THE Bank of South Pacific (BSP) has posted an 11.3 per cent year-on-year increase in operating profit before tax of K607.0 million for 2013 despite a softening of Papua New Guinea’s economy.

Releasing the banks full-year results to the end of December 2013, BSP chairman Kostas Constantinou revealed an after tax profit of K436.8 million, with total assets of the group increasing by about K2.476 billion to K15.809 billion.

The sound results were achieved despite a slowdown in PNG’s economy, Mr Constantinou said.

The customer loan and receivables portfolio has seen net growth of K493.4 million to K5.26 billion, while customer deposits continue to grow strongly, especially in the corporate segment in Fiji, and in the retail and government segments in PNG.

“BSP’s capital base remains sound,” Constantinou said.

Total capital adequacy at the end of 2013 was 19.4% notwithstanding the impact of continued growth in balance sheet assets as well as total dividend payments of K272.72 million. The capital adequacy ratio exceeds the minimum Bank of Papua New Guinea prudential requirement of 12%.

Overall group revenues increased 19% during the year, with most of the revenue growth underpinned from non-interest income streams, in particular foreign exchange earnings in PNG.

Mr Constantinou noted that “extremely aggressive competition” in the corporate lending markets in PNG and Fiji had impacted net interest income, however he did not reveal a specific figure.

However the company managed to achieve growth with customer transaction volumes.

“The expansion of electronic banking facilities mainly through the network of EFTPOS merchants, agents and devices and increased mobile phone banking transactions, are compelling features of BSP’s customer engagement activities in 2013,” Mr Constantinou said.

In terms of expenses, increases have been experienced mainly in the areas of depreciation and amortisation, and in premises and equipment expenses. Management reviewed asset start dates and estimated useful lives of capitalised projects resulted in additional depreciation, amortization and impairment losses being taken in 2013. These increased charges have been the main contributors to a cost to income ratio for the group of 55%, up from 53% in 2012.

Mr Constantinou congratulated staff and management in all of BSP’s operations across Papua New Guinea, Fiji and Solomon Islands on the results achieved in 2013. He expressed confidence in BSP’s capabilities to meet expectations of shareholders in 2014.