BSP Financial Group (ASX:BFL) outlined double-digit profit and revenue growth for fiscal 2025, alongside stepped-up investment spending tied to its “Modernising for Growth” (MSG) program, during its full-year results briefing from Port Moresby.
Group Chief Executive Officer Mark Robinson said the bank delivered “strong operational results” in 2025 while continuing to invest in the business and returning capital to shareholders through a higher dividend. Chief Financial Officer Glen Skarott added that the year reflected “solid growth in revenue and earnings,” even as the group “deliberately leaned into investment for the future.”
Full-year earnings, revenue and dividends
The board declared a final dividend of PGK 1.38 per share, payable March 27, 2026. This brought the full-year dividend to PGK 1.88 per share, up 13% from the prior year. Skarott said the dividend payout ratio was 75%, consistent with recent years.
Drivers of performance: margin expansion, FX and fees
Skarott said the revenue increase was broad-based across net interest income, foreign exchange and fees, supported by lending growth and stronger investment income from the securities portfolio.
- Net interest income increased 9.1%, supported by lending growth and higher income from the securities portfolio.
- Net interest margin expanded 19 basis points to 6.41%, which management attributed to disciplined pricing and a modest shift toward higher-yielding assets.
- FX income increased 28.7% on higher exporter and importer activity and increased uptake of a digital FX offering.
- Fee and commission income rose 14.5%, reflecting customers increasingly using BSP as their primary transactional bank and ongoing growth in digital channels.
Even with higher costs, operating profit grew 11.3% to PGK 1.95 billion. Skarott said this demonstrated operating leverage and noted that the bank is funding its modernization program from “organic earnings growth.”
Costs, investment and the MSG program
Operating expenses rose 18.8% to PGK 1.46 billion, reflecting what management characterized as deliberate investment. Skarott said the bank invested PGK 137 million into the MSG program during the year as it moved into an execution phase. He also cited a deliberate increase in headcount, higher employment costs and a planned step-up in technology investment.
The cost-to-income ratio (CTI) increased 160 basis points to 42.9%, remaining within the group’s 42% to 45% target range. Skarott broke down some of the CTI movement as:
- About 35 basis points from adding 200 roles to support growth and improve customer outcomes
- 32 basis points from long-term incentives
- 30 basis points from MSG investment
- 9 basis points from CPI-linked salary increases
Looking ahead, Skarott said CTI is expected to trend higher within the target range over the next few years as the MSG program reaches its peak expensing and depreciation phase, with more platforms going live and additional direct operating costs flowing through the profit and loss statement. Over the medium term, he said the bank expects operating leverage to “reassert” and CTI to normalize to the “lower forties” as major platforms stabilize and automation increases.
In the Q&A portion, management reiterated the MSG plan totals PGK 1.2 billion over four years, with the majority concluding at the end of that period, while depreciation for some items will continue beyond the program’s completion.
Asset quality and balance sheet position
On credit, Skarott said the 2025 credit expense reflected a normalization from an “unusually low” 2024 outcome that benefited from the release of COVID-related management overlays. He said the current-year impairment charge reflected portfolio growth and a continued “prudent provisioning stance,” rather than deterioration in underlying asset quality.
Management reported delinquencies improved modestly and remained low at 2.7% of total loans, with provision coverage stable year-on-year. Skarott said BSP was not seeing emerging stress in any single sector or geography and that asset quality metrics remained within risk appetite settings.
The balance sheet grew strongly, with total assets up nearly 16% and deposits up over 17%. Gross loans rose nearly 8%, and Skarott said the growth was fully funded by deposits “without stretching liquidity” or the bank’s funding risk appetite. He described the loan book as stable and balanced, with retail mortgage growth reflecting housing demand across Pacific markets, particularly Fiji, and personal lending growth “measured.”
Capital adequacy was 26.4% at year-end, well above the Bank of Papua New Guinea’s 12% requirement. Return on equity was 23.8%, up 50 basis points, which Robinson said extended the group’s track record of ROE above 20% over 20 years.
Digital adoption, ESG initiatives and PNG grey listing commentary
Robinson highlighted increasing customer adoption of digital channels, saying monthly average digital transactions grew 22.5% over the year while transactions at branches and agents were “relatively flat.” He also cited five-year compounded annual growth rates of nearly 22% for mobile banking, and 33% and 18% for internet banking and App Plus, respectively. He noted ATM usage had been flat over that period but changed last year with new ATMs offering higher uptime and deposit-making capabilities.
Robinson said BSP plans to launch a new digital experience platform this year, including new internet banking and mobile app experiences. He also noted the launch of a business bank in April to provide dedicated service for small and medium-sized businesses, and said the corporate bank has introduced new risk and portfolio management capabilities and online foreign exchange services, with new digital experience platforms planned for business and corporate customers.
On ESG, Robinson said BSP published its second sustainability report as part of the 2025 annual report and described an effort to align with international standards, including supporting communities facing more frequent and intense climate events across the South Pacific.
During Q&A, management addressed questions about Papua New Guinea being placed on the Financial Action Task Force grey list, announced February 14. Robinson said PNG had previously been grey listed in 2014 and removed in 2016 after legislative and regulatory changes. He said the latest grey listing followed a 2024 examination focused on effectiveness of anti-money laundering laws and the detection and prosecution system, with the primary concern being a lack of prosecutions under existing laws.
Robinson said BSP would continue to operate normally, but noted potential impacts including increased reporting requirements, longer processing times for transactions, and potentially higher costs for customers. He said BSP would continue to take its obligations seriously and would work with PNG authorities and other institutions as issues are addressed.
About BSP Financial Group (ASX:BFL)
BSP Financial Group Limited provides commercial banking and finance services to individual and corporate customers in Papua New Guinea, the Solomon Islands, Fiji, the Cook Islands, Samoa, Tonga, Vanuatu, Cambodia, and Laos. The company's products and services include transaction, saving, solicitor's trust, foreign currency, and business cheque accounts, as well as term deposits; personal, home, personal asset, student, bridging, tailored business, commercial and residential property investment, construction development, and seasonal finance loans; debit and credit cards; SME business loans; overdraft, asset financing, insurance premium funding, prioritized loan processing, safety deposit box, and electronic and mobile banking services; and online business banking services.
