Thank you. Good morning, everyone, and thank you for dialling in to today's briefing on Kina Securities Limited half-year results for the six months to June 30, 2026.

My name is Ivan Vidovich, CEO and Managing Director of Kina Securities Limited. Before we begin, I'll draw your attention to the disclaimer on slide 2, which notes that this presentation contains forward-looking statements and is not financial product advice.

I'd encourage you to read it in full alongside today's ASX and PNGX announcements. I'm joined today by our Chief Financial Officer, Taiwo Fowowe, who will take you through our financial performance in more detail shortly.

Taiwo joined Kina as CFO earlier this year, bringing deep experience in finance, capital management, and governance from international banking markets. This is his first half-year results briefing with us, and we'll both be available for questions at the end.

Turning to slide 4, before turning to our results, I want to briefly set the economic scene, because it's relevant to how we'd like you to view this half and the catalysts for PNG's economic growth. The standout development during the period was progress on Papua LNG.

The state-led Development Forum opened in July, and project capital costs have been cut from around $18 billion to roughly $14 billion, materially improving the project's commercial viability. Final investment decision, or FID, remains targeted for the fourth quarter of this year, with 15 December set by the Minister for Petroleum as the current deadline.

While there remains the potential for this to be extended to around April 2027, this would still be comfortably ahead of the 2027 national election. We continue to see FID as the single biggest trigger point for a step change in PNG's medium-term growth trajectory, and we're watching it very closely.

On the domestic front, government has moved to cushion the economy from imported inflation, with a 1 billion kina fuel stabilization package holding pump prices at March levels. Around 60— around 630 million kina has been dispersed, by mid-year.

The Bank of Papua New Guinea has resigned— has revised its 2026 CPI forecast up to 4.3%, and we're watching El Niño-related dry conditions as a downside risk to mining export volumes at Ok Tedi and Porgera heading into the fourth quarter. On currency, the crawl-like arrangement for the kina remains the nominal anchor, with further gradual managed depreciation expected against the US dollar, and the PGK/AUD cross continuing to track AUD/USD movements.

On the currency, we're watching for signs of a turning point in the crawl. The Bank of PNG Monetary Policy Committee settings have held steady through 2026, with the next review due in September.

Beyond the near term, we'd expect the combination of Papua LNG-related investment inflows and a more balanced trade position to be the catalyst for a shift in the kina's trajectory. With that backdrop, let's turn to our results for the first half on slide 6.

Firstly, I'd like to be upfront. These results show weaker growth than what we've delivered in recent halves.

That said, they also show the resilience of our business. Statutory NPAT grew 4% to 59.7 million kina, revenue grew 2% to 254.8 million kina, and earnings per share grew 1% to 20.3 toea.

Net interest margin eased 10 basis points to 5.8%, return on equity was 16.6%, 50 basis points lower, and a lower cost of credit risk at 0.2%, down 10 basis points, which speaks to the quality of our book. Against that, our capital position has strengthened materially, with capital adequacy up 870 basis points to 26%, and the board has increased the interim dividend 13% in kina terms to 14.2 toea, holding flat in Australian dollar terms at 4.5 cents.

I'll come back to why growth was softer this half, and also why we remain confident in the outlook, but I want to also note that this result is consistent with the guidance update we provided to the market in July, and that the factors behind it are a combination of headwinds we've previously advised to the market, factors external to Kina Bank, or deliberate decisions we made in the interests of the quality of our balance sheet. On market share, we held our lending market share steady at 16.9% year-on-year.

Our deposit market share declined to 10.9%, which reflects a deliberate decision to run off higher-cost fixed deposits and cash management account balances as we optimize our funding mix, our funding costs, and our margins. That's a choice we've made, not a competitive loss.

Separately, industry-wide deposit growth over the period was largely driven by increased government deposits, which is unrelated to KSL's strategy or performance. On shareholder returns, our one-year total shareholder return was 10%, and over three and five years, 117% and 72% respectively.

The interim dividend is up 13% in kina terms, the third consecutive half of PGK dividend growth, and though the AUD equivalent has held flat at 4.5 cents, reflecting the impact of the kina depreciation against the Australian dollar. I'll now hand over to Taiwo, who will take you through the detail behind these numbers across the next couple of slides.

Thanks, Taiwo.

Thank you, Ivan. Good morning, everyone.

Turning to slide 9, our key revenue drivers this half were interest income on loans, which was up 12%, and wealth income, up 11%. Digital income and underlying foreign exchange income were broadly stable year-on-year.

I'll walk you through each of these over the next few slides. On slide 10, our loan book grew by 2% against prior corresponding period.

That modest growth reflects a deliberate choice. We optimized the balance sheet during the half, including a targeted exit of some lending exposures where we assessed the risk-return no longer met our threshold.

Excluding those strategic actions, underlying growth in the lending loan book would have been 7% against prior corresponding period. We remain confident in the strength of our lending pipeline heading into the second half.

On slide 11, net interest margin eased nominally by 10 basis points to 5.8% compared to June 2025. Our investment spread compressed to 4.4%, reflecting declining yields on government securities in line with what we forecast at the 2025 full year results announcement.

Our loan spread improved slightly to 6.5%. The net interest income gain was partly offset by a planned increase in our cost of funds associated with the new corporate bond, which I'll come back to when we discuss capital.

On slide 12, foreign exchange revenue was 48.3 million kina, down 5% on first half of 2025. That includes a one-off 2.4 million kina FX loss on the 2025 final dividend payment made in April of this year.

Adjusted for this one-off loss, FX revenue would have been flat year-on-year. Though FX revenue was flat, the underlying FX activity actually improved, with increased interbank market activity driving higher volumes and largely offset margin compression.

We had— we had previously advised the market to expect it. We see improved FX FX conditions for revenue growth in the second half of the year.

Digital revenue growth was constrained due to an issue entirely out of our control, but we have been very active in managing in managing this. An interoperability problem which affected a major PNG bank's newly issued debit cards disrupted our payment acquiring business across EFTPOS, e-commerce, and ATMs.

This was an industry-wide issue rather than one specific to Kina Bank. We are working closely with stakeholders in the market on planned system upgrades and expect the issue to be resolved before the end of the second half.

In addition to this matter, Kina has taken a strong leadership position in engaging with relevant regulatory authorities while actively advocating for developments that promote greater competition, customer choice, and the market advance, and a small Papua New Guinea and platform mobile banking system. On slide 13, our wealth business remains a bright spot.

Funds under administration grew 15% to 25.1 billion kina, driven by continued growth in superannuation membership. We also saw strong growth in in funds under management, which rose— which rose 15% to 14.4 billion kina.

Turning to costs on slide 14, operating costs rose 7% to 159.6 million kina. For more context, around 30% of our cost base is exposed to kina depreciation against the US and the Australian dollar.

The impact of that, combined with inflation and continued investment in organizational capabilities, including our digitization program, drove the modest increase. Headcount remains stable.

The rise in staff costs reflects a 4% global CPI adjustment and the FX translation impact on AUD-denominated salaries. Based on that, cost-to-income ratio rose to 62.6%.

Improving this ratio through efficiency, digitization, organic growth remains and organic growth remains a key medium-term objective for the group. We have made good early progress in initiative execution during the first half of our 2030 2030 strategy, which Ivan will provide an update on shortly.

On asset quality, move to slide 15, provision coverage strengthened to 2.6% of gross loans, up from 2.1% a year ago. This is a prudent position.

I want to spend some time on this to explain a technical point because a headline ratio has moved, and I don't want it to be misread. Following our application of IFRS 9 methodology of suspended interest on credit-impaired loans from December 2025, our NPL reporting now includes suspended interest balances.

On a comparable basis, this lifts the December 2025 NPL ratio from 7.7% earlier reported to 8.7%. On the same basis, the June 2026 ratio is 8.9%.

That 0.2% margin marginal increase between June 2026 and December 2025 is not due to a deterioration in underlying credit credit quality, but explained by the 3% reduction in the loan book, which I mentioned a moment ago. In other words, this is a denominator effect.

Actually, the NPL balances in dollar terms reduced slightly over the half. Finally on slide 16, capital adequacy ratio increased to 26%, up from 17.4% at December 2025, following the successful issuance of our 235 million kina Tier 2 bond, which Papua New Guinea's Papua New Guinea's first listed corporate bond.

This is a materially— a materially stronger capital position and give us real capacity to support future lending and growth opportunities as growth opportunities emerge. I will now pass back to Ivan to take you through our strategy and outlook.

Thank you, Taiwo. Turning to slide 18, I want to reconnect this half's results with our strategy.

Our purpose remains creating bright futures, and our vision is to be the most trusted financial services partner for the people, communities, and markets that we serve. That's underpinned by our six strategic priorities: customer first, empowered team, operational excellence, growth through innovation, serving communities, and governance for growth.

By our change makers, which continue to shape how our team members work together to serve our customers. On to slide 19, execution remains on track.

This half we successfully issued and oversubscribed our 235 million kina bond. We launched Paybetter, our digital wallet which expands financial inclusion and payments capability, and we introduced a new corporate online banking platform to strengthen our business banking proposition.

We've continued to invest in risk, leadership, and digitization capability and our culture transformation program, including the roll-out of our change makers across the organization. We continue to pursue organic growth alongside the evaluation of selective value-accretive inorganic opportunities.

Despite the challenges we're facing into in 2026, we continue to make strong progress against our strategic agenda and remain firmly focused on delivering our key milestones, as demonstrated by our first-half achievements. Slide 20 speaks to our community commitments through our Strongim Wantok grant program, which is fully governed and delivered by our own team members.

We've supported school infrastructure, solar power, and water tank installations across provinces including Western Highlands, Jiwaka, East Sepik, Southern Highlands, Milne Bay, Simbu, Central, and Eastern Highlands. We've also renewed our partnership with the Kokoda Track Foundation and support the delivery of their Archer Leaders mentoring program and distance education program.

We also partner with Rise PNG, which supports young women to build skills and confidence and prepare for their future. Turning to our outlook on slide 21, let me be clear about how I'd like you to take this half.

Our earnings growth was softer than we'd like, but every material driver behind that softness was linked to one of three things: firstly, the headwinds we told the market to expect back in our 2025 results; secondly, an external issue with a major PNG bank's debit card interoperability which has affected our payments acquiring growth; and thirdly, a deliberate risk-based decision made to optimize our loan book and funding mix. None of these matters changes our confidence in our strategy.

We enter the second half with positive momentum. We expect the card interoperability issue to be resolved by year-end, supporting a recovery in transaction-related revenue.

The competitive changes in the payments acquiring market resulting from these issues may mean that a full revenue recovery extends into 2027. In the second half, we expect stronger FX activity and loan growth, underpinned by improving market conditions and a solid pipeline.

With a materially strengthened balance sheet and capital position following the bond issuance, we have real capacity to support growth. Longer term, the PNG growth story remains intact, and the Papua LNG final investment decision remains a key trigger point we're watching for a further step-up in the medium-term outlook.

Finally, we remain confident in our ability to deliver long-term value for our shareholders and customers and the communities that we serve. We've also included a set of appendices covering our board of directors, deposit tenure, loan portfolio by industry, and deposits by product for your reference.

Before we move to questions, I want to thank our team across Kina Bank for their continued hard work, our board for its guidance, and our shareholders for your ongoing support, patience through what has been a more challenging half. Taiwo and I are now happy to take questions, and I'll pass back to Darcy, our moderator.

Thank you.

Ivan, can you hear me okay?

We can, Dave.

Cheers. Could you give us a wee bit of an update on the card interoperability issue, I guess how it's going to be fixed and if you have any recourse to the perpetrator of this problem?

Cheers. Thanks for your question, Dave.

Look, we did mention this in the market announcement in July as being one of the factors that would impact our earnings for the half and the year. The brief summary of the matter is that the major PNG bank with a dominant market share moved away from old-fashioned magstripe cards, as indeed all banks in PNG have, and issued debit cards that were proprietary EMV chip cards as opposed to cards like Visa, Mastercard, or UnionPay, which other banks issue in the market, including Kina.

This means that the cardholders of that bank cannot transact on any other bank's payment acquiring network, only their own bank's. That's obviously created an impact on our payment acquiring revenues.

Our actions, Dave, on this matter have been across a variety of focused actions, which has really been regulatory, both from the competition perspective, through also the financial services regulator as well, and we have also pursued independent advice around our options regarding this matter, which we currently hold. I suppose, Dave, the main focus for the bank at the moment has been to work with the regulator and the banking industry to encourage and support a technology solution which allows those same cards to become interoperable across the local payments system.

We believe that tech change will be achieved by the end of the year, and certainly that's where our focus is at the moment. That does also mean that participating banks, including Kina, also have to make some changes to our tech systems so we can interact with that payments card data.

At this stage, we believe that will be solved by the end of the year. In terms of the other part of your question, which was about recourse, advice on this matter, but we're holding on to that position for now.

Thank you.

Okay. Second one, business loans looked like they've dropped off a wee bit, first time in a while.

Just delving into the accounts, it looks like there's quite a big drop-off in building and construction. Was there anything specific that happened there, or why do you think that happened?

Dave. Across the book, as mentioned, we have selectively reduced less than a handful of exposures, some of them large, which was a risk-based decision which has resulted in the reduction of the loan book, as mentioned.

I wouldn't read too much into the construction and building one, because that can be a factor of projects coming to completion, for example. Nothing has changed in terms of our strategy and our appetite.

That's fine. Moving on to your risk profile overall, but also, I think you mentioned in the announcement that you've dropped off on, I think, your funding position, and that was basically a removal of, or reflecting a decision to reduce, higher-cost funding sources.

Is that correct?

That's correct, yeah. Some of the larger wholesale deposits and cash management account balances as well that came with high rates, we've made some adjustments as they've run off.

Again, that doesn't, as mentioned, that's not a competitive loss, that's a direct decision that we've made. The total change in the market share mix that we've noted in the slide is principally driven by movements in government deposits, which is very much unrelated to KSL or our strategy.

Yep. Last one for me before someone else can jump in.

Obviously the potential of Papua LNG to come on board with FID and then obviously start construction would have a material impact on the FX markets. What's the Bank of PNG's view on how they manage the crawl, and will we potentially see a, I guess, an unpegging of the PNG against the US dollar slash?

I guess the second part of the question is I think previous energy projects we saw a huge amount of FX coming into the country while the construction of the plant was carried out, and then because of the financial structure we actually didn't see any more FX coming back into the country for a while because of its, I guess, high-rate high-interest loans, etc. going back to the being cleared before we actually got income coming back to the country.

What's the risk that Papua LNG has the same sort of structure and what post-construction we see FX just going back to the owners of the company?

Thanks, Dave. A couple of points I suppose you've raised in your question there.

I'll try to address all of them. We see Papua LNG as the first of many resources projects, the investment inflows, we see these continuing over a 10 to 15-year period.

Obviously, as we've seen with Papua LNG, the timing of FID does move around a bit. The requirements of state negotiations and consultations, but the forward-looking pipeline over 10-plus years is actually very healthy.

In the past, what we've seen through other resources-led economic cycles in PNG, absolutely, the inflows post-FID during construction phases are significant and go a long way to establishing a more balanced import and export flow. The government is looking at things like a national sovereign wealth fund and other ways to ensure that the economy remains balanced over the medium to longer term beyond those initial inflows.

I think if you also look at the maturity of the economy and FX flows, aside from those economic cycles, the market actually continues to mature as well. In terms of your question about the crawl, we're certainly watching.

It is managed by the Bank of Papua New Guinea Monetary Policy Committee, who last met in May. They're meeting again in the coming month in September.

We're obviously watching that very closely for any sign whether the Monetary Policy Committee votes to slow down the crawl, because, as some of their recent meeting notes would suggest, they are mindful of imported inflationary pressures within the local market as well by continuing to match that crawl three-eighths, but previous cycles have shown that resources inflows and the balancing of the import-export market continues to be the key signal that might shift the turn around in the PGK. Thanks, Dave.

Thank you very much.

thanks, guys. Just confirming that you're reaffirming your guidance that you gave out in July with updating that period on the impacts of the technology issues.

You are reconfirming guidance, I just couldn't see it stated in the pack, anyway.

Correct. We are,

yep. Okay.

Just can you give us a little bit more detail on the loan de-risking? Just sort of where are you trimming and sort of why?

If I just sort of get a bit more clarity on that in my head, thanks.

Yeah. Thanks, Richard.

We'll probably be careful not to give too much in-depth information that might point to an individual customer or customers, forgive me for being somewhat generic, Richard. We had a risk-based decision on a line-by-line basis where we saw that, for example, the trading activity or some of the future signs as we conduct things like our annual reviews fall outside our risk appetite and where there's the opportunity for another institution to refinance that loan.

That's certainly something that we've helped to facilitate, keeping our customers' needs in mind as well. I'd note we don't see any sort of broader issue across our loan book that would cause any concern.

That was just a small cluster of lines which we've actively managed through the first half of this year.

Is that done? Is there more to come in the second half?

No, look, we'll continue to review all our loans, particularly our large exposures, throughout our annual review processes and our internal governance. Big things like our credit committees and so on.

We're not working on anything or we don't see anything at the moment that would cause that to continue, but obviously we maintain broad-like awareness of the quality of our book.

Thanks so much, guys.

Thank you.