Kina Securities H2 Earnings Call Highlights

tickerreport.com · Feb 27, 2026 · Collected from GDELT

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Kina Securities (ASX:KSL) management reported what it described as a strong full-year 2025 result, driven by broad-based revenue growth, continued loan book expansion, and disciplined cost control, while also highlighting the benefits and one-off impacts of a changing corporate tax regime for Papua New Guinea banks. Profit growth supported by revenue momentum and lower banking tax rate Managing Director and CEO Ivan Vidovich said underlying net profit after tax (NPAT) rose 15% to PGK 126 million, while statutory NPAT increased 20% to PGK 121 million. Vidovich attributed part of the statutory result to a decline in the tax rate for banking operations, but noted the tax change also created a one-off accounting impact. He explained that in 2025 the standard corporate tax rate for banks with profits under PGK 300 million fell from 45% to 40%, with a further reduction to 35% scheduled for 2026. However, the company revalued its deferred tax assets as a result of the change, producing a one-off, non-cash increase in tax expense of PGK 5.5 million that was reflected in statutory NPAT. Return on equity increased by 200 basis points to 17.4%. Earnings per share rose 20% to 41.8 toea. Loan growth outpaced the system; deposits grew to plan Vidovich said Kina grew its lending market share during 2025, with year-end gross loans up 17.8% year over year, compared with system lending growth of 8.4%. He said the expansion was largely driven by commercial lending. Customer deposits increased from PGK 4.3 billion to PGK 4.6 billion. Management addressed an apparent decline in market share shown in the presentation materials, explaining it was driven by movements in government-related banking activity affecting system deposits rather than Kina’s own growth trajectory. During Q&A, analyst David Fraser of MST Financial asked about a perceived step-down in loan issuance and deposit receipts between the first and second halves. CFO Johnson Kalo said Kina had managed the book and “definitely hit the loan growth targets” it expected, adding that net interest income was managed closely given deposit competition. Vidovich added that as the organization grows, results may appear more balanced between halves than when it was smaller. Revenue drivers: net interest income, FX, and digital channels Vidovich said revenue grew 13% across the company’s diversified portfolio, with double-digit growth across major lines including lending, foreign exchange, and digital channels. Net interest income increased 20% year over year to PGK 268 million and represented 49% of total revenues. Lending income was supported by 13% loan book growth to PGK 3.3 billion, with growth across segments including business loans (up 17%), asset financing (up 16%), investment property loans (up 11%), and home lending (up 4%). The interest spread increased slightly to 7.2% from 7.1% in FY 2024 and FY 2023, which Vidovich said partly reflected an IFRS 9-aligned re-estimation of interest income, offset by a planned increase in cost of funds as the bank strengthens its funding base. Net interest income was also supported by a 44% increase in income from treasury bills and government Inscribed Stock, which management linked to strong interest rates during the year. Non-interest revenue grew 6% to PGK 278 million. Vidovich highlighted foreign exchange revenue as a key contributor, rising 17% to PGK 100 million on higher commodity prices, strong export volumes, and a “maturing” interbank FX market. He said Kina expects the market to continue evolving in 2026 as the Bank of PNG reduces FX intervention in favor of interbank trading, potentially creating a larger market but tighter margins. Digital and partnerships income rose 13% year over year, with management citing growth in transaction volumes across channels: Internet banking fees up 31% Merchant acquiring fees (including e-commerce) up 18% Mobile banking fees up 17% Visa fee income up 6%, with partnership initiatives underway aimed at restoring higher growth Wealth business revenue increased 2% to PGK 47.8 million, supported by higher fees in non-superannuation funds under management. Vidovich said non-interest income growth was partly offset by reductions in non-operating income and valuation reductions from financial assets. Costs, asset quality, and capital position Kalo said operating costs rose 4% to PGK 298 million, compared with 13% revenue growth. The cost-to-income ratio improved to 54.7% from 59.1% a year earlier, though he noted the comparison benefited from a one-off cost recorded in 2024. Kalo also said the company contained cost inflation despite depreciation of the kina versus the U.S. dollar and Australian dollar, which increased local-currency costs for technology, consulting services, and some salaries. He said Kina made targeted investments in leadership and specialist capabilities (including strategy, risk, technology, digital innovation, and data), technology and network resilience, and AML/CTF uplift, with some investments continuing into 2026. On asset quality, Kalo said provisions rose PGK 39 million over the year. Of that increase, PGK 19.3 million was attributed to organic loan growth, and PGK 19.7 million was a one-off increase recognized after an IFRS 9 maturity review to address aged non-performing loans. Despite the one-off provision, he said underlying asset quality improved, with the non-performing loan ratio decreasing 40 basis points to 7.7% and coverage improving to 2.6% of gross loans and advances. Total assets rose 6% to PGK 5.6 billion, and the capital adequacy ratio ended the year at 17.1%, which Kalo said was well above the central bank’s “well-capitalized” minimum. Dividend increase and 2026 outlook Management declared a final dividend of 19.3 toea (AUD 0.065) per share, bringing the full-year dividend to 31.9 toea (AUD 0.11). Vidovich said this represented a 22% increase in PGK dividends and a 10% increase in AUD dividends, reflecting a payout ratio of 77% at the higher end of the company’s policy, acknowledging kina-to-AUD depreciation alongside underlying growth. Looking ahead, Vidovich said Kina anticipates another year of earnings growth in 2026, supported by revenue uplift across its diversified portfolio, a strengthening domestic e-economy, and targeted, risk-aligned market share gains, alongside the scheduled reduction in the banking corporate tax rate to 35%. He also flagged expected headwinds, including lower yields on government securities, a more competitive foreign exchange market, and potential margin pressure alongside further depreciation of the kina against the Australian dollar. Separately, Vidovich discussed Papua New Guinea’s addition to the Financial Action Task Force (FATF) grey list on Feb. 13, 2026. He said Kina had been preparing for the outcome and does not expect it to have a material financial impact or to impose substantive constraints on the company’s strategy. In response to a question on the planned Tier 2 corporate bond, Kalo said Kina expects—subject to approvals—to issue up to PGK 250 million as the first PNGX-listed corporate bond under new capital markets legislation. He said the transaction is well advanced in the approvals process and is expected to be deployed in the first half, and that the capital could support approximately PGK 1 billion of additional lending capacity. About Kina Securities (ASX:KSL) Kina Securities Limited, together with its subsidiaries, provides commercial banking and financial, fund administration, investment management, and share brokerage services in Papua New Guinea. It operates through two segments, Banking and Finance and Wealth Management. The company provides savings, individual and business cheque, business, cash management, and fixed deposit accounts; personal, home, school fees, residential property investment, and business loans; insurance premium funding; equipment finance; overdrafts; and bank guarantees products. Further Reading Five stocks we like better than Kina Securities The Man Who Predicted the iPhone Says Buy These 3 Companies Read this or regret it forever Unlocked: Elon Musk’s Next Big IPO This makes me furious Buffett, Gates and Bezos Quietly Dumping Stocks—Here’s Why