BSP Financial : 2022 Full Year Financial Statements

BSP Financial Group Limited

ARBN 649 704 656

Financial Statements

31 December 2022

Contents of Financial Statements

		Page
Directors' Report	1
Statements of Comprehensive Income	3
Statements of Financial Position	4
Statements of Changes in Shareholders' Equity	5
Statements of Cash Flows	6
Notes to the Financial Statements	7
Note 1	Financial Statements Preparation	7
Financial Performance	10
Note 2	Segment Reporting	10
Note 3	Net Interest Income	11
Note 4	Non-Interest Income	11
Note 5	Operating Expenses	12
Note 6	Impairment of Financial Assets	13
Note 7	Income Tax	14
Note 8	Earnings per Ordinary Share	16
Note 9	Reconciliation of Operating Cash Flow	16
Financial Instruments: Financial Assets	17
Note 10	Cash and Operating Balances with Central Banks	19
Note 11	Amounts Due from Other Banks	19
Note 12	Treasury and Central Bank Bills	19
Note 13	Cash Reserve Requirement with Central Banks	19
Note 14	Other Financial Assets	20
Note 15	Loans and Receivables from Customers	20
Note 16	Other Assets	26
Financial Instruments: Financial Liabilities	27
Note 17	Amounts Due to Other Banks	28
Note 18	Customer Deposits	28
Note 19	Other Liabilities	28
Note 20	Contingent Liabilities and Commitments	28
Risk Management	30
Note 21	Risk Management Framework and Controls	30
Note 22	Credit Risk and Asset Quality	30
Note 23	Liquidity Risk	40
Note 24	Operational Risk	42
Note 25	Foreign Exchange Risk	42
Note 26	Interest Rate Risk	44
Note 27	Fair Values of Financial and Non-Financial Assets and Liabilities	45
Capital and Dividends	46
Note 28	Ordinary Shares	46
Note 29	Retained Earnings and Other Reserves	47
Note 30	Capital Adequacy	49
Group Structure		50
Note 31	Insurance	50
Note 32	Investment in Subsidiaries	57
Note 33	Investment in Joint Ventures	58
Other		58
Note 34	Fiduciary Activities	58
Note 35	Related Party Transactions	58
Note 36	Directors and Executive Remuneration	59
Note 37	Events Occurring After Balance Sheet Date	61
Note 38	Remuneration of Auditor	61
Independent Auditor's Report	62

APRA Disclaimer:

BSP Financial Group Limited (BSP) is not authorised under the Banking Act 1959 (Commonwealth of Australia) and is not supervised by the Australian Prudential Regulation Authority (APRA). BSP's products are not covered by the depositor protection provisions in Section 13A of the Banking Act 1959 and will not be covered by the financial claims scheme under Division 2AA of the Bank Act 1959.

Directors' Report

for the Year Ended 31 December 2022

The Directors take pleasure in presenting the Financial Statements of the BSP Financial Group Limited and its subsidiaries (Bank and the Group) for the year ended 31 December 2022. In order to comply with the provisions of the Companies Act 1997, the Directors report as follows:

Principal activities

The principal activity of the BSP Financial Group Limited (BSP) is the provision of commercial banking and financial services throughout Papua New Guinea (PNG) and the Asia Pacific region. The Group's activities also include fund management and life insurance business services. BSP is a company listed on the PNG Exchange Markets (PNGX) and the Australian Stock Exchange (ASX), incorporated under the Companies Act of Papua New Guinea, and is an authorised Bank under the Banks and Financial Institutions Act of Papua New Guinea. The Group is also licensed to operate in Solomon Islands, Fiji, Cook Islands, Samoa, Tonga, Vanuatu, Cambodia and Lao. The registered office is at Section 34, Allotment 6 & 7, Klinki Street, Waigani Drive, Port Moresby.

Review of operations

For the year ended 31 December 2022, the Group's profit after tax was K1,081.069 million (2021: K1,075.218

million). The Bank's profit after tax was K1,045.279 million (2021: K1,036.455 million).

The Directors are of the view that there are reasonable grounds to believe that the Bank and the Group will be able to pay their debts as and when they become due and payable; and the attached financial statements and notes thereto are in accordance with the PNG Companies Act 1997, including compliance with accounting standards and give a true and fair view of the financial position and performance of the Bank and the Group.

The results of the Bank and the Group operations during the financial year have, in the opinion of the Directors, not been materially affected by items of an abnormal nature, other than those disclosed in the financial statements.

In the opinion of the Directors, no circumstances have arisen, that make adherence to the existing method of valuation of assets or liabilities of the Bank and the Group misleading or inappropriate.

At the date of this report the Directors are not aware of any circumstances that would render the values attributed to current assets in the financial statements misleading.

No contingent liability other than that disclosed in the notes to the attached financial statements has become enforceable, or is likely to become enforceable, within a period of twelve months from the date of this report, that will materially affect the Bank and the Group in its ability to meet obligations as and when they fall due.

Dividends

Dividends totaling K788.906 million were paid in 2022 (2021: K676.464 million). A detailed breakup of this is provided in Note 28.

Directors and officers

The following were directors of the BSP Financial Group Limited at 31 December 2022:

Sir K Constantinou, OBE	Mr. R Fleming, CSM (retired 31 December 2022)	Mr. S Davis	Ms. P Kevin
Mr. S Brewis-Weston	Mr. F Bouraga	Mr. R Bradshaw	Mr. A Sam
Dr. F Lua'iufi	Mrs. P. Taureka-Seruvatu

Details of directors' tenure and directors and executives' remuneration during the year are provided in Note 36 of the Notes to the Financial Statements. The Group CEO Robin Fleming was the only executive director.

The company secretary is Mary Johns.

1	BSP Financial Group Limited 2022 Financial Statements

Statements of Comprehensive Income

for the Year Ended 31 December 2022

		Consolidated	Bank
All amounts are expressed in K'000	Note	2022	2021	2022	2021
Interest income	3	1,834,996	1,710,501	1,727,733	1,593,872
Interest expense	3	(89,936)	(107,242)	(78,578)	(90,613)
Net interest income		1,745,060	1,603,259	1,649,155	1,503,259
Net fee and commission income	4	419,042	370,468	384,767	338,171
Other income	4	394,686	363,392	408,442	378,786
Net insurance operating income	31	40,224	35,052	-	-
Net operating income before impairment and
operating expenses		2,599,012	2,372,171	2,442,364	2,220,216
Impairment of financial assets	6	5,359	42,655	15,170	51,138
Operating expenses	5	(989,263)	(888,967)	(912,980)	(813,224)
Additional company tax	7	(190,000)	-	(190,000)	-
Profit before income tax		1,425,108	1,525,859	1,354,554	1,458,130
Income tax expense	7	(344,039)	(450,641)	(309,275)	(421,675)
Net profit for the year		1,081,069	1,075,218	1,045,279	1,036,455
Other comprehensive income
Items that may be subsequently reclassified to profit
or loss:
Translation of financial information of foreign
operations to presentation currency	29	(52,381)	(40,680)	(28,345)	(22,425)
Items that will not be reclassified to profit or loss:
Recognition of deferred tax on asset revaluation
reserve movement	29	1,581	1,566	1,581	1,566
Fair value gain / (loss) on re-measurement of
investment securities	29	(82)	15	(82)	15
Net movement in asset revaluation reserve	29	42	560	-	-
Other comprehensive income, net of tax		(50,840)	(38,539)	(26,846)	(20,844)
Total comprehensive income for the year		1,030,229	1,036,679	1,018,433	1,015,611
Earnings per share - basic and diluted (toea)	8	231.4	230.1	223.7	221.8

Comparative period amounts have been restated to conform to presentation in the current year.

The attached notes form an integral part of these financial statements

3	BSP Financial Group Limited 2022 Financial Statements