‘Cautiously optimistic’: BSP CEO sees improved conditions as Papua New Guinea’s resources projects ramp up


How does Papua New Guinea’s largest bank see the outlook for business this year? In this exclusive interview with Business Advantage PNG, BSP Financial Group’s CEO Mark Robinson assesses the trends, risks and opportunities, and how factors such as foreign exchange and a devaluing kina will play a part.

BSP Financial Group’s Mark Robinson. Credit: BSP

Business Advantage PNG (BAPNG): What are your expectations for group performance in 2024?

Mark Robinson: We are cautiously optimistic that 2024 will see improved economic conditions, with Porgera re-opening in December 2023 and Papua LNG’s final investment decision (FID) expected later this year.

These large extractive projects are critical for PNG’s economic growth and their flow-on impacts for PNG businesses will be profound. It’s essential that all levels of government work together to bring this to fruition for the collective benefit of PNG and its people.

Among the most encouraging signs are: higher hotel occupancy rates, fixed-wing and rotary-aviation contract tenders, road construction, restocking and rebuilding of facilities impacted by last year’s unrest.

“With availability of foreign currency volatile in 2024, it’s critical that customers place FX orders as quickly as possible, with correct documentation, to avoid any unwanted delays.”

Major risks in our view include: delays to TotalEnergies’ FID, access to human capital and talent retention, political instability and law and order, availability of FX, ongoing kina devaluation lifting inflation or the floating exchange rate.

BAPNG: What changes is BSP planning for the year ahead?

Mark Robinson: BSP implemented its new core banking system in April 2023 and following a period of post-implementation challenges, the system is now operating in a stable manner.

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The implementation of our new system has enabled us to focus on the modernisation of our service offering to all our customers. The optimisation of our digital platforms will continue in 2024 which will provide businesses with online payment capabilities, particularly in view of the cessation of cheques.

Flexible banking arrangements and targeted measures to address branch queues are also being implemented to provide a more seamless experience for customers.

BAPNG: What are your expectations for foreign exchange availability?

BSP’s foreign exchange outlet at Port Moresby International Airport. Credit: BAI

Mark Robinson: We expect the structural imbalance between foreign currency demand and supply to continue. The re-opening of the Porgera Gold mine and FID will reduce the FX imbalance but not fix it.

Excluding increased Bank of Papua New Guinea (BPNG) intervention, FX inflows grew by only 3 per cent in 2023. BPNG will continue to intervene in 2024, perhaps more regularly than last year, and focus on reducing outstanding import and service orders, however FX turnover is unlikely to vary substantially from 2023.

Under the “crawling peg,” the kina will continue its gradual depreciation against the US dollar by about 0.4 per cent per month, or 5 per cent per annum. A larger risk will be strength in the cross currencies, particularly the Australian dollar, on growing expectations that inflation has peaked and rate cuts are likely from mid-2024.

With availability of foreign currency volatile in 2024, it’s critical that customers place FX orders as quickly as possible, with correct documentation to avoid any unwanted delays.

BAPNG: What is the outlook for BSP’s loan book in 2024?

Mark Robinson: The loan growth outlook for 2024 is positive. Both [resources] projects will create lending opportunities with landowner companies and PNG businesses supporting the main engineering procurement construction (EPC) companies appointed for various components of these major projects.

“I see a strong uplift in business banking for SMEs, which remain under-serviced by all financial institutions”

Key sectors to benefit will be transport, HR and employment services, air freight and logistics, marine transportation, autos, hotels and restaurants, IT services and telecommunications.

There could be a significant construction spike if the rebuild program [after the January Port Moresby riots] is supported by a government relief package. Construction and development investment could exceed K1 billion.

I see a strong uplift in business banking for SMEs, which remain underserviced by all financial institutions, and BSP is best placed given our partnership with the government’s SME Credit Enhancement Scheme Loan.

BAPNG: How is BSP helping to bring financial services to more Papua New Guineans?

Mark Robinson: BSP is continuing to embrace and invest in digital banking solutions, mobile banking, and other financial technologies to significantly expand the reach of financial services. This is crucial in areas where traditional banking infrastructure may be lacking. Our branch footprint, especially in rural and underserved areas, has enhanced accessibility for people who may face challenges in reaching urban centers.

BSP’s financial literacy programs also empower individuals to make informed decisions about their finances and our support of SMEs plays a vital role in uplifting local economies..

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