Thank you for standing by, welcome to the Kina Securities Limited Full Year Results Ending 31st December 2022. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by 1 on your telephone keypad. I would now like to hand the conference over to Mr. Greg Pawson, Managing Director and CEO. Please go ahead.
Thank you. Good afternoon, everyone, from a very stormy and wet Port Moresby in PNG. I've got Johnson Kalo as CFO with me and our investor relations team with Sam Miller also online. I'll take the ASX announcement and investor presentation pack uploaded yesterday as read. We'll take this opportunity really just to give a high-level overview of the year and provide some additional context to the results and most importantly, the year ahead. It's a very good narrative for 2022 and a consistent story of steady growth as we closed out year three post ANZ end of our 2025 strategic plan.
2022, it's fair to say was a challenging year, beginning with a return to the new norm post-pandemic, a long drawn-out PNG election process, impacting domestic business confidence to a certain extent, public sector capacity and supply chain constraints making it even harder to do business. However, we navigated through these market distractions as best we could. Pleasingly, we were the best-performing bank in PNG for the 2022 fiscal year for revenue, NPAT, deposit lending, digital, and customer growth. Just walking through several of the key highlights. Revenue, firstly, up or close to 10%, at PGK 369 million. That was PGK 35 million up on the previous year and almost double that of the 2020, 2021 growth of PGK 19 million.
This was attributed largely to net interest income, which was up 5%, investments up 19%, and fees and commissions up 35%. Overall, just shy of the market expectation of PGK 378 million for two main reasons. FX revenue was down 7% year-on-year, despite transaction volumes increasing by 17%. I'll talk to this further shortly. The slower conversion of business loan growth, which was largely booked in the third and fourth quarters post the PNG election outcome, with the Marape Government reelected for a further term, which did put some business confidence back into the local market.
One of the highlights from the results is that over the past five years, we've transformed our revenue base to better mitigate our strategic risks and to achieve a good mix, with non-interest income now contributing 50% of our total revenue, in accordance with our broader plan to diversify our revenue streams. Our wealth businesses also are continuing to post good growth rates and now contribute 15% of the organization's total revenue. Our Funds Administration and Funds Management contracts with the major super funds here in PNG were also recently extended for an additional three-by-three-year term. OpEx was 15% up due to higher than budgeted admin costs, and these were largely associated with ICT-related vendor and software costs. Some of our software licensing expenses were up 30% year-on-year.
Our objective to strengthen infrastructure, particularly around some of the cybersecurity issues that we've seen happening in Australia. Although it was up 15%, it was actually within market expectation, with underlying NPAT landing at around PGK 106.1 million, and that was up 10.8% on 2021. Cost to income was marginally down from the first half, but impacted as forecast higher revenue growth, which would have seen us land at about 54 basis points. That's a key focus for the organization driving and continuing to drive an organic growth positive jaws for 2023. That is revenue growing at a faster rate than our cost base.
We believe this is achievable given our regional expansion plans over the coming year and giving us the ability as well to continue to invest in those growth opportunities and converting them quickly. FX revenue unfortunately stalled in Q4 with larger than forecast Visa settlements, which are in lower margin USD and which are subjected to regulated trading banks. That was due to strong customer and growth usage offshore. We finished down PGK 7 million on 2021, albeit customer transaction flows were up 17% against market growth of 10%. We're still continuing to chip away and grow market share due to new customer acquisition, both on supply and demand. The structural issues regarding supply were challenging at times, but particularly during the election period.
Although BPNG did intervene more frequently in the second half, our mix of trades shifted to the lower margin USD as opposed to higher margin AUD, pounds and the Euro. This is primarily due to growth in customer numbers using our cards offshore, which on the flip side is very pleasing. I mean, we onboarded over 30,000 new customers during the course of the year. It does evidence strong new customer growth and particularly our targeted affluent customer segment, which is working and paying dividends. It's fair to say, though, that impact did take us by surprise, and it's a structural issue that we have successfully mitigated and addressed early in 2023 through our correspondent banking arrangements with good upside and profitability for the year ahead.
Had the currency mix been the same as 2021, we think we would have comfortably hit our forecast budget for last year at PGK 71 million. That's again another key priority for us this year, is restoring growth in FX revenues. Investment income, pleasingly, was up 19%, and that was largely due to improved yields on government securities and Treasury Bill investments. However, this won't hold for 2023 as those yields have effectively halved, and it will be certainly critical for us to deploy certain liquidity to new lending, hence our expansion plans into regional PNG, which I'll talk about shortly. Overall, lending's up close to 11%, and that was underpinned by the commercial segment at 10%, SME at 25%, and home lending at 18%.
Net growth of PGK 220 million onto the balance sheet, slightly behind the PGK 300 million that we had in 2021. Overall down due to slower system growth, particularly in the commercial segment over the first half, as I said, largely due to the final stages of the pandemic, the drawn-out national election and some issues with public sector capacity and efficiency. However, the momentum for us was restored in the back end of the year, with over PGK 300 million in new loans settled, and syndicated loans of PGK 155 million committed in undrawn moving into the 2023 financial year. We have a solid pipeline.
Moving forward, approvals of around PGK 350 million. We're anticipating for those to draw for the first half of 2023. Hopefully bucking that seasonal trend of a relatively flat first half start to the year. Interestingly, the majority of our loan lending, new lending activity is still from NCD, the National Capital District in Lae. The investment we're making in expanding our business banking footprint into a further five key regional provincial centers early in 2023 all bodes very well for our growth prospects this year. A key benchmark to test our performance is against GDP growth, which was 3% in 2022, and business lending system growth of 2% in 2022. For Kina to achieve 10% overall is a good result and something that we're pleased with.
Again, as I said in my opening statement, the strongest of the four commercial banks in PNG and has resulted in us lifting our market share to circa 16%. Deposits growth was very strong at around 28% and mostly in low-cost transactional deposits due to new customer transaction flows and increased account activation. Our NIM stabilized at 600 basis points, and that held flat from the half year. There's no real pricing pressure on NIM at the moment due to the extent of domestic liquidity. The only downside is the government securities and treasury bond yields, which have fallen, but will be important for us to ensure that these excess deposits are deployed at higher margin lending rates over the course of the first half.
Commercial customer numbers were up 17%, and personal customer growth was up 19%. We onboarded over 30,000 new customers, and this paralleled the growth by endorsing our 95% customer retention target, which we achieved for the year. Also commensurate with this growth account and online activations for both retail and corporate customers were up over 100% year-on-year in accordance with our digital strategy, and this has been a key focus of our customer-facing teams across the business. Visa card issuance was up 152% year-on-year. Our digital channel growth was up 88% due to our expanded EFTPOS fleet and terminal choice strategy.
We've grown our market share in the digital space from a 0 base three years ago to 25% today, and still with considerable upside as we move through 2023. Our MyBank and financial inclusion partnership performed exceptionally well. We opened our first co-branded branch in Alotau in 2022. We established a formal agency agreement which enables Kina Bank to open MyBank accounts on their behalf and facilitate online transfers enabled between the two banks here domestically in PNG. MyBank, pleasingly, over the course of the year, onboarded over 40,000 new customers in 2022 as well. Between the two organizations, we're now reaching in excess of 700,000 Papua New Guineans.
On the risk front, 2022 was a period of reconnection with our risk management framework and alignment to 11 material risks that we believe drive Kina's renewed business model. Traditionally, our focus on risk has used a standard modeling to assess the impact of threats, whereas our growth and strategic intent would lean towards considering a higher level risk maturity model for our business, which we're well on the way to achieving. The business did demonstrate its resilience by delivering in the preceding pandemic, the heightened geopolitical risks, including the PNG election and of course, the Russian aggression in Ukraine, which has created global volatility, particularly around supply chains. A challenging landscape with increased financial market risk across the board that we have fortunately been able to successfully defend.
With respect to the PNG economy, the prospects for a stronger 2023 are baked into our forward forecast. The Prime Minister's reference to the four Ps plus W, which stands for the five major resource projects, that the government is committed to and an investment of in excess of $30 billion. Porgera, P'nyang, Papua, Pasca A, and Wafi- Golpu, in the petroleum and LNG space. The PNG government's budget announcement is that they are very committed to those projects and starting to get traction on them over the course of the year as well, which all is well again for our growth prospects moving forward.
The PNG government's budget announcement of plans to increase the corporate tax rate for the commercial banking sector by 50% to 45% for the 2023 fiscal year only is being violently challenged by the sector, including Kina. It goes without saying that we've been actively lobbying against the proposal through a number of means, including the media, the Business Council of Papua New Guinea, the Prime Minister's office directly, several key ministers, treasury, and the International Monetary Fund, who have now set up a formal office here in PNG. Citing several critical unintended consequences, including diversion of capital, instability, and lack of competition in the sector as a result of a higher tax. Support for more consultation is encouraging, and there's been some very positive developments actually over the last week, which may lead to other options being explored and pursued.
In the meantime, we have developed, though, a robust plan to mitigate any potential impact as best we can, including growth, revisiting our legal structure, M&A opportunities, and offshoring in accordance with our Pan Pacific aspirations. At the same time, and importantly, recognizing and taking advantage of the strong organic growth opportunity which continues to prevail for us here in PNG. Before I finish, I thought it would be good to just reflect the results, against our 2025 strategic pathway and outline some of the exciting digital initiatives that we have launched and that we have in progress.
Looking at our journey, effectively from 2020 to 2021, our objective to be your trusted bank through traditional banking and digital banking, which was very much about self-service, growing, digitizing, growing banking market share, digitizing our core business, customer solutions, testing and learning from strategic partnerships in the market, and playing around with some innovative business models. We're midway through the second phase, 2022 to 24, your trusted financial services partner, which is again about traditional banking, digital banking, investment banking in our Banking-as-a-Service partnership platform, along similar lines to the strategic partnership that we have with MyBank. Really, that is about partnering to create and capture value through business to business and business to consumer.
By 2025, your trusted partner in the Pan Pacific Region, a fully diversified investment bank convening a marketplace of assets, capabilities, and services, again, through business to business and business to consumer. Our digital footprint has been a huge focus, and it is a portfolio that serves multiple purposes. We've now got revenues around PGK 54 million actually. PGK 54 million through our digital and channels portfolio, which include digital payments, instant payment gateway, eKYC, digital identification, partnerships in blockchain, cloud, our partnership integration and API management platform, which is being fully implemented over the past two years. That, as I said earlier, all is well for our Bank-as-a-Service platform, which we're in the process of rolling out.
Several sort of key digital platforms that we have in play at the moment, WhatsApp Banking, which we talked about in the investor presentation. It's a telco disruption really of the banking value chain, and to take the bank to where customers interact socially and professionally. WhatsApp is a very well-utilized channel here in PNG, among the highest, I think, usage rates in the world. The second is Exchange, our eKYC enabled retail FX product, which is now in the third phase of testing. Following the recent approval of the eKYC platform by BPNG, we are now able to deploy that at scale in 2023 as an independent retail FX product powered by Kina Bank. Xero. We were the first bank in PNG to integrate with Xero bank feed, which has now become critical to our suite of SME digital services.
We're in phase I of that rollout, with phase II and III to occur in the first half of this year. Phase I of the Kina Wallet will launch this half in 2023, PNG's first digital wallet. It enables Kina to occupy the digital wallet real estate usually filled by Apple and Google in mature markets. Loyalty programs, discount cards, and partner offers can follow in later phases of that. Pei Beta is in phase II of testing. That's PNG's first independent bill payments platform that customers of any bank can use. It has the potential, which we're very excited about, of becoming the BPAY of PNG.
Through a strategic partnership with NiuPay, we offer e-commerce for the PNG government sector. Kina's partnerships with NiuPay have enabled capture of an estimated 60% market share in internet payments and a foothold in digitization of government services, including the Internal Revenue Commission, the Lands Department, and the Immigration Department as well. Finally, Pronto, which is really the signature strategic partnership backing into our EFTPOS terminal choice strategy. In partnership with Pronto, Kina is the only bank in PNG to successfully deploy integrated POS scale. The key capability behind digital growth of 88% year-on-year. As I mentioned earlier, we've considered side determinant of the largest retailer in PNG. Brian Bell recently said Kina Bank did in three days what took BSP three years or failed to do or deliver in three years.
We're really excited about that terminal of choice strategy. That just gives you a bit of an overview of what's happening in the digital footprint space, which will be coming to fruition some of those already over the course of this year as well. To finish, in closing, our focus for 2023 continues to be very positive and aligned with our five strategic priorities, growth, resilience, service excellence, dynamic people, and sustainable communities. The most exciting of these initiatives is the expansion of our business banking franchise in regional PNG, our new private and corporate advisory teams, and the delivery of our eKYC program, which I've just outlined just for you, which in conjunction with the provident funds will enable us to significantly speed up new customer growth while digital onboarding.
In Exchange, which is modeled off global FX, retail FX payments platforms, Revolut and Wise, will be a key enabler for good growth this year as well. We're also expanding and will be expanding our Banking-as-a-Service platform to other smaller financial services organizations in PNG, recognizing the success to date of our MyBank partnership. A lot in there. Thank you for listening. I'll wrap it up there. I've got Johnson Kalo, our CFO, with me. I think now we're in a position to open up for questions.
Thank you.
Thank you.
If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on speakerphone, please pick up the handset to ask your question. Your first question comes from Glen Wellham with MST Financial. Please go ahead.
Yeah, well done on the results, guys. My first question on capital adequacy, 22.5%, it's down a little bit from previous year and the previous year before that. Is that something you wanna continue to bring down? Then what level would you be comfortable at? I mean, obviously it's quite a high level at the moment. Thanks, Glen. I'll hand over to Johnson just to respond.
Yeah. Thanks for your question, Glen. I think we're sitting at a comfortable position given our the risks that we face in the market at the moment, as well as the growth options that we do need to consider in those conditions. 22% is, it is high, it is coming down. I do think it's probably a safe position to be. We can probably squeeze a few more percentage points coming down, but we would like to have a good sort of solid foundation and reserve to take opportunities as they do come.
Yeah. The only thing I would add to that, Glen, is, you know, we made a commitment when we did the capital raising a few years back of AUD 80 million to return EPS and return on equity, which we've achieved in the timeframe that we set, which was 18 months. It'll be important for us to deploy some of that capital into the growth that we will see, I think, as a result of some of these major resource projects coming online, particularly in regional PNG, the Highlands Highway precinct, which is hence why we're, you know, expanding our business banking footprint in those locations. We wanna take advantage of that.
The only other thing I'd say, we had a board meeting actually earlier this, early last week, is to determine what would be a comfortable level for us in PNG. If in fact the tax rate hike for the 2023, this fiscal year does go ahead, we may seek to reinvest some of that capital elsewhere. There are, as a result of that, some options that I touched on in the presentation that we're considering at the moment. Great. Thanks for that. I suppose, from an Australian perspective, some of the growth numbers are astounding, when you look at them. SME growth in particular, 25% growth in revenue last year. What can we expect going forward?
Can you give us some color on, is that mostly systems growth or is it, are you taking market share or, can you give some sort of insight into why that division's growing so strongly?
Yeah. It's largely, it is largely attributed to market share gains. We've now surpassed Westpac as the second most profitable bank in PNG. Clearly there's a big gap still between us and BSP in that respect. We're eager to continue to close by being, you know, a commanding and competitive challenging brand. It's fair to say Westpac's not really doing anything at the moment, and there's not a great deal left on their balance sheet here in PNG that would appeal to us. Certainly BSP is a target.
Again, I think we're well placed for good, strong growth in SME and also the Agri Sector, which the government is very supportive of from a policy perspective. Again, you know, there's some possibility for tax concessions in relation to those two segments where we seem to be, you know, aggressively supporting them. With the proposed regional expansion into Kokopo, Lae, Goroka, Madang, and Mount Hagen, we will have business bankers on the ground that are able to make decisions and will have the discretion to make those decisions. We think there's a considerable opportunity for us to take share away from BSP. I think, over 2023, 2024, GDP growth is forecasted around 5%, 6%.
There will be a degree of upside in terms of system growth generally, but, you know, that refinance opportunity for us is still very advantageous.
Great. Thanks for that, and well done again.
Thank you.
Your next question comes from Charlie Green with Hunter Green. Please go ahead.
Hello. I think this is a first for all of us, probably. just to follow up on that capital management or capital question previously. is the second half dividend, the payout ratio fell from 94% to 75%, if I've got that right. Is that like a super bullish signal on account of the, you know, you're holding back capital for growth? Or is there something else going on there with that payout ratio?
No, I think that's a little bit of a signal just to try and stabilize, again, our capital position. We did have a couple of years prior to this where we were well outside our dividend payout ratio range, and we've sort of just rationalized that a little bit. We are still paying PGK 0.10 dividend per share for the full year, Mark. I think that sort of neutralizes that impact.
Okay. Thank you. Just, thanks for the color on that WhatsApp observation. Is that because WhatsApp's got end-to-end encryption? Does that help explain its high take-up in PNG?
Yes. The other element, though, is that there's still a large proportion of customers here that use USSD platforms. In other words, they're not using our smartphone mobile app because of the cost of data, which is comparatively high in PNG. It is coming down, fortunately, with the advent of the Coral Sea Cable, thanks to the Australian government. It still does mean that a lot of consumers go for, you know, what you would compare to Australia, as phone banking, through that USSD platform, which WhatsApp plays to. Yeah, the encryption is an element of that.
The other main objective for us is we have another platform called Kina Konnect, which, you know, the telcos here, Digicel, and to a lesser extent, Bmobile, clip the ticket for every transaction that goes through. By migrating those customers onto WhatsApp, there's a financial benefit, a commercial financial benefit for us, which we're keen to leverage.
No worries. Thank you. Just my final question. A lot of other financials in Australia at least had their results briefing on the day of the result. I actually tried to dial in yesterday, assuming that it was gonna be yesterday. Is there something that sits behind that 24-hour delay on your results presentation, please?
No, not in particular, other than I was in transit yesterday, traveling back from Port Moresby, which was a contributing factor. Normally we work in the afternoon of the date of the announcement. That was my only delay.
Okay. No worries. That's it from me. Thank you.
Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Richard Coles with Morgans. Please go ahead.
Well, look, good day, guys. Thanks for the call. Good day. How are you going, Greg? Just a quick one. Just wanted to ask, you know, the pathway on growth in the digital growth areas has been really, really strong. You know, when will that max out? How long can you continue to deliver sort of really strong growth rates in that area? You know, I'm imagining that things, there's only a finite length of share you can take in things like EFTPOS and those sort of things. Just understanding how you see that trajectory in that, what's been a really strong growth area continuing for you over the next few years.
Look, I think the forward growth prospects continue to be really strong. I mean, you know, when we're using those percentages year-on-year, it was off a fairly low base to begin with. In fact, it was zero base three years ago 'cause it, this all came into being after we acquired the ANZ businesses, as you know. The key drivers for us in terms of continued digital growth are more customers at scale, and the eKYC platform is the key enabler for that. We're really excited about that and the partnership with the Provident Fund, because when you think about it as we're fund administrator, we have access to data effectively on every company union that's employed and every employer.
It's gonna be critical for us to leverage that and convert as many of those into new-to-bank customers, and eKYC will be the facilitator for that. Of course then, you know, that transfers into activity. Using our digital channels will be a big part of that. You know, the Kina Bank franchise itself, has 230,000 customers. In a country with a population of latest estimate, 12 million, I think UNDP are estimating 17 million because there hasn't been a census here for almost five years. There's a considerable opportunity moving forward. I think the other, you know, piece to consider here too is that still 70% of the country is effectively unbanked. As more come into the formal sector, that presents upside for us as well.
We really only have one major competitor in that space at the moment, which is BSP. The Westpac Partners platform is probably a decade out of date, ANZ just don't compete in that space because we're a corporate insto bank here in PNG. Even some of the smaller organizations that have been granted provisional banking licenses like Credit Corp and TISA, will have to go through huge investment programs before they can even begin to have an impact. You know, we've had a considerable CapEx spend on our digital channels over the past three years, which is now coming to fruition.
I think the upside, which is still very, very positive, the terminal of choice play, it's not something that you're familiar with in Australia, but many merchants here have a terminal for every bank. They don't need to do that. Part of the product that we have has built in redundancy to ensure our terminals are working 98% of the time. Through the relationship that we have with Pronto, that means that effectively they can just use our terminals. That's where we're starting to get a lot of upside. In fact, close to 60% of our transaction volume through our terminals is coming from other bank customers. Plenty of upside.
Just a question on that, Greg. It's obviously a bit more difficult to see with a bank because we can't see so easily the CapEx you're spending on that area. Would that business be accretive to the group ROE longer term? Obviously, the lending margins you make are very, very strong, but just understanding the breakdown of the non-bank income and what that will mean for group ROE as it builds out.
Yeah, absolutely. It's a similar story, which is to, you know, FX revenue. It's effectively straight to the bottom line. The cost we serve for that channel, aside from the outlay of the scheme, which for us at the moment is Visa, is very profitable.
Okay. Just a second question. Obviously, the margin, the NIM was a bit lower than expected. I think you mentioned things like deposits and the earnings on government securities coming down. Just your comfort level in getting that back to 6%-8% this year, sort of that target margin and how you'll go about that?
Yeah. Look, I think we're playing a conservative card in terms of NIM. In 2022, there are a number of factors associated with that. In the first half, it was more about wholesale deposits for FX flow. You know, the major multinationals here are very liquid. They've got a lot of kina. They wanna park it somewhere. There's an offset there to say, "Well, you know, we've got a lazy PGK 30, 40 million, if we give that to you in advance of some FX flow, what rate can you give?" That pressure point lessened in the second half, we were able to kind of hold our position. Is there upside in NIM? With what's going on with T-Bills and government securities at the moment, I think it's gonna be relatively flat.
There might be 10, 20 basis points in it for the first half of this year. What will be critical for us is deploying those excess deposits into new lending and into the provincial locations because they're the sorts of, you know, transactions that fall within the kind of PGK 1 million, PGK 5 million, PGK 10 million, PGK 15 million range that are not price sensitive at all. The price sensitivity is really in the corporate sector, and we're not at all a lender to the corporate sector in PNG. If we are, it's via a syndicated facility. We've got a couple of those on our books at the moment, but we don't have a great deal of price pressure in that space. I know, Johnson, if you're monitoring this daily. Is there anything you wanna mention in that respect?
Yeah. No, you're right, Greg. The trends are exactly that, and especially in that government paper space. The lending is the one area where we can get some upside on the NIM. The other one is, I think we've positioned our deposit book a little bit better to go for that larger lending growth. We will have a little bit of flexibility in managing our funding and managing our funding costs as well. I do think there is some way to recover that NIM.
Okay. Just one last one, Greg. Obviously the bad debt profile is been a real strong area. Bad debt's coming down. I mean, your bad debt numbers are very good, even sort of versus Australian banks. What's sort of been driving the improvement? Are there any areas you're concerned about going forward? I guess, you know, in a worsening global economic environment, that trend's pretty impressive.
Well, it's interesting. We're not seeing the, you know, upward cycle in interest rates that you're experiencing in Australia at the moment. We unlike, you know, we self-fund, for a start, all of our funding comes from our deposit base, and you can see that in our deposit to loan ratio, which is very conservative at the moment. We don't price off the equivalent of the RBA overnight cash rate, which is called the KFR, Kina Facility Rate here. That's sitting at about 3%. It has no bearing on how we price for our own internal indicator lending rate, which is really off cost of capital, cost of funds, and then there's a slight margin and then the risk margin on top of that.
There's no upward cycle, although in saying that, we did increase our indicator lending rate late last year by about 25 basis points. We're not seeing any real pressure to have to do that again in the immediate to medium term. I think that as a result, we're not seeing, you know, that pressure passed on to customers of having to fund payments based on higher interest rates. Look, if, if I'm completely honest, I think we put a lot of effort into our risk management practices, particularly through our recovery teams. We've got a very strong team now, which were built over the sort of latter half of 2022, and we had a considerable focus on our 90-day plus position, which we've improved markedly.
You know, that's a function I would say of, you know, just effective management at the end of the day. If you lose on those sorts of things, customer behavior starts to shift against us. We've got a fairly tight rein on that at the moment in terms of how we manage it. We've just had quite a big restructure of our business banking lending business, bringing all of the lending teams back together. Our management of things like, you know, annual and periodical reviews has improved quite markedly. We're also doing a considerable review at the moment of our the data that sits within our security register around collateralization. We actually think that there's some upside there that our current position with respect to bad debts is actually conservative. Thanks, Dave.
Do you have anything you want to add to that?
No, no.
Good.
Sorry, I'll fire just one more. Greg, you know, do you have any feel on when the tax issue might sort itself out as far as timeline? Have you thrown up the word alternatives? Is there any sort of things being mooted that you can sort of maybe mention that have been hypothesized?
Yeah. I sort of touched on them. I think firstly, the thing that you know, the PNG government will be very sensitive to is seeking to invest, and that's what I meant by the point about divestment into other jurisdictions. As you know, through our attempt to acquire the Westpac businesses in online, that's an intention of ours. Fiji is a destination for offshoring largely to help facilitate a marked reduction in our cost of income is high on our agenda at the moment. That's a topic very sensitive to the government here. Fiji has a corporate tax rate of 15%, for example. Singapore is 17%. You know, the offshoring of roles that we would otherwise perform here in PNG is very sensitive to the PNG government.
Our continued support, we do offer a very small concessional lending product that's new, that's been very successful. It's up to about 500,000 PGK. We put a tranche aside at PGK 50 million for that. The government wants to support us. They provide free funding to BSP and NDB and wanna bring us into that fold. I mentioned that there's possibly and this could be an opportunity for us, even if the tax increase for this fiscal year doesn't go ahead. There's some tax concessions around what we are planning to do in the Agri Sector, which the government's very favorable on as well. Johnson and the team are doing a lot of work around our legal structure.
One of the advantages that we have is we have other businesses as part of our diversification plan and Funds Administration and Care Firm that doesn't come under the commercial banking revenue. The IRC, the Internal Revenue Commission, the BPNG and the IMF are opposed to it, so we've been lobbying quite heavily with them to, you know, put their voice forward as well. We just heard yesterday we've been invited to an extended consultation period over the course of next week as well. The battle's not over, but, you know, I would like to say we are feeling a lot more positive, I think than we were a few weeks ago.
You know, if in fact it doesn't go ahead, I'm not sure that the government will make a formal statement with respect to that, but, you know, it could just be brushed under the carpet and go away. We have these consultations with Treasury every single year. Last year it was about putting in place deposits. I don't know if you remember in Australia years ago, we used to have a stamp duty on deposits. They were considering that, and you know, we successfully dismissed that. Jury's not out, but we're working hard to make sure that we get a favorable outcome.
Thanks, Greg.
There are no further questions at this time. I'll now hand back to Mr. Pawson for any closing remarks.
I think that's it. The full, fully issued on the ASX is very comprehensive. Of course Johnson and myself are open to any questions that you may have. You can reach out to us through our investor relations team. Thank you for your attention. It was a good year, 2022, despite some of the challenges. We're very excited about the prospects we have for the year ahead as well.
That does conclude our conference for today. Thank You for participating. You may now disconnect.