PNG BANKING SECTOR’S NEED FOR GROWTH
Brett Hooker, chief executive at Westpac PNG, agrees there is room for more players, noting that Fiji has seven commercial banks despite its much smaller population.
There is broad agreement that Papua New Guinea needs more competition in its banking sector, and several finance companies have flagged their desire to acquire banking licences.
Consolidation has been a key theme within PNG’s banking sector in recent years.
Of the four licensed banks, Australia’s ANZ sold its retail division to local Kina Bank in 2019, retaining its institutional business, while Westpac PNG attempted to sell its PNG assets to Kina Bank in 2021 – a move ruled out by PNG’s Independent Consumer and Competition Commission (ICCC).
While the ICCC’s decision was based on the move being anti-competitive, its decision left PNG’s largest bank, BSP Financial Group, as the dominant player in the market.
However, several smaller financial institutions are now showing interest in becoming banks.
Likely candidates
In early 2023, the Bank of Papua New Guinea, PNG’s Central Bank, granted Credit Corporation PNG an approval in principle for a banking licence for 12 months.
CEO Danny Robinson says being able to convert its existing loan customers to full banking customers with a superior customer experience will drive greater competition.
With 75 per cent of the population unbanked, more banking licences have the potential to grow PNG’s banking sector, provided it is through digital delivery.
Mr Robinson expects to increase Credit Corporation’s share-of-wallet by targeting the full banking needs of highvalue customers and within five years expects to capture at least 5 per cent of PNG’s banking market.
Meanwhile, the Teachers Savings and Loan Society is also closer to becoming a fully-fledged bank, after receiving its provisional licence in 2022.
Timing is right
The Nasfund Contributors Savings and Loans Society, which has over 140,000 members, is another institutionly looking to become a bank.
“We need more banks because competition is good.”
Brett Hooker, chief executive at Westpac PNG, agrees there is room for more players, noting that Fiji has seven commercial banks despite its much smaller population.
Mr Hooker also flags rural electrification and further rollout of reliable telecommunications as roadblocks to greater competition within PNG’s banking sector.
“One of the challenges in PNG banking is there’s still significant usage of cash and cheques,” he said.