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.

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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.’

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