A changing finance landscape

Acquisitions and divestments are altering the terrain in Papua New Guinea’s finance sector.

Bank South Pacific, PNG’S dominant domestic bank, continues to look outward, expanding its regional footprint with purchases of Westpac operations in Fiji, the Cook Islands, Samoa, Tonga and Vanuatu. In 2018, the bank launched BSP Finance (Cambodia) in Phnom Penh to increase its regional footprint, ‘offering not just asset finance but potentially other financial services’. Personal loans and asset financing company Moniplus expanded by opening operations in Lae, Mt Hagen, Kokopo and Alotau. General finance company Credit Corporation also continues to have a strong domestic presence.

Robin Fleming, Chief Executive of Bank South Pacific, says domestic banks have some advantages. ‘We are a PNG owned bank and therefore our assessment of PNG risk is based on people who have lived here, in many cases for much of their life.

‘Because we’re closer to regulators, close to people who make decisions, we have a good insight into how business is operating. We can make a far more informed assessment of the real risk associated with PNG—IN PNG. I have no doubt that the country managers for the other banks have probably got a view of PNG risk which is somewhat similar to mine.

‘There is no particular market sector we would target that the ANZ or Westpac wouldn’t target, it’s just they probably find it a bit more difficult to get some of those transactions over the line. BSP as a group is resilient because we’ve been in a position to have profits coming in from other countries: Fiji, Cook Islands and Tonga. It all adds up.’

Fleming says BSP’S market share is 61 per cent; up from 45 per cent five years ago. ‘BSP is the only bank, for whatever reason—whether it’s legacy, design or otherwise— that is in every province and every district. Whereas other banks choose where they want to operate—that isn’t necessarily good for the consumer, nor is it necessarily good if you’re looking at it from a GDP, economic growth, perspective.’ 

Robin Fleming, Chief Executive of Bank South Pacific