KINA Securities has reported a 46.1 per cent fall in profits to K4.5 million for the six months to 30 June, a change the company said exceeded its earlier expectations.
Net profits were down on the K8.4 million recorded over the same period in 2014, while operating income was down 12.1% to K26.4 million from K30 million.
Kina’s income from net interest over the period were down 8.5% to K16.7 million on the back of a narrowing of interest margins to 8.03%, reduced from unusually low levels in the prior corresponding half.
Loan fee income was also slightly lower, while commission income was about K2 million lower in 2015 than in the previous period.
Nonetheless Kina recorded a record rise in funds under management to K5.3 billion, with growth driven by increased investment portfolio valuations and new client fund inflows.
Funds under administration also increased to a record K4.8 billion, leading the division to record a pre-tax profit of K850,000 for the six months to June 2015, up from the K815,000 recorded the year prior.
No contribution from the Maybank Papua New Guinea business, which Kina acquired earlier this year, was included in the profit statement, as the deal is set to be formally finalised on 30 September.
Before tax and costs associated with the Maybank acquisition, Kina had recorded a profit of K8 million for the six months to 30 June 2015, compared with K12.34 million in the prior corresponding period, the company said.
Kina said it was confident the Maybank acquisition would provide it with significant growth opportunities for the coming year – allowing new product offerings and capacity to cross-sell additional products to its combined customer base.
“While economic conditions in PNG have slowed over the past year, national growth rates are still expected to be healthy at around 10%,” the company said in its announcement.
Its result had left it well positioned to achieve the profit forecasts it set out in the prospectus for its initial public offer (IPO) on the Australian Securities Exchange and Port Moresby Stock Exchange.
Kina had set out a pro forma forecast net profit after tax of K45.3 million and a statutory forecast result of K5.7 million in the prospectus, released in late July.
Leading financial institutions from Australia, New Zealand and other Asia Pacific nations had been interested in investing in Kina when it listed, company chief executive Syd Yates said.
“This strong demand reflects investors’ understanding of the quality of our business, Board and management team and the strong economic growth in PNG,” he said.
Fu Shan Investment is the largest shareholder in the company with a 34.98% stake, while Nambawan Super is next with a 14.68% holding in the group.
Hong Kong-based Fu Shan had held an 89.5% stake in the company, but this dropped after the initial public offer.