20
| Annual Report23
Digital Channel Growth
Revenue
PGK 404.2 mil
Up 10%
Deposits
PGK 4,354.9 mil
Up 12%
Net Loan & Advances
PGK 2,562.1 mil
Up 19%
Customers
248,331
Up 19%
Underlying Return on Equity (ROE)
FY22 17.9%
FY23 16.8%
Cost to Income
FY22 58.2%
FY23 54.1%
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Kina Bank.
PNG’s Leading
Digital Bank.
We are delivering on our promise to our customers. We are giving
them more ways to bank with us and live their financial lives. What
else would you expect from a true leader and disruptor in PNG.
Working with our key technology partners, Kina Bank has built a program of
continual Digital product and service releases over the last four years, improving
accessibility, customer experience and reducing the cost of financial services.
Kina Bank has put PNG on the map as a nation fostering digital innovation
and has won awards and critical acclaim for paving the way in the sector. A
key element of the five-year Strategic Plan, this focus has seen Digital portfolio
revenues grow from PGK4million in 2019 to almost PGK65million in 2023.
The Digital development pipeline for 2024 is strong and will ensure Kina Bank
continues to lead digital innovation, not only in PNG, but in the Pacific Region.
13.1% 15.8%
Market Share Deposits
Market Share Lending
3
Every success story starts with ambition.
The desire and determination to break new ground, create something
new, make a better product, and to overcome the biggest challenges.
We see it in the ambitions of our PNG business owners and operators.
We see it in the dreams of hardworking Papua New Guineans, full
of ambition for home ownership, a new vehicle, and to give their
children the best education.
We share these ambitions, because ours is to see this great country
reach its full potential. We’re here to share ideas. To help overcome
the obstacles. To make sure every opportunity is realised and seized
with both hands.
And because ambition fuels innovation, we’re continuing to deliver a
range of digital products and services that offer faster, more effective
ways to solve our partners’ challenges.
The success story of PNG is one that we’re crafting together, and it
takes the ambitions of each of us. Because when it comes to fulfilling
our nation’s potential, together it’s possible.
Shared.
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Ambition.
5
True partnerships
produce the most
fruitful results.
6
About
01 Remuneration
07
About Kina Securities Limited
Chairman's
Message
Report
9
1 Introduction and overview to shareholders
2 Kina’s Key Management Personnel (KMP)
02
3 Executive remuneration
4 Non-executive director arrangements
Chairman’s Message
11
MD & CEO's
Message
Managing Director
& CEO’s Message
5 Related party transactions
6 Directors’ interests in shares
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Corporate
Governance
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08
Corporate Governance Statement
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39
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40
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Vision & Strategy 04
Our Segments
Strategic Overview
Our Values
2023 Strategic Pillars
Board
Board of Directors
Executives
Senior Executive Team
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29
06
35
Financials
09
Directors’ Report
Independent Auditors’ Report
Statements of Comprehensive Income
Statements of Financial Position
Statements of Changes in Equity
Statements of Cash Flows
Notes to the Financial Statements
Shareholders
Shareholder Information
Corporate
Directory
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80
81
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84
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144
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Corporate Directory
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7
Possibilities.
Partnerships.
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About Kina
Securities Limited.
Kina Securities Limited and its related entities (KSL, Kina, the Kina Group, the Group, or
the Company) was established in 1985 as a diversified financial services company offering
banking products, funds administration and wealth advice across Papua New Guinea (PNG).
Kina Wealth encompasses Kina Investment
and Superannuation Services, Kina Funds
Management and Kina Nominees servicing funds
administration, wealth advice, stockbroking, funds
management and nominee custodial services.
Kina’s Corporate Governance Statement is
available on the Company’s website: investors.
kinabank.com.pg/Investors/?page=corporate-
governance
Kina offers customers end-to-end financial
solutions from savings accounts to business loans,
investments to mortgages, financial advice and
investment management. We are committed to
delivering exceptional service and this is what
sets us apart in the market. Since our inception,
we have grown to reach over 650,000 people,
administering 922,000 superannuation accounts
for beneficiaries and having a total asset base of
PGK 5.2 billion.
Kina Securities Limited has two key divisions.
Kina Bank and Kina Wealth.
Kina Bank delivers home, business and corporate
loans, everyday banking transactions, credit cards,
merchant and payment facilities and banking
services to smaller institutions.
Kina
Securities
Limited.
Kina Funds
Management Ltd
Kina Investment
& Superannuation
Services Ltd
Kina Nominees Ltd
Kina Wealth
Management Ltd
9
01 M
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We have delivered
market-leading
digital products that
make our customers’
lives easier.
Chairman’s Message.
Dear Shareholders, I am pleased to introduce Kina’s Annual Report for the financial year
ended 31 December 2023.
Kina Group’s net profit before tax increased by
almost 20% to PGK175.3m, underpinned by loan
book growth of almost 20%, an increase in fees
and commissions and a 200 basis points decline
in cost to income to 54.2%. The underlying
net profit after tax was virtually unchanged at
PGK105.2m recording a 1% drop because of the
increased corporate tax rate from 30% to 45%.
Our foreign exchange (FX) volumes were lower
than expected, at PGK52.7m. While this result was
below prior year levels, there was a noticeable
lift in the final quarter of the year, as central bank
foreign currency interventions aligned more with
KSL’s bank customer demand flows.
Kina Investment and Superannuation Services
recorded an increase of 50% in NPAT
associated with an increase in total funds under
administration to PGK18b and a 5% increase in
total membership.
There was an exceptional contribution from the
lending business, generating organic loan growth
of almost 20% to make loan interest the highest
value revenue portfolio (PGK194m) as well as the
highest increased (PGK37.4m) revenue item from
the prior year. The regional bankers and business
advisors have made a positive impact. Amongst
our clients are 2000 new business customers and
40 corporate, multinational accounts. Our loan
recovery team also produced some significant
wins during the year helping to give us our best
loan provision statistics to date.
Our well established partnerships with
Nambawan Super and National Superannuation
Fund have continued successfully, and our
funds under administration and funds under
management are growing steadily, while our
wealth management teams publish well-read
bulletins and updates on the PNG economy.
Pleasingly, our ROE was 16.8% and ahead of
plan, despite the dampening effect of the first
year of the higher income tax rate.
We paid a final dividend of PGK15.9 toea (AUD
6.0 cents) per share bringing the full year
dividend to PGK25.6 toea (AUD 10.1 cents)
per share. This demonstrates the Board’s
commitment to return a good flow of earnings
back to the owners of our business when growth
is achieved.
I am proud of what we‘ve achieved given difficult
economic conditions in 2023. We have delivered
market-leading digital products that make our
customers’ lives easier.
The Board is supportive of our strategy, as we
continue to build on the progress we have made
in core banking activities, and achieving ongoing
developments in our digital partnership model,
to diversify financial services and revenues for
sustainable growth and returns through the
economic cycle.
Looking ahead, the Board will steer a
prudent course for growth opportunities
while safeguarding our strong balance sheet,
underscoring the requirement that the growth
agenda must be value accretive for all our
stakeholders.
We are tracking well to deliver on our 2025
strategic plan. Now embedded as the primary
11
02 The Board commends all our people for their
adaptability, passion and for bringing to life
Kina’s vision of becoming the most dynamic,
forward-thinking financial services company
in the Pan Pacific.
I would like to thank my Board of Directors for
their ongoing support and solid leadership. Their
excellent knowledge, diligence, and assistance in
creating a strong, customer-focused organisation
is paving the road for innovation and, in turn,
improving the future of PNG.
Isikeli (Keli) Taureka
Non-executive Chairman
Chair of the Disclosure Committee
challenger brand, our market share and digital
footprint continue to grow. Our mission to
deliver prosperity for the communities we serve
remains central to our purpose. As we advance
into the second half of our 5-year strategy, the
key priorities for the Board will be to support
Management as it audits all branch locations
to ensure our service and product offerings
are accessible and inclusive, revamp our
flagship branch and key locations to provide a
better experience for our customers, enhance
technology infrastructure and capabilities, and
expand our footprint beyond Papua New Guinea.
The Board commends all our people for their
adaptability, passion and for bringing to life
Kina’s vision of becoming the most dynamic,
forward-thinking financial services company in
the Pan Pacific.
We have an extremely skilled leadership team,
and the Board is pleased with the progress
that has been made over the years and have
confidence that the Managing Director and CEO
Greg Pawson and his capable team will continue
to deliver value to all our stakeholders.
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I am proud of our people
who continue to go
above and beyond to
deliver some of PNG’s
banking firsts.
Managing Director
& CEO’s Message.
Once again, it gives me great pleasure to report to you on the performance of Kina Securities
Limited for 2023. We have been working hard to improve the financial services landscape
in PNG by making banking more dynamic, progressive, accessible and convenient. This has
always been and continues to be the cornerstone of our vision.
Our 2023 revenue growth was underpinned by
solid revenue growth in core banking products,
most notably business lending, and also the
continued stellar growth in digital revenues,
which kept us on track to achieve the 2025
strategic plan.
Our underlying ROE remained at 16.8%, and
regulatory capital closed the year at a risk-
aligned 20%, inside our target operating range
and above the minimum requirement. This
supports Kina’s growth focus and demonstrates
our ability to execute a revenue diversification
strategy, with close to 50% of income derived
from non-interest products.
The business has also shown agility to adapt
when necessary to deal with variability in
conditions, such as changes to our corporate tax
rate, foreign currency supply inconsistency, and
low yields on domestic securities.
Executing sustainable growth on the core lending
businesses through a targeted approach to
segments has clearly stood out as a market winning
plan in 2023. This has enabled our market share
to improve by 4% in loans and 2% in deposits with
associated customer growth of 19%. Our digital
revenues grew over 44% year on year and the
trajectory remains positive. We are confident that it
will deliver more in the coming years.
The PNG government’s increase in Corporate
Income Tax for commercial banks from 30% to
45% came into effect on 1 January 2023, and
despite indications that further consultations
would continue with the banking industry in the
first half of 2023, the tax remained in place for the
financial year. Despite this and some significant
headwinds in 2023, we still remained true to our
identity as PNG’s leading Digital Bank by driving
innovation and delivering services and products
that have made banking accessible, convenient
and easier to use for our customers.
In 2023, we launched our Pei Beta bill payments
platform that customers of any bank can use,
opened the first Kina Bank Business Centre and
Kina Private Suite at Harbour City Port Moresby,
launched the first of several new look Digital
Hubs in Port Moresby, and launched the ‘Red
Thunder’, a mobile banking team that assists
businesses and their employees to seamlessly
on-board to Kina Bank.
2023 was also a record year for Kina in customer
growth and lending growth to the SME and
Commercial sectors and while NCD was a major
contributor to this growth, our regional branches
also shone, testament to our investment in the
ability of experienced and qualified business
bankers in our regional provincial branches to
make quick and effective decisions. This is a
business model that we will also look to replicate
across the country and in conjunction with our
partnership strategy for new locations with MiBank.
Kina Bank also through its partnership with
NiuPay and the Department of Lands and
Physical Planning, launched an E-Lands Kiosk, an
innovation that revolutionises land management
services for the public sector in Papua New
Guinea by integrating with Kina Bank’s payment
processing solutions. It is a product which we
are very proud of as it facilitates efficient and
accountable service delivery.
Perhaps the most exciting feature of 2023 though
was the launch of Kina DigiBankr, an online
mobile app and website that allows new-to-Kina
customers to on-board themselves anytime
and anywhere. By using this app, the hassles of
queueing or long waiting times can be avoided,
and the customer can open and activate their
15
03 own account. Through developments such as
these, Kina is committed to bringing the best of
international banking practices and technology to
our shores.
management while maintaining our growth
aspirations. We know achieving this balance will
underpin our strategy and in turn, the value we
create for our stakeholders.
In 2023, we implemented a realigned structure
that reflects our growth agenda and evolution
of the 2025 strategy. We welcomed three new
executives in Charlie Sukkar as our new Chief
Information Officer to lead KinaTech, Roppe
Uyassi as Chief Operating Officer and Philip Keller
as our new Chief Risk Officer.
2023 came with its fair share of challenges,
but thanks to the efforts of our Kina staff, the
leadership shown by my Executive team, and
the counsel and support of the Board, Kina has
further strengthened its business through the
many products, services and initiatives we have
launched.
I am proud of our people especially who continue
to go above and beyond to deliver some of
PNG banking's ‘firsts’. We remain PNG’s leading
digital bank by offering our customers simpler,
convenient ways of banking.
I am confident we are moving in the right
direction to fulfilling our vision of being the most
dynamic, progressive and accessible financial
services organisation in the Pan Pacific region.
Gregory Pawson
Managing Director & CEO
At Kina our focus remains on building on the
strong momentum across our business to deliver
on our strategic initiatives. I remain positive on the
outlook for Kina in 2024.
As we move into 2024, expansion and growth of
our services remains a key focus. Development
of our digital capability, driving growth in our
core businesses of retail and business banking,
and wealth management will see Kina Bank
make a valuable contribution to supporting
the Government’s nation building agenda. Our
commitment is underlined by our plan to invest
over PGK 30 million during 2024 to continue
expanding and refining our services, putting our
customers at the centre of everything we do.
Some may assume we are a traditional
commercial bank however our strategy and
business model is designed around innovation
and digitalisation. Our Bank to Market Maker
Model shows how we are differentiated from
our competitors, emphasising the importance of
partnerships to quickly expand our market reach
and capture value.
While we would love everyone to switch to Kina,
we can also reach more of the market faster
by offering leading services and innovative
independent platforms using our infrastructure
that attract users from our competitors’
customers, without them having to bank with us.
A great example of this is our recently launched
Pei Beta payments platform.
Our ambitious plans to expand Business Banking,
develop an expertise in Agri business and create
a customer obsessed workforce will continue to
define our success as we move into 2024.
We take a balanced approach to our investment
profile. Our aim is to diligently manage
costs and adopt a measured approach to risk
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17
SME Lending growth
increased by 25%
Revenue growth
of 10%
Lending Market
Share growth of 4%
Retail customer
growth of 20%
Digital channel
growth of 44%
Home loan growth
of 8%
PNG is growing.
This creates opportunity
across the spectrum
of consumer and
business markets.
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Our Segments.
Kina Bank
Kina Bank delivers home, business and corporate
loans, everyday banking transactions, credit cards,
merchant and payment facilities, and banking
services to smaller institutions. Kina also delivers
partner products, and independently branded
financial services products and services for
customers of any bank. In 2023, we continued our
focus on our Digital Banking platforms to increase
accessibility to banking services for all Papua New
Guineans, and on delivering results in Customer
acquisition, Corporate and Home lending, and SME.
Growing Digital Portfolio revenues
Digital portfolio growth was up 44% year on year.
This consolidated result includes growth in core
merchant payment services, VISA card revenues,
mobile and internet banking transactions, bill
payments services, and Internet Payment Gateway
from which we provide e-commerce services direct
to merchants and via our strategic partners.
Growing savings accounts and customers
Low-cost savings accounts grew by 19%.
Customer acquisition in both Consumer, (20%),
and Commercial customers, (10%) was strong.
Growth in Loan Book by 19%
Overall lending was up 19% YOY to PGK2.6bn,
including growth in Term Loans, Asset Financing
and Home Loan portfolios of PGK377.9m. Growth
in the business customer base and improvements
in the operating model across transactional,
lending and digital banking services for business
and SMEs, contributed to this solid outcome.
Kina Wealth
Kina Wealth had a solid year of performance.
Kina Funds Management, the country’s leading
fund manager renewed its key customer contract
for a term of 3 years with inbuilt renewals. Fund
performance was solid and cash inflows steady
leading to funds under management (FUM) ending
at PGK10 billion, growth of 12% YOY.
Kina Investment and Superannuation Services
(KISS) maintained its position as the country’s
leading funds administrator. Cost management was
key in 2023 leading to profit ahead of budget of
circa 30%. Increasing use of technology improved
processes and customer experience. We added a
new technology services partner, Novigi, a leading
technology services business in the superannuation
sector in Australia, to provide strategic technology
support for clients. KISS provides a strategic
platform for Group growth by leveraging the
membership base of superannuation funds to
provide bank services.
Service level agreements for both businesses
exceeded contractual requirements being in the
high ninety percent region and Return on Equity
(ROE) measures were also strong, helping to lift
overall group ROE.
Kina Private (Private) was launched targeting the
underserved high net worth market in PNG. Private
is based on a high trust, high touch relationship
service. Our first office in Port Moresby has been
a resounding success closing out 2023 with
75 customers with a very high average deposit
balance of PGK3 million providing a solid pool of
deposit funds. We expect transactional volumes
from this segment will be meaningful across all our
service channels with cross sell opportunities across
all divisions. This segment will be a key distribution
platform for the wealth management business as
we develop collective investment opportunities for
the domestic market.
Our Corporate Advisory business, another new
segment, closed the year strongly with 40 new to
Kina Bank corporate grade relationships ranging
from multi-nationals to large PNG businesses. We
also focussed on exporters to assist us in growth
of our foreign exchange supply and made good
inroads to this market. Progress was made on
developing a capability to participate in leading
local syndications and also in the development of
a strategic relationship with Bank of China that will
provide for USD options in foreign exchange.
19
04 Strategic Overview.
Over the next three years our strategic intent is built on our banking and
wealth capabilities to provide services and partnerships to create value for our
communities. Supporting our strategic evolution are the key strategic pillars
of Growth and Prosperity, Resilience, Service Excellence, Dynamic People and
Sustainable Communities.
2020-21
Your trusted bank
+ Traditional banking
+ Digital banking
2022-24
Your trusted financial
services partner
+ Traditional banking
+ Digital banking
+ Investment Banking Bank Services
+ Partnership Platform
Retail
Commercial
Ecosystem Services
Corporate
SME
Corporate
Commercial
Superannuation Partners
Superannuation Partners
Banking Partners
Banking Partners
Infrastructure Partner
Sell, service, grow, digitise
• Grow banking market share
• Digitise core business
• Digital customer solutions
• Test and learn partnerships and
innovative business models
Digital Partners
Partnering to create and capture value
(B2B, B2C)
• Maturing technology and infrastructure
• Maturing partnerships capability
• Targeted acquisitions
• Selectively scale new business models
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2025
Your trusted partner
in the Pan Pacific Region
+ Pan Pacific diversified investment bank
Markets
Kina Bank Modules and Partners
Digital Partners
Infrastructure Partner
Convene a marketplace of assets, capabilities
and services (B2B, B2C)
• Geographical reach; digital-only bank
• Bank as a service – B2B
• Customer and partnership marketplace
• Diversified investment bank
21
Vision.
Our Vision is to be the most dynamic, progressive and accessible
financial services organisation in the Pan Pacific region.
Purpose.
Our defining purpose is to constantly improve the prosperity
of the people, communities, and markets that we serve.
Our
Strategy.
Prosperity for our communities is Kina’s DNA. Serving our
communities, supporting the growth of Papua New Guinea
and continually developing innovative customer-led solutions
is at the core of our organisation.
Priorities.
GROWTH &
PROSPERITY
BUILDING
RESILIENCE
SERVICE
EXCELLENCE
DYNAMIC
PEOPLE
SUSTAINABLE
COMMUNITIES
22
Our Values.
Fairness.
Inspire.
Responsive.
Serve.
Together.
Guides equity
and justice,
ensuring
opportunities
for all to thrive.
Sparks
creativity, fuels
perseverance,
drives change and
touches hearts.
Fosters trust
and satisfaction
by addressing
peoples’ needs
promptly and
effectively.
Embodies
empathy,
compassion,
kindness and
enriching our
customers’ lives.
Is a team who
entrust each other.
23
2023 Strategic Pillars.
Growth & Prosperity
More than halfway through our strategic plan
cycle, Kina has seen strong growth across our
diversified portfolio, defined by the business
models of Core Banking, Digital Banking,
Partnerships Platform, Bank as a Service and
Diversified Investment Bank.
Kina’s growth in market share and mix of
approximately 50% interest and 50% non-interest
income reflects this healthy diversification as well
as the 16.8% underlying ROE and foundation of
20% risk aligned regulatory capital supporting
sustainable growth.
Delivering on the middle years of our Bank to
Market Maker roadmap has seen Kina deploy
to the market innovative products, services, and
partnerships, including several firsts for the PNG
market. This includes Pei Beta, an independently
branded bill payments platform that is fee free
and available for customers of any bank to use,
even if they don’t have a bank account with Kina.
We also released our DigiBankr platform, PNG’s
first eKYC enabled digital onboarding solution for
a commercial bank, meaning customers can sign
up to Kina and open an account without having
to come to one of our branches. Our e-commerce
and internet payments gateway (IPG) capabilities
have been further enhanced and are reaching
more customers through our distribution partners
NiuPay and SNS Tech. We see the enabling of
digital payments as a critical part of growing the
prosperity of small and large businesses in PNG
and will continue to focus on this area.
In 2023 we also commenced several major digital
banking initiatives which will be completed in
2024 including a full platform replacement of
our Corporate Online Banking solution, to better
service the SME, corporate and multinational
sectors as cheques are phased out and digital
solutions become more commonplace. Our
Bank as a Service model will be further extended
through an embedded finance solution with a
major corporate institution in PNG who is looking
to improve how their customers access and
transact with payment services.
In parallel to product innovation driving Kina’s
digital and channels growth to 44% year on year,
Kina’s core banking business was strengthened
through the appointment of an Executive General
Manager for Business Banking and the delivery
of record lending growth of almost 20%, and
an increase in market share of 4%. The Regional
Business Advisor model contributed strongly to
this growth, as did the contribution of regional
branch network to our record year for onboarding
new customers.
Kina Investment Superannuation Services recorded
an increase of 50% in NPAT associated with an
increase in total funds under administration to
PGK18b and a 5% increase in total membership,
while funds under management within our Wealth
division continues to grow steadily.
While Foreign Exchange volumes and revenues
were lower than expected, at PGK51.3m, the
final quarter of the year saw a significant uplift,
including several record months due partly to
Central Bank interventions.
Across the portfolio, Kina has seen positive growth
momentum from end of 2023 into 2024, supported
by investments into keeping our products and
services competitive and ahead of the market.
Resilience
Kina’s total regulatory capital adequacy of 20%
remains well above the regulatory minimum of 12%.
At the same time as sustainable growth, prudent
cost containment was pursued to achieve a cost
to income improvement of 200 points to just
above 54%.
Our Reimagining Risk program of work continued
through 2023 with a focus on embedding
governance processes and an establishment
of a target risk maturity for 2025. This included
the finalisation of Risk Appetite Statements that
align with strategic objectives and continued
improvement in risk modelling practices.
Our Strategic Intelligence capability was further
matured in 2023, enabling Kina Group to
identify strategic disruption risks and emerging
growth opportunities.
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Over the past three years, we have made
prudent investments into our technology
foundations and are now seeing the benefits of
these investments, including for API middleware,
in the activation and growth of our digital and
partnered products and services.
Kina continues to invest in leadership capability
and technology solutions to remain alert to and
prepared for cyber security risks. As cyber-attacks
pose a constant risk to business operations directly
and indirectly, we will continue to strengthen
infrastructure and capability where it is needed
through the short, medium, and longer term.
Service Excellence
The launch of our FIRST program was a 2023
highlight, realigning our company values around
customer service and the ambition for this to be
a key differentiator. We are Fair, we Inspire, are
Responsive and Serve Together. Following an all-
company launch event in 2023, every employee
in Kina participated in FIRST training and
awareness. In addition to a focus on customers,
this program encourages self-awareness and
reflection, critical attributes for our service-based
culture. Our cross-functional FIRST champions
commenced phase two of their training, so that
they can continue to embed the FIRST values and
behaviours across the business in 2024.
In recognising Kina’s role in the ongoing transition
from traditional banking to digital banking in
PNG, Kina launched several initiatives to improve
accessibility, make it easier to switch banks, and
to remind customers that they have a choice.
In addition to taking the bank to our customers
digitally via products such as WhatsApp
Banking and DigiBankr, we also launched Kina
Onboarding days at key branch locations in
NCD and regionally as well as launching the Red
Thunders, our mobile banking team that can
go to customers and their communities as an
alternative to customers travelling to branches.
We also piloted a low cost but highly accessibility
distribution model. Our first Digital Hub was
launched within the premises of one of our key
customers, Eliseo Limited. This provides customer
onboarding, non-cash transactions and a first
point of contact for customer queries. The Digital
Hub concept will be further expanded in 2024
and complimented by the launch of Kina Lite
Branch model for which we have confirmed an
initial location in Port Moresby.
Our efforts to digitalise and innovate, to improve
service and distribution points, helped Kina to
onboard almost 40,000 customers in 2023, a
record number for Kina.
Dynamic People
Our people are at the forefront of driving service
differentiation, growth, and innovation. In 2023 we
completed an employee engagement action plan
that was actively sponsored at executive level. This
plan resulted in a 12% uplift in engagement and
15% uplift in the leadership effectiveness index as
measured at year end. Focus areas included Small
Groups communication forums, an Emerging
Talent Program in partnership with the University
of Tasmania, the FIRST values program, the
implementation of a Cost of Housing Allowance,
a new intranet and other communication tools,
and the embedding of leadership, coaching and
performance management practices.
Remuneration policies and practices continue to
be an area of focus, within the context of cost-
of-living challenges. Kina continues to review
opportunities to provide services, support, and
benefits to staff. In 2023, following a peer review
of remuneration practices, Kina introduced
its first Cost of Housing Allowance for eligible
staff members. This provides a foundation from
which we can continue to review and adjust our
practices in the future.
Kina’s Graduate Program continues to be an
attractor of talent, building future resilience and
organisational capability. Many of our graduates
from earlier years have now furthered their
careers in areas such as Wealth Management,
Finance, Business Banking, Strategy, Marketing,
and Product Development. Our career pathways
approach continues to be rolled out across the
business, beyond the Funds Administration team
which piloted the program in 2022.
25
Through the Kokoda Track Foundation, Kina
supports Flexible Open Distance Education
(FODE), sponsors young emerging PNG leaders
through the Archer Leadership program, while
providing the opportunity for Kina employees to
participate in the mentoring of students.
Kina is also contributing to improving the standard
of education in PNG through its support toward
the LiteHaus International to establish digital
classrooms in primary schools in PNG. The donation
Kina provides helps provide the schools with digital
skills training and access to offline e-libraries.
Kina’s Strongim Komuniti Grants program is
employee-led and delivers direct funding and
support to community programs where our
employees believe we should be making a
difference.
In 2023, Kina continued our partnership with
the Financial Inclusion Bank, MiBank. MiBank
currently has over 450,000 customers. We provide
many essential core payment solutions and other
services to allow MiBank to sustainably provide
access to banking products to their customers.
This includes plans for more co-branded
branches in regional areas of PNG.
With more than 50% of our staff being female, our
focus on gender and diversity is a priority. Gender
balance has been achieved and maintained in
our executive and senior management teams.
Kina is a member of the Business Coalition for
Women, which among other programs includes
participation in the female executive leadership
program. We continue to subscribe to the Bel Isi
PNG program, which provides for safe housing,
case management and support services for
survivors of family and sexual violence (FSV)
in our workforce and for their families and
dependents. Kina’s standalone FSV policy was
approved in 2022 and continues to guide Kina’s
approach to support services, privacy, security,
and education.
In 2023, Kina recruited a Head of Talent and
Culture to take forward our customer focussed
FIRST values program, and to continue to
explore and activate opportunities for workforce
enablement and growth.
Sustainability
In May 2023, Kina released its first Sustainability
Report, receiving a highly encouraging and
complimentary response from our investors
and key stakeholders, particularly in light of our
relative size as an organisation. This report sets
out the overall progress of our sustainability
strategy which was approved by the KSL Board
in 2022. The report includes our initial disclosure
following our carbon emissions measurement in
line with the Greenhouse Gas (CHG) Protocol and
the Global Sustainability Standards Board (GSSB),
Global Reporting Initiative (GRI) for materiality,
and our goals that are aligned with the United
Nations Sustainable Development Goals (SDG).
Our mission to deliver prosperity for the
communities we serve remains central to our
purpose. In 2023 Kina continued to invest
into community programs, many of which our
employees have the opportunity to directly
participate in.
Kina supports the Links of Hope program which
supports children and their communities that are
impacted by HIV.
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Service.
Sustainability.
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Board of Directors.
Isikeli (Keli) Taureka
Non-Executive Chairman
Chair of the Disclosure Committee
Gregory Pawson
Managing Director & CEO
Mr. lsikeli Taureka was appointed as a Director of
Kina in April 2016.
As at 14 March 2022, Mr. Taureka holds the
position of Managing Director of Laba Holdings
Limited which comprises shareholdings from
four local areas supporting PNG LNG projects.
Previously, he held the position of Managing
Director of Kumul Consolidated Holdings which is
the trustee and shareholder for the Government
of PNG in major state-owned entities including Air
Niugini, Water PNG, PNG Power Limited, Kumul
Telikom Holdings, Ports PNG, Post PNG and Motor
Vehicles Insurance Limited.
lsikeli previously held several senior executive
roles with Chevron Corporation. Before joining
Chevron, he was the Managing Director of
the PNG-owned Post and Telecommunication
Corporation and held senior management
positions in the Bank of South Pacific Limited.
lsikeli provides extensive knowledge and
networks across PNG and Fiji.
He holds a Bachelor of Economics degree from
the University of Papua New Guinea and is a
graduate member of the Australian Institute of
Company Directors.
Mr Greg Pawson was appointed Managing Director
and Chief Executive Officer of Kina in 2018. He
joined the Group with an extensive knowledge
of the financial services industry in Australia, New
Zealand, Southeast Asia and the Pacific.
Before his appointment, Greg was Regional
Head of South Asia Pacific for the Westpac
Group and held senior executive roles in retail
banking, corporate financial services, financial
planning, and funds management. His extensive
banking experience includes more than 16
years at Westpac where he had accountability
for Westpac’s Country/Institutional, Retail and
Commercial banking businesses operating in
India, Singapore, Indonesia, PNG and Fiji, and
the divestment of Westpac’s retail businesses in
the Cook Islands, Tonga, Samoa, Vanuatu and the
Solomon Islands. Prior to this role he was Westpac’s
General Manager Commercial Banking for three
years leading the Australian Commercial banking
customer segment with revenue in excess of
$1.2 billion and responsible for 1,500 employees.
Greg holds a Master of Business Administration
from the Australian Institute of Management
Adelaide and is a graduate member of the
Australian Institute of Company Directors.
29
05 Andrew Carriline
Non-Executive Director
Member of the Audit Committee, the Risk Committee, Remuneration
and Nomination Committee and the Disclosure Committee
Jane Thomason
Non-Executive Director
Member of the Remuneration and Nomination Committee
Mr. Andrew Carriline was appointed as a Director
of Kina on 16 August 2018.
Dr Jane Thomason was appointed as a Director of
Kina on 27 April 2018.
Andrew is an experienced business executive,
highly skilled at operating successfully in
regulated environments. He was an executive at
a major Australian bank, where until 2017 he was
the Chief Risk Officer in the Institutional Bank,
as well as Chairman of the bank’s business in
PNG. Since 2017 Andrew has accepted several
non-executive roles in the ‘for profit’ and ‘not-for-
profit’ sectors.
Before his focus on purely risk roles, Andrew
practiced corporate law in the public and private
sectors and has held several senior legal and
operational roles.
Andrew holds bachelor’s degrees in law and
commerce from UNSW and is a graduate member
of the Australian Institute of Company Directors.
An entrepreneur and innovator, Jane has worked
in international development implementation
in the Asia Pacific region for 30 years. Her
international career has included work for
governments and donors including the Asian
Development Bank, WHO, World Bank, USAID
and AusAID.
Since 2017, she has focused on Fintech and
Blockchain and is a thought leader in the
applications of blockchain technology to solve
social problems. She is the Co-Founder of the
British Blockchain and Frontier Technology
Association, Chair, Kasei Holdings Blockchain
Securities), Aquis Stock Exchange, London, and
is on the Editorial Board of both Frontiers in
Blockchain and Journal of Metaverse.
Dr Thomason co-authored the books Blockchain
Technologies for Global Social Change and
Applied Ethics in a Digital Age. She is a Thinkers
360 in the Top 50 Global Thought Leaders and
Influencers on Blockchain and Sustainability.
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Paul Hutchinson
Non-Executive Director
Chair of the Risk Committee and Member of the Audit Committee
Mr. Paul Hutchinson was appointed as a Director
of Kina on 16 August 2018.
Paul is currently employed by the University of
Adelaide in the capacity of Program Director,
responsible for large scale organization
restructuring and major projects.
Previously, Paul was the Managing Director and
Chief Executive Officer of Rural Bank (specializing
in the provision of financial services to the
agribusiness sector), Chief Operating Officer of
New Zealand Post and held various other senior
appointments with Westpac, National Australia
Bank and Bank of New Zealand.
Paul’s extensive background in strategy, finance,
sales and distribution, commercial operations and
risk management has been honed over 30 years
in the financial services sector.
He is a Fellow of the Institute of Financial Services
and is a member of the Australian Institute of
Company Directors, having attended both the
Company Directors Course and International
Company Directors Course.
Karen Smith-Pomeroy
Non-Executive Director
Chair of the Audit Committee, Member of the Risk Committee,
and the Disclosure Committee
Ms. Karen Smith-Pomeroy was appointed as a
Director of Kina on 12 September 2016.
Karen is an experienced non-executive director,
with involvement across numerous industry
sectors. Karen has many years of experience in
the financial services sector, including a period of
five years as Chief Risk Officer for Suncorp Bank.
Karen has specific expertise in risk and
governance, deep expertise in credit risk and
specialist knowledge of several industry sectors,
including energy, property, and agribusiness.
Karen is a non-executive director of Queensland
Treasury Corporation and National Construction
Fund Corporation and is Chair of the Regional
Investment Corporation and National Affordable
Housing.
Karen holds accounting qualifications and is a
Fellow of the Institute of Public Accountants, a
Senior Fellow of the Financial Services Institute of
Australasia (FINSIA), a certificate member of the
Governance Institute of Australia and a graduate
member of the Australian Institute of Company
Directors.
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Richard Kimber
Non-Executive Director
Member of the Remuneration and Nomination Committee
Richard is a seasoned international financial
services and technology executive and director
with over 30 years of experience having worked
in HK, USA, and the UK. His other board positions
currently include ING Bank Australia, (where he
is Chairman of the Technology & Transformation
Committee), Chairman of Stone & Chalk,
Chairman of AustCyber and a Non-Executive
Director of Daisee, an AI software company he
founded in 2017.
Richard’s prior executive roles include being CEO
of ASX-listed OFX Group, a leading international
payment company; Managing Director of Google
in Southeast Asia (which included Australia and
NZ); CEO of FirstDirect Bank plc in the UK; and
several international roles with the HSBC Group,
including as Global Head of Internet Marketing
based in New York and the APAC leader for
e-Commerce based in Hong Kong.
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Acumen.
Influence.
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It’s amazing
what we can
achieve together.
Senior Executive
Team.
Deepak Gupta
Executive General Manager Wealth Management
& Corporate Advisory
Deepak Gupta is Executive General Manager
and is responsible for Wealth Management and
Corporate Banking at Kina. He has held a variety
of senior positions with Westpac, AMP, and
domestic New Zealand institutions.
In addition, Deepak has strong governance
experience having held non-executive director
roles on the boards of NZX and ASX-listed
companies. He brings substantial experience
and a record of accomplishment of success
and innovation across various areas in financial
services including successful development of
New Zealand’s first institutional private equity fund
for retail investors And establishment at the time of
New Zealand’s largest KiwiSaver registry business.
Deepak holds a Bachelor of Commerce and
Administration from Victoria University, New
Zealand, and an MBA from Massey University,
New Zealand. He has a Certificate of Investment
Analysis from the University of Otago, New
Zealand and is a Fellow of the Institute of Finance
Professionals New Zealand. Deepak is a non-
executive director of PNGX.
Johnson Kalo
Chief Financial Officer & Company Secretary
Johnson Kalo was appointed acting Chief
Financial Officer and Company Secretary in
September 2022. He previously held the role
of Chief Information Officer. Johnson has
substantial industry experience in Papua New
Guinea having previously held the positions
of Deputy Chief Executive Officer and Chief
Financial Officer for BSP.
His previous roles also include independent
Director of the Board of Credit Corporation and
Executive Director of the Port Moresby Stock
Exchange (PNGX). He is a fellow of the Financial
Services Institute of Australasia and an associate
member of Certified Practicing Accountants PNG.
He holds a Bachelor of Arts in Commerce from
the University of Papua New Guinea and a Post
Graduate Diploma in Applied Financial Investment
from the Financial Services Institute of Australasia.
Nathaniel Wingti
Executive General Manager Treasury & Financial Markets
Nathan Wingti joined Kina in February 2016 as
GM Treasury and Financial Markets. Prior to joining
Kina, he spent 15 years at ANZ Bank where his last
role was Head of Global Markets PNG and Balance
Sheet Manager for ANZ across the Pacific. Nathan
has 20 years’ experience in foreign exchange,
money markets and balance sheet management
across the Pacific region having worked in PNG,
Fiji, and Australia.
Nathan holds a Bachelor of Business from the
Queensland University of Technology. He has also
completed the AFMA Dealer Accreditation Program
and the PNG Institute of Directors Program.
35
06
Ivan Vidovich
Chief Transformation Officer
Ivan Vidovich joined Kina Bank in 2019. In the
role of Chief Transformation Officer, Ivan is
responsible for Group Strategy and Planning,
People and Culture, Digital Channels, Innovation,
Design, Product and Marketing.
Ivan has 20 years senior leadership experience
in Australia, Asia and Europe in the financial
services and logistics industries with companies
including Suncorp, TNT Express and DBS Bank,
where he has managed large-scale sales and
service operations, strategy, customer experience,
innovation and multicountry integration and
transformation programs.
He brings significant experience in people
and culture transformational change and is a
strong advocate of diversity and inclusion in the
workplace.
Ivan holds a Bachelor of Arts from La Trobe
University and is a member of the Australian
Institute of Company Directors.
Roppe Uyassi
Chief Executive Officer Kina Bank (PNG)
Roppe Uyassi joined Kina Securities Ltd in
November 2023 to be Kina Bank PNG CEO.
Prior to joining Kina, Roppe was the Country
Manager for Twinza Oil Limited in PNG where
he was the lead negotiator for the Pasca A Gas
Agreement negotiations. Roppe’s prior experience
includes 6 years at Deloitte as a key member of
the leading corporate finance team in the South
Pacific. He has also previously been a board
member for a major finance company in PNG and
has recently been appointed to the board of the
Australian Government’s Incentive Fund.
Roppe is a Certified Practicing Accountant and
holds a Bachelor of Business (Economics with a co-
major in Finance) from the Queensland University
of Technology.
Philip Keller
Chief Risk Officer
Philip Keller joined Kina Securities Ltd in February
2024 as the Chief Risk Officer.
He brings to Kina a wealth of experience in the
banking and financial services sector, having
worked across risk management, strategy, and
finance. Philip has worked in Australia, Hong
Kong, Switzerland, the UK, and USA with UBS
and Capco, providing consulting services for
HSBC on a global scale. Most recently, Philip held
senior management roles at Westpac, based in
Sydney, including Director, Wealth Strategy and
Head of Customer Outcomes and Risk Excellence
(CORE) Development.
36
Rayeleene Elston
Executive General Manager Business Banking
Rayeleene Elston joined Kina in February 2023 as
Executive General Manager for Business Banking
and Prime. In her role, she is responsible for the
distribution of retail and business lending.
Business Banking team that covered Commercial,
Corporate, SME and Agribusiness. Her previous
role was General Manager for Community
Branches at Heritage.
Prior to joining Kina Bank, Rayeleene had a 30-
year career in Banking in Australia. Her career
began in Retail Banking, and she spent over 20
years as an Executive across Business Banking
at National Australia Bank {NAB). Her last role at
NAB was leading the Queensland central region
Rayeleene brings a deep knowledge of Business
and Corporate Banking across multiple products,
credit, and customer experience. She will be
leading a key strategic project for Business
Banking expansion into regional PNG over the
next three years.
Charlie Sukkar
Chief Information Officer
Since his appointment in July 2023 Charlie
has been helping guide Kina Tech through
a period of considerable technology service
modernisation. At the core of this role, Charlie is
responsible for ensuring Kina’s technology and
cyber security architecture align with the Bank’s
broader strategic direction to meet the evolving
needs across PNG.
Prior to joining the Kina Bank, Charlie led a
team of professionals at building materials and
construction conglomerate Fletcher Building
Australia. Charlie and his team partnered with
a network of global and local specialists to
deliver one of the biggest fiscal and cultural
transformations in the organisation’s history.
As a result of this work, Fletcher Building
Australia’s digital commerce business now
contributes around 40% of the company’s top
line sales revenue. This was achieved while
raising employee satisfaction to more than 85%
and digital NPS (the Customer Net Promotor
score) to around 35 for most of Fletcher
Building’s business units.
Charlie previously led a team delivering world-
class digital platforms for CSR Limited. This
included the development of more agile IT
infrastructure and embedding innovation across
CSR’s technology portfolios, helping redefine
the building materials and construction industry
across Australia and New Zealand.
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Capital.
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Remuneration Report.
1.
Introduction and overview
to shareholders
The Remuneration Report is focused on providing
information to Kina Securities Limited shareholders
about the Company’s remuneration framework
which is designed to support the delivery of targeted
operating financial and non-financial results. Although
Kina is not required to have the Remuneration Report
audited and prepared in accordance with section
300A of the Australian Corporations Act 2001 (Cth),
the level of disclosure meets the requirements of an
Australian-incorporated company.
In 2023, Kina reviewed its incentive plans to ensure
that they align with market best practice and
continue to attract, motivate and retain high calibre
management and employees. As part of this review,
it was determined that for all key management
personnel except the CEO, the deferred component
of Short Term Incentives (STIs) would be removed,
and the total STI would be payable in cash. The
Board will continue to evaluate the structure,
eligibility, granting and vesting of fixed and variable
remuneration arrangements for the company,
including exercising provisions that exist to defer the
payment of STIs.
2.
Kina’s Key Management
Personnel (KMP)
This report covers the remuneration arrangements
of Kina’s Key Management Personnel (KMP) who are
the people with the authority and responsibility for
planning, directing and controlling the activities of the
Kina Group directly or indirectly. Kina’s KMP comprise
the non-executive directors, the Managing Director
and Chief Executive Officer (MD&CEO) and the
direct reports to the MD&CEO, who are collectively
called the Senior Executive Team. For the purposes
of this report, ‘executive’ refers to the MD&CEO and
the members of the Senior Executive Team (Senior
Executives). The KMP disclosed in this Remuneration
Report for 2023 were:
Non-executive directors (refer to section 4 of this
Remuneration Report)
Name
Position held during the financial
year ended 31 December 2023*
Isikeli Taureka
Non-executive Chairman
Andrew Carriline
Non-executive director
Paul Hutchinson
Non-executive director
Karen Smith-Pomeroy Non-executive director
Ila Temu1
Non-executive director
Jane Thomason
Non-executive director
Richard Kimber 2
Non-executive director
MD&CEO and Senior Executive Team (direct reports to
the MD&CEO)
Name
Position held during the financial
year ended 31 December 2023*
Greg Pawson
MD&CEO
Johnson Kalo
Deepak Gupta
Chief Financial Officer (CFO) and
Company Secretary
EGM Wealth Management &
Corporate Advisory
Karen Mathers
Chief Risk Officer
Samantha Miller3
General Manager Corporate Affairs
and Investor Relations
Charlie Sukkar4
Chief Information Officer
Ivan Vidovich
Chief Transformation Officer
Nathan Wingti
EGM Treasury & Financial Markets
Lesieli Taviri5
Chief Operations Officer
Roppe Uyassi6
Chief Executive Officer Kina Bank
1 resigned 9 May 2023
2 appointed 1 September 2023
3 resigned 2 March 2023
4 appointed 2 October 2023
5 resigned 20 October 2023
6 appointed 6 November 2023
* The term as KMP was for the full year unless otherwise indicated.
39
07 Remuneration and Nomination Committee
The Board has established the Remuneration and
Nomination Committee (RNC) to ensure the Company:
• has a Board with an effective composition,
size and commitment to adequately discharge
its responsibilities and duties and to bring
transparency, focus and independent judgment
to decisions regarding its composition
To align remuneration, performance and strategy, the
RNC regularly reviews:
• the remuneration policy
• the structure and quantum of the remuneration of
the MD&CEO, members of the Senior Executive
Team, staff holding Responsible Person positions
and selected risk and compliance staff; and
• the structure and level of non-executive directors’
• has coherent remuneration policies and practices
board fees and committee fees.
For more information on the RNC, refer to Kina’s
Corporate Governance Statement (available on
Kina’s website at http://investors.kinabank.com.pg/
investors/?page=corporate-governance).
3. Executive remuneration
Remuneration policy and governance
framework
The RNC reviews and determines Kina’s remuneration
policy and structure annually, for approval by the
Board, to ensure it remains aligned to the Company’s
business needs and meets its remuneration
principles. The RNC also engages external
remuneration consultants to assist with this review as
required. In particular, the RNC aims to ensure Kina’s
remuneration practices are:
• transparent, competitive and reasonable, enabling
the Company to attract and retain key talent
• aligned to the Company’s strategic and business
objectives and values, and the creation of
shareholder value; and
• acceptable to shareholders.
to attract and retain directors and Senior
Executives who will create value for shareholders
• observes those remuneration policies and
practices; and
• rewards executives fairly and responsibly having
regard to the performance of both the Kina
Group and its executives and the general external
pay environment (including the level of fees for
non-executive directors).
The RNC assists the Board in the performance of its
constitutional and regulatory duties by:
• advising the Board on the remuneration of the
MD&CEO, Senior Executive Team and employees
holding Responsible Person positions (as defined
in accordance with Banking Prudential Standard
BPS310 Corporate Governance – Fit and Proper
Requirements (BPS310), issued by the Bank of
Papua New Guinea (BPNG)
• providing an objective, non-executive review of
the effectiveness of Kina’s remuneration policies
and practices
• recommending to the Board for approval by
shareholders, the amount and structure of non-
executive directors’ fees
• overseeing aspects of the ’Fit and Proper’
requirements of BPNG BPS310; and
• identifying the mix of skills and individuals
required to allow the Board to contribute to the
successful oversight and stewardship of
the Company.
40
– specify measurable, objective, verifiable performance
targets which have to be met or exceeded before any
additional payment is due
– specify a measurement period that takes into account
the time to observe the real outcomes of the employee’s
business activities and efforts
– discourage the employee from taking extreme risks
to achieve short-term performance targets that could
jeopardise the financial stability and viability of the
Group in the medium to long term
– provide for the Board to set aside part or all of the
performance-based payments due if in the Board’s
judgment this is necessary to protect the financial
soundness of the Group or address unintended and
unforeseen consequences when the performance-based
measures were originally formulated.
• Where a package includes equity or equity-linked
deferred remuneration the package must be
structured to prohibit the employee leveraging the
equity in any way until it is fully vested. The Group
will cancel the vested equity and rights to future
equity of any employees found to be in breach
of this provision of their employment agreement.
The Board maintains complete discretion to
award equity rights to employees, including the
determination of vesting conditions and whether
the equity rights vest and/or are awarded.
• On an overall basis, Kina Group would like
to position itself between the 50th and 75th
percentile of the defined market, with flexibility
to adjust based on market dynamics and
organisational strategy.
Under the Company’s Securities Trading Policy,
Relevant Persons (which includes all directors and
officers of Kina (MD&CEO, CFO and Company
Secretary) and all direct reports of the MD&CEO),
are prohibited from entering into any hedging
arrangements that limit the economic risk of holding
Kina securities under Kina equity plans. This helps
align the interests of directors, the Senior Executive
Team and shareholders.
Remuneration Policy
The key tenets of Kina’s Remuneration Policy
include that:
• Remuneration should be set at levels that reflect
the relative size of the position, the remuneration
ranges for positions of equivalent ‘size’ in
the relevant market, the performance of the
person holding the position and any position-
specific factors such as location or the strategic
importance of the role.
• Remuneration levels must reflect what the Group
can afford. The Board through the RNC will
provide the MD&CEO with advice on affordability
and this must be factored into the MD&CEO’s
annual review of remuneration.
• The levels of every role in the organisation
shall be identified through a professional job
evaluation exercise and endorsed by the selected
Job Evaluation Panel.
• Pay structures and levels may be reviewed based
on the organisational growth and maturity over
a period; and from time to time benchmarked
against identified market participants. This survey
cycle period shall typically be not more than once
in any two years.
• Remuneration packages may comprise a mix of
base pay, performance-related pay and other
benefits where this is consistent in the market
with the structure of packages for similar sized
roles, and must take into account the value of all
such elements.
• Remuneration packages, including any
performance-based component, must not
compromise the independence of any risk and
financial control officers of the Group.
• Where a remuneration package includes a
variable performance-based component the
package must be structured to:
– motivate the employee to achieve personal goals
that demonstrably contribute to the Group’s overall
strategic direction and medium to long-term financial
performance objectives
– encourage the employee to work within the Group’s risk
management framework and to comply with the Group’s
prudential policies
41
Remuneration components, approach and mix
To align the interests of Kina’s Senior Executive Team with Kina’s strategic goals and to assist in the attraction, motivation
and retention of management and employees of Kina, the Board has determined that the remuneration packages of the
MD& CEO and the Senior Executive Team should comprise the following components:
Fixed Remuneration
(FR)
Total fixed remuneration comprises base salary, other non-cash benefits and
includes superannuation. The Senior Executive Team members may receive
their fixed remuneration as cash, or cash with non-monetary benefits such as
insurance, allowances and tax advisory services. FR is reviewed annually, or
on promotion. It is benchmarked against market data for comparable roles in
companies in a similar industry and with similar market capitalisation. The RNC
aims to recommend to the Board a remuneration package that would position
the respective member of the Senior Executive Team at or near the median for
a corresponding role, with flexibility to take into account capability, experience,
and value to the organisation and performance of the individual.
Short-term incentive award
(STI Award)
The short-term incentive award (STI Award) provides participants with an
opportunity to earn an incentive calculated as a percentage of their salary each
year, conditional upon achievement of group and individual key performance
indicators (KPIs) which may consist of financial and, if applicable non-financial
performance measures.
For all participants, except the MD & CEO, the incentive earned will be paid
100% in cash.
– MD & CEO 65% in cash and 35% in an offer of performance rights.
– The cash portion of the incentive will be paid in the next pay cycle
following confirmation of the performance outcomes being achieved. For
the MD & CEO, the performance rights portion (STI Performance Rights)
will be issued under Kina’s Performance Rights Plan (Plan) in one tranche
and will lapse upon resignation or termination, subject to the absolute
discretion of the Board.
The Board has the right to vary the STI Award.
Long-term incentive award
(LTI Award)
The long-term incentive award (LTI Award) provides an opportunity for
employees to receive an equity interest in Kina through the granting of
Performance Rights (LTI Performance Rights) under the Plan.
Under the LTI Award, LTI participants may be offered LTI Performance Rights
that are subject to vesting conditions set by the Board.
The Board has the absolute discretion to vary the LTI Award.
Retention Award
Retention Awards are no longer applicable or awarded in the ordinary course
of Kina’s business.
42
STI Award
Structure of LTI Award
Features
Eligibility
STI Award components
Description
The MD&CEO and Senior Executive Team are eligible to participate in the STI Award
(STI Participants).
Cash bonus: 100% of the STI Participant’s STI Award, except for MD & CEO with 65%
of STI Award.
STI Performance Rights: 35% of MD & CEO’s STI Award.
Individual KPIs specific to each STI Participant are agreed at the start of each year.
These KPIs consist of both financial and non-financial performance measures.
No STI Award is payable unless a minimum Group Net Profit After Tax (NPAT) is
achieved. The Board has the absolute discretion to vary this requirement.
The Board allocates an annual pool to the STI Award each year. There are levels of
targeted performance for allocation of the pool for 2023:
Performance measures
Minimum (85% of budget)
Threshold (85% – 100% budget):
Target (Budget 100%):
Stretch (100+ to 110%+):
Stretch (120%+):
50%
90%
100%
up to 120%
Calculation of STI
Performance Rights
Vesting of STI
Performance Rights
The pool is then allocated in accordance with the maximum and target STI Award for
each STI participant (which is detailed later) as a percentage of gross pay.
The Board has the absolute discretion to vary the STI Award.
The number of STI Performance Rights granted is determined by dividing the award
value by the 10-day volume weighted average price per share prior to 31 December of
the year of award (VWAP).
STI Performance Rights are restricted from exercise until the second anniversary after the
grant date and will vest on the second anniversary. These are not subject to any further
measurement after award and allotment.
Period
Date granted
Vesting date
Financial Year (FY) ended 31 December 2020
01/04/2021
01/04/2023
FY ended 31 December 2021
01/04/2022
01/04/2024
FY ended 31 December 2022
01/04/2023
01/04/2025
FY ended 31 December 2023
01/04/2024
01/04/2026
Forfeiture of STI
Performance Rights
STI Performance Rights are subject to Kina’s clawback policy. Under the clawback policy,
unvested STI Performance Rights may be forfeited if the Board determines that adverse
events or outcomes arise that should impact on the grant of STI Performance Rights to a
STI Participant.
Payments and grants
Payment of the cash component under the STI Award will be made in April of each year
after the release of the full year financial results to the ASX and PNGX.
Target STI and maximum
STI that can be awarded
MD&CEO
CFO
Target
Maximum
100% of base salary
150% of base salary
40% of base salary
50% of base salary
Other Senior Executives
30% of base salary
45% of base salary
43
Long-term incentive Award (LTI Award)
The MD&CEO and the Senior Executive Team participate, at the Board’s discretion, in the LTI Award comprising annual
grants of Performance Rights. Further details are shown in the table below:
Structure of LTI
Features
Description
Eligibility
Participants must be a permanent full-time or part-time employee or executive director of Kina or any of
its subsidiaries (LTI Participants).
LTI components
The LTI Award will be delivered as performance rights (LTI Performance Rights) with each right conferring
on its owner the right to be issued or transferred one (1) fully paid ordinary share in the Company.
Since 2016, the LTI Performance Rights will only vest subject to Board assessed satisfaction of the
following conditions:
• Meeting the required Total Shareholder Return (TSR) performance level based on peer group –
50% weighting
• Over a three-year period, whereby:
Peer group relative TSR performance
Vesting outcome
Below 50th percentile of peer group
Nil
At 50th percentile
50% vesting
Between 50th – 75% percentile
Pro rata between 50% to 100%
75% and above
100% vesting
• Meeting Earnings Per Share (EPS) target level based on peer group – 50% weighting
• Compound Annual Growth rate over a three-year period, whereby:
EPS performance
< 5% compound annual growth
5%
>5% and < 10%
10%
Vesting Outcome
Nil
50% vesting
Pro rata between 50% – 100%
100% vesting
Performance
measures
In 2021, the Board worked with an independent advisor to identify the comparator group companies and
the advisor calculates the vesting schedule.
Calculation of
LTI Performance
Rights
Grants are approved annually. The number of LTI Performance Rights for each year will be
determined by dividing the LTI Awards by the 10-day volume weighted average price per share
prior to 31 December in the year of grant (VWAP).
44
Structure of LTI
Features
Description
While the grants are approved annually, they will vest no earlier than the third anniversary of the
commencement of the performance period and subject to satisfaction of the vesting conditions and
performance measures.
The performance periods for the outstanding awards are as follows:
Financial
Year
Date
granted
Performance
Period
Measures
Vesting date
(subject to
performance
testing)
2020
01/04/2021
Vesting & exercise
of LTI Performance
Rights
2021
01/04/2022
2022
01/04/2023
2023
01/04/2024
01/04/2021
to
31/03/2024
01/04/2022
to
31/03/2025
01/04/2023
to
31/03/2026
01/04/2024
to
31/03/2027
EPS assessment compound till FY 2023 – 50%
01/04/2024
Relative TSR assessment compounded to FY
2023 – 50%
EPS assessment compound till FY 2024 – 50%
01/04/2025
Relative TSR assessment compounded to FY
2024 – 50%
EPS assessment compound till FY 2025 – 50%
01/04/2026
Relative TSR assessment compounded to FY
2025 – 50%
EPS assessment compound till FY 2026 – 50%
01/04/2027
Relative TSR assessment compounded to FY
2026 – 50%
Forfeiture of LTI
Performance
Rights
Unvested LTI Performance Rights may be forfeited:
• if the Board determines that any vesting condition applicable to the LTI Performance Right has
not been satisfied in accordance with its terms or is not capable of being satisfied
• in certain circumstances if the LTI Participant’s employment is terminated; or
• in other circumstances specified in the LTI Award under the Plan (for example, if the Board
determines that the LTI Participant has committed an act of fraud or gross misconduct in
relation to the affairs of Kina).
Lapse of LTI
Performance
Rights
Unless otherwise specified in the vesting conditions or otherwise determined by the Board, a LTI
Performance Right lapses on the earliest of:
• if the Board determines that any vesting condition applicable to the LTI Performance Right has
not been satisfied in accordance with its terms or is not capable of being satisfied
• the expiry of the exercise period (if any)
• in circumstances of cessation of employment, i.e. either resignation or termination
• in other circumstances specified in the LTI Award under the Plan (for example, if the Board
determines that the LTI Participant has committed an act of fraud or gross misconduct in
relation to the affairs of Kina); or
• if the LTI participant purports to deal in the LTI Performance Right in breach of any disposal or
hedging restrictions in respect of the Performance Right.
45
Structure of LTI
Features
Description
Target LTI and
maximum LTI that
can be awarded
MD&CEO
CFO
Other Senior Executives
Target
50%
40%
30%
Maximum
50%
40%
30%
Calculation of
Fair Value of LTI
Performance
Rights
Fair value of the LTI performance rights subject to TSR and EPS vesting conditions for financial reporting
purposes is generally estimated based on Kina’s ASX market share price at grant date and using a
simulation pricing model applying the assumptions of price volatility, risk-free interest rates and dividend
yields. Kina engages an independent valuation expert who performs the fair value calculations on the
grants based on the valuation methodologies referenced above and below.
TSR
A Monte Carlo simulation approach is used to value the LTI Awards subject to the relative TSR
performance condition as it incorporates an appropriate amount of flexibility with respect to different
features of the award. This approach is assumed to follow Geometric Brownian motion under a risk-
neutral measure as follows:
• simulates correlations between Kina’s proxy and other peer companies as well as correlations
between other companies in the peer group
• ranks simulated performances and the proportion of relative TSR award vested as calculated
based on vesting schedule; and
• records present value of TSR-hurdle award vested.
The above process is repeated multiple times and the estimated fair value is the average of the results.
EPS
Fair value of awards subject to EPS is calculated using a risk-neutral assumption. The fair value is the
difference between the share prices of the underlying asset, minus the expected present value of future
dividends over the expected life if holders of the underlying asset are not entitled to receive future
dividends. The fair value of the awards subject to EPS performance conditions will be equal to the share
price of the underlying asset if holders are entitled to receive future dividends.
Performance-based and non-performance based components
All STI and LTI elements of the remuneration of the KMP who are executives are performance-based.
46
Cash salary/fees/short-term
compensated absences $
Non-monetary benefits $
Total $
750,000
603,508
400,000
385,577
375,000
360,577
328,482
323,360
330,663
338,129
258,355
323,599
400,000
400,000
72,115
288,462
287,500
-
76,923
-
37,063
-
185,441
189,407
50,057
16,356
156,095
142,140
45,551
31,655
135,339
117,585
99,396
115,923
16,424
15,546
3,779
14,575
92,869
-
1,890
-
1,827
-
975,612
792,914
450,057
401,933
531,095
502,717
374,034
355,015
466,002
455,714
357,751
439,522
416,424
415,546
75,894
303,036
380,369
-
78,813
-
38,890
-
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Participant
Greg Pawson
Ivan Vidovich
Deepak Gupta
Johnson Kalo
Nathan Wingti
Lesieli Taviri1*
Karen Mathers
Samantha Miller2*
Rayeleene Elston3*
Charlie Sukkar4*
Roppe Uyassi5*
* pro-rata based on start/exit date
1 resigned 20 October 2023
2 resigned 2 March 2023
3 appointed 20 January 2023
4 appointed 2 October 2023
5 appointed 6 November 2023
External Advisor Services
The Kina Performance Rights Plan is administered
independently by Link Market Services Pty Ltd. Orient
Capital Pty Limited is engaged to provide the assessment
of EPS Growth and Relative TSR Performance in relation to
the LTI Awards and valuation of the VWAP.
Holdings in Company Shares
The table below sets out the current holdings of Company
Shares by KMP.
KMP Shareholding
Current Balance
Gregory Pawson
Deepak Gupta
Nathan Wingti
Ivan Vidovich
Johnson Kalo
1,215,414
303,697
121,589
105,575
27,205
47
Performance Rights holdings
The table below sets out the current holdings of Performance Rights (PR) by KMP.
First
Name
Last
Name
Gregory
Pawson
Chetan
Chopra
Michael
Van
Dorssen
Deepak
Gupta
Nathan
Wingti
Gavin
Heard
Ivan
Vidovich
Johnson
Kalo
Lesieli
Taviri
Karen
Mathers
STI
STI
LTI
LTI
LTI
STI
LTI
LTI
LTI
STI
LTI
LTI
LTI
STI
LTI
LTI
LTI
LTI
STI
LTI
LTI
LTI
STI
LTI
LTI
LTI
STI
LTI
LTI
LTI
LTI
Award
Year
Grant Date
Vesting
date
2021
2022
2020
2021
2022
2021
2020
2021
01/04/2022
01/04/2023
01/04/2021
01/04/2022
01/04/2023
01/04/2024
01/04/2025
01/04/2024
01/04/2025
01/04/2026
01/04/2022
01/04/2021
01/04/2022
01/04/2024
01/04/2024
01/04/2025
Value
of PR
granted
(AUD)
277,825
265,072
274,466
264,595
252,450
101,801
148,009
143,194
VWAP
period
VWAP $
applied
PR
31/12/2023
31/12/2022
31/12/2023
31/12/2021
31/12/2022
31/12/2023
31/12/2022
31/12/2021
31/12/2022
0.7756
0.7832
0.8233
0.7756
0.7832
0.7756
0.8233
0.7756
358,207
338,448
333,373
341,149
322,331
131,255
179,775
184,623
2020
01/04/2021 01/04/2024
111,006
31/12/2021
0.8233
134,831
2021
2020
2021
2022
2021
2020
2021
2022
01/04/2022
01/04/2021
01/04/2022
01/04/2023
01/04/2024
01/04/2024
01/04/2025
01/04/2026
01/04/2022
01/04/2021
01/04/2022
01/04/2023
01/04/2024
01/04/2024
01/04/2025
01/04/2026
46,985
97,131
93,971
95,931
54,816
83,255
80,546
90,882
31/12/2022
31/12/2021
31/12/2022
31/12/2023
31/12/2022
31/12/2021
31/12/2022
31/12/2023
0.7756
0.8233
0.7756
0.7832
0.7756
0.8233
0.7756
0.7832
60,579
117,978
121,159
122,486
70,676
101,124
103,850
116,039
2020
01/04/2021 01/04/2024
61,053
31/12/2021
0.8233
74,157
2021
2020
2021
2022
2021
2020
2021
2022
2021
2020
2021
2022
01/04/2022
01/04/2021
01/04/2022
01/04/2023
01/04/2024
01/04/2024
01/04/2025
01/04/2026
01/04/2022
01/04/2021
01/04/2022
01/04/2023
01/04/2024
01/04/2024
01/04/2025
01/04/2026
01/04/2022
01/04/2021
01/04/2022
01/04/2023
01/04/2024
01/04/2024
01/04/2025
01/04/2026
62,648
138,758
134,244
136,323
37,589
88,805
85,916
82,400
37,589
88,805
85,916
116,733
31/12/2022
31/12/2021
31/12/2022
31/12/2023
31/12/2022
31/12/2021
31/12/2022
31/12/2023
31/12/2022
31/12/2021
31/12/2022
31/12/2023
0.7756
0.8233
0.7756
0.7832
0.7756
0.8233
0.7756
0.7832
0.7756
0.8233
0.7756
0.7832
80,773
168,539
173,084
174,059
48,464
107,865
110,774
105,209
48,464
107,865
110,774
149,046
2022
01/04/2023 01/04/2026
106,029
31/12/2023
0.7832
135,379
Subsequent to, and in relation to, the year ended 31 December 2023 (FY2023 Awards), the Board approved the
following STI and LTI Awards for eligible participants. The STI Performance Rights and LTI Performance Rights
components of the FY2023 STI and LTI Awards for the MD&CEO are subject to shareholder approval at the 2024 AGM to
be held on 23 May 2024.
48
First
Name
Last
Name
Gregory
Pawson
Johnson
Kalo
Deepak
Gupta
Nathan
Wingti
Ivan
Vidovich
Rayeleene
Elston
Karen
Mathers
Charlie
Sukkar
Award
Year
Grant Date
Vesting
date
Value of
PR granted
(AUD)
VWAP
period
VWAP $
applied
PR 3
1/12/2022
STI
LTI
LTI
LTI
LTI
LTI
LTI
LTI
LTI
2023
2023
01/04/2024
01/04/2024
01/04/2026
01/04/2027
$262,500
$375,000
31/12/2023
31/12/2023
0.7832
0.7832
335,163
478,805
2023
01/04/2024
01/04/2027
$152,000 31/12/2023
0.7832
194,076
2023
01/04/2024
01/04/2027
$103,500 31/12/2023
0.7832
132,150
2023
01/04/2024
01/04/2027
$90,000 31/12/2023
0.7832
114,913
2023
01/04/2024
01/04/2027
$165,000 31/12/2023
0.7832
210,674
2023
01/04/2024
01/04/2027
$130,000 31/12/2023
0.7832
165,986
2023
01/04/2024
01/04/2027
$160,000 31/12/2023
0.7832
204,290
2023
01/04/2024
01/04/2027
$75,000 31/12/2023
0.7832
95,761
Employment agreements
KMP employment contracts
• All Senior Executive Team members’ employment contracts are over a period of three years with a notice period of
three months.
MD&CEO employment agreement
The MD&CEO’s employment agreement is for a term of five years with a notice period of six months. Kina may terminate
the MD&CEO’s employment without notice or payment in lieu of notice in circumstances where the MD&CEO:
• is bankrupt or has made any arrangement or composition with his creditors or taken advantage of any legislation for
relief of an insolvent debtor; or
• is convicted of any criminal offence, other than an offence which in the reasonable opinion of the Board does not affect
his position as MD&CEO of Kina.
On termination of the MD&CEO’s employment agreement, the MD&CEO will be subject to a restraint of trade period of
12 months. The enforceability of the restraint clause is subject to all usual legal requirements.
49
Remuneration of employees
During the year, the number of employees or former employees (not being directors of the Company), receiving
remuneration in excess of PGK100,000 per annum from the Group, stated in bands of PGK10,000, were as follows:
In PGK
1,940,001 - 1,950,000
1,820,001 - 1,830,000
1,030,001 - 1,040,000
970,001 - 980,000
950,001 - 960,000
910,001 - 920,000
890,001 - 900,000
870,001 - 880,000
850,001 - 860,000
840,001 - 850,000
810,001 - 820,000
800,001 - 810,000
790,001 – 800,000
770,001 - 780,000
730,001 - 740,000
720,001 - 730,000
710,001 - 720,000
700,001 - 710,000
660,001 - 670,000
600,001 - 610,000
590,001 - 600,000
580,001 - 590,000
550,001 - 560,000
540,001 - 550,000
530,001 - 540,000
510,001 - 520,000
500,001 - 510,000
480,001 - 490,000
470,001 - 480,000
2023
1*
-
2
1
-
-
1
1
1
1
1
1
-
-
1
-
1
-
-
2
-
1
1
-
-
-
-
1
2022
In PGK
2023
2022
-
1
-
2
-
1
-
2
-
-
-
1
1
1
-
1
-
-
-
2
-
2
1
-
1
1
1
1
1
450,001 - 460,000
400,001 - 410,000
390,001 - 400,000
380,001 - 390,000
360,001 - 370,000
350,001 - 360,000
340,001 - 350,000
330,001 - 340,000
320,001 - 330,000
310,001 - 320,000
300,001 - 310,000
290,001 - 300,000
280,001 - 290,000
270,001 - 280,000
250,001 - 260,000
240,001 - 250,000
220,001 - 230,000
210,001 - 220,000
200,001 - 210,000
190,001 - 200,000
180,001 - 190,000
170,001 - 180,000
160,001 - 170,000
150,001 - 160,000
140,001 - 150,000
130,001 - 140,000
120,001 - 130,000
110,001 - 120,000
100,000 - 110,000
*Impact of foreign exchange conversion.
1
-
1
1
-
3
1
2
-
1
2
1
-
3
4
1
3
-
6
8
5
3
7
3
5
10
11
12
11
1
1
-
-
1
1
-
1
1
2
2
-
2
-
1
-
1
1
4
4
5
2
11
10
10
6
9
16
16
50
4.
Non-executive director arrangements
Remuneration policy
Non-executive directors receive a Board fee and fees for chairing or participating on Board Committees as shown in the
table below. They do not receive performance-based awards or retirement allowances.
The fees are exclusive of superannuation.
Directors’ fees are reviewed annually by the Board, taking into account comparable roles and market data provided by
the Board’s independent remuneration advisor.
Remuneration components
Kina’s Board and Committee fee structure as at 31 December 2023 was:
Board fees
Chairman
Non-executive director/committee member
Board
Board
Committee fees
Audit Committee
Risk Committee
$180,000 (excluding superannuation
entitlements)
$90,000 (excluding any superannuation
entitlements)
Committee Chair: $22,500 (excluding any
superannuation entitlements)
Members: $11,250 (excluding any
superannuation entitlements)
Committee Chair: $22,500 (excluding any
superannuation entitlements)
Members: $11,250 (excluding any
superannuation entitlements)
Remuneration and
Nomination Committee
Committee Chair: $22,500 (excluding any
superannuation entitlements)
Members: $11,250 (excluding any
superannuation entitlements)
Disclosure Committee
No additional fees are paid
No additional fees are paid
Fee pool
Under the Company’s Constitution, the Board decides the total amount paid to each non-executive director as
remuneration for their services as a director of the Company. However, the total amount of fees (including statutory
superannuation entitlements, if any) paid to the directors for their services (excluding, for these purposes, the
remuneration of any executive director) must not exceed in aggregate in any financial year the amount fixed by the
Company in a general meeting of shareholders.
For the financial year ended 31 December 2023, this has been fixed at $1.28 million per annum (no change from the
prior year, and the amount set out in the Company’s Listing Prospectus). Any increase in the total amount payable
by the Company to the non-executive directors as remuneration for services must be approved by shareholders in a
general meeting.
The aggregate sum includes any special and additional remuneration for special exertions and additional services
performed by a director as determined appropriate by the Board.
51
Committee fees
The Committee Chair fees are not duplicated for those directors who are appointed to Chair of more than one
Committee or the Board.
Non-executive director remuneration details
The following payments were made to non-executive directors in the 2023 and 2022 financial years.
Short-term benefits
Post-employment benefits
Total
Fees $ Non-monetary benefits $
Superannuation contributions $
180,000
180,000
119,063
112,500
114,375
101,250
123,750
123,750
42,188
101,250
112,500
112,500
33,750
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,120
15,110
7,560
7,560
7,560
7,560
7,560
7,560
3,545
9,012
2,520
-
$
195,120
195,110
126,623
120,060
121,935
108,810
131,310
131,310
45,733
110,262
112,500
112,50
36,270
-
Director
Isikeli Taureka
Andrew Carriline
Paul Hutchinson
Karen Smith-Pomeroy
Ila Temu1
Jane Thomason
Richard Kimber2
1 resigned 9 May 2023
2 appointed 1 September 2023
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
52
Variable remuneration
Special remuneration
Directors may be paid such special or additional
remuneration as the Board determines for performing
extra services or making any special exertions for the
benefit of Kina which, in the Board’s opinion, are outside
of the scope of ordinary duties of a director.
Reimbursement for out-of-pocket expenses
Directors may be reimbursed for travel and other
expenses incurred in attending and returning from
any Board, Board Committee or general meetings of
Kina shareholders, or otherwise in connection with the
business or affairs of the Kina Group.
Retirement benefits
There are no retirement benefit schemes for directors,
other than statutory superannuation contributions.
Participation in incentive schemes
6. Directors’ interests in shares
Directors are not required under the Constitution to
hold any shares in the Company. As at the date of this
Remuneration Report, the Directors have the following
interests in the shares in Kina (either directly or through
beneficial interests or entities associated with the director).
Director
Number of
Shares
Shareholding as
at the date of this
Remuneration
Report (%)
Isikeli Taureka
65,000
Greg Pawson
1,215,414
Andrew Carriline
125,000
Paul Hutchinson
80,299
0.02%
0.42%
0.04%
0.03%
The non-executive directors are not entitled to participate
in any Kina Group employee incentive scheme.
Karen Smith-
Pomeroy
90,000
0.03%
5. Related party transactions
Please refer to Note 29 to the financial statements, for
further comments on related party transactions.
Jane Thomason
35,000
Richard Kimber
-
0.01%
0.00%
53
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54
Corporate Governance
Statement.
Introduction
Kina Securities Limited and its related entities (Kina,
the Kina Group, the Group, or the Company) places
great emphasis on the continued development of a
strong corporate governance, risk management and
compliance culture. In an emerging marketplace, Kina
seeks to be innovative as well as provide a safe and secure
environment for its customers and clients, which in turn
brings value to shareholders.
The Board of Directors of Kina Securities Limited (the
Board) is responsible for the overall corporate governance
of the Kina Group, including adopting appropriate policies
and procedures designed to ensure that Kina is properly
managed to protect and enhance shareholder interests.
The Board monitors the operational and financial
position and performance of Kina and oversees its
business strategy, including approving the Company’s
strategic goals and considering and approving business
plans, key governance, risk and operational policies and
the annual budget.
Kina has a well-developed corporate governance
framework and practices, for the operation and
management of Kina, which incorporates resilient internal
controls, risk management processes and governance
policies and practices. The Board monitors adherence
to this framework which enables the Group to comply
with relevant laws, regulations and standards set down
by the Bank of Papua New Guinea (BPNG), the Australian
Securities Exchange (ASX), PNG’s National Stock Exchange
(PNGX), the PNG Companies Act 1997 (Companies Act),
PNG Securities Act, Capital Markets Act 2015, and the
Australian Corporations Act 2001 (Cth) (Corporations Act).
This Corporate Governance Statement (Statement)
sets out the key features of Kina’s current corporate
governance framework and reports against the ASX
Corporate Governance Council’s Corporate Governance
Principles and Recommendations (4th Edition) (ASX
Principles and Recommendations). The Statement is
current as at 19 April 2024 and has been Board approved.
The Board considers and applies the ASX Principles and
Recommendations, considering the circumstances of
Kina. Unless otherwise noted, the Company has followed
during the reporting period, all of the best practice
recommendations set out in the ASX Principles and
Recommendations. Where Kina’s practices depart from
a Recommendation, this Statement identifies the area of
divergence and reasons for it, or any alternative practices
adopted by Kina.
Governance framework
The core of Kina’s corporate governance framework
is the Company’s Constitution and the Charters and
Policies (Governance Documents), which are referenced
in this Statement, and copies which are available on the
Company’s website at: https://investors.kinabank.com.pg/
Investors/?page=corporate-governance.
The Governance Documents are reviewed regularly by
the Board to ensure they comply with any updated laws or
regulations, that they meet high governance standards and
that they remain relevant to the Group and its operations.
Principle 1: Lay solid foundations
for management and oversight
A listed entity should clearly delineate the respective
roles and responsibilities of its board and management
and regularly review their performance.
Board of Directors
The Role of the Board
The Board is committed to maximising performance,
generating shareholder value and financial returns, and
sustaining the growth and success of Kina. In conducting
Kina’s business in accordance with these objectives, the
Board seeks to ensure that Kina is properly managed to
protect and enhance shareholders’ interests, and that
Kina, its directors, officers and employees operate in a
well governed environment.
The Board has adopted a Board Charter. The Board
Charter sets out, amongst other things, the:
• role and responsibilities of the Board, including those
matters specifically reserved to the Board;
• role and responsibilities of the Managing Director and
Chief Executive Officer (MD&CEO), who is primarily
responsible for the day-to-day management of Kina;
• procedures for management of potential and actual
conflicts of interest; and
• guidance on Board performance evaluation, ethical
standards and taking independent professional advice.
55
08 Board Responsibilities
The Board’s first responsibility is to govern the Company
in the interest of its shareholders; to protect and grow
the value of its stakeholders’ interests. The Board Charter
establishes that the primary goal of the Board is to add
value to the Company by:
• ensure succession plans are in place for all key
positions in the Company;
• adopt a comprehensive suite of prudential and
administrative policies;
• verify independently that the prudential and
administrative policies are operating effectively;
• ensuring the long-term viability and sustainability of
• maintain effective and timely communications
the Company;
with shareholders;
• protecting the interests of shareholders by exercising
effective control over the Company;
• providing strategic direction and leadership;
• bringing independent and informed judgment to bear
on material decisions of the Company;
• setting the standards of behaviour and ethical values
for the Company;
• establishing strong internal control and compliance
systems;
• monitoring the effectiveness of the Company’s overall
risk management and control framework; and
• accounting to shareholders for the overall
performance of the Company.
Under the terms of its Charter, the Board will:
• approve the Company’s strategy, business plans
and policy;
• establish the risk appetite within which management
will implement the strategic direction;
• monitor the implementation of strategic plans against
pre-determined performance indicators;
• identify key business risks and ensure measures are
taken to mitigate those risks;
• ensure that effective internal control systems are in
place to safeguard the Company’s assets;
• establish and monitor terms of reference and
procedures of all Board Committees;
• ensure the annual financial statements of the
Company and other published reports and
announcements are prepared according to the
relevant standard;
• resolve that the financial statements and other
published reports and announcements (where
relevant) accurately represent the financial position
of the Company;
• approve the annual report including the financial
statements, dividend proposals and notices to
shareholders for consideration at the Annual General
Meeting; and
• assess applications for new and increased loan
exposures where the amount or nature of the
lending requires referral to the Board as set out
in the Group’s Credit Risk Management Framework
and the Delegated Lending Authority Framework.
Delegations to Management
Day-to-day management and operations of the Company
are delegated to Management. The MD&CEO has the
authority to exercise all necessary powers, discretions and
delegations authorised from time to time by the Board.
The Board has delegated to the MD&CEO responsibility
for the following matters:
• selecting the senior management team;
• setting the terms and conditions of employment
within Remuneration Policy parameters;
• evaluating the performance of management;
• ensure compliance with all relevant laws, regulations
• implementing the strategic direction established by
and standards;
the Board;
• approve the external auditor’s fees;
• drafting the annual budget in consultation with the
• approve and monitor the progress of material
capital investment decisions, including new products
and services;
Audit and Risk Committee;
• managing the Group’s day-to-day operations on time
and within budget;
• appoint the MD&CEO, set executive remuneration and
• maintaining effective internal risk controls; and
establish performance objectives;
• appoint the Company Secretary;
• review the compensation of directors and recommend
changes to the non-executive directors’ fee pool to
shareholders;
• managing the daily operations of the business in
accordance with social, ethical and environmental
policies set by the Board.
56
The MD&CEO’s responsibilities are set out in the Board
Charter. The MD&CEO is supported by the Group
Executives, all of whom are listed on the Company’s
website at: https://investors.kinabank.com.pg/
Investors/?page=board-management.
The Board Charter, Charters of each Board Committee,
and the Constitution are available on the Company’s
website at https://investors.kinabank.com.pg/
Investors/?page=corporate-governance.
Written Agreements with Directors
and Senior Executives
Each non-executive director is provided with a
Letter of Appointment, which sets out:
• the term of appointment;
• the time commitment envisaged, including any
expectations regarding involvement with
Committee work and any other special duties
attaching to the position;
Director Appointment
As required by BPNG’s Prudential Standards (Standards),
Kina undertakes ‘Fit and Proper’ testing for candidates
who will hold ‘Responsible Person’ positions on initial
appointment, which includes directors and the Senior
Executive Team.
This rigorous testing, in accordance with the Standards,
is also carried out on an annual basis for all Responsible
Persons including thorough background checks. When
directors are proposed for election, or re-election at
General Meetings of shareholders, the Notice of Meeting
provides the following information about a candidate
standing for election or re-election:
• remuneration, including superannuation entitlements;
• the requirement to disclose the director’s interests
and any matters which may affect the director’s
independence;
• the requirement to comply with key corporate policies,
including Kina’s Code of Ethics and Business Conduct
• and its Securities Trading Policy;
• the Company’s policy on when directors may seek
independent professional advice at the expense of
the Company (which generally should be whenever
directors, especially non-executive directors, judge
such advice necessary for them to discharge their
responsibilities as directors);
• the circumstances in which the director’s office
• biographical details;
becomes vacant;
• details of other directorships held by the candidate;
• indemnity and insurance arrangements;
• a statement as to the independence of the candidate;
• ongoing rights of access to corporate information; and
• details of any adverse information revealed as part of
• ongoing confidentiality obligations.
the checks performed about the director;
• details of any interest, position association or
relationship that might impact on the ability of the
director to be independent;
• the term of office currently served by the director; and
• a statement by the Board as to whether it supports
the election or re-election of the candidate.
Prior to appointing a director, the Remuneration
and Nomination Committee undertakes appropriate
background checks on their qualifications, experience,
education, character, bankruptcy history and
criminal record.
Prior to appointment, candidates are required to provide
the Chairman with details of other commitments and an
indication of time involved, and to acknowledge that they
will have adequate time to fulfil his or her responsibilities
as a non-executive director of Kina.
The MD&CEO and each Senior Executive Team member
are also provided with a Letter of Appointment which
sets out the information above (to the extent applicable),
as well as:
• a description of their position, duties and
responsibilities;
• the person or body to whom they report;
• the circumstances in which their service may be
terminated (with or without notice);
• any entitlements on termination; and
• any circumstances in which their remuneration
may be clawed back.
57
Company Secretary
The Company Secretary is accountable directly to the
Board, through the Chairman, on all matters to do with the
proper functioning of the Board.
Mr. Johnson Kalo was appointed Company Secretary and
Chief Financial Officer on 1 April 2023. Mr. Kalo holds a
Bachelor of Arts in Commerce from University of Papua
New Guinea and a Post Grad Diploma in Applied Financial
Investment from FINSIA. Mr. Kalo is a member of Certified
Practising Accountants PNG.
Diversity
The Company’s Diversity Policy emphasises Kina’s
commitment to the maintenance and promotion of
a workplace that ensures equity and fairness and is
free from discrimination, harassment, bullying and
victimisation. Kina recognises the importance of
embracing diversity, specifically in valuing the unique
qualities, attributes, skills and experiences each employee
brings to the workplace.
The Company’s vision for diversity incorporates a number
of different factors, including but not limited to gender,
ethnicity and cultural background, disability, age and
educational experience.
The Diversity Policy provides a framework to help Kina
achieve its diversity goals, while creating a commitment
to a diverse work environment where staff are treated
fairly and with respect and have equal access to
workplace opportunities.
The Board has been focused on the improvement of
diversity reporting which is regularly provided to the
Board, and through the Remuneration and Nomination
Committee, plans to set measurable objectives for
achieving gender diversity in the composition of its
Board, Senior Executive Team and workforce generally,
and disclose in relation to each reporting period: (a)
the measurable objectives set for that period to achieve
gender diversity; (b) the entity’s progress towards
achieving those objectives; and (c) the respective
proportions of men and women on the Board, in senior
executive positions and across the whole workforce
(including how the entity has defined “senior executive”
for these purposes).
The numbers of females within Kina’s workforce as at
31 December 2023 and 31 December 2022, including
the Board and Senior Executive Team is set out below:
31 December 2022
31 December 2023
Females
Males
Total
Females
Males
Total
2
4
40
344
390
5
5
34
257
301
7
9
74
601
691
2
4
63
336
405
5
6
41
269
320
7
10
104
605
725
Board
Senior Executive Team
Team Leaders
Other employees
Total employees
58
The Senior Executive Team are those individuals who
report directly to the MD&CEO. Team Leaders are those
individuals who have been appointed as Supervisors
and Managers.
Kina was an inaugural member of the PNG Business
Coalition for Women and, through the year, has provided
specialist training to female team leaders to assist with
their career development. Kina is a strong advocate for
gender smart policies in the workplace and provides both
maternity and paternity leave for its employees. This is
complemented by the opportunity of flexible working
arrangement when returning to work. Also, within the
first six months of a child’s life, new parents are provided
with paid leave to enable time out of the workplace to
feed babies.
In 2023, Kina renewed its subscription to the Bel isi
PNG program, which provides safe housing and case
management services for employees and family members
who are survivors of domestic violence. Kina also trained 21
employees as family and sexual violence Contact Persons,
providing more opportunities for survivors of violence
to safely and confidentially reach out for assistance. The
management has incorporated and launched FSVU on
the common learning platform to allow for an extended
participation by the entire Kina employees.
The ratio of women to men at Kina is 56% female to 44%
male (2022: 56% to 44%).
The Group will continue to promote awareness and
understanding of workplace diversity principles and
develop policies to help employees balance work, family
and cultural responsibilities while at the same time
removing barriers to career development.
The Remuneration and Nomination Committee reviews
and oversees the implementation of the Diversity Policy
and will regularly consider the need to set specific gender
diversity objectives.
In accordance with the Standards, and as set out in the
Board Charter, the performance of the Board, the directors
and its Committees are assessed each year. The Board
commenced an independent performance evaluation
in 2023 conducted by an external firm, ProPerformance
Strategic Leadership. The findings will be used to further
refine the ongoing Board processes, succession and
renewal plan. The Board will continue to review individual,
Committee and collective Board performance and ensure
that composition, skills and experience of the directors
is appropriate.
Performance evaluations, overseen by the Chairman
and the Chair of the Remuneration and Nomination
Committee in the case of the MD&CEO, and the
Remuneration and Nomination Committee in the case
of the Senior Executive Team, are carried out on an
annual basis and were completed in 2023.
59
Principle 2: Structure the board to
be effective and add value
The board of a listed entity should be of an
appropriate size and collectively have the skills,
commitment and knowledge of the entity and
the industry in which it operates, to enable it to
discharge its duties effectively and to add value.
Board Composition
The Board currently comprises six non-executive directors
(NEDs) and one executive director. The Company’s
Constitution provides for a minimum of three and a
maximum of ten directors. The Board members have a
diverse range of skills and experience which ensure they
are able to add value to the Board’s decisions, contribute
effectively and act in the best interests of its shareholders.
The Company’s current executive director is Mr. Gregory
Pawson, the MD&CEO of the Company.
Board Committees
The Board has the power to establish and delegate
powers to Committees that are formed to facilitate
effective decision-making. The Board, however, ultimately
has full accountability for matters delegated by it to
those Committees.
The Board has established an Audit Committee, a
Risk Committee, a Remuneration and Nomination
Committee and a Disclosure Committee. Each Committee
has a separate Charter which sets out, in detail, the
membership and powers of the Committee including
its roles and responsibilities.
The Charters are reviewed at least annually, and copies
are available on the Company’s website at: https://
investors.kinabank.com.pg/Investors/?page=corporate-
governance.
Other Committees may be established by the Board as
and when required. Membership of Board Committees
is based on the needs of Kina, relevant legislative and
other requirements and the skills and experience of
individual directors.
Audit and Risk Committee
The Board established an Audit and Risk Committee to
fulfil its responsibilities with respect to financial policies
and financial processes, including internal and external
audit matters, and risk management and compliance
within the Company and its subsidiaries.
In April 2023, the Board split the Audit and Risk
Committee into two separate Committees; the Audit
Committee and Risk Committee. Prior to the split, the
Audit and Risk committee met twice during the year 2023.
Audit Committee
The Board established the Audit Committee to assist
the Board:
• To fulfil its responsibilities with respect to its statutory
and prudential duties and obligations to shareholders;
• With its obligations as a finance institution, as
documented in all of the Bank of PNG (BPNG)
Prudential Standards and other regulators in the
jurisdictions we operate;
• In ensuring the Reliability of Financial Information;
• With the oversight of management of material
financial risks;
• Reviewing and overseeing the systems in place
to ensure compliance with financial reporting
requirements and external reporting agencies
requirements, including ASX and PNGX;
• Reviewing and overseeing the systems in place to
ensure compliance with accounting standards in all
relevant jurisdictions;
• Liaison with External and Internal Auditors as
appropriate
• Monitor and assess the performance of the internal
and external audit functions; and
• Requesting and reviewing relevant external financial,
taxation and insurance advice so the Board can be
appropriately advised.
The Audit Committee is responsible for the financial
reporting and internal control, internal and external
audit. The Committee is to ensure that the Company
complies with its Risk Management Strategy and
Framework; It’s Corporate Strategy; It’s Code of Conduct;
It’s policies and procedures; and All other relevant
laws, regulations, codes, regulations, and industry
and organizational standards.
60
As set out in its Charter, the Audit Committee must
comprise at least three directors and all non-executive
directors. The Chair of the Audit Committee is appointed
by the Board and must be an independent director. In
accordance with the Standards, the Chair of the Board
must not be a member of any Board Committee.
Audit Committee met four (4) times during the year
ending 31 December 2023.
Risk Committee
The Board established the Risk Committee to assist
the Board:
• To fulfil its responsibilities with respect to its statutory
and prudential duties and obligations to shareholders;
• Its obligations as a finance institution, as documented
in all of the Bank of PNG (BPNG) Prudential Standards
and other regulators in the jurisdictions we operate;
• Review and oversee systems of risk management,
internal control and legal and regulatory compliance;
• Review the Kina Group’s risk appetite and tolerance
levels and ensuring they are consistent with and
appropriately aligned to the approved Kina Group
strategy; and
• Monitor and assess new technologies, and systems
of cyber security, data governance and modelling
integrity.
The Risk Committee is responsible for risk oversight,
risk management, compliance, anti-money laundering
and counter terrorist financing (AML/CTF), monitor
Group Insurance Program, monitor Group Litigation and
Informational Communication and technology.
The Committee is to ensure that the Company complies
with its Risk Management Strategy and Framework; It’s
Corporate Strategy; It’s Code of Conduct; It’s policies and
procedures; and All other relevant laws, regulations, codes,
regulations, and industry and organizational standards.
As set out in its Charter, the Risk Committee must comprise
at least three directors and all non-executive directors. The
Chair of the Risk Committee is appointed by the Board and
must be an independent director. In accordance with the
Standards, the Chair of the Board must not be a member
of any Board Committee.
Risk Committee met three (3) times during the year
ending 31 December 2023.
Remuneration and Nomination Committee
The Board has established a Remuneration and
Nomination Committee to ensure that the Company:
• has a Board of an effective composition, size
and commitment to adequately discharge its
responsibilities and duties and to bring transparency,
focus and independent judgment to decisions
regarding the composition of the Board;
• has coherent remuneration policies and practices to
attract and retain directors and senior executives who
will create value for shareholders;
• observes those remuneration policies and practices;
and
• fairly and responsibly rewards Group Executives
having regard to the performance of the Group, the
performance of the Group Executives and the general
external pay environment.
In its function as a Nominations Committee, the
Remuneration and Nomination Committee assists the
Board in fulfilling its corporate governance responsibilities
in regard to:
• Board appointments, re-elections and performance;
• Board and Committee membership;
• directors’ induction and continuing development;
• succession planning; and
• strategies to address Board diversity.
As set out in its Charter, the Remuneration and
Nomination Committee must comprise at least three
directors and all non-executive directors.
The Board has regard to diversity in constituting
the Remuneration and Nomination Committee.
The Remuneration and Nomination Committee may
obtain information from, and consult with, Management
and external advisers, as it considers appropriate.
The Committee met five (5) times during the year ended
31 December 2023.
Disclosure Committee
The Board has established a Disclosure Committee, the
purpose of which is to assist the Board in the performance
of its statutory and regulatory obligations by:
• ensuring market sensitive and/or Company
information is disclosed through the appropriate
channel promptly and without delay; and
• providing assurance to the Board that all potentially
market sensitive information has been considered
for compliance with the Company’s continuous
disclosure obligations.
61
The duties and responsibilities of the Disclosure
Committee include to:
The Disclosure Committee has the power to:
• determine whether information should be disclosed
• assess whether information concerning the Company
to the market or any public forum; and
should be disclosed to the market;
• authorise the disclosure of any information to the
• determine the substance of the market disclosure and
market or any public forum.
when it must be made;
• where necessary, review market disclosures for
accuracy and completeness and approve or
recommend to the Board for approval;
• determine whether a trading halt or voluntary
suspension of trading is required;
• respond to any request from ASX or PNGX to disclose
market sensitive information to correct or prevent a
false market;
• ensure that breaches of BPNG’s Standards are
communicated, where appropriate, to BPNG or other
regulators in compliance with the relevant listing rules
and/or continuous disclosure requirements; and
• oversee the Disclosure Officer’s administration of the
Continuous Disclosure Policy.
The Disclosure Committee has absolute right of access to
any information held by the Kina Group. The Disclosure
Committee shall comprise at least three members
appointed by the Board. Members shall include the
Chairman of the Board, the MD&CEO and the Chair of the
Audit and Risk Committee. The Committee Chair shall be
appointed by the Chair of the Board. The Committee met
twice during the year ended 31 December 2023.
Membership of and attendance at Board and
Committee meetings
Membership of the Committees during the reporting
period, the number of Board and Committee meetings
held and the attendance at those meetings are set out in
the table below. All directors are invited to and regularly
attend all Committee meetings.
Director
Board
Meetings
*Audit & Risk
Committee
Meetings
Audit
Committee
Risk
Committee
Remuneration
& Nomination
Committee
meetings
Disclosure
Committee
Meetings
A
82
8
8
8
8
8
4
2
Isikeli Taureka
Gregory
Pawson
Andrew
Carriline
Paul
Hutchinson
Karen Smith-
Pomeroy
Jane
Thomason
Ila Temu*
Richard
Kimber
B
61
8
71
8
8
8
31
2
A
B
A
A
B
B
A
B
2
2
22
2
2
2
4
4
42
4
4
4
3
32
3
3
3
3
5
5
3
52
3
1
21
5
21
1
A
22
2
2
B
2
2
2
2
2
A meetings held that the director was eligible to attend
B meetings attended
1 these absences were known and approved prior to the meeting
2 Chair
*Audit & Risk Committee split into Risk Committee and Audit Committee effective 27 April 2023
* Ila Temu resigned from the Board in April 2023.
62
Board Skills Matrix
The Board seeks to have an appropriate mix of skills, experience, expertise and diversity to enable it to discharge its
responsibilities and add value to the Company.
As of 19 April 2024, the directors collectively contribute the following key skills and experience:
Skills and experience
Explanation
Banking &/
or financial
services
experience
Customer
focus &
outcomes
Experience outside Kina in, with global business perspectives of, significant components of
the financial services industry, including retail and commercial banking services and adjacent
sectors, equity and debt capital markets, with strong knowledge of their economic drivers and
the regulatory environment.
Experience in developing and overseeing the embedding of a strong customer focused
culture in large complex organisations, and a demonstrable commitment to achieving
customer outcomes.
Environment,
social &
sustainability
Understanding the potential risks and opportunities from an environmental and social
perspective, and experience in developing and monitoring sustainability frameworks and
related practices.
Financial
acumen
Good understanding of financial statements and drivers of financial performance for a
business of significant size, including ability to assess the effectiveness of financial controls.
Governance
Publicly listed company experience, extensive experience in and commitment to the highest
standards of governance, experience in the establishment and oversight of governance
frameworks, policies and processes.
International
experience
Senior leadership experience involving responsibility for operations across borders, and exposure
to a range of political, cultural, regulatory and business environments in that position.
Leadership &
commercial
acumen
Skills gained whilst performing at a senior executive level for a considerable length of time.
Includes delivering superior results, running complex businesses, leading complex projects
and issues, and leading workplace culture.
People,
culture &
conduct
Experience at a senior executive level in people matters including building workforce
capability, workplace cultures, management development, succession and setting a
remuneration framework that attracts and retains a high calibre of executives, and promotion
of diversity and inclusion.
Risk &
compliance
An understanding of compliance and experience in anticipating and evaluating macro,
strategic, operational, financial, social, technological including digital disruption and cyber
security) risks that could impact the business. Recognising and managing these risks by
developing sound risk management frameworks and providing oversight. Includes experience
in managing compliance risks and regulatory relationships.
Stakeholder
engagement
Demonstrated ability to build & maintain key relationships with industry, government
or regulators.
Strategy
Experience in leading, developing, setting and executing strategic direction. Experience in
driving growth and transformation, executing against a clear strategy.
Technology &
digital
Experience in businesses of a significant size with major technology focus, including
adaptation to digital change and innovation, with knowledge of developments in
Decentralised Finance (DeFi).
63
Composition of the Board and details
of directors
The Kina Board currently comprises seven directors,
one of whom is Gregory Pawson, the MD&CEO.
The remaining six directors are considered by the Board
to be independent non-executive directors, comprising
Isikeli Taureka (Chairman of the Board), Karen Smith-
Pomeroy (Chair, Audit Committee), Jane Thomason
(Chair, Remuneration and Nomination Committee),
Paul Hutchinson (Chair, Risk Committee), Andrew Carriline,
and Ila Temu. Ila Temu resigned from the Board in April
2023 and this vacancy was filled in by Richard Kimber.
The Board considers that each of the non-executive
directors are ‘independent’ of the Company.
Throughout the year, the Board therefore had
a majority of independent non-executive directors.
Directors’ Details
Name
Isikeli Taureka
Appointment date
Length of service
Non-executive
Independent
19 April 2016
8 years, 0 months
Karen Smith-Pomeroy
12 September 2016
7 years, 7 months
Gregory Pawson
Jane Thomason
Andrew Carriline
Paul Hutchinson
Ila Temu
1 January 2018
6 years,4 months
27 April 2018
5 years, 11 months
16 August 2018
5 years, 8 months
16 August 2018
5 years, 8 months
14 December 2020
2 year, 4 months
Richard Kimber
1 September 2023
7 months
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
The Board considers an independent director to be a
non-executive director who is not a member of Kina’s
Senior Executive Team and who is free of any business or
other relationship that could materially interfere with, or
reasonably be perceived to materially interfere with, the
independent exercise of their judgment.
At least annually, the Board reviews the independence
of each director in light of their interests disclosed to the
Board at each Board meeting and considers examples
of interests, positions, associations and relationships that
might cause doubts about the independence of a director
including if the director:
• is, or has been, employed in an executive capacity by
the entity or any of its child entities and there has not
been a period of at least three years between ceasing
such employment and serving on the Board;
• receives performance-based remuneration (including
options or performance rights) from, or participates in
an employee incentive scheme of, the entity;
• is, or has been within the last three years, in a material
business relationship (e.g. as a supplier, professional
adviser, consultant or customer) with the entity or any
of its child entities, or is an officer of, or otherwise
associated with, someone with such a relationship;
• is, represents, or has been within the last three years
an officer or employee of, or professional adviser to, a
substantial shareholder of the Company’s securities;
• has close personal ties with any person who falls
within any of the categories described above; or
• has been a director of the entity for such a period that
their independence from management and substantial
shareholders may have been compromised.
The Board considers that each of the non-executive
directors brings objective and independent judgment to
Board deliberations and makes a valuable contribution to
Kina through the skills and experience they bring to the
Board and their understanding of Kina’s business.
Board Chair
In accordance with the Board Charter, the Board Chair is
an independent director. The roles and responsibilities of
the Board Chair are contained within the Board Charter
and the role of the Board Chair and MD&CEO may not be
exercised by the same individual.
64
Director induction and education
Kina’s induction program is designed to provide all new
directors with a comprehensive view of the business.
As part of the induction, new directors are given a
detailed overview of Kina’s operations, copies of
governance and internal policies and procedures and
instruction on the roles and responsibilities of the Board,
its Committees and Senior Management.
The electronic Board portal utilised by the Board provides
directors access to relevant Governance Documents,
educational information, Board and Committee papers
and provides a secure means of communication between
directors and Senior Management. There is a strong
emphasis on continued education and directors are
expected to keep themselves updated on changes
and trends within the business, in the financial sector,
market environment and any changes and trends in the
economic, political, social, global, environmental and
legal climate generally.
Consistent with guidance on best-practice, all directors
seek to complete a minimum of 20 hours during the
year in ongoing professional development. Directors
are encouraged to attend recognised courses, seminars
and conferences and internal education sessions are
scheduled at Board meetings throughout the year.
Principle 3: Instil a culture of acting
lawfully, ethically and responsibly
A listed entity should instil and continually reinforce
a culture across the organisation of acting lawfully,
ethically and responsibly.
Kina Group Purpose Statement
Kina’s purpose is ‘to constantly improve the prosperity of
the people, communities, and markets that we serve’.
Kina Group Vision Statement
Our Vision is ‘to be the most dynamic, progressive
and accessible financial services organisation in the
Pan Pacific region’.
This Vision is supported by our Strategic Priorities:
• Growth and Prosperity: multiple business lines
providing customers with a full range of services,
strong organic growth, value added services, and
synergistic acquisitions;
• Building Resilience: strong company, well capitalised,
well governed, managing risk versus rewards, and
insulated against economic or market shocks;
• Service Excellence: digital from the inside and out,
simple processes, great customer service, always first
when it matters;
• Dynamic People: we love people, our culture is
everything, our people are well trained, adaptable and
care; and
• Sustainable Communities: we are in the business of
doing good, building trust, and creating long-term
value for all our stakeholders.
Kina’s Culture
Our People are here to make a difference, not just for
their day job. They are passionate about empowering
customers to effect life change.
Kina’s culture is underpinned by our Group Values, FIRST:
• Fairness – Guides equity and justice, ensuring
opportunities for all to thrive.
• Inspire – Sparks creativity, fuels perseverance, drives
change and touches hearts.
• Responsive – Fosters trust and satisfaction by
addressing peoples’ needs promptly and effectively.
• Serve – Embodies empathy, compassion, kindness
and enriching our customers’ lives.
• Together – Is a team who entrust each other.
In 2023, Kina changed the FIRTH values and adopted the
FIRST values. Since the introduction of the FIRST values,
Kina has seen an increase in employee participation
in FIRTH value moments which has helped them gain
renewed perspective in our values and how they can be
applied through the business. Our Learning Managements
System was updated to include self-assessment and leader
assessment of employee contribution to our Values and
defined behaviours.
Kina has articulated its Group Vision Statement, its
Defining Purpose and its Culture in its Board Charter,
a copy of which is available on the Company’s
website at https://investors.kinabank.com.pg/
Investors/?page=corporate- governance.
65
Acting Ethically and Responsibly
The Board is committed to ensuring that Kina maintains
the highest standards of integrity, honesty and fairness in
its dealings with all stakeholders, and that Kina complies
with all legal and other obligations.
Kina’s Code of Ethics and Business Conduct (Code)
applies to all directors, employees of Kina and its
subsidiaries (including subcontractors and consultants).
The Code sets out certain minimum standards of conduct
that Kina expects of its employees and directors including
integrity, diligence, impartiality, equality and fairness.
The Code sets out how employees and directors are to
conduct themselves in order to meet these minimum
standards. It is a requirement for all directors and officers
to acknowledge the Code annually.
Whistleblower Policy
The Board has adopted a Protected Disclosure (Whistle-
Blower) Policy. The Board wishes to promote an
organisational culture that values open, transparent,
ethical, legal, compliant behaviour and does not tolerate
behaviour that departs from the high standards expected
of Kina directors and employees.
This Policy is intended to reinforce that culture and to
provide a safe, secure, confidential means whereby
persons with concerns over any breaches including any
unlawful conduct, misconduct, malpractices, violation
of any legal or regulatory provisions that has, or may
have occurred, can report it without fear of reprisal,
discrimination or harassment of any kind. It is expected
that the protected disclosures will be made in confidence
and in the knowledge that it will be properly investigated
and escalated to the appropriate level for it to be
properly addressed.
Anti-Bribery and Corruption Policy
The Board has adopted an Anti-Bribery and Corruption
Policy. The purpose of the Policy is to provide clarity of
expectations, which helps to reinforce and strengthen the
understanding of our responsibilities as well as those with
whom we engage and also provide guidance in dealing
with incidents or suspected incidents of bribery and
corruption, should they occur.
The Policy complements Kina’s other related policies,
in particular, the Code of Ethics and Business Conduct,
Conflicts of Interests Policy, and the Gift and Entertainment
Policy. The Policy harmonises with Kina’s Core Values that
emphasise principles of fairness, imagination, reflection,
togetherness and honesty in our relationships and business
dealings with both our internal and external stakeholders.
Principle 4: Safeguard the integrity
of corporate reports
A listed entity should have appropriate processes
to verify the integrity of its corporate reports.
Audit Committee
Details of the Audit Committee are set out on page 60.
Written Declarations
When the Board considers the statutory half-year
and annual financial statements, the Board obtains a
declaration1, from the MD&CEO and CFO concerning
the integrity of the financial statements and assurance
as to the effective operation of the risk management
and internal compliance and control systems.
Kina’s financial reports for the half-year ended 30 June
and the full year ended 31 December are respectively
reviewed and audited by Deloitte, the Company’s
external auditor.
1(equivalent to the declaration required by section 295A of the Corporations
Act and the statements required by Recommendation 4.2 of the Principles and
Recommendations)
Principle 5: Make timely and
balanced disclosure
A listed entity should make timely and balanced
disclosure of all matters concerning it that a
reasonable person would expect to have a material
effect on the price or value of its securities.
Timely and Balanced disclosure
Kina is committed to observing its disclosure obligations
under the ASX Listing Rules, the PNGX Listing Rules,
the (PNG) Companies Act 1997, (PNG) Securities Act
1997, the (PNG) Capital Markets Act 2015 and the
Australian Corporations Act, 2001 (Cth). The Board
has adopted a Continuous Disclosure Policy and a
Shareholder Communications Policy that implement
Kina’s commitment to providing timely, complete and
accurate disclosure of information.
66
The Continuous Disclosure Policy sets out the roles and
responsibilities of officers and employees in complying
with Kina’s continuous disclosure obligations and
nominates those individuals who are responsible for
determining whether or not information is required
to be disclosed.
Shareholder Communications
The Shareholder Communications Policy promotes
effective communication with shareholders and seeks to
ensure that shareholders have equal and timely access to
material information concerning Kina. The Policy sets out
the investor relations program, a key tenet of which is to
encourage effective shareholder participation.
In accordance with the Shareholder Communications
Policy, Shareholders are encouraged to attend General
Meetings of shareholders and shareholder information
sessions and to submit written questions prior to those
meetings. If they are unable to attend General Meetings
of shareholders, shareholders are encouraged to vote by
proxy or other means included in the Notice of Meeting.
Kina’s website www.kinabank.com.pg contains information
regarding the Company, the Board and Senior Executive
Team, corporate governance, media coverage, ASX and
PNGX Announcements, investor presentations and reports.
Kina’s Investor Relations Program includes a number
of scheduled and ad hoc interactions with institutional
investors, private investors, sell-side and buy-side analysts
and the financial media. At a minimum, so as to ensure
that shareholders and other stakeholders have a full
understanding of Kina’s performance and strategies,
Kina will convene analyst briefings twice a year on Kina’s
financial performance and objectives, following release
of the half- year and full year financial results.
Shareholders may receive and send information
electronically to and from both Kina and Kina’s Share
Registry. Other methods of communication are also
available to shareholders and other stakeholders, including
telephone and mail. Kina may consider the use of other
reliable technologies as they become widely available.
Each director automatically receives a copy of each ASX
and PNGX Announcement directly from the ASX Market
Announcements Platform as soon as it has been released
by ASX and PNGX.
In accordance with Kina’s Continuous Disclosure Policy
and Shareholder Communications Policy, any presentation
to a new and substantive investor or analyst presentation,
is released on the ASX Market Announcements Platform
ahead of the presentation.
Principle 6: Respect the right of
security holders
A listed entity should provide its security holders with
appropriate information and facilities to allow them to
exercise their rights as security holders effectively.
Kina values engagement with its shareholders, providing
an understanding to the market of the Company’s
business, performance and governance. The Company
uses the following procedures for engaging with
its shareholders:
• Periodic Reporting: The Company produces financial
statements for its shareholders and other interested
parties twice per year and allows shareholders to
receive these documents by mail or access them
electronically (https://investors.kinabank.com.pg/
Investors/?page=Reports-and-Presentations).
• Annual General Meeting: Shareholders are
encouraged to attend the Annual General Meeting
each year and are provided with an explanatory
memorandum on the resolutions proposed through
the Notice of Meeting. If unavailable to attend,
shareholders are encouraged to appoint a proxy to
vote/attend on their behalf. The Company requires
its external auditor to attend each Annual General
Meeting and be available to answer questions from
shareholders about the conduct of the audit and the
preparation and contents of the auditor’s report.
• Website: The Kina website provides information
on the Company’s products and services as well
as information useful to shareholders and market
participants (https://www.kinabank.com.pg).
In particular:
– the Investor section (https://investors.kinabank.com.
pg/investors); and
– Corporate Governance section (https://investors.
kinabank.com.pg/Investors/?page=corporate-
governance) directs shareholders to information
likely to be of greatest interest to them.
• Investor Relations: On its website at https://
investors.kinabank.com.pg/Investors/?page=asx-
announcements, the Company posts prompt and
relevant communications for shareholders and the
market generally to access, such as ASX and PNGX
Announcements and financial results. Investors
and shareholders can also contact the Company or
its share registry, Link Market Services, directly by
email or by mail and can in turn choose to receive
communications electronically at https://investors.
kinabank.com.pg/Investors/?page=my-shareholding.
67
The Notice of Meeting for any general or annual
meetings of Kina shareholders includes the statement
that in accordance with Article 55.3 of the Constitution,
the Chairman intends to demand a poll on each of the
resolutions proposed at the Meeting.
Principle 7: Recognise & manage risk
A listed entity should establish a sound risk
management framework and periodically review
the effectiveness of that framework.
Risk Committee
Details of the Risk Committee are set out on page 61.
Risk Management and Internal Controls
Risk is managed structurally through clearly defined risk
management policies specific to certain parts of the
business. These are interlinked and feed into a Group
Risk Management Framework, which is overseen by the
Audit Committee and the Risk Committee. The Board has
approved and regularly reviews and updates the Group’s
Risk Appetite Statement and tolerance limits, as part of
the Group Risk Management Framework, to ensure that
all major areas of risk and risk management systems are
appropriately monitored and accurately documented.
Kina has a dedicated Group Chief Risk Officer (CRO) who
is responsible for the Governance, Risk and Compliance
attributes of the businesses. The CRO reports to the
MD&CEO and the Chairs of the Audit Committee and Risk
Committee respectively to ensure all material risks remain
well managed.
The Audit Committee and Risk Committee are supported
by a number of approved risk management committees,
including the Credit Committee, Asset and Liability
Committee, Operational Risk and Compliance Committee
and Executive Committee. The management committees
have been established to nurture a strong and robust risk
culture within the Group through the application of the
three lines of defence risk model, and the implementation
of key policies and frameworks.
Communication and education throughout the Group
on the three lines of defence model emphasises each
individual’s role in the management of risk. During 2023,
the Group’s Risk Management Framework, including
underlying policies, was reviewed by the Risk Committee
and, where relevant, by the Board.
A dedicated Compliance department is in place to ensure
that Kina personnel are aware of the Group’s prudential
and legislative obligations and that these are maintained
at all times. Risk within the Group is managed according
to the appropriate risk parameters whilst promoting
compliance of the limits set in the Board Approved Risk
Appetite Statement. People risk is monitored including
via an Occupational Health, Safety and Wellbeing
regime, which is designed to maintain the safety of Kina’s
Employees and Customers. The Group’s risk management
activities comply with all relevant regulation including
that of the BPNG Standards, relevant legislation and the
Investment Promotion Authority (IPA), and the ASX and
PNGX Listing Rules.
Kina also employs skilled credit managers who understand
the PNG economic environment to ensure that the growing
loan portfolio is maintained within an acceptable level of risk
and within Kina’s Board-approved risk appetite. All lending
proposals are considered based on credit policy and within
the risk appetite of the Group. Debt servicing assessment
criteria is maintained to ensure Kina understands its level of
credit risk while managing its impairment exposure.
Kina’s risk management framework and internal control
functions incorporate an Internal Audit function, which
reports directly to the Audit Committee.
In 2023, the Board ensured the Internal Audit function was
brought internally to provide independent and objective
assurance to the Board, via the Audit Committee. The
annual Internal Audit Plan is formulated by the Group
Chief Risk Officer (CRO) using a risk- based approach.
Progress against the Internal Audit Plan is reported to
the Audit Committee on a quarterly basis.
The internal audit function determines an independent
assessment of the effectiveness of Kina’s Risk
Management and internal control environment which
is utilised in continual improvement measures of Kina’s
business processes.
Kina is exposed to the economic conditions of PNG
through its normal course of business in lending monies
to commercial businesses operating in PNG. Kina does
not believe it currently has any material exposure to
environmental or social (ESG) sustainability risks and
the Company is currently working to develop further
our ESG framework and processes.
68
Principle 8: Remunerate fairly
and responsibly
A listed entity should pay director remuneration
sufficient to attract and retain high quality directors
and design its executive remuneration to attract,
retain and motivate high quality senior executives
and to align their interests with the creation of value
for security holders and with the entity’s values and
risk appetite.
Remuneration and Nomination Committee
Details of the Remuneration and Nomination Committee
are set out on page 61.
Remuneration
Kina is committed to a fair and responsible system of
remuneration throughout the Group. Members of Senior
Management are remunerated in a way that aims to attract
and retain an appropriate level of talent and reflects
their performance in relation to the delivery of corporate
strategy and operational performance.
Remuneration for non-executive directors is set using
advice from independent consultants and considers the
level of fees paid to non-executive directors of similar
corporations and the responsibilities and work/time
requirements of the non-executive directors.
The Remuneration Report and further details about
the remuneration policy of Kina are set out in the 2022
Annual Report.
Dealings in Company Securities
The Board has adopted a Securities Trading Policy that
applies to Kina’s equity-based remuneration scheme
and explains the conduct that is prohibited under the
PNG Securities Act, Capital Markets Act, and the
Corporations Act.
The Securities Trading Policy:
• provides for certain Trading Windows when ‘Relevant
Persons’ may trade provided the appropriate process
has been adhered to;
• prohibits any Relevant Person from entering into a
hedge transaction involving unvested equity held
pursuant to an Employee, Senior Management or
Director Equity Plan operated by Kina;
• prohibits any Relevant Person from entering into a
hedge transaction involving unvested equity held
pursuant to an Employee, Senior Management or
Director Equity Plan operated by Kina;
• sets out the prohibitions against insider trading and
prescribes certain requirements for dealing in Kina
securities; and
• prohibits Relevant Persons from trading in Kina
securities while in possession of material non-public
information, which is information a reasonable person
would expect to have a material effect on the price or
value of Kina securities.
Principle 9: Additional
Recommendations
Kina is registered in Papua New Guinea and is in the
same time zone as Eastern Australia. All meetings of
Kina’s Board and its Committees are held at a reasonable
time. The company utilizes facilities to hold secure, virtual
meetings where necessary, to enhance meeting logistics
and efficiency.
69
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70
Dividends
The Company paid a dividend of PGK16.1 toea (AUD
6.5 cents) per share (PGK46.1m) in April 2023 in relation
to the profit for the half year ended 31 December 2022.
In October 2023, the Company also paid dividend of
PGK9.7 toea (AUD 4.0 cents) per share (PGK28.1m) in
relation to the profit for the half year ended 30 June 2023.
After balance sheet date events
Subsequent to balance sheet date, the directors declared
a final dividend of PGK15.9 toea (AUD 6.0 cents) per
share (PGK45.5m) on underlying NPAT declared for the
second half of financial year 2023.
See also note 37 for other subsequent events.
Donations
During the year the Group made donations totalling
PGK659,415 (2022: PGK124,996)
Auditor’s fees
Fees paid to the auditor during the year for professional
services are shown in note 35 to the accounts. The external
auditor is Deloitte Touche Tohmatsu Ltd.
Directors’ Report.
The directors of Kina Securities Limited (“Company”)
submit herewith the annual financial report of the
Company and its Subsidiaries for the year ended
31 December 2023.
Principal activities
The principal continuing activities of the Company and
its Subsidiaries during the year were the provision of
commercial banking and financial services (including
asset financing, provision of commercial and personal
loans, money market operations and corporate advice),
fund administration, investment management services
and share brokerage.
The directors consider there are no unusual or other
matters that warrant their comments and the Group’s
financial position and results from operations are properly
reflected in these financial statements.
Operating results and review
of operations
The net profit attributable to equity holders for the
year for the Group was PGK105 million compared
with PGK116.5 million in 2022.
The profit includes the following items:
• Net interest income of PGK203.3 million,
compared with PGK181.2 million in the prior year
to 31 December 2022.
• Net fee and commission income of PGK137.0 million
compared with PGK116.2 million in the prior year.
• Operating income before impairment losses and
other operating income of PGK404.2 million, up from
PGK366.5 million in the prior year.
• Expected credit losses on financial instruments
at amortised cost of PGK9.9million, compared with
PGK4.8 million in the prior year.
• Other operating expenses of PGK218.7 million,
compared with PGK213.3 million in the prior period.
7171
09 Remuneration Report
Remuneration of employees
During the year, the number of employees or former employees (not being directors of the Company), receiving
remuneration in excess of PGK100,000 per annum from the Group stated in bands of PGK10,000 was as follows:
In PGK
1,940,001 - 1,950,000
1,820,001 - 1,830,000
1,030,001 - 1,040,000
970,001 - 980,000
950,001 - 960,000
910,001 - 920,000
890,001 - 900,000
870,001 - 880,000
850,001 - 860,000
840,001 - 850,000
810,001 - 820,000
800,001 - 810,000
790,001 – 800,000
770,001 - 780,000
730,001 - 740,000
720,001 - 730,000
710,001 - 720,000
700,001 - 710,000
660,001 - 670,000
600,001 - 610,000
590,001 - 600,000
580,001 - 590,000
550,001 - 560,000
540,001 - 550,000
530,001 - 540,000
510,001 - 520,000
500,001 - 510,000
480,001 - 490,000
470,001 - 480,000
2023
2022
In PGK
2023
2022
1*
-
2
1
-
-
1
1
1
1
1
1
-
-
1
-
1
-
-
-
2
-
1
1
-
-
-
-
1
-
1
-
2
-
1
-
2
-
-
-
1
1
1
-
1
-
-
-
2
-
2
1
-
1
1
1
1
1
450,001 - 460,000
400,001 - 410,000
390,001 - 400,000
380,001 - 390,000
360,001 - 370,000
350,001 - 360,000
340,001 - 350,000
330,001 - 340,000
320,001 - 330,000
310,001 - 320,000
300,001 - 310,000
290,001 - 300,000
280,001 - 290,000
270,001 - 280,000
250,001 - 260,000
240,001 - 250,000
220,001 - 230,000
210,001 - 220,000
200,001 - 210,000
190,001 - 200,000
180,001 - 190,000
170,001 - 180,000
160,001 - 170,000
150,001 - 160,000
140,001 - 150,000
130,001 - 140,000
120,001 - 130,000
110,001 - 120,000
100,000 - 110,000
1
-
1
1
-
3
1
2
-
1
2
1
-
3
4
1
3
-
6
8
5
3
7
3
5
10
11
12
11
1
1
-
-
1
1
-
1
1
2
2
-
2
-
1
-
1
1
4
4
5
2
11
10
10
6
9
16
16
72
* Increase in fixed base salary and impact of foreign exchange conversion.
Directors’ remuneration
Directors’ fees paid during the year was as follows:
In PGK
Directors
I. Taureka
K. Smith-Pomeroy
J. Thomason
P. Hutchinson
A. Carriline
I. Temu
R.Kimber
Managing Director
G. Pawson
– Salaries
– Other benefits including leave entitlements
* Increase in fixed base salary and impact of foreign exchange conversion.
Signed at Port Moresby on behalf of the board on 28th March 2024.
2023
2022
PGK‘000
PGK‘000
446
325
277
281
293
104
83
455
333
285
257
285
257
-
1,809
1,874
1,946*
454
2,400
4,209
1,817*
452
2,269
4,143
Mr Isikeli Taureka
Director and Chairman
Mr Greg Pawson
Managing Director and Chief Executive Officer
73
Directors’ Report
The directors declare that:
• in the directors’ opinion, there are reasonable grounds to believe that the Company and the Subsidiaries
(together the Group) will be able to pay their debts as and when they become due and payable
• in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the
PNG Companies Act 1997, including compliance with International Financial Reporting Standards (IFRS)
and giving a true and fair view of the financial position and performance of the Company and the Group
as at and for the year ended 31 December 2023
Signed in accordance with a resolution of the Board of directors.
On behalf of the directors
Mr Isikeli Taureka
Director and Chairman
Port Moresby, 28 March 2024
Mr Greg Pawson
Managing Director and Chief Executive Officer
Port Moresby, 28 March 2024
74
Deloitte Touche Tohmatsu
Level 9, Deloitte Haus
MacGregor Street
Port Moresby
PO Box 1275 Port Moresby
National Capital District
Papua New Guinea
Tel: +675 308 7000
Fax: +675 308 7001
www.deloitte.com.pg
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne VIC 3000
GPO Box 78B
Melbourne VIC 3001,
Australia
Tel: +61 (0)3 9671 7000
Fax: +61 (0)3 9671 7001
www.deloitte.com.au
Independent Auditor’s Report to the shareholders of Kina
Securities Limited
RReeppoorrtt oonn tthhee AAuuddiitt ooff tthhee FFiinnaanncciiaall SSttaatteemmeennttss
Opinion
We have audited the accompanying financial statements of Kina Securities Limited (the “Company”) and its
subsidiaries (the “Group”) which comprise the Group and the Company’s statements of financial position as at 31
December 2023, the statements of comprehensive income, the statements of changes in equity and the
statements of cash flows for the year then ended, and notes to the financial statements, including material
accounting policy information and other explanatory information.
In our opinion, the accompanying financial statements of the Group and the Company, give a true and fair view of
the Group’s and the Company’s financial position as at 31 December 2023 and of their financial performance and
cash flows for the year then ended in accordance with International Financial Reporting Standards and the
requirements of the Companies Act 1997 (amended 2022).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements
section of our report. We are independent of the Group in accordance with the International Ethics Standards
Board for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of
the financial statements in Papua New Guinea, and we have fulfilled our other ethical responsibilities in
accordance with these requirements and the IESBA Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial statements of the Group for the current period. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
KKeeyy AAuuddiitt MMaatttteerr
EExxppeecctteedd ccrreeddiitt lloossss oonn llooaannss aanndd aaddvvaanncceess
As at 31 December 2023, the Group has
recognised a loss allowance for Expected Credit
Losses (ECL) amounting to K52.5m on loans and
advances held at amortised cost in accordance
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt
MMaatttteerr
Our audit procedures, in conjunction with our specialists,
included, but were not limited to:
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Asia Pacific Limited and the Deloitte organisation.
75
KKeeyy AAuuddiitt MMaatttteerr
with IFRS 9 Financial Instruments (IFRS 9) as
disclosed in Note 3(b).
Loans and advances subject to IFRS 9’s impairment
lending
requirements
portfolio, personal
loan
commitments.
include the residential
loan portfolio and
Allowance for Expected Credit Loss (ECL)
is
considered a key audit matter due to significance
loans and advances to the financial
of the
significant management
statements
judgement
loss allowance,
including:
in estimating the
and
• The application of the requirements of IFRS 9 as
reflected in the Group’s ECL model particularly
in light of the current economic environment;
• Identification of exposures with a significant
in credit quality to determine
movement
whether 12-month or lifetime expected credit
loss should be recognised; and
• Assumptions used in the ECL model such as the
the counterparty,
financial condition of
repayment capacity and
forward-looking
macroeconomic factors as disclosed in Note
3(b).
IImmppaaiirrmmeenntt ooff nnoonn--ccuurrrreenntt aasssseettss
ggooooddwwiillll
iinncclluuddiinngg
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt
MMaatttteerr
CCoonnttrrooll ddeessiiggnn aanndd iimmpplleemmeennttaattiioonn::
We tested the design and implementation of controls
over the loss allowance including controls over:
• The accuracy of data input into the system used for
determining the past due status and approval of credit
facilities; and
• The ongoing monitoring and identification of loans
displaying indicators of impairment and to ensure
whether they are migrating on a timely basis to
appropriate default stages including the generation of
“days past due” reports.
AAsssseessssiinngg iimmppaaiirrmmeenntt mmooddeell aapppprroopprriiaatteenneessss::
We assessed the appropriateness of management’s
internally developed model in determining the loss
allowance for ECL. Our procedures included, but were not
limited to:
• Assessing whether
the ECL model adequately
addresses the requirements of IFRS 9;
• Assessing, based on sample testing, whether individual
exposures are classified
into appropriate default
stages and aging categories for the purpose of
determining the loss allowance for ECL;
• Assessing the reasonableness of the assumptions
driving Probabilities of Default (PD), Loss Given Default
(LGD) and Exposure at Default (EAD); and
• Assessing the adequacy of management overlays to
the modelled loss allowance for ECL by recalculating
the coverage provided by the loss allowance (including
overlays) to the loan book, taking into account recent
history, performance and de-risking of the relevant
portfolios.
We also evaluated the adequacy of the disclosures in Note
3(b) to the financial statements.
In conjunction with our valuation specialists, our
procedures included, but were not limited to:
As at 31 December 2023, the Group has
recognised goodwill amounting to K92.7m, arising
from the acquisitions of Maybank (PNG) Limited
and Maybank Property (PNG) Limited as disclosed
in Note 36.
• Evaluating the appropriateness of management’s key
controls over the impairment assessment process,
including the identification of potential indicators of
impairment such as the carrying value of the Group’s
net assets exceeding the market capitalisation;
In accordance with IAS 36 Impairment of Assets,
Cash Generating Units (CGUs) including goodwill
are required to be tested for impairment at least
annually.
• Assessing the reasonableness of cash flow projections
and growth rates against external economic and
financial data and the Group’s own historical
performance;
76
KKeeyy AAuuddiitt MMaatttteerr
This is considered a key audit matter due to the
significance of judgement required in preparing a
discounted cash flow model (value in use). These
judgements include estimating:
• Future cash flows for the Cash Generating Unit
(“CGU”) taking into accounting regulatory and
macroeconomic factors;
• Discount rates; and
• Terminal value growth rates.
IInnffoorrmmaattiioonn tteecchhnnoollooggyy
The Group’s business operations are heavily reliant
on IT systems for processing large volumes of
transactions as well as automated calculations
supporting both internal and external financial
reporting. These systems are vital to the ongoing
operations of the business and to the integrity of
the financial reporting process and as a result, the
assessment of IT systems forms a key component
of our audit and is considered a key audit matter.
HHooww tthhee ssccooppee ooff oouurr aauuddiitt rreessppoonnddeedd ttoo tthhee KKeeyy AAuuddiitt
MMaatttteerr
• Comparing historical performance against prior years’
budgets and forecasts to assess management’s
historical forecasting accuracy;
• Assessing the key assumptions and methodology used
by management in the impairment model, in particular
the discount rate and the terminal growth rate; and
• Testing the mathematical accuracy of the impairment
model.
We also evaluated the adequacy of the disclosures in Note
36 to the financial statements.
In conjunction with our IT specialists, our procedures
included but were not limited to:
• Obtaining an understanding of the IT environment and
identification of the key systems relevant to financial
reporting;
• Testing the design and implementation of IT controls
including, but not limited to, access administration,
change management and segregation of duties; and
• Responding to deficiencies identified by designing and
performing additional procedures which included the
identification and testing of compensating manual
controls and varying the nature, timing and extent of
the substantive procedures performed.
Other Information
The directors are responsible for the other information. The other information comprises the Directors’ Report
and Directors’ Declaration, which we obtained prior to the date of this auditor’s report, and annual report (but
does not include the financial statements and our auditor’s report thereon), which is expected to be made
available to us after that date.
Our opinion on the financial statements does not cover the other information and we do not and will not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If,
based on the work we have performed on the other information that we obtained prior to the date of this auditor’s
report, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
When we read the annual report, if we conclude that there is a material misstatement therein, we are required to
communicate the matter to the directors and use our professional judgement to determine the appropriate
action.
Responsibilities of the Directors for the Financial Statements
The directors are responsible for the preparation of the financial statements that give a true and fair v iew in
accordance with International Financial Reporting Standards and the Companies Act 1997 (amended 2022) and
77
for such internal control as the directors determine is necessary to enable the preparation of the financial
statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the ability of the Group and the
Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the International Standards on Auditing will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of the financial
statements.
As part of an audit in accordance with the International Standards on Auditing, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit 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
Group or the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group or the Company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group or the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the Group financial statements. We are responsible for
the direction, supervision and performance of the Group’s audit. We remain solely responsible for our audit
opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
78
From the matters communicated with the directors, we determine those matters that were of most significance
in the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
RReeppoorrtt oonn OOtthheerr LLeeggaall aanndd RReegguullaattoorryy RReeqquuiirreemmeennttss
In accordance with section 200 of the Companies Act 1997 (amended 2022), in our opinion:
• We obtained all information and explanations that were required; and
• Proper accounting records have been kept by the Group for the year ended 31 December 2023.
We have no interest in the Company and the Group or any other relationship, other than that of the auditor of
the Company and the Group.
The engagement partners on the audit resulting in this independent auditor’s report are Mark Stretton and Helen
Hamilton-James.
DELOITTE TOUCHE TOHMATSU
MMaarrkk SSttrreettttoonn
Partner
Chartered Accountants
Registered Company Auditor in Australia
MMeellbboouurrnnee,, 2288 MMaarrcchh 22002244
HHeelleenn HHaammiillttoonn--JJaammeess
Partner
Chartered Accountants
Registered under the Accountants Act, 1996
PPoorrtt MMoorreessbbyy,, 2288 MMaarrcchh 22002244
79
Statements of Comprehensive Income.
For the year ended 31 December 2023
Interest income
Interest expense
Net interest income
Fee and commission income
Fee and commission expense
Net fee and commission income
Foreign exchange income
Dividend income
Net gains from financial assets at fair value through
profit and loss
Other income
Operating income before impairment losses and other
operating expenses
Expected credit losses on financial instruments
at amortised cost
Administrative and operating expenses
Profit before tax
Income tax expense
Notes
Consolidated
Parent
2023
PGK‘000
2022
PGK‘000
2023
PGK‘000
2022
PGK‘000
253,340
224,600
252,614
223,949
(50,020)
(43,389)
(50,180)
(42,991)
203,320
181,211
202,434
180,958
136,979
116,324
102,493
(16)
(110)
(16)
82,908
(110)
136,963
116,214
102,477
82,798
51,342
60,339
51,363
61,843
660
469
2,733
3,610
9,139
4,657
40
2,776
7,445
74
3,737
9,190
404,157
366,500
366,535
338,600
(9,900)
(4,825)
(10,215)
(4,160)
(218,718)
(213,257)
(209,656)
(203,322)
175,539
148,418
146,664
131,118
(70,576)
(31,930)
(62,081)
(26,704)
5
5
6
6
7
15
8
3b
9
10
Net profit for the year attributable to the equity holders
of the Company
104,963
116,488
84,583
104,414
Other comprehensive income
-
-
-
-
Total comprehensive income for the year attributable to
the equity holders of the Company
104,963
116,488
84,583
104,414
Earnings per share – basic (toea)
Earnings per share – diluted (toea)
27 b
27 b
2023
36.67
36.39
2022
40.60
40.35
The notes on pages 84 to142 are an integral part of these consolidated financial statements.
80
Statements of Financial Position.
As at 31 December 2023
Assets
Cash and cash equivalents
Central bank bills
Regulatory deposits
Financial assets at fair value through profit or loss
Loans and advances to customers
Investments in Government Inscribed Stocks
Due from subsidiaries
Deferred tax assets
Investments in subsidiaries
Property, plant and equipment
Goodwill
Intangible assets
Other assets
Liabilities
Due to other banks
Due to customers
Current income tax liabilities
Due to subsidiaries
Employee provisions
Lease Liabilities
Other liabilities
Net assets
Shareholders’ equity
Issued and fully paid ordinary shares
Share-based payment reserve
Retained earnings
Total equity
Notes
Consolidated
Parent
2023
PGK‘000
2022
PGK‘000
2023
PGK‘000
2022
PGK‘000
12
13
14
15
16
17
29
11
18
19
36
20
21
22
23
29 b
24
25
26
27 a
27 c
396,840
433,488
391,357
397,376
1,236,496
1,215,763
1,236,496
1,215,763
433,274
35,816
383,083
15,262
433,274
31,105
383,083
10,508
2,562,078
2,158,921
2,558,747
2,154,963
157,554
152,650
157,554
152,650
-
-
35,099
30,067
-
71,954
92,786
27,608
129,829
-
82,839
92,786
32,493
79,669
4,284
34,618
249
71,954
92,786
27,608
125,687
38,113
29,220
249
82,839
92,786
32,493
76,847
5,179,334
4,677,021
5,165,719
4,666,890
13,912
2,060
13,912
2,060
4,344,571
3,878,835
4,368,599
3,896,958
11,461
-
16,461
33,775
4,196
-
14,111
41,713
10,332
43,899
14,698
33,775
5,130
30,507
12,717
41,713
118,831
126,803
114,149
122,090
4,539,011
4,067,718
4,599,364
4,111,175
640,323
609,303
566,355
555,715
394,693
394,693
394,693
394,693
2,776
2,477
2,776
2,477
242,854
212,133
168,886
158,545
640,323
609,303
566,355
555,715
These financial statements have been approved for issue by the Board of Directors and signed on its behalf by:
Mr Isikeli Taureka
Director and Chairman
Mr Greg Pawson
Managing Director and Chief Executive Officer
The notes on pages 84 to142 are an integral part of these consolidated financial statements.
81
Statements of Changes in Equity.
For the year ended 31 December 2023
Consolidated
Attributable to the equity holders of the Group
Share
Capital
Share Based
Payment
Reserve
Retained
Earnings
Total
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Balance as at 31 December 2021
394,693
3,587
178,343
Profit for the year
Employee share scheme – vested rights
Employee share scheme – value of employee services
Deferred tax on share-based payment
Dividend paid
-
-
-
-
-
-
116,488
(1,360)
2,277
(2,027)
-
-
-
-
(82,698)
Balance as at 31 December 2022
394,693
2,477
212,133
Profit for the year
Employee share scheme – vested rights
Employee share scheme – value of employee services
Deferred tax on share-based payment
Dividend paid
-
-
-
-
-
-
104,963
(1,529)
2,073
(245)
-
-
-
-
(74,242)
Balance as at 31 December 2023
394,693
2,776
242,854
576,623
116,488
(1,360)
2,277
(2,027)
(82,698)
609,303
104,963
(1,529)
2,073
(245)
(74,242)
640,323
Parent
Attributable to the equity holders of the Parent
Share
Capital
Share Based
Payment
Reserve
Retained
Earnings
Total
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Balance as at 31 December 2021
394,693
3,587
136,829
Profit for the year
Employee share scheme – vested rights
Employee share scheme – value of employee services
Deferred tax on share-based payment
Dividend paid
-
-
-
-
-
-
104,414
(1,360)
2,277
(2,027)
-
-
-
-
(82,698)
Balance as at 31 December 2022
394,693
2,477
158,545
Profit for the year
Employee share scheme – vested rights
Employee share scheme – value of employee services
Deferred tax on share-based payment
Dividend paid
-
-
-
-
-
-
84,583
(1,529)
2,073
(245)
-
-
-
-
(74,242)
Balance as at 31 December 2023
394,693
2,776
168,886
535,109
104,414
(1,360)
2,277
(2,027)
(82,698)
555,715
84,583
(1,529)
2,073
(245)
(74,242)
566,355
The notes on pages 84 to142 are an integral part of these consolidated financial statements.
82
Statements of Cash Flows.
As at 31 December 2023
Cash flows from operating activities
Interest received
Interest paid
Foreign exchange gain
Dividend received
Fee and commission income received
Fee and commission expense paid
Net trading and other operating income
Recoveries on loans previously written-off
Notes
Consolidated
Parent
2023
PGK‘000
2022
PGK‘000
2023
PGK‘000
2022
PGK‘000
245,205
(51,865)
51,342
660
215,812
(29,974)
60,339
469
244,479
(52,025)
51,363
40
215,162
(29,576)
61,843
74
137,286
118,472
102,174
82,839
(16)
15,256
499
(110)
6,177
931
(16)
13,784
499
(110)
6,565
931
Cash payments to employees and suppliers
(198,036)
(171,975)
(142,192)
(112,225)
Income tax paid
(68,506)
(54,436)
(62,516)
(47,838)
Cash flows from operating profits before changes
in operating assets and liabilities
Changes in operating assets and liabilities:
131,825
145,705
155,590
177,665
– net (increase)/decrease in regulatory deposits
(50,191)
(170,208)
(50,191)
(170,208)
– net increase in loans and advances to customers
(402,486)
(210,776)
(402,486)
(210,776)
– net decrease/(increase) in other assets
– net increase in due to customers
– net (decrease)/increase due to other banks
– net (decrease)/increase in other liabilities
Net cash inflow/(outflow) from operating activities
28c
Cash flows from investing activities
(53,634)
467,581
11,851
(5,428)
99,518
(35,491)
828,498
(2,640)
34,594
(52,313)
473,486
11,851
(5,396)
(36,208)
804,090
(2,640)
30,625
589,682
130,541
592,548
Purchase of property, equipment and software
(12,817)
(14,005)
(12,817)
(14,005)
Proceeds from sale of property and equipment
89
306
89
306
Net movement in investment securities
28b
(39,533)
(452,937)
(39,577)
(452,937)
Net cash inflow/(outflow) generated from/(used in)
investing activities
Cash flows from financing activities
Dividend paid
Lease liability payments
Net cash inflow/(outflow) generated from/(used)
in financing activities
(52,260)
(466,636)
(52,305)
(466,636)
(74,242)
(82,698)
(74,242)
(82,698)
(11,838)
(11,349)
(11,838)
(11,349)
(86,080)
(94,047)
(86,080)
(94,047)
Net increase in cash and cash equivalents
(38,823)
28,999
(7,844)
31,865
Effect of exchange rate movements on cash
and cash equivalents
2,175
(3,845)
1,825
(791)
Cash and cash equivalents at beginning of year
433,488
408,334
397,376
366,302
Cash and cash equivalents at end of year
28a
396,840
433,488
391,357
397,376
The notes on pages 84 to142 are an integral part of these consolidated financial statements.
83
Notes to the Financial Statements.
For the year ended 31 December 2023
1. Material accounting policies
1.1 General information
The Company and its subsidiaries are incorporated
in Papua New Guinea. The Group’s business activities
include the provision of banking services, personal
and commercial loans, money market operations,
provision of share brokerage, fund administration,
investment management services, asset financing,
and corporate advice.
Effective 9 July 2021, Kina Securities Limited
amalgamated with Kina Bank Limited (KBL), Kina Ventures
Limited (KVL) and Kina Properties Limited (KPL) and is
now known as Kina Securities Limited.
The directors have, at the time of approving the financial
statements, a reasonable expectation that the Company
and Group have adequate resources to continue in
operational existence for the foreseeable future.
Thus, they continue to adopt the going concern basis
of accounting in preparing the financial statements.
1.2 Basis of preparation
The financial statements of the Company and Group have
been prepared in accordance with International Financial
Reporting Standards (IFRS) and the requirements of the
Papua New Guinea Companies Act 1997.
The financial statements of the Company and Group
as at and for the year ended 31 December 2023 were
authorised for issue by the Board of Directors on
28 March 2024.
The financial statements of the Company and Group have
been prepared on a historical cost basis, except for the
revaluation of certain financial instruments at fair value.
Cost is based on the fair values of the consideration given
in exchange for assets.
1.3
Amendments to IFRSs that are mandatorily
effective for the current reporting period
In the current year, the Group has applied a number of
amendments to IFRS Accounting Standards issued by the
International Accounting Standards Board (IASB) that are
mandatorily effective for an accounting period that begins
on or after 1 January 2023. Their adoption has not had
any material impact on the disclosures or on the amounts
reported in these financial statements.
1.4 New and revised IFRS standards in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following revised IFRS standards
that have been issued but are not yet effective:
Amendments to IFRS 10 and IAS 28
Amendments to IAS 1
Amendments to IAS 1
Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture
Classification of Liabilities as Current or Non-current
Non-current Liabilities with Covenants
Amendments to IAS 7 and IFRS 7
Supplier Finance Arrangements
Amendments to IFRS 16
Lease Liability in a Sale and Leaseback
The directors do not expect that the adoption of the Standards listed above will have material impact on the financial
statements of the Group in the future period.
84
1. Material accounting policies (continued)
1.5 Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and its controlled
entities (its subsidiaries) made up to 31 December each
year. Control is achieved when the Company:
• has the power over the investee;
• is exposed, or has rights, to variable returns from its
involvement with the investee; and
• has the ability to use its power to affect its returns.
The Group reassesses whether or not it controls an investee
if facts and circumstances indicate that there are changes to
one or more of the three elements of control listed above.
The Group considers all relevant facts and circumstances
in assessing whether or not the Group’s voting rights in
an investee are sufficient to give it power, including:
• the size of the Group’s holding of voting rights relative
to the size and dispersion of holdings of the other
vote holders;
• potential voting rights held by the Group, other vote
holders or other parties;
• rights arising from other contractual arrangements;
and
• any additional facts and circumstances that indicate
that the Group has, or does not have, the current
ability to direct the relevant activities at the time that
decisions need to be made, including voting patterns
at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Group
Consolidation of a subsidiary begins when the Group
obtains control over the subsidiary and ceases when the
Group loses control of the subsidiary. Specifically, the
results of subsidiaries acquired or disposed of during
the year are included in the consolidated profit or loss
account from the date the Group gains control until the
date when the Group ceases to control the subsidiary.
All intragroup assets and liabilities, equity, income,
expenses and cash flows relating to transactions
between the members of the Group are eliminated on
consolidation, with the exception of foreign currency gains
and losses on intragroup monetary items denominated in
a foreign currency of at least one of the parties.
1.6 Segment reporting
Operating segments are presented on a basis that is
consistent with information provided internally to the
Group’s key decision makers. The chief operating decision-
maker, who is responsible for allocating resources and
assessing performance of the operating segments, has
been identified as the Board of Directors. The Group has
two reportable segments, which are the two business
divisions – Banking & Finance and Wealth Management.
1.7 Foreign currency translation
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(the functional currency). The consolidated financial
statements are presented in Kina, which is the Company’s
and the Group’s functional and presentation currency.
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange
rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the statement of
comprehensive income.
1.8
Interest income and interest expense
Interest income and expense for all financial instruments
except for those measured or designated as at fair value
through profit and loss (FVTPL) are recognised as ‘Interest
income’ or ‘Interest expense’ in the profit or loss account
using the effective interest method.
The effective interest rate (EIR) is the rate that exactly
discounts estimated future cash flows of the financial
instrument through the expected life of the financial
instrument or, where appropriate, a shorter period, to
the net carrying amount of the financial asset or financial
liability. The future cash flows are estimated taking into
account all the contractual terms of the instrument.
The calculation of the EIR includes all fees and points
paid or received between parties to the contract that are
incremental and directly attributable to the specific lending
arrangement, transaction costs, and all other premiums
or discounts. For financial assets at FVTPL transaction costs
are recognised in profit or loss at initial recognition.
The interest income/expense is calculated by applying
the EIR to the gross carrying amount of non-credit
impaired financial assets (i.e. at the amortised cost of the
financial asset before adjusting for any expected credit
loss allowance), or to the amortised cost of financial
liabilities. For credit-impaired financial assets the interest
income is calculated by applying the EIR to the amortised
cost of the credit-impaired financial assets (i.e. the gross
carrying amount less the allowance for expected credit
losses (ECLs)).
85
1. Material accounting policies (continued)
1.9 Fee and commission income
The Group recognises fee and commission income from
the following major services it provides to customers;
• Investment and portfolio management – The Group
manages investments for a number of superannuation
funds and corporate clients. These services are
provided by the Group on a monthly basis and
the performance obligation is satisfied over time.
Bills are raised monthly and revenue is recognised
on this basis.
• Fund administration – The Group earns a fee through
administration of funds for its customers based on
the fee rates agreed under the terms of the contract.
These services are provided by the Group on a
monthly basis and the performance obligation is
satisfied over time. Bills are raised monthly and
revenue is recognised on this basis.
• Share brokerage – The Group generates share
brokerage from trading services for customers on
the Port Moresby Stock Exchange (“PNGX”) and
the Australian Stock Exchange (“ASX”). Income is
recognised at a point in time upon settlement of
the trade which is commensurate with when the
performance obligation is satisfied.
• Loan fee and bank commission – The Group
charges various loan fees and commissions to
its customers during the tenure of the loan unrelated
to establishment of the loan facility. Income is
recognised at a point in time when services promised
under the contract are completed.
• Digital banking fees – The Group increases the
services it provides through digital access solutions
giving customers convenient ways to do transactions.
The services include online banking, utility top-ups,
cashless transactions using payment platforms, and
card transactions. Income is recognised at a point in
time when the transaction to which the fee relates
is settled which is a point at which performance
obligation is satisfied.
1.10 Leases
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration. A right-of-use asset and a corresponding
lease liability is recognised with respect to all lease
arrangements in which it is the lessee, except for short-
term leases (defined as leases with a lease term of 12
months or less) and leases of low value assets (such as
tablets and personal computers, small items of office
furniture and telephones). For these leases, the Group
recognises the lease payments as an operating expense
on a straight-line basis over the term of the lease unless
another systematic basis is more representative of the
time pattern in which economic benefits from the leased
assets are consumed.
To assess whether a contract conveys the right to control
the use of an identified asset, the Group assesses whether:
• the contract involves the use of an identified asset
– this may be specified explicitly or implicitly and
should be physically distinct or represent substantially
all of the capacity of a physically distinct asset. If the
supplier has a substantive substitution right, then the
asset is not identified;
• the Group has the right to obtain substantially all
of the economic benefits from use of the asset
throughout the period of use; and
• the Group has the right to direct the use of the asset.
The Group has this right when it has the decision-
making rights that are most relevant to changing how
and for what purpose the asset is used. In rare cases
where the decision about how and for what purpose
the asset is used is predetermined, the Group has the
right to direct the use of the asset if either:
– the Group has the right to operate the asset; or
– the Group designed the asset in a way that
predetermines how and for what purpose it will
be used.
At inception or on reassessment of a contract that
contains a lease component, the Group allocates the
consideration in the contract to each lease component on
the basis of their relative stand-alone prices. However, for
the leases of land and buildings in which it is a lessee, the
Group has elected not to separate non-lease components
and account for the lease and non-lease components as a
single lease component.
The Group recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date,
86
1. Material accounting policies (continued)
1.10 Leases (continued)
plus any initial direct costs incurred and an estimate of
costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is
located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date to
the earlier of the end of the useful life of the right-of-use
asset or the end of the lease term. The estimated useful
lives of right- of-use assets are determined on the same
basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain re-measurements of
the lease liability.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
determined, at the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease
liability comprise the following:
• fixed payments, including in-substance fixed
payments, less any lease incentive receivable;
• variable lease payments that depend on an index
or a rate, initially measured using the index or rate
as at the commencement date;
• the amount expected to be payable under a residual
value guarantee, if any; and
• the exercise price, if any, under a purchase option
that the Group is reasonably certain to exercise, lease
payments in an optional renewal period if the Group
is reasonably certain to exercise an extension option,
and penalties for early termination of a lease unless
the Group is reasonably certain not to terminate early.
The lease liability is re-measured when there is a change
in future lease payments arising from a change in an
index or rate, if there is a change in the Group’s estimate
of the amount expected to be payable under a residual
value guarantee, or if the Group changes its assessment
of whether it will exercise a purchase, extension or
termination option.
When the lease liability is re-measured in this way, a
corresponding adjustment is made to the carrying
amount of the right-of-use asset, or is recorded in profit
or loss if the carrying amount of the right-of-use asset
has been reduced to zero.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets
and lease liabilities for all short-term leases that have a
lease term of 12 months or less. The Group recognises
the lease payments associated with these leases as an
expense on a straight-line basis over the lease term.
1.11 Taxation
The income tax expense or credit for the period is the tax
payable on the current period’s taxable income based
on the applicable income tax rate adjusted by changes in
deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses.
The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at the
end of the reporting period in the country where the
Company and its subsidiaries operate and generate
taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in
which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authority.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts
in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from
the initial recognition of goodwill. Deferred income tax is
also not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business
combination that at the time of the transaction affects
neither accounting nor taxable profit and loss. Deferred
income tax is determined using tax rate (and law) that
have been enacted or substantially enacted by the end
of the reporting period and are expected to apply when
the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable
that future taxable amounts will be available to utilise
those temporary differences and losses.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle
on a net basis, or to realise the asset and settle the
liability simultaneously.
Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised
in other comprehensive income or directly in equity.
In this case, the tax is also recognised in other
comprehensive income or directly in equity, respectively.
87
1. Material accounting policies (continued)
1.12 Cash and cash equivalents
For the purpose of presentation in the statement of cash
flows, cash and cash equivalents includes cash on hand
and deposits held at call with financial institutions which
are subject to an insignificant risk of changes in value, and
bank overdrafts.
In the statement of financial position, cash and bank
balances comprise cash (i.e. cash on hand and demand
deposits) and cash equivalents. Cash equivalents are
short-term (generally with an original maturity of three
months or less), highly liquid investments that are readily
convertible to a known amount of cash and which are
subject to an insignificant risk of changes in value.
Cash equivalents are held for the purpose of meeting
short-term cash commitments rather for investment
or other purposes.
For the purposes of the statement of cash flows, cash
and cash equivalents consist of cash and cash equivalents
as defined above.
1.13 Financial instruments
Financial assets and financial liabilities are recognised
in the statement of financial position when the Company
or Group becomes a party to the contractual provisions
of the instrument.
Recognised financial assets and financial liabilities are
initially measured at fair value. Transaction costs that
are directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than financial
assets and financial liabilities at FVTPL) are added to or
deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition
of financial assets or financial liabilities at FVTPL are
recognised immediately in profit or loss.
Financial assets
All financial assets are recognised and de-recognised
on a trade date where the purchase or sale of a financial
asset is under a contract whose terms require delivery of
the financial asset within the timeframe established by the
market concerned, and are initially measured at fair value,
plus transaction costs, except for those financial assets
classified as at FVTPL.
Transaction costs directly attributable to the acquisition
of financial assets classified as at FVTPL are recognised
immediately in profit or loss.
All recognised financial assets that are within the scope
of IFRS 9 are required to be subsequently measured at
amortised cost or fair value on the basis of the entity’s
business model for managing the financial assets and the
contractual cash flow characteristics of the financial assets.
Specifically:
• debt instruments that are held within a business
model whose objective is to collect the contractual
cash flows, and that have contractual cash flows that
are solely payments of principal and interest on the
principal amount outstanding (SPPI), are subsequently
measured at amortised cost;
• debt instruments that are held within a business model
whose objective is both to collect the contractual cash
flows and to sell the debt instruments, and that have
contractual cash flows that are SPPI, are subsequently
measured at fair value through other comprehensive
income (FVTOCI);
• all other debt instruments (e.g. debt instruments
managed on a fair value basis, or held for sale)
and equity investments are subsequently measured
at FVTPL.
Financial assets at FVTPL
Financial assets at FVTPL are:
• assets with contractual cash flows that are not SPPI;
or/and
• assets that are held in a business model other than
held to collect contractual cash flows or held to collect
and sell; or
• assets designated at FVTPL using the fair value option.
These assets are measured at fair value, with any gains/
losses arising on re-measurement recognised in profit
or loss and therefore no reclassifications were made.
Changes in contractual cash flows are considered under
the accounting policy on Modification and de-recognition
of financial assets described below.
Impairment
The Group measures and recognises loss allowances
for ECLs on the following financial instruments that are
measured at amortised cost:
• Loans and advances;
• Investment in Government Inscribed Stocks;
• Other financial assets;
• Loan commitments issued; and
• Financial guarantee contracts issued.
88
1. Material accounting policies (continued)
1.13 Financial instruments (continued)
ECLs are required to be measured through a loss
allowance at an amount equal to:
• 12-month ECL, i.e. lifetime ECL that result from those
default events on the financial instrument that are
possible within 12 months after the reporting date,
(referred to as Stage 1); or
• full lifetime ECL, i.e. lifetime ECL that result from all
possible default events over the life of the financial
instrument, (referred to as Stage 2 and Stage 3).
A loss allowance for full lifetime ECL is required for a
financial instrument if the credit risk on that financial
instrument has increased significantly since initial
recognition. For all other financial instruments, ECLs
are measured at an amount equal to the 12-month ECL.
More details on the determination of a significant
increase in credit risk and determination of ECL are
provided in note 3.
Significant increase in credit risk
The Group monitors all financial assets, issued loan
commitments and financial guarantee contracts that are
subject to the impairment requirements to assess whether
there has been a significant increase in credit risk since
initial recognition. If there has been a significant increase
in credit risk the Group will measure the loss allowance
based on lifetime rather than 12-month ECL.
The Group’s accounting policy is not to use the practical
expedient that financial assets with ‘low’ credit risk at the
reporting date are deemed not to have had a significant
increase in credit risk. As a result, the Group monitors all
financial assets, issued loan commitments and financial
guarantee contracts that are subject to impairment for
significant increase in credit risk.
In assessing whether the credit risk on a financial
instrument has increased significantly since initial
recognition, the Group compares the risk of a
default occurring on the financial instrument at the
reporting date with the risk of a default occurring
that was anticipated when the financial instrument
was first recognised. In making this assessment, the
Group considers both quantitative and qualitative
information that is reasonable and supportable.
Irrespective of the outcome of this assessment, the
Group presumes that the credit risk on a financial asset
has increased significantly since initial recognition when
contractual payments are more than 30 days past due,
unless the Group has reasonable and supportable
information that demonstrates otherwise.
Definition of default
The definition of default is used in measuring the amount
of ECL and in the determination of whether the loss
allowance is based on 12-month or lifetime ECL, as
default is a component of the probability of default (PD)
which affects both the measurement of ECLs and the
identification of a significant increase in credit risk (see
note 3). The Group considers that default has occurred
when a financial asset is more than 90 days past due
unless the Group has reasonable and supportable
information to demonstrate that a more lagging default
criterion is more appropriate.
Write-off
Loans and debt securities are written off when the
Company or Group has no reasonable expectations of
recovering the financial asset (either in its entirety or a
portion of it). This is the case when it is determined that
the borrower does not have assets or sources of income
that could generate sufficient cash flows to repay the
amounts subject to the write-off. A write-off constitutes a
de-recognition event. The Group may apply enforcement
activities to financial assets written off. Recoveries
resulting from the Group’s enforcement activities will
result in impairment gains.
Presentation of allowance for ECL in the statement
of financial position
Loss allowances for ECL are presented in the statement of
financial position as a deduction from the gross carrying
amount of the financial assets held at amortised cost.
Derecognition of financial assets
The Group derecognises a financial asset only when
the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of
the asset to another entity. If the Group neither transfers
nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset,
the Group recognises its retained interest in the asset
and an associated liability for amounts it may have to
pay. If the Group retains substantially all the risks and
rewards of ownership of a transferred financial asset,
the Group continues to recognise the financial asset
and also recognises a collateralised borrowing for the
proceeds received. On derecognition of a financial asset
measured at amortised cost, the difference between the
asset’s carrying amount and the sum of the consideration
received and receivable is recognised in profit or loss.
89
1. Material accounting policies (continued)
1.13 Financial instruments (continued)
Financial liabilities
A financial liability is a contractual obligation to deliver
cash or another financial asset or to exchange financial
assets or financial liabilities with another entity under
conditions that are potentially unfavourable to the Group
or a contract that will or may be settled in the Group’s
own equity instruments and is a non-derivative contract
for which the Group is or may be obliged to deliver
a variable number of its own equity instruments, or a
derivative contract over own equity that will or may be
settled other than by the exchange of a fixed amount
of cash (or another financial asset) for a fixed number
of the Group’s own equity instruments.
Financial liabilities are classified as ‘other financial
liabilities’ as the Group does not have any financial
liabilities that are classified or designated as at FVTPL.
Other financial liabilities
Other financial liabilities, including deposits and
borrowings, are initially measured at fair value, net
of transaction costs. Other financial liabilities are
subsequently measured at amortised cost using
the effective interest method.
The effective interest method is a method of calculating
the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The EIR is the
rate that exactly discounts estimated future cash payments
through the expected life of the financial liability, or,
where appropriate, a shorter period, to the net carrying
amount on initial recognition.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and
only when, the Group’s obligations are discharged,
cancelled or have expired. The difference between the
carrying amount of the financial liability derecognised
and the consideration paid and payable is recognised
in profit or loss.
When the Group exchanges with the existing lender
one debt instrument into another one with substantially
different terms, such exchange is accounted for as an
extinguishment of the original financial liability and
the recognition of a new financial liability.
Financial guarantee contracts
A financial guarantee contract is a contract that requires
the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails
to make payments when due in accordance with the terms
of a debt instrument.
Financial guarantee contracts issued by a group entity are
initially measured at their fair values and, if not designated
as at FVTPL and not arising from a transfer of a financial
asset, are subsequently measured at the higher of:
• the amount of the loss allowance determined in
accordance with IFRS 9; and
• the amount initially recognised less, where appropriate,
cumulative amount of income recognised in accordance
with the Group’s revenue recognition policies.
Financial guarantee contracts not designated at FVTPL are
presented as provisions on the consolidated statement of
financial position and the re-measurement is presented in
other income.
The Group has not designated any financial guarantee
contracts as at FVTPL.
1.14 Property, plant and equipment
Property, plant and equipment is stated at historical cost
less accumulated depreciation. Depreciation is calculated
on the basis of straight line to write-off the cost of such
assets to their residual values over their estimated lives
as follows:
Furniture and fittings
11.25% to 15%
Building improvements 10%
Motor vehicles
30%
Office equipment
15% to 30%
The assets’ residual values and useful lives are reviewed,
and adjusted, if appropriate at each balance date. Gains
and losses on disposal (being the difference between
the carrying value at the time of sale or disposal and the
proceeds received) are taken into account in determining
operating profit for the year. Repairs and maintenance
costs are charged to statement of comprehensive income,
when the expenditure is incurred.
1.15 Intangible assets and other
non-financial assets
Goodwill
Goodwill is measured as described in note 36 Goodwill
having an indefinite useful life is not amortised but it is
tested for impairment annually or more frequently
if events or changes in circumstances indicate that it
might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal
of an entity include the carrying amount of goodwill
relating to the entity sold. Goodwill is allocated to cash-
generating units for the purpose of impairment testing.
90
1. Material accounting policies (continued)
1.15 Intangible assets and other non-financial assets (continued)
The allocation is made to those cash-generating units
or groups of cash-generating units that are expected
to benefit from the business combination in which the
goodwill arose. The units or groups of units are identified at
the lowest level at which goodwill is monitored for internal
management purposes, being the operating segments.
Other non-financial assets
Other assets are tested for impairment whenever events
Other assets are tested for impairment whenever events
or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs of
disposal and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows which
are largely independent of the cash inflows from other
assets or groups of assets cash- generating units (CGU).
Non-financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
Customer deposits relationship / intangible assets
A customer deposits relationship asset was recognised
with the acquisition of Maybank (PNG) Limited in 2015.
Also, the acquisition of Australian and New Zealand
(ANZ) Bank’s retail, commercial and SME banking
businesses in PNG on 23 September 2019 gave rise to
the recognition of core customer deposit relationship
intangible asset (note 20), representing the value, or
avoided cost, of having a deposit base from consumer
and business transaction accounts, savings accounts, term
deposits and other money market accounts that provide
a cheaper source of funding than alternative sources of
funding. The customer deposits relationship intangible
asset is amortised using the straight-line method over a
period of five years and three years on the Maybank and
ANZ acquisition respectively, and is stated at cost less
accumulated amortization and impairment. The customer
deposits relationship intangible asset is also assessed for
any indication of impairment at each reporting date and
whenever there is an indicator that these may be impaired.
Software
Costs associated with maintaining computer software
programs are recognised as an expense as incurred.
Costs that are directly associated with identifiable and
unique software products controlled by the Group that
will probably generate economic benefits exceeding
costs beyond one year are recognised as intangible assets.
Direct costs include staff costs of the software development
team and an appropriate portion of relevant overheads.
Expenditure which enhances or extends the performance
of computer software programs beyond their original
specifications is recognised as a capital improvement
and added to the original cost of the software. Computer
software development costs recognised as assets are
amortised using the straight-line method over their useful
lives, not exceeding a period of five years.
1.16 Provisions
Provisions are recognised when the Group has a present
legal or constructive obligation as a result of past events,
it is probable that outflow of resources embodying
economic benefits will be required to settle the obligation,
and a reliable estimate of the amount of the obligations
can be made.
1.17 Employee benefits
Short-term obligations
Provision is made for benefits accruing to employees in
respect of annual leave and other short term obligations
when it is probable that settlement will be required and
they are capable of being measured reliably.
Provisions made in respect of employee benefits
expected to be settled within twelve months, are
measured at their nominal values using the remuneration
rate expected to apply at the time of settlement. Liabilities
recognised in respect of employee benefits which are
not expected to be settled within twelve months are
measured as the present value of the estimated future
cash outflows to be made by the Group in respect of
services provided by employees up to reporting date.
The contributions in relation to employees of the Group
who contribute to defined contribution pension plans are
charged to the statement of comprehensive income in
the year to which they relate.
Share-based payments
Senior executive employees are entitled to participate
in a share ownership incentive scheme. The fair value
of share rights provided to senior executive employees
as share-based payments is recognised as an expense
with a corresponding increase in equity. The fair value is
measured at grant date and is recognised over the period
the services are received being the expected vesting
period at the end of which the senior executive employees
would become entitled to exercise their share rights.
The fair value of the share based payments is based on
the market price of the shares at grant date and market
vesting conditions upon which the rights were granted.
Non-market vesting conditions are taken into account by
adjusting the number of rights which will eventually vest.
91
1. Material accounting policies (continued)
1.17 Employee benefits (continued)
Cash bonus
The Group recognises a liability and an expense for
bonuses based on a formula that takes into consideration
the profit attributable to the Company’s shareholders after
certain adjustments. The Group recognises a provision
where contractually obliged or where there is a past
practice that has created a constructive obligation.
1.18 Share capital and other equity accounts
Share capital
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax,
from the proceeds.
Dividends
Dividends on ordinary shares are recognised in
equity in the period in which they are declared by
the Company’s directors.
Reserves
Capital reserve comprises accumulated gains on
historic asset revaluation. Share-based payment reserve
comprises the fair value of unvested performance rights
as at the reporting date.
1.19 Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the
profit attributable to owners of the company, excluding
any costs of servicing equity other than ordinary shares
by the weighted average number of ordinary shares
outstanding during the financial year (note 27(b)).
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into
account the after income tax effect of interest and other
financing costs associated with dilutive potential ordinary
shares, and the weighted average number of additional
ordinary shares that would have been outstanding assuming
the conversion of all dilutive potential ordinary shares.
1.20 Fiduciary activities
The Group provides custodian, trustee, corporate
administration, investment management and advisory
services to third parties, which involve the Group making
allocation and purchase and sale decisions in relation
to a wide range of financial instruments. Those assets
that are held in a fiduciary capacity are not included in
these consolidated financial statements. Details of such
investments held under trust may be found in note 30.
2.
Critical accounting estimates
and judgements
In the application of the Group’s accounting policies,
which are described in note 1, the directors are required
to make judgements that have a significant impact on
the amounts recognised and to make estimates and
assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on
historical experience and other factors that are considered
to be relevant. Actual results may differ from these
estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the
estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if
the revision affects both current and future periods.
The areas involving significant estimates or judgments are:
• Significant increase in credit risk – note 3
• Estimated allowance for loans and advances
to customers – note 16 and 3(b)
• Estimated goodwill impairment – note 36
3. Financial risk management
By its nature the Group’s activities are principally related
to the use of financial instruments. The Group accepts
deposits from customers at both fixed and floating rates
and for various periods and seeks to earn above-average
interest margins by investing these funds in high quality
assets. The Group seeks to increase these margins by
consolidating short-term funds and lending for longer
periods at higher rates whilst maintaining sufficient
liquidity to meet all claims that might fall due. The Group
raises its interest margins by obtaining above-average
margins, net of provisions, through lending to commercial
and retail borrowers with a range of credit standing.
The Group also enters into transactions denominated
in foreign currencies. This activity generally requires
the Group to take foreign currency positions in order to
exploit short-term movements to the foreign currency
market. The Board places trading limits on the level of
exposure that can be taken in relation to both overnight
and intra-day market positions.
Risk in the Group is managed by a system of delegated
limits. These limits set the maximum level of risks that
can be assumed by each operational unit and the Group
as a whole. The limits are delegated from the Board of
Directors to executive management and then to the
respective operational managers.
92
3.
Financial risk management (continued)
Market risk
(a)
Market risk is the risk that movements in market factors,
such as foreign exchange rates, interest rates, credit
spreads and equity prices, will reduce the Group’s income
or the value of its portfolios.
The group is exposed to the following type of market risks:
(i)
Foreign exchange risk
The Group undertakes transactions denominated in
foreign currencies from time to time and resulting from
these activities, exposures in foreign currencies arise.
Though there are no specific hedging activities to
mitigate any currency risk, this exposure is monitored
by management on an ongoing basis.
(i)
(ii)
Foreign exchange risk;
Interest rate risk; and
(iii) Equity price risk.
Exposure
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in PGK, was as follows:
PGK‘000
31 December 2023
Cash balance
Due from other banks
Due to other banks
31 December 2022
Cash balance
Due from other banks
USD
AUD
SGD
GBP
EUR
NZD
JPY
Others
177
51
27,584
5,496
135
83
87
145
8,498
1,715
(6,667)
(4,399)
(2,022)
-
-
589
160
-
178
239
-
21,094
1,148
(1,804)
8,585
1,860
749
417
149
932
(651)
430
257
40
62,043
47,743
62,300 47,783
2
407
409
70
331
401
152
1,285
566
920
1,437
1,486
179
302
481
29
2,070
2,099
There were no material liabilities denominated in foreign currency in 2022.
Sensitivity
As shown in the table above, the Group is primarily exposed to changes in USD/PGK exchange rates. The sensitivity of
profit or loss to changes in the exchange rates arises mainly from US dollar denominated financial instruments.
USD/PGK – exchange rate – increase 10% (2022:10%)
USD/PGK – exchange rate – decrease 10% (2022:10%)
Impact on statement of comprehensive income in
PGK‘000
2023
(1,902)
2,324
PGK‘000
2022
(176)
(215)
93
Financial risk management (continued)
3.
(a) Market risk (continued)
(ii)
Interest rate risk
Interest rate risk in the statements of financial position
arises from the potential for a change in interest rate to
have an adverse effect on the earnings in the current and
future years. As interest rates and yield curves change
over time the Group may be exposed to a loss in earnings
due to the effects of interest rates on the components of
the statements of financial position.
Sensitivity to interest rates arises from mismatches in re-
pricing dates, cash flows and other characteristics of the
assets and their corresponding liability funding.
These mismatches are actively managed by the Assets
and Liabilities Committee (ALCO), which meets regularly
to review the effects of fluctuations in the prevailing levels
of market interest rates of the financial position and cash
flows of the Group.
The following table risks summarises the Group’s exposure to interest rate risks:
Year ended 31 December 2023
Carrying
amount
Average
interest rate
PGK‘000
(% p.a.)
396,840
1,236,496
2,562,078
157,554
0.21%
3.62%
8.22%
9.02%
4,344,571
1.15%
Year ended 31 December 2022
Carrying
amount
Average
interest rate
PGK‘000
(% p.a.)
433,488
1,215,763
2,158,921
152,650
0.17%
5.38%
7.66%
9.93%
3,878,835
1.15%
(iii) Equity price risk
The Group is exposed to equity securities price risk due
to the listed shares traded on stock exchange. To manage
its price risks arising from financial assets at fair value
through profit or loss, the Group diversifies its portfolio.
Diversification of the portfolio is done in accordance with
the limits set by the Group. The Group’s financial assets
at fair value through profit or loss are publicly traded on
the Port Moresby Stock Exchange (PNGX).
Assets
Cash and cash equivalents
Central bank bills
Loans and advances to customers
Investments in Government Inscribed Stocks
Liability
Due to customers
Assets
Cash and cash equivalents
Central bank bills
Loans and advances to customers
Investments in Government Inscribed Stocks
Liability
Due to customers
Sensitivity
Given the profile of assets and liabilities at 31 December
2023 and prevailing interest rates, a 200 basis points
increase/decrease in market rates in relation to interest
bearing assets and liabilities will result in a maximum of
K167,967 (2022: K1,639,739) decrease/increase in net
interest income at a Group level.
94
Financial risk management (continued)
3.
(a) Market risk (continued)
Sensitivity
The sensitivity analysis below has been determined based on the exposure to equity price risks at the end of the reporting
period. If equity prices had been 5% higher/lower, net profit for the year ended 31 December 2023 and net assets as of
balance date would have been affected by K899,745 (2022: K763,103).
Equity prices – increase 5% (2021:5%)
Equity prices – decrease 5% (2021:5%)
Credit risk
(b)
Credit risk is the risk that a customer or counterparty will
default on its contractual obligations resulting in financial
loss to the Group. The Group’s main income-generating
activity is lending to customers and therefore credit risk
is a principal risk. Credit risk mainly arises from loans and
advances to customers and other banks (including related
commitments to lend such as loan or credit card facilities)
and investments in debt securities. The Group considers
all elements of credit risk exposure such as counterparty
default risk, geographical risk and sector risk for risk
management purposes.
(i)
Credit risk management
The Group’s credit committee is responsible for managing
the Group’s credit risk by:
• Ensuring that the Group has appropriate credit risk
practices, including an effective system of internal
control, to consistently determine adequate allowances
in accordance with the Group’s stated policies and
procedures, IFRS and relevant supervisory guidance.
• Identifying, assessing and measuring credit risk
across the Group, from an individual instrument to
a portfolio level.
• Creating credit policies to protect the Group against
the identified risks including the requirements to
obtain collateral from borrowers, to perform robust
ongoing credit assessment of borrowers and to
continually monitor exposures against internal
risk limits.
• Limiting concentrations of exposure by type of asset,
counterparties, industry, credit rating, geographic
location etc.
• Establishing a robust control framework regarding the
authorisation structure for the approval and renewal of
credit facilities.
• Developing and maintaining the Group’s risk
grading to categorise exposures according to the
degree of risk of default. Risk grades are subject to
regular reviews.
Impact on statement of comprehensive income
in PGK‘000
2023
900
(900)
2022
763
(763)
• Developing and maintaining the Group’s processes
for measuring ECL including monitoring of credit risk,
incorporation of forward looking information and the
method used to measure ECL.
• Ensuring that the Group has policies and procedures
in place to appropriately maintain and validate models
used to assess and measure ECL.
• Establishing a sound credit risk accounting assessment
and measurement process that provides it with a
strong basis for common systems, tools and data to
assess credit risk and to account for ECL. Providing
advice, guidance and specialist skills to business units
to promote best practice throughout the Group in the
management of credit risk.
The internal audit function performs regular audits making
sure that the established controls and procedures are
adequately designed and implemented.
(ii)
Significant increase in credit risk
As explained in note 1 the Group monitors all financial
assets that are subject to impairment requirements to
assess whether there has been a significant increase in
credit risk since initial recognition. If there has been a
significant increase in credit risk the Group will measure the
loss allowance based on lifetime rather than 12-month ECL.
(iii)
Incorporation of forward-looking information
The Group uses forward-looking information that is
available without undue cost or effort in its assessment
of significant increase of credit risk as well as in its
measurement of ECL.
(iv) Measurement of ECL
The key inputs used for measuring ECL are (1) Probability
of default (PD), (2) Loss given default (LGD) and (3)
Exposure at default (EAD). These figures are generally
derived from internally developed statistical models
and other historical data and they are adjusted to reflect
probability-weighted forward-looking information.
95
Financial risk management (continued)
3.
(b) Credit risk (continued)
PD is an estimate of the likelihood of default over a
given time horizon. It is estimated as at a point in time.
The calculation is based on rating models and assessed
using rating tools tailored to the various categories of
counterparties and exposures.
EAD is an estimate of the exposure at a future default
date, taking into account expected changes in the
exposure after the reporting date, including repayments
of principal and interest, and expected drawdowns on
committed facilities.
These models are based on market data (where available),
as well as internal data comprising both quantitative and
qualitative factors.
LGD is an estimate of the loss arising on default. It is
based on the difference between the contractual cash
flows due and those that the lender would expect to
receive, taking into account cash flows from any collateral.
(v) Groupings based on shared risks characteristics
In determining the ECL, the financial instruments are
grouped on the basis of shared risk characteristics,
such as instrument type, credit risk grade, collateral type,
the value of collateral relative to financial asset (loan-to-
value (LTV) ratios) etc. The groupings are reviewed on
a regular basis to ensure that each group is comprised
of homogenous exposures.
(vi) Credit quality
The Group monitors credit risk per class of financial instrument. The table below outlines the classes identified, as well as
the financial statement line item and the note that provides an analysis of the items included in the financial statement line
for each class of financial instrument:
Class of financial instrument
Financial statement line
Cash and cash equivalents at amortised cost
Cash and cash equivalents
Treasury and central bank bills at amortised cost
Central bank bills
Regulatory deposits at amortised cost
Regulatory deposits
Loans and advances to customers at amortised cost
Loans and advances to customers
Note
Note 12
Note 13
Note 14
Note 16
Investments in Government Inscribed Stocks at amortised cost
Investments in Government Inscribed Stocks
Note 17
Bank guarantees
Other financial assets
Contingent liabilities
Other assets
Note 32
Note 21
An analysis of the Group’s credit risk concentrations per class of financial asset is provided in the following tables. Unless
specifically indicated, for financial assets, the amounts in the table represent gross carrying amounts. For documentary letters
of credit and bank guarantees, the amounts in the table represent the amounts committed or guaranteed, respectively.
96
Financial risk management (continued)
3.
(b) Credit risk (continued)
Cash and cash equivalents at amortised cost
Concentration by sector
Cash on hand
With central bank (exchange settlement account)
With other banks
Total
Concentration by region
Papua New Guinea
Offshore*
Total
Consolidated
31 December 2023
PGK‘000
31 December 2022
PGK‘000
173,876
168,972
53,992
396,840
365,871
30,969
396,840
151,370
160,392
121,726
433,488
319,423
114,065
433,488
* Bank accounts maintained in Australia, New Zealand, Great Britain, Singapore, Malaysia, Philippines, Japan, India and Turkey.
Cash and cash equivalents at amortised cost
Concentration by sector
Cash on hand
With central bank (exchange settlement account)
With other banks
Total
Concentration by region
Papua New Guinea
Offshore*
Total
Parent
31 December 2023
PGK‘000
31 December 2022
PGK‘000
173,876
168,972
48,509
391,357
365,871
25,486
391,357
151,370
160,392
85,614
397,376
328,423
68,953
397,376
* Bank accounts maintained in Australia, New Zealand, Great Britain, Singapore, Malaysia, Philippines, Japan, India and Turkey.
97
Financial risk management (continued)
3.
(b) Credit risk (continued)
Treasury and central bank bills at amortised cost
Concentration by sector
With central banks
Total
Concentration by region
Papua New Guinea
Total
Treasury and central bank bills at amortised cost
Concentration by sector
With central banks
Total
Concentration by region
Papua New Guinea
Total
Regulatory deposits at amortised cost
Concentration by sector
With central banks
Total
Concentration by region
Papua New Guinea
Total
Regulatory deposits at amortised cost
Concentration by sector
With central banks
Total
Concentration by region
Papua New Guinea
Total
98
Consolidated
31 December 2023
PGK‘000
31 December 2022
PGK‘000
1,236,496
1,236,496
1,236,496
1,236,496
Parent
1,215,763
1,215,763
1,215,763
1,215,763
31 December 2023
PGK‘000
31 December 2022
PGK‘000
1,236,496
1,236,496
1,236,496
1,236,496
1,215,763
1,215,763
1,215,763
1,215,763
Consolidated
31 December 2023
PGK‘000
31 December 2022
PGK‘000
433,274
433,274
433,274
433,274
Parent
383,038
383,038
383,038
383,038
31 December 2023
PGK‘000
31 December 2022
PGK‘000
433,274
433,274
433,274
433,274
383,038
383,038
383,038
383,038
Financial risk management (continued)
3.
(b) Credit risk (continued)
Loans and advances to customers at amortised cost
Consolidated
31 December 2023
PGK‘000
31 December 2022
PGK‘000
Concentration by sector
Individuals:
Mortgages
Unsecured lending
Corporate entities:
Agriculture, Forestry & Fishing
Mining
Manufacturing
Electrical, Gas & Water
Building and Construction
Wholesale & Retail
Hotel & Restaurants
Transport & Storage
Financial Intermediation
Real Estate/Renting/Business Services
Post & Telecommunication
Equipment Hire
Other Business
Personal Banking
Total
Concentration by region
Papua New Guinea
Total
601,556
91,890
4,101
15,486
21,079
869
183,612
770,868
75,058
67,775
655
360,122
96,731
34,037
290,705
693,446
553,845
59,467
3,874
16,233
18,806
6,684
171,237
694,077
79,030
23,214
837
316,094
-
43,623
211,309
3,088
2,614,544
2,201,418
2,614,544
2,614,544
2,201,418
2,201,418
99
Financial risk management (continued)
3.
(b) Credit risk (continued)
Loans and advances to customers at amortised cost
Parent
31 December 2023
PGK‘000
31 December 2022
PGK‘000
Concentration by sector
Individuals:
Mortgages
Unsecured lending
Corporate entities:
Agriculture, Forestry & Fishing
Mining
Manufacturing
Electrical, Gas & Water
Building and Construction
Wholesale & Retail
Hotel & Restaurants
Transport & Storage
Financial Intermediation
Real Estate/Renting/Business Services
Post & Telecommunication
Equipment Hire
Other Business
Personal Banking
Total
Concentration by region
Papua New Guinea
Total
Investments in Government Inscribed Stocks at amortised cost
Concentration by sector
Sovereign
Total
Concentration by region
Papua New Guinea
Total
601,556
91,890
4,101
15,486
21,079
869
183,612
770,868
75,058
67,775
655
360,122
96,731
34,037
286,709
693,446
553,845
59,467
3,874
16,233
18,806
6,684
171,237
694,077
79,030
23,214
837
316,094
-
43,623
206,333
3,088
2,610,548
2,196,442
2,610,548
2,610,548
2,196,442
2,196,442
Consolidated
31 December 2023
PGK‘000
31 December 2022
PGK‘000
159,856
159,856
159,856
159,856
Parent
154,881
154,881
154,881
154,881
Investments in Government Inscribed Stocks at amortised cost
31 December 2023
PGK‘000
31 December 2022
PGK‘000
Concentration by sector
Sovereign
Total
Concentration by region
Papua New Guinea
Total
100
159,856
159,856
159,856
159,856
154,881
154,881
154,881
154,881
Financial risk management (continued)
3.
(b) Credit risk (continued)
Bank guarantees
Concentration by sector
Corporate entities:
Agriculture, Forestry & Fishing
Mining
Manufacturing
Wholesale & Retail
Building and Construction
Transport & Storage
Other Business
Total
Concentration by region
Papua New Guinea
Total
Bank guarantees
Concentration by sector
Corporate entities:
Agriculture, Forestry & Fishing
Mining
Manufacturing
Wholesale & Retail
Building and Construction
Transport & Storage
Other Business
Total
Concentration by region
Papua New Guinea
Total
Consolidated
31 December 2023
PGK‘000
31 December 2022
PGK‘000
1,121
10,439
2,000
531
9,213
1,064
2,465
26,833
26,833
26,833
4,616
-
-
3,800
11,812
2,426
3,090
25,744
25,744
25,744
Parent
31 December 2023
PGK‘000
31 December 2022
PGK‘000
1,121
10,439
2,000
531
9,213
1,064
2,465
26,833
26,833
26,833
4,616
-
-
3,800
11,812
2,426
3,090
25,744
25,744
25,744
The amount of bank guarantees disclosed above represent notional amount guaranteed being the maximum exposure to
credit risk.
101
Financial risk management (continued)
3.
(b) Credit risk (continued)
An analysis of the Group’s credit risk exposure per class of financial asset and “stage” without taking into account
the effects of any collateral or other credit enhancements is provided in the following table. Unless specifically indicated,
for financial assets, the amounts in the table represent gross carrying amounts.
For loan commitments and financial guarantee contracts, the amounts in the table represent the amounts committed
or guaranteed, respectively.
Consolidated
31 December 2023
Stage 1
Stage 2
Stage 3
POCI
Total
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
396,840
1,236,496
433,274
-
-
-
-
-
-
-
-
-
396,840
1,236,496
433,274
2,401,427
46,756
157,597
8,764
2,614,544
Cash and cash equivalents
Treasury and central bank bills
Regulatory deposits
Loans and advances
Investments in Government Inscribed Stocks
Other financial assets
159,856
123,984
-
-
-
-
-
-
159,856
123,984
Total gross carrying amount
4,751,877
46,756
157,597
8,764
4,964,994
Loss allowance
Net carrying amount
(25,174)
(5,480)
(28,104)
-
(58,758)
4,726,703
41,276
129,493
8,764
4,906,236
Consolidated
31 December 2022
Stage 1
Stage 2
Stage 3
POCI
Total
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
433,488
1,215,763
383,083
-
-
-
-
-
-
-
-
-
433,488
1,215,763
383,083
1,899,383
110,370
178,079
13,586
2,201,418
Cash and cash equivalents
Treasury and central bank bills
Regulatory deposits
Loans and advances
Investments in Government Inscribed Stocks
Other financial assets
154,881
83,659
-
-
-
-
-
-
154,881
83,659
Total gross carrying amount
4,170,257
110,370
178,079
13,586
4,472,292
Loss allowance
Net carrying amount
(23,681)
(5,458)
(19,579)
-
(48,718)
4,146,576
104,912
158,500
13,586
4,423,574
102
Financial risk management (continued)
3.
(b) Credit risk (continued)
Parent
31 December 2023
Stage 1
Stage 2
Stage 3
POCI
Total
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
391,357
1,236,496
433,274
-
-
-
-
-
-
-
-
-
391,357
1,236,496
433,274
2,398,406
46,461
156,917
8,764
2,610,548
Cash and cash equivalents
Treasury and central bank bills
Regulatory deposits
Loans and advances
Investments in Government Inscribed Stocks
Other financial assets
159,856
119,832
-
-
-
-
-
-
159,856
119,832
Total gross carrying amount
4,739,221
46,461
156,917
8,764
4,951,363
Loss allowance
Net carrying amount
(25,176)
(5,478)
(27,439)
-
(58,093)
4,714,045
40,983
129,478
8,764
4,893,270
Parent
31 December 2022
Stage 1
Stage 2
Stage 3
POCI
Total
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
397,376
1,215,763
383,038
-
-
-
-
-
-
-
-
-
397,376
1,215,763
383,038
1,895,673
110,248
176,935
13,586
2,196,442
Cash and cash equivalents
Treasury and central bank bills
Regulatory deposits
Loans and advances
Investments in Government Inscribed Stocks
Other financial assets
154,881
80,901
-
-
-
-
-
-
154,881
80,901
Total gross carrying amount
4,127,632
110,248
176,935
13,586
4,428,635
Loss allowance
Net carrying amount
(23,682)
(5,456)
(18,562)
-
(47,700)
4,103,950
104,792
158,373
13,586
4,380,935
In addition to the above, the Group has issued financial guarantee contracts with a notional value of K26,833,000
(2022: K 25,744,000) which are secured against cash and term deposits for which loss allowance of NIL (2022: NIL)
has been recognised.
103
Financial risk management (continued)
3.
(b) Credit risk (continued)
This table summarises the loss allowance as of the year end by class of exposure/asset.
Loss allowance by classes
Loans and advances to customers at amortised cost
Investments in Government Inscribed Stocks at amortised cost
Other financial assets
Total
Loss allowance by classes
Loans and advances to customers at amortised cost
Investments in Government Inscribed Stocks at amortised cost
Other financial assets
Total
Consolidated
31 December 2023
PGK‘000
31 December 2022
PGK‘000
42,497
2,231
3,990
48,718
52,466
2,245
3,990
58,701
Parent
31 December 2023
PGK‘000
31 December 2022
PGK‘000
51,801
2,302
3,990
58,093
41,479
2,231
3,990
47,700
Other financial assets comprise of miscellaneous receivables from individuals on which lifetime ECL has been recognised.
No ECL has been recognised on other classes of financial assets either due to negligible probability of default or the
assets being fully collateralized by high quality liquid assets.
Table below summarises the movement in ECL during the year by class of financial assets:
Loss allowance by classes
Loans and advances to customers
at amortised cost
Investments in Government
Inscribed Stocks at amortised cost
Other financial assets
Total
Consolidated
Balance at
01 January 2023
PGK‘000
ECL recognised
during the year
PGK‘000
Write-offs
PGK‘000
Bad debt
Recoveries
PGK‘000
Balance at
31 December 2023
PGK‘000
42,497
9,758
(288)
499
2,231
3,990
48,718
71
-
-
-
-
-
9,829
(288)
499
52,466
2,302
3,990
58,758
104
Financial risk management (continued)
3.
(b) Credit risk (continued)
Loss allowance by classes
Loans and advances to customers
at amortised cost
Investments in Government
Inscribed Stocks at amortised cost
Other financial assets
Total
Consolidated
Balance at
01 January 2022
PGK‘000
ECL recognised
during the year
PGK‘000
Write-offs
PGK‘000
Bad debt
Recoveries
PGK‘000
Balance at
31 December 2022
PGK‘000
38,100
4,323
(857)
931
1,639
3,990
43,729
592
-
-
-
-
-
4,915
(857)
931
42,497
2,231
3,990
48,718
Loss allowance by classes
Loans and advances to customers
at amortised cost
Investments in Government
Inscribed Stocks at amortised cost
Other financial assets
Total
Parent
Balance at
01 January 2023
PGK‘000
ECL recognised
during the year
PGK‘000
Write-offs
PGK‘000
Bad debt
Recoveries
PGK‘000
Balance at
31 December 2023
PGK‘000
41,479
10,111
(288)
499
2,231
3,990
71
-
-
-
-
-
47,700
10,182
(288)
499
51,801
2,302
3,990
58,093
Loss allowance by classes
Loans and advances to customers
at amortised cost
Investments in Government
Inscribed Stocks at amortised cost
Other financial assets
Total
Parent
Balance at
01 January 2022
PGK‘000
ECL recognised
during the year
PGK‘000
Write-offs
PGK‘000
Bad debt
Recoveries
PGK‘000
Balance at
31 December 2022
PGK‘000
37,746
3,659
(857)
931
41,479
1,639
3,990
592
-
-
-
-
-
43,375
4,251
(857)
931
2,231
3,990
47,700
105
Financial risk management (continued)
3.
(b) Credit risk (continued)
Consolidated
31 December 2023
Loss allowance – Loans and advances to
customers at amortised cost
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Stage 1
Stage 2
Stage 3
12-month ECL
Lifetime ECL
Lifetime ECL
POCI
Total
Loss allowance as at 01 January
17,460
5,458
19,579
Changes in the loss allowance
- Transfer to stage 1
- Transfer to stage 2
- Transfer to stage 3
- Write-offs
New financial assets originated or purchased
Financial assets that have been derecognised
Loss allowance as at 31 December
1,066
(543)
(523)
(1,457)
2,766
(1,309)
(4,552)
(1,266)
5,818
-
13,810
(7,445)
18,882
-
4,363
(5,297)
(288)
10,883
(6,057)
5,481
28,103
-
52,466
Consolidated
31 December 2022
Loss allowance – Loans and advances to
customers at amortised cost
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Stage 1
Stage 2
Stage 3
12-month ECL
Lifetime ECL
Lifetime ECL
POCI
Total
Loss allowance as at 01 January
19,983
10,527
7,590
Changes in the loss allowance
- Transfer to stage 1
- Transfer to stage 2
- Transfer to stage 3
- Write-offs
2,677
(2,619)
(1,190)
1,234
(58)
(44)
(2,701)
(6,120)
8,821
-
-
(857)
9,889
New financial assets originated or purchased
12,263
3,886
Financial assets that have been derecognised
(13,572)
(1,450)
(5,762)
Loss allowance as at 31 December
17,460
5,458
19,579
-
42,497
106
-
-
-
-
-
-
-
42,497
-
-
-
(288)
29,056
(18,799)
-
-
-
-
-
-
-
38,100
-
-
-
(857)
26,038
(20,784)
Financial risk management (continued)
3.
(b) Credit risk (continued)
Parent
31 December 2023
Stage 1
Stage 2
Stage 3
12-month ECL
Lifetime ECL
Lifetime ECL
POCI
Total
Loss allowance – Loans and advances to
customers at amortised cost
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Loss allowance as at 01 January
17,462
5,456
18,561
Changes in the loss allowance
- Transfer to stage 1
- Transfer to stage 2
- Transfer to stage 3
- Write-offs
New financial assets originated or purchased
Financial assets that have been derecognised
Loss allowance as at 31 December
1,066
(1,457)
(4,552)
-
13,810
(7,445)
18,884
(543)
2,766
(1,266)
-
4,363
(5,297)
(523)
(1,309)
5,818
(288)
10,847
(5,668)
5,479
27,438
-
-
-
-
-
-
-
-
41,479
-
-
-
(288)
29,020
(18,410)
51,801
Parent
31 December 2022
Loss allowance – Loans and advances to
customers at amortised cost
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Stage 1
Stage 2
Stage 3
12-month ECL
Lifetime ECL
Lifetime ECL
POCI
Total
Loss allowance as at 01 January
19,985
10,525
7,236
Changes in the loss allowance
- Transfer to stage 1
- Transfer to stage 2
- Transfer to stage 3
- Write-offs
2,677
(2,619)
(1,190)
(2,701)
1,234
(6,120)
-
-
New financial assets originated or purchased
12,263
3,886
(58)
(44)
8,821
(857)
8,871
Financial assets that have been derecognised
(13,572)
(1,450)
(5,408)
Loss allowance as at 31 December
17,462
5,456
18,561
-
-
-
-
-
-
-
-
37,746
-
-
-
(857)
25,020
(20,430)
41,479
107
Financial risk management (continued)
3.
(b) Credit risk (continued)
Consolidated
31 December 2023
Stage 1
Stage 2
Stage 3
12-month ECL
Lifetime ECL
Lifetime ECL
POCI
Total
Loans and advances to customers at
amortised cost
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Gross carrying amount as at 01 January
1,899
110
178
14
2,201
Changes in the gross carrying amount
- Transfer to stage 1
- Transfer to stage 2
- Transfer to stage 3
- Write-offs
New financial assets originated or purchased
Financial assets that have been derecognised
146
(38)
(1,234)
-
2,234
(739)
(74)
40
(12)
-
42
(60)
(72)
(2)
1,113
(499)
115
-
-
-
-
-
-
-
-
(499)
2,392
(1,174)
(5)
(1,978)
Gross carrying amount as at 31 December
2,401,427
46,756
157,597
8,764
2,614,544
Consolidated
31 December 2022
Stage 1
Stage 2
Stage 3
12-month ECL
Lifetime ECL
Lifetime ECL
POCI
Total
Loans and advances to customers at
amortised cost
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Gross carrying amount as at 01 January
1,749,549
152,441
71,667
1,988,547
Changes in the gross carrying amount
- Transfer to stage 1
- Transfer to stage 2
- Transfer to stage 3
- Write-offs
41,924
(39,095)
(70,988)
72,997
(2,829)
(2,009)
(44,382)
(64,450)
108,832
-
-
(857)
New financial assets originated or purchased
581,710
8,615
17,725
-
-
-
-
-
-
-
-
(857)
608,050
Financial assets that have been derecognised
(358,430)
(20,138)
(14,450)
(1,304)
(394,322)
Gross carrying amount as at 31 December
1,899,383
110,370
178,079
13,586
2,201,418
108
Financial risk management (continued)
3.
(b) Credit risk (continued)
Parent
31 December 2023
Stage 1
Stage 2
Stage 3
12-month ECL
Lifetime ECL
Lifetime ECL
POCI
Total
Loans and advances to customers at
amortised cost
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Gross carrying amount as at 01 January
1,896
110
177
14
2,196
Changes in the gross carrying amount
- Transfer to stage 1
- Transfer to stage 2
- Transfer to stage 3
- Write-offs
New financial assets originated or purchased
Financial assets that have been derecognised
146
(38)
(1,101)
-
2,231
(735)
(74)
40
(12)
-
42
(60)
(72)
(2)
1,113
(499)
115
-
-
-
-
-
-
-
-
(499)
2,388
(1,174)
(5)
(1,974)
Gross carrying amount as at 31 December
2,398,406
46,461
156,917
8,764
2,610,548
Parent
31 December 2022
Stage 1
Stage 2
Stage 3
12-month ECL
Lifetime ECL
Lifetime ECL
POCI
Total
Loans and advances to customers at
amortised cost
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Gross carrying amount as at 01 January
1,745,858
151,459
69,812
14,890
1,982,019
Changes in the gross carrying amount
- Transfer to stage 1
- Transfer to stage 2
- Transfer to stage 3
- Write-offs
41,924
(39,095)
(70,988)
72,997
(2,829)
(2,009)
(44,382)
(64,450)
108,832
-
-
(857)
New financial assets originated or purchased
578,000
8,492
17,068
-
-
-
-
-
-
-
-
603,560
Financial assets that have been derecognised
(354,739)
(19,155)
(13,082)
(1,304)
(388,280)
Gross carrying amount as at 31 December
1,895,673
110,248
176,935
13,586
2,196,442
109
Financial risk management (continued)
3.
(b) Credit risk (continued)
Investments in Government Inscribed Stock
In relation to Investment in Government Inscribed Stocks which continue to be classified as Stage 1, there have been no
significant movements in the carrying amount during the year.
The table below provides an analysis of the gross carrying amount of loans and advances to customers by past due status.
Loans and advances to customers
Gross carrying amount
PGK‘000
Loss allowance
PGK‘000
Gross carrying amount
PGK‘000
Loss allowance
PGK‘000
Consolidated
Year ended 2023
Year ended 2022
0-29 days
30-59 days
60-89 days
90-180 days
More than 181 days
Total
2,401,297
25,190
1,899,939
17,460
33,137
15,539
22,348
142,223
2,614,544
2,835
1,108
3,526
19,807
52,466
Parent
64,459
46,028
41,223
149,769
2,201,418
3,284
2,173
4,299
15,281
42,497
Loans and advances to customers
Gross carrying amount
PGK‘000
Loss allowance
PGK‘000
Gross carrying amount
PGK‘000
Loss allowance
PGK‘000
Year ended 2023
Year ended 2022
0-29 days
30-59 days
60-89 days
90-180 days
More than 181 days
Total
2,398,277
25,190
1,896,229
17,460
32,921
15,459
22,342
141,549
2,610,548
2,835
1,108
3,524
19,144
51,801
64,401
45,964
41,112
148,736
2,196,442
3,284
2,173
4,271
14,291
41,479
110
Financial risk management (continued)
3.
(b) Credit risk (continued)
Collateral held as security and other credit enhancements
The Group holds collateral or other credit enhancements
to mitigate credit risk associated with financial assets.
The main types of collateral and the types of assets these
are associated with are listed in the table below.
Exposure type
Type of collateral held
Mortgage lending LTDV ratio
Consolidated
Year ended
2023
Year ended
2022
Gross
carrying
amount
PGK‘000
Gross
carrying
amount
PGK‘000
Mortgage lending
Personal lending
Corporate lending
Mortgage over residential
property
Mortgage over residential
property / bill of sale
Mortgage over commercial
property
Investment securities
Sovereign guarantee
Lease receivables
Charge over property
and equipment
Bank guarantee and
documentary letters of credit
Charge over cash deposit
In addition to the collateral included in the table above,
the Group holds other types of collateral and credit
enhancements, such as second charges, floating charges
and guarantees for which specific values are not
generally available.
Mortgage lending
The Group holds mainly residential properties as
collateral for the mortgage loans it grants to customers.
In some cases it does hold cash as collateral. It monitors
its exposure to retail mortgage lending using a Loan To
Discounted Value (LTDV) ratio. At origination, the Group
lends based on a discounted collateral value which
is calculated at 80% of the market value at that time.
This becomes the Value definition for the LTDV. The
Group then lends up to 100% of this Value. The following
table reflects the exposure by ranges based on this
methodology. The Group believes that this methodology
provides further risk reduction in case of changes in
market value. For credit-impaired loans the value
of collateral is based on the most recent valuations.
Less than 50%
68,556
67,922
51-75%
75-90%
90-100%
82,524
55,401
73,712
58,677
166,144
148,867
More than 100%
228,931
204,667
Total
601,556
553,845
Parent
Year ended
2023
Year ended
2022
Gross
carrying
amount
PGK‘000
68,556
82,524
55,401
Gross
carrying
amount
PGK‘000
67,922
73,712
58,677
166,144
148,867
228,931
204,667
-
-
601,556
553,845
Mortgage lending LTDV ratio
Less than 50%
51-75%
75-90%
90-100%
More than 100%
Fully cash covered
Total
111
Financial risk management (continued)
3.
(b) Credit risk (continued)
Consolidated
Year ended
2023
Year ended
2022
Gross
carrying
amount
PGK‘000
Gross
carrying
amount
PGK‘000
7,899
12,278
7,631
4,927
23,846
56,581
9,501
14,806
9,082
6,829
31,602
71,820
Parent
Year ended
2023
Year ended
2022
Gross
carrying
amount
PGK‘000
Gross
carrying
amount
PGK‘000
7,899
12,278
7,631
4,927
23,846
56,581
9,501
14,806
9,082
6,829
31,602
71,820
Credit impaired – Mortgage
lending LTDV ratio
Less than 50%
51-75%
75-90%
90-100%
More than 100%
Total
Credit impaired – Mortgage
lending LTDV ratio
Less than 50%
51-75%
75-90%
90-100%
More than 100%
Total
Personal lending
The Group’s personal lending portfolio consists of
secured and unsecured loans as follows:
Consolidated and Parent
Year ended
2023
Year ended
2022
PGK‘000
PGK‘000
601,556
553,845
88,812
59,467
690,368
613,312
Secured
Unsecured
Total
For secured loans, the Group requires formal valuation of
collateral to be performed prior to approval of the loan
facility. The valuation is conducted by the external firm
of valuers independent of the Group who are required
to meet certain minimum standards as per the Group’s
policy. Collateral value determined by the valuer is further
discounted by 20-30% before determining the facility
limit. The discounted value of the collateral must exceed
the facility limit by at least 12.5% to allow for sufficient
buffer should there be any adverse movement in value
due change in macroeconomic indicators.
The collateral value is updated when the facility is
classified as stage 3 or at least every 2 years. The Group
monitors the collateral value on an ongoing basis and
in event of any indicator which may result in significant
decline will require the fresh valuation to be performed.
As at 31 December 2023, the portfolio of secured
personal lending is entirely secured by eligible collateral.
For unsecured loans, the Group takes a higher level
of return to reflect the credit risk. However, credit risk
standards are maintained to ensure a reasonable standard
of debt servicing is proven.
112
Financial risk management (continued)
3.
(b) Credit risk (continued)
Corporate lending
The most relevant indicator of corporate customers’
creditworthiness is an analysis of their financial
performance and their liquidity, leverage, management
effectiveness and growth ratios. In addition, the Group also
requires collaterals and guarantees to secure the corporate
loans. Similar to personal lending, collaterals are required
to be valued by independent firm of valuers before the
facility is approved. The approved facility limit is equal to
or less than the assessed value of the collateral discounted
by 10-50% to allow for sufficient buffer should there be
any adverse movement in the value due to change in
macroeconomic indicators. Collateral values are updated
at least every 2 years if there are any changes to the loan
facilities or if the facility is classified as stage 3 loan. The
Group monitors the collateral value on an ongoing basis
and in event of any indicator which may result in significant
decline will require the fresh valuation to be performed.
As at 31 December 2023, the portfolio of the corporate
lending is fully collateralized by eligible collateral.
Investment securities
The Group holds Investments in Government Inscribed
Stocks measured at amortised cost with a carrying
amount of K157,554,061 (2022: K152,649,962) which
are collateralized by sovereign guarantee.
Bank guarantee and documentary letters of credit
Bank guarantees and documentary letters of credit are
fully collateralized by charge over the cash deposits.
Liquidity risk
(c)
Liquidity risk is the risk of being unable to meet financial
obligations as they fall due. The Group’s liquidity and
funding risks are governed by a policy framework which is
approved by the Board of Directors. Liquidity and funding
positions and associated risks are overseen by the ALCO.
The following outlines the Group’s approach to liquidity
and funding risk management focusing on conditions
brought on by the current global economic environment:
• ensuring the liquidity management framework is
compatible with local regulatory requirements,
• daily liquidity reporting and scenario analysis to
quantify the Group’s positions,
• targeting commercial and corporate customers’
liability compositions,
• intense monitoring of detail daily reports to alert
management and directors of abnormalities, and
• arranging back up facilities to protect against
adverse funding conditions and to support
day-to-day operations.
The Group is monitoring its liquidity contingency plans,
lending requirements and guidelines which include:
• the monitoring of issue severity/stress levels with
high level diligence,
• early warning signals indicative of an approaching
issue and a mechanism to monitor and report these
against signals,
• action plans and courses of action to account for
early warning signals as noted above,
• management reporting at a higher level,
• maintenance of contractual obligations in regards
to deposits, and
• assigned responsibilities for internal and external
written communications.
113
3.
(c)
Financial risk management (continued)
Liquidity risk (continued)
Maturities of financial assets and liabilities
The table below presents a maturity analysis of the Group’s financial liabilities including issued financial guarantee
contracts and corresponding analysis of financial assets held to manage the inherent liquidity risk using undiscounted
contractual cash flows associated with those assets and liabilities.
Consolidated
Up to 1
month
1 to 3
months
4 to 12
months
1 to 5
years
Over 5
years
Total
contract
value
Total
carrying
value
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
31 December 2023
Cash and cash equivalents
396,840
-
-
Central bank bills
28,000
391,200
838,380
Regulatory deposits
433,274
-
-
Total financial assets
858,114
391,200
838,380
Due to other banks
13,912
-
-
-
-
-
-
-
-
-
-
396,840
396,840
1,257,580
1,236,496
433,274
433,274
- 2,087,694
2,066,610
-
13,912
13,912
Due to customers
3,241,808
306,318
773,524
40,166
306
4,362,122
4,344,571
Other liabilities
118,831
-
-
-
-
118,831
118,831
Total financial liabilities
3,374,551
306,318
773,524
40,166
306
4,494,865
4,477,314
Issued financial guarantee
contracts
Issued loan commitments
Total
31 December 2022
9,650
951
16,232
39,152
48,802
-
-
951
16,232
Cash and cash equivalents
433,488
-
-
Central bank bills
74,900
193,340
975,290
Regulatory deposits
383,083
-
-
Total financial assets
891,471
193,340
975,290
Due to other banks
2,060
-
-
-
-
-
-
-
-
-
-
Due to customers
2,782,132
396,063
714,868
5,114
Other liabilities
126,803
-
-
-
-
-
-
-
-
-
26,833
26,833
39,152
39,152
65,985
65,985
433,488
433,488
1,243,530
1,215,763
383,083
383,083
- 2,060,101
2,032,334
-
-
-
2,060
2,060
3,898,177
3,878,835
126,803
126,803
Total financial liabilities
2,910,995
396,063
714,868
5,114
- 4,027,040 4,007,698
Issued financial guarantee
contracts
761
140
14,853
9,990
Issued loan commitments
229,800
-
-
-
Total
230,561
140
14,853
9,990
-
-
-
25,744
25,744
229,800
229,800
255,544
255,544
114
3.
(c)
Financial risk management (continued)
Liquidity risk (continued)
Parent
Up to 1
month
1 to 3
months
4 to 12
months
1 to 5
years
Over 5
years
Total
contract
value
Total
carrying
value
PGK‘000
PGK‘000
PGK‘000 PGK‘000 PGK‘000
PGK‘000
PGK‘000
31 December 2023
Cash and cash equivalents
391,357
-
-
Central bank bills
Regulatory deposits
Due from subsidiaries
28,000
391,200
838,380
433,274
4,284
-
-
-
-
Total financial assets
856,915
391,200
838,380
Due to other banks
Due to customers
Other liabilities
Due to subsidiaries
13,912
-
-
3,276,024
306,318
773,524
40,166
306
4,396,338
4,368,599
114,149
43,899
-
-
-
-
-
-
-
-
114,149
114,149
43,899
43,899
Total financial liabilities
3,447,984
306,318
773,524
40,166
306
4,568,298
4,540,559
Issued financial guarantee
contracts
Issued loan commitments
Total
31 December 2022
9,650
951
16,232
39,152
48,802
-
-
951
16,232
Cash and cash equivalents
397,376
-
-
Central bank bills
Regulatory deposits
Due from subsidiaries
74,900
193,340
975,290
383,083
38,113
-
-
-
-
Total financial assets
893,472
193,340
975,290
-
-
-
-
-
-
-
-
-
-
391,357
391,357
1,257,580
1,236,496
433,274
433,274
4,284
4,284
- 2,086,495
2,065,411
-
13,912
13,912
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26,833
26,833
39,152
39,152
65,985
65,985
397,376
397,376
1,243,530
1,215,763
383,083
383,083
38,113
38,113
- 2,062,102
2,034,335
-
-
-
-
2,060
2,060
3,916,301
3,896,958
122,090
122,090
30,507
30,507
Due to other banks
Due to customers
Other liabilities
Due to subsidiaries
2,060
-
-
2,800,256
396,063
714,868
5,114
122,090
30,507
-
-
-
-
-
-
Total financial liabilities
2,954,913
396,063
714,868
5,114
- 4,070,958
4,051,615
Issued financial guarantee
contracts
761
140
14,853
9,990
Issued loan commitments
229,800
-
-
-
Total
230,561
140
14,853
9,990
-
-
-
25,744
25,744
229,800
229,800
255,544
255,544
The liquidity gap in ‘up to 1 month’ bucket is due to the assumption that current and saving deposits amounting to
K2,411m (31 December 2022: K2,127m) included within ‘due to customers’ mature within one month since these are
on demand and do not have any fixed or determinable maturity.
115
4. Capital adequacy
Kina Securities Limited (“KSL”) as the consolidated
Company is required to comply with prudential standard
PS1/2003 `Capital Adequacy` issued by the Bank of Papua
New Guinea (“BPNG”). BPNG is the Government authority
responsible for the prudential supervision of Banks and
financial institutions in Papua New Guinea. The prudential
guidelines issued by BPNG follow the prudential
guidelines set by the Bank of International Settlements
under the terms of the Basel Accord (Basel 1).
KSL calculates and reports its capital adequacy in respect
of the bank.
Prudential Standard PS1/2003 `Capital Adequacy’ is
intended to ensure KSL maintains a level of capital which:
1) Is adequate to protect the interest of depositors
and creditors,
2) Is commensurate with risk profile and activities
of KSL, and
3) Provide public confidence in KSL as a financial
institution and the overall banking system
PS1/2003 `Capital Adequacy` prescribes ranges of capital
ratios to measure whether KSL is under, adequately,
or well capitalised and also prescribes a leverage ratio.
The minimum capital adequacy ratios prescribed under
PS1/2003 `Capital Adequacy` are:
1) Tier 1 risk based ratio of 8%,
2) Total risk-based capital of 12%,and
3) Leverage capital of 6%.
As at 31 December 2023, KSL’s capital ratios were in
compliance with the BPNG Minimum capital adequacy
requirements as follows:
2023
PGK‘000
2022
PGK‘000
Risk weighted assets
2,516,916
2,080,590
Capital : tier 1
Capital : tier 2
379,868
326,605
136,426
142,496
Capital : tier 1 and tier 2
502,516
469,101
Capital adequacy ratios
Tier 1 capital
Total capital ratio
15.1%
20.0%
15.7%
22.5%
Leverage capital ratio
7.6%
7.5%
The measure of capital used for the purpose of prudential
supervision is referred to as base capital. Total base
capital varies from the capital shown in the statements
of financial position and is made up of Tier 1 (core) and
Tier 2 (supplementary) capital, after deducting the value
of investments in other banks and financial institutions.
Tier 1 capital is obtained by deducting intangible assets
including deferred tax assets from equity capital and
audited retained earnings (or accumulated losses).
Tier 2 capital cannot exceed the amount of tier 1 capital,
and can include subordinated loan capital, specified
assets revaluation reserves, un-audited profits (or losses)
and a small percentage of general loan provisions.
The Leverage Capital is calculated as Tier 1 Capital (less
inter-group loans) divided by Total Assets. Risk-weighted
assets are derived from on-statements of financial
positions assets. On-statements of financial position
assets are weighted for credit risk by applying weightings
(0, 20, 50 and 100 percent) according to risk classification
criteria set by the BPNG, for example cash and money
market instruments have a zero-risk weighting which
means that no capital is required to support the holding
of these assets.
116
5. Net interest income
Interest income
Cash and short-term funds
Investments in Government Inscribed Stocks
Loans and advances to customers
Interest expense
Banks and customers
Net interest income
6. Net fee and commission income
Fees and commission income
Investment and portfolio management
Fund administration
Shares brokerage
Loans fees and bank commissions
Digital banking fees
ATM and other transaction fees
Fee and commission expenses
Net fee and commission income
7. Dividend income
Dividend income from investments
Financial assets at fair value through profit or loss
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
45,232
13,993
194,115
253,340
(50,020)
(50,020)
203,480
54,747
13,143
156,710
224,600
(43,389)
(43,389)
181,211
44,506
13,993
194,115
252,614
(50,180)
(50,180)
202,434
54,096
13,143
156,710
223,949
(42,991)
(42,991)
180,958
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
10,438
23,180
1,500
30,358
10,019
22,225
2,093
30,083
63,819
44,268
7,683
7,636
-
-
914
30,358
63,819
7,401
136,979
116,324
102,493
(16)
(110)
(16)
136,963
116,214
102,477
-
-
1,512
30,083
44,268
7,045
82,908
(110)
82,798
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
660
660
469
469
40
40
74
74
117
8. Other income
Profits from disposal of property and equipment
Unrealised gains/losses
Support fees from subsidiaries
Management fees
Other
9. Other operating expenses
Staff costs
Administrative expenses
Depreciation and amortization
Operating lease
Software maintenance and support charges
Auditor’s remuneration (note 35)
Other
Staff costs are detailed as below:
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
89
5,576
-
-
3,474
9,139
249
2,638
-
-
1,770
4,657
89
4,062
(88)
(91)
3,473
7,445
249
3,064
3,657
470
1,750
9,190
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
86,059
71,865
29,946
4,331
8,365
1,965
85,778
58,904
38,203
4,978
6,556
1,919
81,497
68,917
29,946
4,173
7,483
1,769
16,187
16,919
15,871
218,718
213,257
209,656
80,388
55,820
38,203
4,857
5,634
1,707
16,713
203,322
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Salaries, wages and other benefits
80,534
79,510
76,148
74,339
Superannuation costs
3,726
3,991
Cost of employee share based incentive plan
1,799
2,277
3,550
1,799
3,772
2,277
Total staff costs
86,059
85,778
81,497
80,388
As at 31 December 2023, the Group had 718 employees (2022: 664) and 8 consultants (2022: 3). The Parent had 669
(2022: 615) employees and 3 (2022: 3) consultants.
118
10. Income taxes
The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in
the financial statements as follows:
Profit before tax
Prima facie tax* (2022: 30%)
Tax effect of:
Permanent differences
Prior year adjustment
Impact of increase in tax rate on deferred taxes
Income tax expense
Represented by:
Current tax
Deferred taxes
Income tax expense
Consolidated
Parent
2023
PGK‘000
175,539
74,662
2022
PGK‘000
148,418
44,525
(3,069)
(1,017)
(1,937)
(243)
-
(10,415)
2023
PGK‘000
146,664
65,999
(2,900)
(1,018)
-
70,576
31,930
62,081
75,853
(5,277)
70,576
46,971
(15,041)
31,930
67,725
(5,644)
62,081
2022
PGK‘000
131,118
39,336
(1,986)
(231)
(10,415)
26,704
41,476
(14,772)
26,704
* 2023 Income tax rate applied on Parent: 45% and 30% for subsidiaries.
In December 2022, during the PNG Government’s announcement of 2023 national budget, an increase in the corporate
income tax rate from 30% to 45% on commercial banks was announced and is effective 1 January 2023. Accordingly,
the Group applied corporate tax rate of 45% on the taxable income of the parent entity whereas the corporate tax rate
for subsidiary entities to remain at 30%.
11. Deferred taxes
(a)
Net deferred tax assets where there is a right to offset:
Allowance for losses
Employee benefit provision
Lease liability
Depreciation and amortisation
Others
Net deferred tax asset
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
29,423
7,143
15,199
51,765
(15,590)
(1,076)
(16,666)
35,099
26,130
8,168
18,770
53,068
(20,597)
(2,404)
(23,001)
30,067
29,224
6,614
15,199
51,037
25,824
7,750
18,771
52,345
(15,590)
(20,597)
(829)
(2,528)
(16,419)
(23,125)
34,618
29,220
119
11. Deferred taxes (continued)
(b)
The movement on deferred tax account is as follows:
Balance at beginning of year
Statement of comprehensive income credit/(charge)
Transfer out DTA on SBP to equity
Balance at end of year
Represented by:
Deferred tax assets (note 11(a))
Deferred tax liabilities (note 11(a))
12. Cash and cash equivalents
Cash on hand
Exchange settlement accounts
Due from other banks
13. Central bank bills
Central bank and treasury bills
Less than 90 days
Over 90 days
Unearned discount
Consolidated
Parent
2023
2022
2023
PGK‘000
PGK‘000
PGK‘000
30,067
5,032
-
16,988
15,106
(2,027)
29,220
5,398
-
35,099
30,067
34,618
51,764
51,041
(16,665)
(20,974)
35,099
30,067
51,036
(16,418)
34,618
Consolidated
Parent
2023
2022
2023
PGK‘000
PGK‘000
PGK‘000
173,876
168,972
53,992
396,840
151,370
160,392
121,726
433,488
173,876
168,972
48,509
391,357
Consolidated
Parent
2023
2022
2023
PGK‘000
PGK‘000
PGK‘000
419,200
268,240
838,380
(21,084)
975,290
(27,767)
219,200
838,380
(21,084)
2022
PGK‘000
16,474
14,773
(2,027)
29,220
50,318
(21,098)
29,220
2022
PGK‘000
151,370
160,392
85,614
397,376
2022
PGK‘000
268,240
975,290
(27,767)
Central bank bills are debt securities issued by the Bank of Papua New Guinea (BPNG) and are measured at amortised cost.
1,236,496
1,215,763
1,236,496
1,215,763
120
14. Regulatory deposits
Regulatory deposit of the Group as at 31 December 2023 amounted to K433,273,700 (2022: K383,083,700).
This represents the mandatory balance required to be maintained in a non-interest-bearing account with
the Central Bank – Bank of Papua New Guinea. Regulatory deposits are measured at amortised cost.
Regulatory deposit of the parent as at 31 December 2023 amounted to K433,273,700 (2022: K383,083,700).
15. Financial assets at fair value through profit or loss
Securities
- Listed
- Unlisted
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
4,878
30,938
35,816
4,910
10,352
15,262
196
30,909
31,105
184
10,324
10,508
The movement in financial assets at fair value through profit or loss is reconciled as follows:
Balance at beginning of year
Gains from changes in fair value
Financial assets acquired during the year
Balance at end of year
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
15,262
2,733
17,821
35,816
11,652
3,610
-
15,262
10,508
2,776
17,821
31,105
6,771
3,737
-
10,508
The fair value of the listed equities is based on quoted market prices at the end of the reporting period. The quoted
market price used is the current market prices. These financial instruments are categorized as level 1 within the fair value
hierarchy. Unlisted equities are categorized within level 3 of the fair value hierarchy.
16. Loans and advances to customers
Loans to individuals
Loans to corporate entities
Consolidated
Parent
2023
2022
2023
PGK‘000
PGK‘000
PGK‘000
693,446
613,312
693,446
2022
PGK‘000
613,312
1,921,098
1,588,106
1,917,102
1,583,130
Gross loans and advances to customers
2,614,544
2,201,418
2,610,548
2,196,442
Expected credit losses (note 3b)
(52,466)
(42,497)
(51,801)
(41,479)
2,562,078
2,158,921
2,558,747
2,154,963
121
16. Loans and advances to customers (continued)
Details of gross loans and advances to customers are as follows:
Overdrafts
Property mortgage
Asset financing
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
97,628
80,108
97,628
80,108
685,343
627,468
685,343
627,468
92,585
71,792
92,585
71,792
Business and other loans
1,738,989
1,422,050
1,734,993
1,417,074
2,614,544
2,201,418
2,610,548
2,196,442
Movements in expected credit losses are as follows:
Balance at beginning of year
Impairment losses during the year
Loans written off
Bad debt recoveries
Balance at end of year
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
42,497
38,100
9,758
(288)
499
4,323
(857)
931
41,479
10,111
(288)
499
37,746
3,659
(857)
931
52,466
42,497
51,801
41,479
17. Investments in Government Inscribed Stocks
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Government Inscribed Stocks principal balance
160,000
155,000
160,000
155,000
Unamortised premium
Unamortised discount
Accrued interest
Gross Investments in Government Inscribed Stocks
Expected credit losses (note 3b)
258
(3,140)
2,738
159,856
(2,302)
157,554
333
(3,318)
2,866
154,881
(2,231)
152,650
258
(3,140)
2,738
159,856
(2,302)
157,554
333
(3,318)
2,866
154,881
(2,231)
152,650
122
17.
Investments in Government Inscribed Stocks (continued)
The movement in Investments in Government Inscribed Stocks is as follows:
Balance at beginning of year
Additions / (maturities)
Amortised discount/(premium)
Accrued interest
Write back / (addition) of expected credit losses
Consolidated
Parent
2023
2022
2023
PGK‘000
PGK‘000
PGK‘000
2022
K ‘000
152,650
112,107
152,650
112,107
5,000
103
(128)
(71)
40,000
893
243
(593)
5,000
103
(128)
(71)
40,000
893
243
(593)
157,554
152,650
157,554
152,650
Investments in Government Inscribed Stocks are measured at amortised cost. Included within the balance is an amount of
K nil (31 December 2022: Knil) which has been pledged with a third party against repurchase agreement transaction.
18. Investments in subsidiaries
Kina Funds Management Limited (KFM)
Kina Investment and Superannuation Services
Limited (KISS)
Kina Wealth Management Limited (KWML)
Kina Nominees Limited (KNL)
Kina Securities (Fiji) PTE Limited
Total Investment at cost
Provision for impairment
Balance as at 31 December
Shareholdings*
2023
2022
2023
2022
%
100
100
100
100
100
% Amount (PGK)
Amount (PGK)
100
100
100
100
100
2
2
2
2
2
2
500,002
500,002
197
197
500,205
500,205
(251,677)
(251,677)
248,528
248,528
* All the subsidiaries are incorporated in Papua New Guinea and in Fiji. The results of the operations of above subsidiaries have been consolidated in the Group’s financial statements.
123
19. Property, plant and equipment
Consolidated
Furniture
& Fittings
Building
improvements
Motor
Vehicles
Office
Equipment
Land &
Building
Work in
Progress
Right-of-
use assets
Total
Cost
PGK‘000
PGK‘000 PGK‘000
PGK‘000 PGK‘000 PGK‘000
PGK‘000
PGK‘000
Balance
31 December 2021
Additions
Transfer in (out)
Disposals
Balance
31 December 2022
Additions
Transfer in (out)
Disposals
Balance
31 December 2023
Accumulated depreciation
4,810
22,792
4,840
51,225
2,129
2,270
71,507
159,573
4
-
-
1,044
2,132
538
-
-
(1,132)
7,748
-
(79)
-
-
-
1,297
3925
14,556
(2,132)
-
-
-
(11,259)
(12,470)
4,814
25,968
4,246
58,894
2,129
1,435
64,173
161,659
23
-
-
1,300
3,447
2,893
441
-
-
(453)
-
-
-
-
-
73
(441)
952
8,688
-
-
-
(4,180)
(4,633)
4,837
27,709
7,240
61,787
2,129
1,067
60,945
165,714
Balance
31 December 2021
Charge during
the year
Disposals
Balance
31 December 2022
Charge during
the year
Disposals
Balance
31 December 2023
Book value
Balance
31 December 2023
Balance
31 December 2022
(3,156)
(8,012)
(3,765)
(25,980)
(594)
(2,653)
(746)
(5,932)
-
-
1,132
35
(3,750)
(10,665)
(3,379)
(31,877)
(546)
(2,414)
(1,063)
(6,609)
-
-
453
-
(4,296)
(13,079)
(3,989)
(38,486)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(28,193)
(69,106)
(12,144)
(22,069)
11,188
12,355
(29,149)
(78,820)
(9,348)
(19,980)
4,587
5,040
(33,910)
(93,760)
541
14,630
3,251
23,301
2,129
1,067
27,035
71,954
1,064
15,303
868
27,017
2,129
1,435
35,024
82,839
124
19. Property, plant and equipment (continued)
Parent
Cost
Balance
31 December 2021
Additions
Transfer in (out)
Disposals
Balance
31 December 2022
Additions
Transfer in (out)
Disposals
Balance
31 December 2023
Furniture
& Fittings
Building
improvements
Motor
Vehicles
Office
Equipment
Land &
Building
Work in
Progress
Right-of-
use assets
Total
PGK‘000
PGK‘000 PGK‘000
PGK‘000 PGK‘000 PGK‘000
PGK‘000
PGK‘000
4,810
22,792
4,840
51,225
2,129
2,270
71,507
159,573
4
-
-
1,044
2,132
538
-
-
(1,132)
7,748
-
(79)
-
-
-
1,297
3,925
14,556
(2,132)
-
-
-
(11,259)
(12,470)
4,814
25,968
4,246
58,894
2,129
1,435
64,173
161,659
23
-
-
1,300
3,447
2,893
441
-
-
(453)
-
-
-
-
-
73
(441)
952
-
8,688
-
-
(4,180)
(4,633)
4,837
27,709
7,239
61,787
2,129
1,067
60,946
165,714
Accumulated depreciation
Balance
31 December 2021
Charge during
the year
Disposals
Balance
31 December 2022
Charge during
the year
Disposals
Balance
31 December 2023
Book value
Balance
31 December 2023
Balance
31 December 2022
(3,156)
(8,012)
(3,764)
(25,980)
(594)
(2,653)
(746)
(5,932)
-
-
1,132
35
(3,750)
(10,665)
(3,378)
(31,877)
(546)
(2,414)
(1,063)
(6,609)
-
-
453
-
(4,296)
(13,079)
(3,989)
(38,486)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(28,194)
(69,106)
(12,144)
(22,069)
11,188
12,355
(29,150)
(78,820)
(9,346)
(19,979)
4,587
5,040
(23,908)
(93,759)
541
14,630
3,250
23,300
2,129
1,067
27,037
71,955
1,064
15,303
867
27,017
2,129
1,435
35,024
82,839
125
20. Intangible assets
Consolidated
Cost
Balance 31 December 2021
Additions
Transfer in (out)
Disposals
Balance 31 December 2022
Additions
Transfer in (out)
Disposals
Software
PGK‘000
59,075
1,907
1,945
62,927
1,013
506
Customer deposit
relationship / intangible
Work in
Progress
Total
PGK‘000
PGK‘000
PGK‘000
22,468
-
-
22,468
-
-
9,348
1,546
(1,945)
(3,475)
5,474
4,069
(506)
-
90,891
3,453
-
(3,475)
90,869
5,082
-
-
Balance 31 December 2023
64,446
22,468
9,037
95,951
Accumulated depreciation
Balance 31 December 2021
Charge during the year
Balance 31 December 2022
Charge during the year
Balance 31 December 2023
Book value
Balance 31 December 2023
Balance 31 December 2022
(24,294)
(11,614)
(35,908)
(9,967)
(45,875)
18,571
27,019
(17,934)
(4,533)
(22,468)
-
(22,468)
-
-
-
-
-
(42,228)
(16,147)
(58,376)
(9,967)
(68,343)
-
-
9,037
5,474
27,608
32,493
126
20.
Intangible assets (continued)
Parent
Cost
Balance 31 December 2021
Additions
Transfer in (out)
Disposals
Balance 31 December 2022
Additions
Transfer in (out)
Disposals
Software
PGK‘000
59,075
1,907
1,945
-
62,927
1,013
506
-
Customer deposit
relationship
Work in
Progress
Total
PGK‘000
PGK‘000
PGK‘000
22,468
-
-
-
22,468
-
-
-
9,049
1,546
(1,945)
(3,176)
5,474
4,069
(506)
-
90,592
3,453
-
(3,176)
90,869
5,082
-
-
Balance 31 December 2023
64,446
22,468
9,037
95,951
Accumulated depreciation
Balance 31 December 2021
Charge during the year
Disposals
Balance 31 December 2022
Charge during the year
Disposals
(24,294)
(11,614)
-
(35,908)
(9,967)
-
(17,934)
(4,534)
-
(22,468)
-
-
Balance 31 December 2023
(45,875)
(22,468)
-
-
-
-
-
-
-
(42,228)
(16,148)
-
(58,376)
(9,967)
-
(68,343)
Book value
Balance 31 December 2023
Balance 31 December 2022
18,571
27,019
-
-
9,037
5,474
27,608
32,493
The acquisition of Australian and New Zealand (ANZ) Bank’s retail, commercial and SME banking businesses in PNG on
23 September 2019 gave rise to the recognition of core customer deposit intangible.
The intangible assets were estimated to have a useful life of five years and three years respectively based on the license
term of software and expected length of customer deposit relationship and core deposit intangible. Customer deposit
relationship and core deposit intangible was fully amortised in 2022.
127
21. Other assets
Prepayments
Security deposits and bonds
Card Settlement accounts
Other debtors
Less: Expected credit losses
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
9,895
31,303
50,496
42,125
133,819
(3,990)
129,829
5,631
9,180
33,873
34,975
83,659
(3,990)
79,669
9,845
31,255
50,496
38,081
129,677
(3,990)
125,687
5,615
9,132
33,873
32,217
80,837
(3,990)
76,847
Movement of expected credit loss on other assets is as follows:
Balances at beginning of year
(3,990)
(3,990)
(3,990)
(3,990)
Write-off
Balance at end of year
-
-
-
-
(3,990)
(3,990)
(3,990)
(3,990)
22. Due to customers
Corporate customers
Retail customers
Consolidated
Parent
2023
2022
PGK‘000
PGK‘000
3,335,288
3,072,938
2023
PGK‘000
3,359317
2022
PGK‘000
3,091,061
1,009,283
805,897
1,009,282
805,897
4,344,571
3,878,835
4,368,599
3,896,958
23. Current income tax (assets) liabilities
Balance at beginning of year
Paid during the year
Current provision
Prior year under provision
Balance at end of year
Net current income tax (assets) liabilities are represented by:
Current income tax asset
Current income tax liability
128
Consolidated
Parent
2023
PGK‘000
4,196
(68,506)
76,788
(1,017)
11,461
(137)
11,597
11,461
2022
PGK‘000
11,666
(54,506)
47,279
(243)
4,196
2023
PGK‘000
5,130
(62,516)
68,736
(1,018)
10,332
2022
PGK‘000
11,494
(47,839)
41,706
(231)
5,130
(952)
5,148
4,196
-
10,332
10,332
-
5,130
5,130
24. Employee provisions
Consolidated
2023
Provision for Annual Leave
Provision for Long Service Leave
Provision for Salaries
Provision for Bonus
Total
Parent
Provision for Annual Leave
Provision for Long Service Leave
Provision for Salaries
Provision for Bonus
Total
2023
Represented by:
Short term provisions
Long term provisions
Total employee provision
Opening balance
Additions
Payments Closing balance
PGK‘000
PGK‘000
PGK‘000
PGK‘000
4,663
4,745
1
4,702
14,111
3,842
1,099
57,257
7,898
70,096
2023
(3,476)
3
(57,305)
(6,968)
(67,746)
5,029
5,847
(47)
5,632
16,461
Opening balance
Additions
Payments Closing balance
PGK‘000
PGK‘000
PGK‘000
PGK‘000
4,342
4,197
1
4,177
12,717
3,550
1,114
54,026
7,434
66,124
(3,402)
(2)
(54,077)
(6,662)
4,490
5,309
(50)
4,949
(64,143)
14,698
Consolidated
Parent
10,614
5,847
16,461
9,389
5,309
14,698
129
24. Employee provisions (continued)
Consolidated
2022
Provision for Annual Leave
Provision for Long Service Leave
Provision for Salaries
Provision for Bonus
Total
Parent
Provision for Annual Leave
Provision for Long Service Leave
Provision for Salaries
Provision for Bonus
Total
2022
Represented by:
Short term provisions
Long term provisions
Total employee provision
Opening balance
Additions
Payments Closing balance
PGK‘000
PGK‘000
PGK‘000
PGK‘000
4,306
2,251
-
4,349
10,906
4,933
2,623
55,406
7,313
70,275
2022
(4,576)
(129)
(55,405)
(6,960)
(67,070)
4,663
4,745
1
4,702
14,111
Opening balance
Additions
Payments Closing balance
PGK‘000
PGK‘000
PGK‘000
PGK‘000
3,944
1,902
-
3,956
9,802
4,712
2,424
51,538
6,875
(4,314)
(129)
(51,537)
(6,654)
4,342
4,197
1
4,177
65,549
(62,634)
12,717
Consolidated
Parent
9,366
4,745
14,111
8,520
4,197
12,717
130
25. Lease Liabilities
Details of associated lease liabilities recognised in respect of the right of use assets are presented below:
Consolidated
31 December 2023
31 December 2022
Maturity analysis – contractual undiscounted cash flows
PGK‘000
PGK‘000
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities
Lease liabilities included in statement of financial position
Current
Non-current
Amounts recognised in statement of comprehensive income
Interest on lease liabilities
Expense relating to short-term leases
Amounts recognised in statement of cash flows
Total cash outflow for short-term lease
Total cash outflow for leases
10,829
26,871
1,066
38,766
10,992
22,783
33,775
2,805
8,474
11,279
8,381
11,838
11,732
32,289
5,364
49,385
11,872
29,841
41,713
3,522
8,024
11,546
8,024
11,349
Parent
31 December 2023
31 December 2022
Maturity analysis – contractual undiscounted cash flows
PGK‘000
PGK‘000
Less than one year
One to five years
More than five years
Total undiscounted lease liabilities
Lease liabilities included in statement of financial position
Current
Non-current
Amounts recognised in statement of comprehensive income
Interest on lease liabilities
Expense relating to short-term leases
Amounts recognised in statement of cash flows
Total cash outflow for short-term lease
Total cash outflow for leases
10,829
26,871
1,066
38,766
10,992
22,783
33,775
2,805
8,148
10,953
8,058
11,838
11,732
32,289
5,364
49,385
11,872
29,841
41,713
3,522
7,777
11,299
7,777
11,349
131
26. Other liabilities
Accruals
Unclaimed money and stale cheques
Bank cheques
Accounts payable
Unearned commission income
Lease incentive payable
Advance payments
Other liabilities
Balance at end of year
Consolidated
Parent
2023
2022
2023
2022
PGK’000
PGK‘000
PGK’000
PGK‘000
26,295
17,322
10,473
4,736
310
-
35,305
24,390
27,344
17,663
10,420
6,493
521
3,442
30,301
30,619
25,389
17,322
10,473
4,681
310
-
35,305
20,669
26,995
17,663
10,420
6,347
521
3,442
30,301
26,401
118,831
126,803
114,149
122,090
27. Issued and paid ordinary shares
(a) Movement
The Company does not have authorised capital and ordinary shares have no par value. The table below provides the
annual balances in share capital.
Balance as at 31 December 2021
Share issued during the year
Balance as at 31 December 2022
Share issued during the year
Balance as at 31 December 2023
Number of shares
Share capital
PGK‘000
286,936
-
PGK‘000
394,693
-
286,936
394,693
-
-
286,936
394,693
(b) Earnings per share
Basic earnings per ordinary share is calculated by dividing the net profit attributable to shareholders by the weighted
average number of ordinary shares on issue during the year. The group has no significant dilutive potential ordinary
shares. Consequently, basic earnings per ordinary share equals diluted earnings per share.
Net profit attributable to shareholders – K’000
Weighted average number of ordinary shares basic earnings
Weighted average number of ordinary shares diluted earnings
Basic earnings per share (in toea)
Diluted earnings per share (in toea)
132
Consolidated
2023
104,963
286,936
289,093
36.67
36.39
2022
116,488
286,936
288,695
40.60
40.35
27.
Issued and paid ordinary shares (continued)
(c) Share-based payment reserve
Kina operates both a Short Term Incentive (STI) and
Long Term Incentive (LTI) plan. The purpose of these
Plans is to assist in the reward, retention and motivation
of key management personnel and align the interests
of management and shareholders. The plans are
commensurate with those adopted by major banks
in Australia and the Pacific and is managed by an
independent Plan manager. The operation of both
the STI and LTI plans are explained below:
Short term incentive plan (STI Plan)
The STI plan provides participants with an opportunity to
earn an incentive calculated as a percentage of their salary
each year, conditional upon them achieving specified
performance targets. Under the plan 100% of any award
granted is paid in cash except for the CEO&MD where
65% of any award granted is paid as a cash bonus, with
the remaining 35% awarded as a grant of performance
rights to shares. The granted performance rights are
restricted from exercise and subject to the Company’s
clawback policy and subject to the rules of the Plan.
The following STI plan arrangements were in place during the year ended 31 December 2023:
Date of grant
Number of share rights granted
Market value at grant date
Vesting date
Vesting conditions
1 April 2023
338,448
AUD 265,072
1 April 2025
1 April 2022
849,901
AUD 658,408
1 April 2024
Continued service
Continued service
Long term incentive plan (LTI plan)
The LTI plan provides participants with an opportunity to
receive an equity interest in Kina through the granting
of performance rights. LTI plan participants may be
offered performance rights that may be subject to vesting
conditions as set out by the Board. The selection of
participants is at the discretion of the Board.
A performance right is a contractual right to receive one
ordinary share in Kina, subject to performance and vesting
conditions being met. Each vested performance right
represents a right to one ordinary share. If the participant
leaves Kina any unvested Performance Rights will be
forfeited (unless the Board determines otherwise).
The following LTI plan arrangements were in place during the year ended 31 December 2023:
Date of grant
Number of share rights granted
1 April 2023
1,345,023
1 April 2022
1,297,727
1 April 2021
1,339,664
Market value at grant date
AUD 1,053,424
AUD 1,006,516
AUD 1,152,341
Fair value at grant date
Vesting date
AUD 571,635
1 April 2026
AUD 629,398
1 April 2025
AUD 811,805
1 April 2024
Vesting conditions
Continued service
Continued service
Continued service
50% target TSR
50% target TSR
50% target TSR
50% target EPS growth
50% target EPS growth
50% target EPS growth
The estimated fair value of share rights issued on 1 April
2023 under the LTI plan was AUD 0.43, compared to the
grant date market value per share of AUD 0.783. Fair value
is generally estimated using a Monte Carlo simulation
model taking into account the share price at grant date,
the vesting period, share price volatility, risk-free interest
rate and market performance conditions.
Retention incentive
Retention awards are no longer applicable or awarded
in the ordinary course of business.
133
Issued and paid ordinary shares (continued)
27.
(c) Share-based payment reserve (continued)
Movement in outstanding share rights
Outstanding rights at beginning of year
New rights granted
Rights vested and shares issued/purchased
Outstanding rights at end of year
Consolidated
2023
Number
5,035,388
1,683,471
2022
Number
4,164,980
2,146,628
(1,489,096)
(1,276,220)
5,229,763
5,035,388
The fair value at grant date of share rights awarded under the incentive schemes is recognised as an expense over the
expected vesting period with a corresponding increase in the share based payments reserve in equity. The movement
in the Share Based Premium Reserve is as below:
Brought forward from previous year
Expense arising from share incentive plans
Rights vested
Deferred tax asset on share based payment
Total
Consolidated
2023
PGK’000
2,477
2,073
(1,529)
(245)
2,776
2022
PGK’000
3,587
2,277
(1,360)
(2,477)
2,477
28. Statements of cash flows
(a)
For the purposes of the statements of cash flow, cash and cash equivalents comprises the following:
Consolidated
Parent
2023
PGK‘000
396,840
396,840
2022
PGK‘000
433,488
433,488
2023
PGK‘000
391,357
391,357
2022
PGK‘000
397,376
397,376
Cash and cash equivalents (note 12)
(b) Movement in investment securities is as follows:
Central bank bills
Government Inscribed Stocks
Financial assets at FVTPL
134
Consolidated
2022
Movement
2023
PGK‘000
1,229,813
157,579
35,816
PGK‘000
1,215,763
152,650
15,262
1,423,208
1,383,675
PGK’000
14,050
4,929
20,554
39,333
28. Statements of cash flows (continued)
(c)
Reconciliation of net profit after tax for the year to net cash flows from operating activities is presented below.
Net profit after tax
Profit from disposal of property and equipment
Depreciation and amortisation
(Premium)/ Discount amortisation
Share-based payment expense
Net losses/ (gains) from changes in fair values of financial
assets
Dividend income on equity investments
Interest income on convertible notes
Impairment losses-loans and advances to customers
Foreign translation loss/ (gain) on Nostro bank account
Increase/(decrease) in current tax liability
Increase/(decrease) in deferred tax balances
(Increase)/decrease in assets
Increase/(decrease) in liabilities
Consolidated
Parent
2023
PGK‘000
104,964
(89)
29,946
103
2,073
(2,733)
(660)
(620)
9,900
(2,175)
7,264
(5,032)
2022
PGK‘000
116,488
(249)
38,203
893
2,277
(3,610)
(469)
-
4,825
3,845
(7,469)
(15,106)
2023
PGK‘000
84,583
(89)
29,946
103
2,073
(2,776)
(40)
(620)
10,215
(1,825)
5,201
(5,399)
2022
PGK‘000
104,414
(249)
38,203
893
2,277
(3,737)
(74)
-
4,160
791
(6,363)
(14,772)
(513,234)
(421,194)
(466,946)
(375,570)
469,811
871,248
476,115
842,575
Net cash inflow generated from operating activities
99,518
589,682
130,541
592,548
29. Related party transactions
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or
operational decisions. The Group is controlled by Kina
Securities Limited (“KSL”) incorporated in Papua New
Guinea, which owns 100% of the ordinary shares of its
subsidiaries, unless otherwise stated.
A number of banking transactions are entered into
with related parties in the normal course of business.
These include loans, deposits and foreign currency
transactions. These transactions were carried out on
normal commercial terms and at normal market rates.
The volumes of related party transactions, outstanding
balances at 31 December 2023, and related expenses
and income for the year ended are as follows:
(a) Directors and management transactions
From time to time during the year, Directors and Senior
Management of the Parent and subsidiaries had deposits
in the Group on normal terms and conditions. Brokerage
rates for buying and selling shares for the Senior
Management and staff are discounted.
A listing of the members of the Board of Directors
is shown in the Annual Report. In 2023, the total
remuneration of the Directors was PGK4,209,303
(2022: PGK4,142,855).
Key management personnel (KMP) of the group includes
directors and the executive general managers (EGMs)
during the year.
135
29. Related party transactions (continued)
(a) Directors and management transactions (continued)
The table below shows the Group specified EGM remuneration in aggregate (in K’000).
No of KMP
Salary
Bonus
Super
Equity Options
Other benefits
Total
2023
2022
11
10,297
3,543
184
544
1,694
16,262
11
9,597
3,433
289
917
1,720
15,956
(b) Subsidiary transactions and balances
The Company maintains an intercompany account with subsidiary undertakings, which are interest-bearing at the rate of
KSL cost of funds plus 12.50 (2022: 12.50) basis points, unsecured and with no fixed term of repayment. Details as follows:
Transactions
Balance outstanding
Income
Expenses
Income
Expenses
Due from
Due to
2023
2023
2022
2022
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
PGK‘000
KFM
KISS
KWM
KNL
KSL Fiji
193
-
-
-
-
-
915
-
-
-
1,151
2,286
-
-
-
-
221
-
-
-
193
915
3,437
221
-
-
714
64
-
778
35,340
-
356
64
-
(7,359)
(36,540)
-
(30,507)
-
-
-
-
-
-
35,760
(43,899)
(30,507)
30. Investments under trust
The Group acts as trustee holding or placing of assets on behalf of superannuation funds and individuals. As the Group
acts in a fiduciary capacity, these assets are not assets of the Group and, therefore, are not included in its statements of
financial position. The Group is also engaged in investing client monies. A corresponding liability in respect of these
monies is also excluded from the statements of financial position. Investments under trust at year end are:
Clients funds held for shares trading
Consolidated
Parent
2023
2022
2023
2022
PGK‘000
PGK‘000
PGK‘000
PGK‘000
6,941
6,941
12,963
12,963
6,901
6,901
4,200
4,200
136
31. Segment reporting
The segment information provided to the Chief Operating Decision Maker for the reportable segments for the year ended
31 December 2023 is as follows:
Banking & Finance
Wealth Management
Total
PGK‘000
PGK‘000
PGK‘000
Interest income
Interest expense
Foreign exchange income
Fee and commission income
Other revenue
Total external income
Other operating expenses
Provision for impairment
Depreciation and amortisation
Total external expenses
Profit before inter-segment revenue and expenses
Inter-segment income
Inter-segment expense
Profit before tax
Income tax expense
Profit after tax
Total assets
Total assets include:
252,454
(50,020)
51,363
102,478
10,442
366,717
(179,712)
(10,215)
(29,946)
(219,873)
146,844
179
-
147,023
(62,081)
84,942
5,165,719
886
-
(21)
34,485
2,090
37,440
(9,060)
315
-
253,340
(50,020)
51,342
136,963
12,532
404,157
(188,772)
(9,900)
(29,946)
(8,745)
(228,618)
28,695
175,539
-
(179)
28,516
(8,495)
20,021
179
(179)
175,539
(70,576)
104,963
13,615
5,179,334
Additions to non-current assets
Total liabilities
12,817
(4,599,364)
-
12,817
(60,353)
(4,539,011)
Banking and finance segments include the operations of Kina Bank while Wealth Management includes fund management
and fund administration business.
137
31. Segment reporting (continued)
The segment information provided to the management for the reportable segments for the year ended 31 December 2022
is as follows:
Banking & Finance Wealth Management
Total
Interest income
Interest expense
Foreign exchange income
Fee and commission income
Other revenue
Total external income
Other operating expenses
Provision for impairment
Depreciation and amortisation
Total external expenses
Profit before inter-segment revenue and expenses
Inter-segment income
Inter-segment expense
Profit before tax
Income tax expense
Profit after tax
Total assets
Total assets include:
PGK‘000
224,348
(43,389)
61,843
82,799
8,876
334,477
(165,120)
(4,160)
(38,203)
(207,483)
126,994
4,127
-
131,121
(26,705)
104,416
PGK‘000
PGK‘000
252
-
(1,504)
33,415
(140)
32,023
(9,934)
(665)
-
224,600
(43,389)
60,339
116,214
8,736
366,500
(175,054)
(4,825)
(38,203)
(10,599)
(218,082)
21,424
148,418
-
(4,127)
17,297
(5,225)
12,072
4,127
(4,127)
148,418
(31,930)
116,488
4,621,333
55,688
4,677,021
Additions to non-current assets
Total liabilities
14,084
(4,061,592)
-
14,084
(6,126)
(4,067,718)
There is only one segment for the Parent entity and the information is the same as the primary statements.
138
32. Contingent liabilities
34. Fair value of financial assets
Litigations and claims
Contingent liabilities exist in respect of actual and
potential claims and proceedings that have not been
determined. An assessment of the Group’s likely loss has
been made on a case by case basis for the purposes of
the financial statements and specific provisions are made
where appropriate. As at 31 December 2023, the Group
is a party to some litigation before the courts, however,
management does not believe these will result in any
material loss to the Group. There was no litigation matter
of a material nature that is not already provided for in the
financial statements.
33. Commitments
Capital commitments
There was a total of PGK1,890,694 relating to
commitments under contracts for capital expenditure at
balance sheet date (31 December 2022: PGK2,793,486).
Loan commitments
There was a total of PGK39.2m relating to loan
commitments at balance sheet date (31 December 2022:
PGK229.8m).
and liabilities
The Group measures fair values in accordance with IFRS
13, which defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at
the measurement date. The Group also uses a fair value
hierarchy that categorises into three levels the inputs to
valuation techniques used to measure fair value, which
gives highest priority to quoted prices.
• Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities that the
entity can access at the measurement date. Assets
and liabilities are classified as Level 1 if their value is
observable in an active market.
• Level 2 inputs are inputs other than quoted prices
included within Level 1 that are observable for the
asset or liability, either directly or indirectly. A Level
2 input must be observable for substantially the full
term of the instrument. Level 2 inputs include quoted
prices for similar assets or liabilities in active markets,
quoted prices for identical or similar assets or liabilities
in markets that are not active, inputs other than quoted
prices that are observable for the asset or liability.
• Level 3 inputs are unobservable inputs. Assets and
liabilities are classified as Level 3 if their valuation
incorporates significant inputs that are not based
on observable market data.
Where possible, fair value is determined by reference to a
quoted market price for the instrument valued. The group
does not hold any material financial instruments for which
quoted prices are not available other than investment in
unlisted shares which are classified in Level 3 category.
The following table provides an analysis of financial
instruments that are measured subsequent to initial
recognition at fair value, grouped by fair value
hierarchy level.
139
34.
Fair value of financial assets and liabilities (continued)
Financial instruments measured at fair value
The following tables present the Group’s and the parent’s assets and liabilities that are measured at fair value at
31 December 2023.
Investment securities measured at FVTPL
- Investment in securities – Listed
- Investment in securities – Unlisted
Total assets
Investment securities measured at FVTPL
- Investment in securities – Listed
- Investment in securities – Unlisted
Total assets
Consolidated
Level 1
Level 2
Level 3
Total
PGK‘000
PGK‘000
PGK‘000
PGK‘000
4,878
-
4,878
-
-
-
-
30,938
30,938
4,878
30,938
35,816
Parent
Level 1
Level 2
Level 3
Total
PGK‘000
PGK‘000
PGK‘000
PGK‘000
196
-
196
-
-
-
-
30,909
30,909
1196
13,088
31,105
The following tables present the Group’s and the parent’s assets and liabilities that are measured at fair value at
31 December 2022.
Assets
Level 1
Level 2
Level 3
Total
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Consolidated
Investment securities measured at FVTPL
- Investment in shares – Listed
- Investment in shares – Unlisted
Total assets
4,910
-
4,910
-
-
-
-
10,352
10,352
4,910
10,352
15,262
Parent
Assets
Level 1
Level 2
Level 3
Total
PGK‘000
PGK‘000
PGK‘000
PGK‘000
Investment securities measured at FVTPL
- Investment in shares – Listed
- Investment in shares – Unlisted
Total assets
184
-
184
-
-
-
-
10,323
10,323
184
10,323
10,508
140
34.
Fair value of financial assets and liabilities (continued)
Reconciliation of level 3 fair value measurements
of financial assets and financial liabilities
The group holds investment in unlisted securities
amounting to PGK30,937,556 (31 December 2022:
PGK10,351,782) in level 3 category. During the year,
there were additions or disposals in these securities.
The increase is primarily attributable to the addition
of WLTH convertible Note.
The parent holds investment in unlisted securities
amounting to PGK30,909,269 (31 December 2022:
PGK10,323,495) in level 3 category. During the year,
there were additions or disposals in these securities.
The increase is primarily attributable to the addition
of WLTH convertible Note.
Financial instruments not measured at fair value
For the financial instruments not measured at fair value
as at 31 December 2023 and 2022, there is no material
difference between the fair value and carrying value of
the Group’s and the Parent’s financial assets and liabilities.
35. Auditors’ remuneration
Audit and audit related
Consolidated
2023
2022
PGK‘000
PGK‘000
1,965
1,965
1,919
1,919
Parent
2023
2022
PGK‘000
PGK‘000
Audit and audit related
1,769
1,707
Other services
-
-
1,769
1,707
36. Goodwill
On September 2015, the Group, through Kina Ventures
Limited, a 100% owned subsidiary of Kina Securities
Limited, acquired all of the shares in Maybank (PNG)
Limited and Maybank Property (PNG). Maybank (PNG)
and Maybank Property (PNG) are the PNG subsidiaries
of Malaysia’s largest bank. The acquisition strengthened
Kina Bank’s investment in PNG as it was an excellent fit
for its expansion program.
The goodwill arising on this acquisition was recorded
at PGK92.8 million. The goodwill was attributable to
Maybank (PNG) Limited’s strong position and synergies
expected to arise after the Group’s acquisition of the
new subsidiary. None of the goodwill is expected to be
deductible for tax purposes.
For the purpose of impairment test, goodwill is allocated
to the Group’s banking business as an independent
cash generating unit (CGU). The banking CGU including
goodwill was tested for impairment as at 31 December
2023 by comparing the CGU’s carrying amount
with its recoverable amount and no impairment loss
was recognised.
The recoverable amount is determined based on a
value-in-use calculation which uses post-tax cash flow
projections based on financial budgets approved by
the directors discounted by a cost of equity of 18%
(2022: 16%) applicable to banking business. Given a
banking business is generally valued on equity basis, the
use of post-tax cash flows and discount rate is considered
more appropriate. The projected cash flows cover a
period of 5 years beyond which they are extrapolated
using an estimated terminal growth rate of 3% (2022: 3%)
which does not exceed the long-term average growth rate
for the market in which the Group operates. Cash flows
during the forecast period are derived from approved
budgets, and assume an average growth rate in net
profit after tax (NPAT) over the forecast period of 12.2%
(2022: 10.2%), which is consistent with the rolling average
growth rates over the last 3-5 year period and is driven
by growth in the interest-bearing assets, foreign exchange
income, and banking fees income, whilst retaining a
controlled cost-to-income base.
141
37. Events after reporting date
Declaration of dividend
Subsequent to the financial reporting date, the directors
declared a final dividend of K15.9 toea (AUD 6.0 cents)
per share (K45.5m).
36. Goodwill (continued)
Sensitivity analysis
Under above assumptions, the estimated recoverable
amount of the CGU exceeds its carrying amount by
K90 million.
The Group has conducted an analysis of sensitivity of
the impairment test to changes in the key assumptions
used to determine the recoverable amount. The directors
believe that the following represent reasonably possible
changes in the key assumptions on which the recoverable
amount of the banking CGU is based would result in
the carrying amount to exceed its recoverable amount:
• If all other assumptions remain the same, should the
discount rate be increased to 20.1%, the carrying value
will exceed the recoverable amount by K1 million.
• If all other assumptions remain the same, should the
average NPAT growth rate be reduced to 9.2%, the
carrying value will exceed the recoverable amount
by K1million.
During the prior year, the corporate income tax was
increased from 30% to 45% effective 01 January 2023.
The increase had a significant impact on the cash flows
used in the value-in-use calculations and consequently on
the recoverable amount. Throughout the year, the Group
has been assessing its strategic response to the change
which include intense focus on loan growth, repricing
of loans and deposits, maximising investment of surplus
funds in available market instruments, reviewing fees and
commissions, and cost control.
Where practical and appropriate, some short-term
measures have been implemented, and more strategic
action has been taken in the normal course of business,
as evidenced by the growth in lending and loan interest
spread, and the decline in the cost to income ratio.
Business development efforts continue in the area of
foreign exchange client relationships with
targeted efforts on large importers and exporters in key
industries, where revenue potential is set to build as
the large natural resource projects proceed along their
implementation path.
Whilst these strategic developments are expected to
produce positive impacts on the cash flows, the Group has
not fully incorporated the effect of these positive impacts
on the cash flow projections used in the estimation of
recoverable amount.
142
Navigate.
Challenges.
143143
Shareholder Information.
Additional information required by the Australian Securities Exchange Limited Listing Rules and not
disclosed elsewhere in the Report is set out below. The information is current as of 28 March 2024.
(a)
The distribution of holders of quoted securities (fully paid ordinary shares)
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
% No. of holders
Securities
313,446
3,339,133
6,094,457
71,223,083
205,965,781
0.11
1.16
2.12
24.82
71.78
286,935,900
100.00
528
1,157
771
2,147
308
4,911
(b)
The distribution of holders of unquoted securities (performance rights)
Range
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total
Securities
% No. of holders
-
-
-
145,070
5,084,693
-
-
-
2.77
97.23
5,229,763
100.00
-
-
-
2
11
13
(c) Number of holders for each class of equity securities on issue
Class of equity security
Securities No. of holders No. of holders
Quoted securities (fully paid ordinary shares)
Unquoted securities (performance rights)
286,935,900
5,229,763
4,911
13
-
-
%
10.75
23.56
15.70
43.72
6.27
100.00
%
-
-
-
15.38
84.62
100.00
%
-
-
(d) Unmarketable Parcel of Shares
The number of shareholders holding less than a marketable parcel of ordinary shares is 206, holding
46,184 securities.
(e) Substantial Shareholders
Name
Number of shares
% of total shares issued
HSBC Custody Nominees (Australia) Limited
34,340,890
11.97
(f)
Stock Exchanges
The Company’s ordinary fully paid shares are listed on the Australian Securities Exchange (ASX) and the
Papua New Guinea National Stock Exchange (PNGX).
(g) Voting Rights
Each ordinary shareholder present at a general meeting (whether in person, by proxy or by representative), is
entitled to one vote on a show of hands, or on a poll, for each fully paid ordinary share held.
144
(h) 20 largest holders of quoted securities (fully paid ordinary shares)
Rank Name
1 HSBC Custody Nominees (Australia) Limited
2 HSBC Custody Nominees (Australia) Limited (Asian Development Bank A/C)
Number of shares
34,340,890
10,751,916
3 Comrade Trustee Services Limited (DFRBF A/C)
4 Citicorp Nominees Pty Limited
5 Mineral Resources CMCA Holdings Limited
6 Pacific Markets Pty Ltd
7 Sky Finance Limited
8 BNP Paribas Nominees Pty Ltd (DRP)
9 J P Morgan Nominees Australia Pty Limited
10 ROCKCAR Pty Ltd (RCR FAMILY A/C)
11 Capital Nominees Limited
12 Airwolf Limited
13 BNP Paribas Nominees Pty Ltd (IB AU NOMS RETAILCLIENT DRP)
14 Kina Asset Management No 1 Limited
15 Mr Ivan Lu
16 Gas Resources PNG LNG Plant Limited
17 Creabird Pty Ltd (EM A/C)
18 PNG Lending Consultants Ltd
19 GEAT Incorporated (GEAT-PRESERVATION FUND A/C)
20 Garmaral Pty Ltd
Total Top 20
Balance of Register
Total fully paid ordinary shares on issue
% of total
shares issued
11.97
3.75
2.77
2.29
1.85
1.76
1.70
1.64
1.58
1.39
1.31
1.01
0.97
0.87
0.82
0.75
0.61
0.57
0.55
0.53
7,951,328
6,568,414
5,312,834
5,044,258
4,876,147
4,705,093
4,520,361
4,000,000
3,766,217
2,885,390
2,769,020
2,507,128
2,345,172
2,139,037
1,756,568
1,627,891
1,570,500
1,532,615
110,970,779
175,965,121
286,935,900
38.67
61.33
100.00
(i) On-market buy-back
There is no current on-market buy-back.
(j)
Securities purchased on-market during the reporting period
To satisfy the entitlements of holders of performance
rights under the Kina Performance Rights Plan
871,109
$0.72
Number of shares purchased
Average purchase price
145
10 Corporate Directory.
Directors
Isikeli Taureka (Chairman)
Greg Pawson (CEO)
Karen Smith-Pomeroy
Dr Jane Thomason
Paul Hutchinson
Andrew Carriline
Richard Kimber
Company Secretary
Johnson Kalo
Share Registry
Papua New Guinea
PNG Registries Ltd
Level 4, Cuthbertson Haus
PO Box 1265, Port Moresby
Papua New Guinea
Telephone: (675) 321 6377
Facsimile: (675) 321 6379
Email: brenda.igo@linkgroup.com
Australia
Link Market Services Limited
Level 21, 10 Eagle St
Brisbane QLD 4000
Telephone: 1300 554 474
(within Australia)
+61 1300 544 474 (outside Australia)
Auditor
Deloitte Touche Tohmatsu Ltd
Level 9 Deloitte Haus
MacGregor St
PO Box 1275, Port Moresby
National Capital District
Papua New Guinea
Telephone: +675 308 7000
Facsimile: +675 308 7001
www.deloitte.com/pg
Stock Exchange Listing
ASX Code: KSL
PNGX Code: KSL
www.kinabank.com.pg
Registered Office
Head Office
Level 9, Kina Bank Haus Douglas St
PO Box 1141, Port Moresby
National Capital District 121
Papua New Guinea
Telephone: +675 308 3888 or
+675 308 3800
Alotau Branch
Lae Market Branch
Chascorp Haus,
Section 10, Allotment 9,
Office 6, Ground Floor, Alotau
PO Box 723, Alotau Milne Bay Province
Papua New Guinea
Business Centre Harbour City
Portion 13 Section 44
Allotment 30
Off Poreporena Freeway
PO Box 1141, Port Moresby 121
National Capital District
Papua New Guinea
Digital Hub
Elisio Rainbow Shopping Mall
Port Moresby
National Capital District
Papua New Guinea
Goroka Branch
Cnr of Fox & Elizabeth St
Ground Floor, Gouna Plaza
PO Box 767, Goroka 441
Eastern Highlands Province
Papua New Guinea
Hides Branch
Block 8 – HGDC Para Camp,
Tari, Hela Province
Papua New Guinea
Jacksons Branch
Jacksons International Airport
PO Box 1152, Port Moresby 121
National Capital District
Papua New Guinea
Kimbe Branch
Cnr San Remo Drive and Talasea Rd
PO Box 466, Kimbe 621
West New Britain Province
Papua New Guinea
Kina Bank Centre
Level 1, Kada Gunan Building
Habour City
PO Box 1141, Port Moresby
National Capital District
Papua New Guinea
Kokopo Branch
Peter Torot Street,
Tabubar Kokopo,
PO Box 419, Kokopo
East New Britain Province
Papua New Guinea
Cnr Cedarbank St and Aircorps Rd
Second St, Top Town
PO Box 674, Lae Morobe Province
Papua New Guinea
Lae Top Town Branch
Ground Floor, Nambawan Super Haus
2nd St Top Town
PO Box 682, Lae Morobe Province
Papua New Guinea
Lihir Branch
Block 830, Wide Rd, Londolovit
PO Box 223, Lihir
New Ireland Province
Papua New Guinea
Madang Branch
Section 20, Lot 08
Coastwatcher’s Ave
PO Box 181, Madang 511
Madang Province
Papua New Guinea
Mt Hagen Branch
Hagen Dr
PO Box 121, Mt Hagen 281
Western Highlands Province
Papua New Guinea
Port Moresby Branch
Cnr Musgrave St and Champion Parade
PO Box 143, Port Moresby 121
National Capital District
Papua New Guinea
Vision City Branch
Ground Floor, Sir John Guise Drive
PO Box 1141, National Capital
District 121
Papua New Guinea
Waigani Cameron Rd Branch
Cnr Waigani Dr and Cameron Rd
PO Box 252, Waigani 131
National Capital District 121
Papua New Guinea
Waigani Drive Branch
Cnr Waigani and Islander Dr
PO Box 1141, Port Moresby
National Capital District 121
Papua New Guinea
Wewak Branch
Centre St, PO Box 1069, Wewak 531
East Sepik Province
Papua New Guinea
146
147147
11 | Annual Report
A digital version of this report
can be accessed via
investors.kinabank.com.pg/investors