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By Baeau Tai

PORT MORESBY, Papua New Guinea (The National, Sept. 13) - Bank South Pacific recorded an operating profit of K76.27 million [US$26.6 million] for the first half of this year, a 13.36 percent improvement on the K67.28 million [US$23.5 million] in the same period last year.

[PIR editor’s note: According to its website, Bank South Pacific is Papua New Guinea's largest retail bank with over 35 branches and in excess of 2 billion kina(US$700 million) in assets ]

BSP chairman Noreo Beangke said after-tax profit for the interim period was K52.15 million with recent share prices on the Port Moresby Stock Exchange valuing the bank at more than K1.5 billion.

Mr .Beangke said prospects for the second half were "positive", leading to expectations that BSP could expect another record profit in the current year.

BSP’s total assets have grown to K3.63 billion in line with significant growth in the Papua New Guinea banking system.

"This growth is largely the result of the ongoing favorable economic conditions and the 2000 financial reforms that underpin the financial system," he said.

Total assets had grown by K680 million during the half-year, equating to a growth rate of 23.05 percent for the period.

BSP, PNG’s leading bank with a 52 percent market share, is well capitalized in terms of international standards.

Beangke said: "The capital adequacy ratio of 29.10 percent as at June 30 confirms the bank’s strong capital position."

The improved profit result was a result of operational cost efficiencies with the bank’s cost to income ratio falling from 54.97 percent to 52.06 percent. This compared favorably with regional banks in Australia.

Growth in loans and receivables from K873.54 million to K972.04 million confirmed steady loan demand against a backdrop of low interest rates and adequate domestic liquidity.

Beangke said recent BSP share trades on PoMSOX at K3.50 represented a significant increase from the K3.20 level at the beginning of this year and market capitalization now exceeded K1.5 billion.

Beangke said BSP expects another good year of rationalization and vibrant growth.

"Current indications are that the 2006 profit result is expected to exceed the original budget projections adopted by the board," he said.

September 14, 2006

The National:

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