In this exclusive interview, Bank South Pacific’s Chief Executive Officer, Robin Fleming, speaks with Business Advantage PNG about the real impact of Papua LNG and P’nyang, how power cuts are affecting mobile banking and the prospects for business in 2020.

Bank South Pacific staff helping customers open accounts. Credit: BSP/Fcebook

The proposed Papua LNG and P’nyang projects – the latter is still being negotiated with the government – will not have any ‘real impact’ on PNG business for at least 12 to 18 months, Bank South Pacific (BSP)’s Chief Executive tells Business Advantage PNG in an exclusive interest.

He expects 2020 to be a relatively slow year, particularly for lending.

‘It’s been pretty flat across all sectors. In terms of overall bank lending, growth has been relatively minimal and the majority of the growth has probably come from BSP – more so than the other banks.

‘Port Moresby always seems to be able to create its own little microcosmic economy and activity continues regardless. Lae would certainly have less confidence than elsewhere and then, when you consider some of the other provincial areas, it’s going to be dependent on what the agricultural sector has been doing.’

How power cuts are affecting banking

Fleming says BSP’s First Home Ownership Scheme, which is valued at K250 million, is progressing well. The bank conducted a review of the scheme, assessing it against a risk adjusted return on capital, the bank’s own internal liquidity ratios, and interest risk management ratios. BSP decided to continue to offer the scheme, ‘because it was successful and right.’

‘There’s a lot of work which still needs to be done on infrastructure to give a customer the confidence that their electronic banking solution’s going to work first time, every time. In the absence of that they will be cash dependent.’

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But Fleming says a continuing operational challenge is long queues at the branches. ‘You’re dealing with a lot of technology issues; you’re dealing with telecommunications. PNG Power has had outages across the country.  Some of our branches are going through sustained load shedding.  One of the branches I was at a couple of weeks ago is on three hours on, then four hours off.

‘At Kokopo, for example, they’ve been on very long load shedding which puts a lot of stress on BSP’s generators. If an EFTPOS terminal isn’t working, then customers revert to the tried and trusted queue.’

Bank South Pacific’s Robin Fleming. Credit: BAI

BSP has approximately 300,000 customers. It does 13 million electronic banking transactions a month, seven million of which are executed via mobile banking.

‘We’re trying to promote as much as possible people getting into mobile banking. There’s a lot of work which still needs to be done on infrastructure to give a customer the confidence that their electronic banking solution’s going to work first time, every time. In the absence of that, they will be cash dependent.’

‘Personal loans probably chew up around about 20 to 30 per cent of a queue. We want to get some solution so that people can find out the balance of their personal loans using a USSD mobile phone without having to come into the bank.  Some of our personal loan officers will say to our customers: “You need to reduce your loan by 50 per cent before you can come back for another one.” We get people coming into the branch just to ask what the balance of their loan is to see if they qualify for a top-up.’

The year ahead

BSP acquired the banking operations of Westpac in Samoa, Cook Islands, Solomon Islands, Vanuatu and Tonga four year ago. Fleming describes Samoa as a ‘shining star’ this year.

‘The Cook Islands, which is the smallest of our countries with only 10,000 people, has also performed well for the size of their GDP, the number of customers, and the size of the operation.’

BSP plans a system upgrade over the next year, which will put all seven markets (including Fiji) on to the one system.

‘We’ve got Vanuatu targeted for October 2020 and PNG at this stage we’re looking at the first half of 2021. It is a significant project and requires a lot of effort to convert seven countries in the space of two years.’