Papua New Guinea’s Kina Group looks to the future

From modest beginnings, Papua’s New Guinea’s largest non-bank financial services company, the Kina Group, has come a long way. Chief Executive Officer Syd Yates explains the Kina vision.

Since it started as Kina Securities, a small funds administrator and stockbroker, some 17 years ago, the Kina Group has grown into a model diversified financial services group in Papua New Guinea.

Today, Kina is also a funds manager with over K4.7 billion (US$1.82 billion) funds under management, a finance company, mortgage lender, insurance provider and cofounder and shareholder in PNG’S bourse, the Port Moresby Stock Exchange.

With over K340 million (US$132 million) in assets, an annual turnover of K66 million (US$25 million) and over 200 staff, Kina’s CEO Syd Yates looks back with some satisfaction.

‘From seven staff with two computers in 1996/97, we’ve come a long way,’ Yates tells Business Advantage.

‘We’ve built Kina with a strong foundation of best practice governance and systems and controls. We now have two banking and financial institution licences, two licences under the Superannuation Act, a Trustee Licence, and we’re also member of the Port Moresby Stock Exchange.

‘We’ve also developed a strong track record of returns in that time, and proven products and services for our customers.’

Parallel growth

The growth of the Kina Group has mirrored the emergence of Papua New Guinea’s economy, which itself has more than doubled in the past eight years and is expected to grow by more than 8% in 2015.

As more Papua New Guineans have entered the formal economy, so demand for vehicles, white goods, payment systems, savings accounts, small business loans, investments and home ownership has grown. Generally regarded as well regulated by the Bank of Papua New Guinea, PNG’S financial services sector has grown steadily to meet demand.

Yates says the strength of the company is in its diversity: several businesses servicing different parts of the market, supported by a common back office.

‘We are the funds manager for superannuation fund Nambawan Super. They started off with around K720 million (US$280 million) of funds, and today their fund is worth about K4.2 billion (US$1.63 billion). We’ve been supporting them in the growth of its investments and helping to secure the financial future of its members.

Loan finance

‘But that’s just on our funds management side. On our finance side, we’ve developed products to help Papua New Guineans own their first house, to be able to get school fees to send their kids to school, to buy a car and so on.’

One of Kina Finance’s successful products has been Esiloan, while the group has recently launched its own insurance product, underwritten by Tower Insurance.

‘In the first month, we wrote 300 policies, which is pretty good for housing in PNG,’ says Yates.

In 2007, Kina set up Kina Asset Management Limited (KAML), PNG’S only listed investment company, which now has an investment portfolio worth K48.6 million (US$19 million).

KAML’S most recent results—a year-to-date return of 17.5% for the third quarter of this year—suggest it was an astute move.

‘Over 3,000 Papua New Guinean shareholders now have the opportunity not only just to own shares on the PNG market, but also shares on the Australian and overseas markets,’ notes Yates.

The Kina difference

In addition to being quick to market with new products and services, Yates thinks one of Kina’s strengths is its ability to be responsive.

‘For instance, if our clients have an Esiloan Cashcard, which we launched this year, we can turn customers’ loans around in two hours. That’s best practice. That’s better than most places in Australia, and this is done by everyday Papua New Guineans.

‘We want to meet our customers’ expectations, and that’s what we try to do.’

Having in-house capability has been key: Kina’s IT staff recently developed its own Esiloan app for Android phones.

‘Young Papua New Guineans want what everyone else wants. They want a nice house, they want to go on holidays, they want to have investment portfolios, and we’ve been able to help them with that.’