New water tanks at St Igna(cid:415) us High and Aitape Primary, WSP.
Bus stop and refurbishment of Kaselok Aidpost, Kavieng, NIP.
Renova(cid:415) on at St Johns Clinic, Gerehu, Port Moresby.
Refurbished main market bus stop, Goroka, EHP.
Town bus stop, Arawa, AROB
New community stage, Buka, AROB.
Renova(cid:415) on at Kiunga Hospital, WP.
Bus stop at Pimaga Sta(cid:415) on, Moro, SHP.
New playground at Port Moresby General Hospital.
Classroom maintenance, playground and water tank at Mendi Pre School.
MORO, SHP
DEMOLISHING THE OLD
HAPPY SCOUTS
AITAPE, WEST SEPIK
ARAWA, BOUGAINVILLE
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CORPORATE SOCIAL RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY
Queen Victoria School Gym.
Miss Samoa Pageant.
Our teams in Fiji & Solomon Islands also delivered Community Projects in 2015.
Some of the ac(cid:415) vi(cid:415) es & organisa(cid:415) ons we supported in 2015 include:
Fiji Branch Projects
Samabula: Upgraded playground, Suva Primary School.
Opera(cid:415) ons Centre: New volleyball court, Mokosoi Park.
Thomson St & E-Channels: Upgraded basketball court, Stella Maris
Solomon Islands Branch Projects
Pt Cruz: New toilets, Honiara Integrated School.
Auki: Supplied chairs and desks, Aimela Primary.
Noro: Water tank, chairs, bed sheets, pillows, curtains, tubs, Noro
Primary School, Suva.
Clinic nursery.
Project BEST: New pathway and fencing of homes for the elderly,
Munda: New furniture, curtains, carpet and water tank, EC Kindy
Lagilagi Housing Project.
School.
Savusavu: New mul(cid:415) - purpose court, Nasavusavu Secondary School.
Taveuni: Construc(cid:415) on of recyclables sor(cid:415) ng sta(cid:415) on.
Wes(cid:414) ield: Upgrading sports fi eld, spectator benches, Nadovu Park.
Microfi nance Team: Upgrade the exis(cid:415) ng sports ground, Nadarivatu.
Nausori & Customer Care: Upgraded gym, Queen Victoria School Gym.
E-Channels Support: Renova(cid:415) on to the Chevalier Training Centre.
Rakiraki: Construc(cid:415) on and set up, benches in Rakiraki town.
Labasa: Upgrade gym at Sukanaivalu.
BSP Heritage Park: New water tank to St John Secondary & Primary
School.
Gizo: Rubbish bins drums, Gizo Town Council.
Ranadi: New food trolley, digital scale, urn and a cleaner trolley,
Children’s Ward, Na(cid:415) onal Referral Hospital.
Fiji
Team Fiji to Pacifi c Games
Banking on Gold - Rewarding Athletes.
Fiji Nurses Associa(cid:415) on
Annual Conven(cid:415) on of the Fiji College of
General Prac(cid:415) (cid:415) oner
Fiji Hotel & Tourism Associa(cid:415) on
Fiji Oral Health Workers Associa(cid:415) on Annual
Conference
Fiji Medical Associa(cid:415) on Annual Conference
Fiji Head Teachers Annual Conferenc.
Fiji Correc(cid:415) ons Women’s Conference
Fiji Dental Associa(cid:415) on Conference
Fiji HR Ins(cid:415) tute Annual Conference
Solomon Islands
Australia Pacifi c Islands Business Council
Australian G’Day Fun Run
SI Red Cross Handicap Centre.
SI Basketball team to the PG Games
Women in Business Associa(cid:415) on (SIWIBA)
G’Day Australian Film Fes(cid:415) val
Cook Islands
Aitutaki Golf Open 2015
The Rotary Club of Rarotonga
Rarotonga Sailing Club
Breast Cancer Awareness
Na(cid:415) onal Baby Show
Kids Christmas Giving Tree
Water Safety & Life Saving
Council
Rarotonga Squash 2015
Tournament
Cook Islands Maths Quiz Compe(cid:415) (cid:415) on
Rarotonga Road Race
Rarotonga Round Cup Compe(cid:415) (cid:415) on
Tiare Fes(cid:415) val
Cook Islands Triathlon Associa(cid:415) on
Samoa
Commonwealth Youth Games
Miss Samoa Pageant 2015
Senese Secondary Program
Cancer Founda(cid:415) on
Tusitala Short Story
Rugby Samoa Academy
Samoa Ins(cid:415) tute of Accountants
Fitness Firm Weight Loss Challenge
Pacifi c Literacy Fes(cid:415) val
Tonga
Vava’u Billfi sh Fishing
Tournament
Queen Salote College School
Tonga Golf Associa(cid:415) on
Rugby World Cup 2015
Mo’unga ‘Olive High School
Royal Maopa Choir
Royal Nuku’alofa Club
Mo’onia Netball Tournament
Pacifi c Provident Fund &
Social Security Forum
Christmas In the Park
WOWS- Laughing Samoans
Vava’u High School
Nuku’alofa Outrigger Canoe Club
Open Heart Interna(cid:415) onal
HONIARA BRANCH
AUKI BRANCH
NORO BRANCH
ATHLETES WELCOME, COOK ISLANDS
CANOE CLUB, TONGA
ROAD RACE, COOK ISLANDS
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BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
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CORPORATE SOCIAL RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY
The BSP School Kriket program is one of Papua New Guinea’s most successful junior sports development ini(cid:415) a(cid:415) ves.
Buk Bilong Pikinini (BbP) Library at Koki. Our support ensures such libraries are set up.
We are very proud to have BSP as our partner in this program and together we can be proud of our achievement. -
Gayan Loku, Cricket PNG Game Development Manager
At BSP our commitment is to help communi(cid:415) es prosper in all areas we operate in. Some of the ac(cid:415) vi(cid:415) es & organisa(cid:415) ons we
supported in 2015 include:
BSP Sponsorship & Dona(cid:415) ons focuses on many aspects of the community such as:
Sports ini(cid:415) a(cid:415) ves promo(cid:415) ng healthy, ac(cid:415) ve lifestyle.
Educa(cid:415) onal ini(cid:415) a(cid:415) ves promo(cid:415) ng literacy.
Na(cid:415) on building & encouraging investment.
Art & Cultural ac(cid:415) vi(cid:415) es.
Health & Environmental ini(cid:415) a(cid:415) ves.
Humanitarian and charitable ini(cid:415) a(cid:415) ves.
Some major sports sponsorships are:
BSP School Kriket Program
K300, 000 pa + K100, 000 for equipment.
150,543 par(cid:415) cipants, 235 schools, 111 clinics in 2015.
BSP School Kriket Blasts reached addi(cid:415) onal 5,500 children.
Awarded the best Overall Development Program in the ICC Regional
(EAP) Awards in 2009, 2011, 2012, 2013 and 2014.
BSP Junior Golf Development
Sponsorship of K200,000 to PNG Golf Associa(cid:415) on for junior golf
development.
BSP Na(cid:415) onal Aqua(cid:415) c Excellence Program
The Papua New Guinea Swimming Inc receives K80, 000 for the BSP
Na(cid:415) onal Aqua(cid:415) c Excellence Program.
Since 2004, more than 1,200 young swimmers have gone through this
program.
Young swimmers set goals, achieve results and become part of the BSP
Na(cid:415) onal Aqua(cid:415) c Excellence Program.
Mo(cid:415) vates volunteers to pursue careers as coaches, administrators, and
technical offi cials in swimming.
Soim Kala Art Show
Buk Bilong Pikinini
Hospital Poroman Founda(cid:415) on
Salva(cid:415) on Army
City Mission
PNG Red Cross
Miss South Pacifi c Pageant
Coali(cid:415) on for Change
Sir Buri Kidu Heart
Sorop(cid:415) mist Interna(cid:415) onal
Susu Mamas
Transparency Interna(cid:415) onal PNG
PNG Cancer Founda(cid:415) on
Australian Doctors Interna(cid:415) onal
BSP School Kriket Program launch
PNG Paralympic
PNG Swimming Inc
BSP Jnr Golf Development Program
PNG Investment Summit
Australia PNG Business Forum
Business Advantage Investment Summit
CPA Conference
NDB Entrepreneurial Youth Summit
PNG Human Resource Ins(cid:415) tute
PNG Medical Symposium
Ins(cid:415) tute of Internal Audit Conference
Morobe Agricultural Show
Goroka Show
Warwagira & Mask Fes(cid:415) val
Sepik River Crocodile Fes(cid:415) val
Frangipani Fes(cid:415) val
Kenu & Kundu Fes(cid:415) val
Madang Fes(cid:415) val
Bulolo Show
Women’s Doctors Associa(cid:415) on
BPNG Young Minds Savings Campaign
Some
Organisa(cid:415) ons
BSP Supports
The Institute of
Internal Auditors
PNG Chapter
A notable product of the program is PNG’s ‘super fi sh’ and BSP Brand
Morobe Province
Agricultural Society Inc
Ambassador Ryan Pini.
BSP supports Paralympics, Canoeing, Sailing, Fishing and Football among many other worthy ac(cid:415) vi(cid:415) es and ini(cid:415) a(cid:415) ves...
ANNUAL HOSPITAL VISITS
CHARITABLE WALKS
HUMANITARIAN CAUSES
HR DEVELOPMENT
SUPPORTING CULTURAL EVENTS
PROMOTING LEARNING & LITERACY
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BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
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CORPORATE SOCIAL RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY
BSP HQ staff in Port Moresby wai(cid:415) ng for the Pacifi c Games Baton.
Cook Islanders par(cid:415) cipa(cid:415) ng in the Annual School Clean Up Day.
As Offi cial Sponsors, BSP played a signifi cant role in ensuring the success of the XV Pacifi c Games, Port Moresby 2015.
Here are some of the things we helped out with:
We are demonstra(cid:415) ng socially responsible ac(cid:415) ons which posi(cid:415) vely impact the community. Our major Go Green ac(cid:415) vity is the
Annual School Clean Up Day. Here are 2015 Highlights:
BSP staff allowed (cid:415) me off to join the volunteer program.
BSP staff seconded to the Games Offi ce.
Bank products for Games Offi ce staff and training for Games Finance staff .
BSP had the largest ac(cid:415) va(cid:415) on/Pacifi c Games Sponsor zone for spectators.
BSP issued a limited edi(cid:415) on KunduCard.
Supporter giveaways included Sombreros and hand fans.
Promoted Games via Adver(cid:415) sing, Billboards and Merchandise.
Branch at Games Village for FX money transfers and EFTPoS & ATM at Venues.
Merchandise gi(cid:332) s for 6,000+ PNG and visi(cid:415) ng Pacifi c Island Athletes.
Developed standalone Ticke(cid:415) ng program, sold at 17 BSP Branches na(cid:415) onwide.
BSP has fully funded and led clean ups in PNG, Fiji & Solomon Islands since 2010.
1000s of school children par(cid:415) cipated in the School Clean Up.
BSP supports the Annual School Clean Up with T Shirts, Caps, Rubbish bags, and gloves.
Our staff lead the Clean Up ac(cid:415) vi(cid:415) es and provide logis(cid:415) cal support.
We support clean up ac(cid:415) vi(cid:415) es in communi(cid:415) es, our staff o(cid:332) en lend a helping hand.
We have branch based Go Green Ambassadors who visit schools and communi(cid:415) es and promote
environmental responsibility.
We support local authori(cid:415) es and help provide rubbish drums.
We recycle tonnes of waste paper every year.
We are teaching children the value of keeping their environment clean, green & healthy.
Our message is to Reuse, Recycle and Respect our environment.
I say with much confi dence that with BSP’s support we now have the capacity to dream big about the range of
possibili(cid:415) es for engagement, par(cid:415) cipa(cid:415) on and for delivering the best ever Pacifi c Games - Pacifi c Games Organising
Chairperson, Emma Waiwai.
BSP WANTOKS
SPECTATORS HAVING FUN
BATON RELAY
PNG
SAMOA
TONGA
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BANK OF SOUTH PACIFIC LTD ANNUAL REPORT 2015
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