BSP Financial Group has reported a robust 12.9% increase in net profit for 2025, underpinned by strong revenue growth and strategic restructuring, including converting its Fiji branch into a wholly owned subsidiary.
- Revenue up 14.4% to K3,407 million
- Net profit rises 12.9% to K1,172 million
- Net interest margin improves by 19 basis points to 6.41%
- Fiji branch converted to wholly owned subsidiary
- Operating expenses increase 15.4% due to inflation and technology investments
Strong Financial Performance Amid Strategic Restructuring
BSP Financial Group Limited has delivered a solid full-year financial performance for 2025, reporting a 12.9% increase in net profit to K1,172 million and a 14.4% rise in revenue to K3,407 million. This growth reflects the Group's expanding commercial banking and financial services footprint across Papua New Guinea and the South Pacific.
The Group’s net interest income rose by 9.1%, driven primarily by higher returns from investment securities and sustained excess liquidity throughout the year. Notably, the net interest margin improved by 19 basis points to 6.41%, signalling enhanced profitability from core lending and investment activities.
Digital Growth and Fee Income Boost
Fees and commission income grew by 14.5%, supported by increased transaction volumes across BSP’s digital channels. This uptick underscores the Group’s successful push towards digital banking adoption, which has also contributed to a 28.7% rise in foreign exchange earnings, buoyed by stronger commodity prices and international trade activity in the region.
Insurance operations also contributed positively, with net insurance income increasing by 10.3%, driven by higher investment returns from BSP Life entities in Fiji and PNG.
Operational Costs and Strategic Investments
Operating expenses rose by 15.4%, reflecting inflationary pressures on salaries, increased headcount to support the Modernising for Growth program, and higher technology investments. Non-salary technology expenses surged 27.7%, highlighting BSP’s commitment to digital transformation and operational efficiency.
Additional costs were incurred due to increased card-cloning incidents and operational losses, particularly in PNG, which contributed to a 62.5% rise in non-lending losses. Despite these challenges, the Group maintained a disciplined cost-to-income ratio of 42.9%.
Fiji Branch Conversion and Capital Strength
A significant structural change during the year was the conversion of BSP’s Fiji branch into a wholly owned subsidiary, BSP Financial Group (Fiji) Pte Limited, effective 1 January 2025. This move aims to enhance operational efficiency and regulatory compliance in line with global banking practices. The conversion transferred net assets of K714 million and goodwill of K18 million to the new subsidiary, generating a tax benefit of K28 million at the Group level.
Capital adequacy remains robust, with the Group’s capital adequacy ratio improving by 20 basis points to 26.4%, well above regulatory requirements. The Group’s strong capital position supports ongoing lending growth and shareholder returns.
Lending and Deposit Growth
Gross loans and receivables increased by 7.6%, driven by recovery in Pacific markets outside PNG, where both retail and corporate lending expanded. Meanwhile, deposits grew by 17.4%, strengthening the Group’s funding base and lowering the loans-to-deposit ratio to 53.0%, providing a solid platform for future credit expansion.
Shareholders benefited from a 13.3% increase in dividends, with total dividends for 2025 amounting to 188 toea per share, reflecting BSP’s confidence in its earnings sustainability and capital management.
Bottom Line?
BSP’s 2025 results highlight resilient growth and strategic realignment, setting the stage for continued expansion in the South Pacific banking sector.
Questions in the middle?
- How will BSP leverage its new Fiji subsidiary structure for regional growth?
- What impact will rising operating expenses have on future profitability?
- How might evolving economic conditions in PNG and Pacific markets affect lending momentum?