ANZ Bank hit by PNG crises

EVEN the banks are finding it tough going in Papua New Guinea. ANZ banking group (PNG) Ltd has released its annual report, which shows a loss after tax and extraordinaries for the year to September 30 of k 5.67 million (SUSS.7B million), compared with a profit of k 2.36 million the previous year.

This included write-offs associated with the purchase last July at a time when PNG’s economy was rapidly deteriorat ing of Niugini International Bank Ltd for k 4.5 million.

Chairman Doug Watson said the bank had faced the economic recession in Papua New Guinea, as well as restricted lending growth, higher security costs and increased numbers of non-performing loans. Papua New Guinea also had been hit by the Bougainville mine closure, falling agricultural commodity prices and lower production levels.

“The law and order situation ... if not reversed, could become a major barrier to new foreign investment,” said Watson.

“All these factors have combined to confront the government with its biggest crisis since independence.”

The bank made a pre-tax profit of

k 1.76 million, but against this there were abnormals 0fk3.75 million and extraord inary items of k 5.93 million. Of the total bad debts of k 4.04 million, the Arawa branch on Bougainville island accounted for 53.72 million of the sum written off.

Debt provisions were increased from k 917,430 to k 6.98 million.

The acquisition costs and other extra ordinary items associated with the pur chase of Niugini International Bank had all been included in the year’s accounts, Watson said. The acquisition had in creased the lending portfolio from k 123 million to k 161 million but profitability had been hit by the considerably higher incidence of non-performing loans.

Watson said the gulf crisis, which had led to higher fuel prices, would have a direct flow-on effect to already troubled businesses and private borrowers.

The Papua New Guinea Bank’s inter national operations showed strong growth, helped by the capital inflows for oil and mineral developments. But ANZ was expecting thai competition in this sector would become tighter as other banks sought greater shares of these inflows, he said. □