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Ping An boosts operating profit and net profit attributable to shareholders of the parent company by 23.3% and 33.8% respectively in 1H 2018

Time:2018-08-28   from:Ping An   [Size:large    medium     small]

Ping An boosts operating profit and net profit attributable to shareholders of the parent company by 23.3% and 33.8% respectively in 1H 2018

increasing dividends

 

(Shanghai, Hong Kong, August 21, 2018) Ping An Insurance (Group) Company of China, Ltd. (hereafter “Ping An”, the “Company” or the “Group”, HKEX: 2318; SSE: 601318) today announced its interim results for the six months ended June 30, 2018.
 

Under IFRS 9, in the first half of 2018, Ping An Group achieved an operating profit attributable to shareholders of the parent company of RMB59,339 million, up 23.3% year on year. Net profit attributable to shareholders of the parent company rose 33.8% year on year to RMB58,095 million. The Company’s net profit attributable to shareholders of the parent company under the old accounting standards would be RMB62,405 million, up 43.7% year on year.
 

Given the fast growth in operating profit and adequate, stable solvency, Ping An is raising its interim cash dividend by 24.0% year on year to RMB0.62 (tax inclusive) per share.
In the first half of 2018, Ping An continued to further “finance + technology” and pursue “finance + ecosystem,” using technological innovations to improve experience and develop business. The life and health insurance business’s value of new business (NBEV) rose 0.2% year on year to RMB38,757 million following a 9.9% year-on-year rise in the second quarter, after a first-quarter decline amid industry restructuring. In the first half of 2018, the fintech and healthtech business grew rapidly and realized an operating profit of RMB4,607 million, which accounted for 7.0% of the Group’s operating profit, up 6.4 pps year on year.

Business highlights in the first half of 2018:
 The operating profit attributable to shareholders of the parent company grew by 23.3% year on year to RMB59,339 million. The unannualized return on equity (ROE) was 11.6%, up 1.0 pps year on year.
 The Group’s retail business recorded an operating profit of RMB50,380 million, up 28.3% year on year and accounting for 84.9% of the Group’s operating profit attributable to shareholders of the parent company.
 Ping An scored further achievements in customer development. Retail customers grew 25.2% year on year to 179 million. Contracts per customer rose 4.8% year on year to 2.39. As at June 30, 2018, 30.8% of retail customers held multiple contracts with different subsidiaries, up 2.3 pps from the beginning of 2018.
 The life and health insurance business’s operating ROEV (unannualized) was 17.6%. The NBEV grew by 0.2% year on year to RMB38,757 million amid industry restructuring; the NBEV margin reached 38.5%, up 4.1 pps year on year; the NBEV margin of the agent channel stood at 48.1%, up 6.5 pps year on year. The number of sales agents increased by 5.5% year on year to 1,399 thousand following a 3.4% QoQ growth in the second quarter.
 The life and health insurance business’s operating profit rose 24.7% year on year to RMB35,595 million. The residual margin grew by 15.2% from the beginning of 2018.
 Ping An Property & Casualty boosted its premium income by 14.9% year on year to RMB118,878 million while maintaining a better-than-industry combined ratio of 95.8%. Ping An Property & Casualty improved the “510 City Superfast Onsite Investigation” service, through which 95.5% of the auto insurance cases requiring an onsite investigation were handled within 5-10 minutes.
 Ping An Bank made significant progress in its strategic transformation towards retail banking. Revenue and net profit from retail banking grew by 34.7% and 12.1% year on year, accounting for 51.2% and 67.9% of the Bank’s revenue and net profit, up 10.9 pps and 3.4 pps, respectively.
 Ping An Good Doctor (01833.HK) was successfully listed on the HKEX’s Main Board on May 4, 2018. Ping An Healthcare Technology raised USD1,150 million in early 2018, which implied a post-money valuation of USD8,800 million. In the first half of 2018, OneConnect raised USD750 million at a post-money valuation of USD7,500 million.

The Group: Retail business accounted for 84.9% of operating profit; over 30% of new customers were sourced from the five ecosystems.

In the first half of 2018, the Group’s retail business recorded an operating profit of RMB50,380 million, up 28.3% year on year and accounting for 84.9% of the Group’s operating profit attributable to shareholders of the parent company. Ping An continued to strengthen its channel management to enhance service quality. The Group’s retail customers increased by 25.2% year on year to 179 million. Of the 25.81 million new customers, 8.45 million or 32.7% were sourced from internet users captured within the Group’s five ecosystems of financial services, health care, auto services, real estate services, and smart city services.
 

Cross-selling continued to increase. As at June 30, 2018, 55.33 million retail customers held multiple contracts with different subsidiaries, up 17.2% from the beginning of 2018, accounting for 30.8% of all customers (up 2.3 pps year on year).
 

Ping An has further diversified finance and life scenarios, and improved service experience. The Group’s internet users increased 20.6% year on year to 486 million. On average, each internet user used 2.30 online services, up 12.7% year on year.
 

According to Mr. Ma Mingzhe, Chairman and CEO of Ping An, thanks to the trust and support from customers, Ping An has increased retail customer value and achieved growth in the 30 years since its establishment. In the future, focusing on retail customers, Ping An will strive to become a world-leading technology-powered retail financial services group. Ping An will leverage technology innovations to create greater value for customers.

Core Finance Business: The life and health insurance business’s ROEV (unannualized) was 17.6%; Ping An Property & Casualty maintained a better-than-industry combined ratio of 95.8%; Ping An Bank made significant progress in strategic transformation towards retail banking
 

In the first half of 2018, the Company remained true to its original aspiration to engage in the insurance business. The life and health insurance business achieved stable, healthy growth as its operating profit climbed 24.7% year on year to RMB35,595 million; residual margin increased 15.2% from the beginning of 2018 to RMB710,032 million. Amid industry restructuring, the life and health insurance business’s NBEV rose 0.2% year on year to RMB38,757 million following a 9.9% year-on-year growth in the second quarter. The unannualized operating ROEV was 17.6%. Due to the improved business mix, the share of long-term protection products continued to increase, boosting the NBEV margin by 4.1 pps year on year to 38.5%. The NBEV margin of the agent channel reached 48.1%, up 6.5 pps year on year.
 

Ping An Property & Casualty’s premium income grew by 14.9%, 0.7 pps higher than the industry average. The combined ratio decreased by 0.3 pps year on year to 95.8%, remaining at a better-than-industry level. The unannualized ROE was 8.3% as business quality remained excellent.
 

As of June 30, 2018, the Company’s investment portfolio of insurance funds grew to RMB2,583 billion by 5.4% from the beginning of 2018. In the first half of 2018, the portfolio’s annualized net investment yield and annualized total investment yield under IFRS 9 were 4.2% and 4.0%, respectively. The annualized total investment yield under the old accounting standards was 4.5%.
 

Ping An Bank maintained stable, healthy business growth, continued to transform towards retail banking, and realized a net profit of RMB13,372 million, up 6.5% year on year. Revenue and net profit from retail banking grew by 34.7% and 12.1% year on year to RMB29,316 million and RMB9,079 million, accounting for 51.2% and 67.9% of the Bank’s revenue and net profit, up 10.9 pps and 3.4 pps respectively. Ping An Bank kept asset-quality risks under control. The non-performing loan ratio and the proportion of special mention loans decreased by 0.02 pps and 0.29 pps to 1.68% and 3.41% respectively from the beginning of 2018.
 

In the first half of 2018, the asset management business recorded a net profit of RMB9,376 million, up 30.3% year on year.

Fintech & Healthtech Business: Operating profit reached RMB4,607 million, accounting for 7.0% of the Group's operating profit
 

In the first half of 2018, the Group fully implemented the “finance + ecosystem” strategy, and built the five ecosystems of financial services, health care, auto services, real estate services, and smart city services. Some core technologies have been exported to serve external entities both domestically and in overseas markets. The fintech and healthtech business grew rapidly and realized an operating profit of RMB4,607 million, which accounted for 7.0% of the Group’s operating profit, up 6.4 pps year on year. Ping An’s technology patent applications increased to 6,121, up by 3,091 from the beginning of 2018, covering AI-based cognition, AI, blockchain, and cloud computing.
 

Lufax Holding, a subsidiary of Ping An, is China’s leading online wealth management and retail lending technology platform. In the first half of 2018, Lufax Holding’s profit increased sharply. As of June 30, 2018, Lufax Holding had 36.84 million registered users on its platform, up 18.0% year on year. Loans under management grew by 8.8% from the beginning of 2018 to RMB313,747 million.
 

Ping An Good Doctor is committed to building the world’s largest health care ecosystem, and was successfully listed on the HKEX’s Main Board on May 4, 2018. As of June 30, 2018, Ping An Good Doctor had provided health care management services for nearly 230 million users and processed over 300 million consultations, up 122.2% year on year. Ping An Good Doctor grasps the opportunities of industry development, meeting the needs of a large user base and providing abundant medical and health services whenever and wherever possible through a mobile platform. During the Reporting Period, its revenue rose 150.3% year on year to RMB1,123 million.
 

Ping An Healthcare Technology is committed to becoming China’s leading tech-powered managed care service platform. In social health insurance, Ping An Healthcare Technology’s services have covered over 200 cities across China. In private insurance, over 2,300 hospitals have connected with Ping An Healthcare Technology’s service platform.
 

OneConnect is committed to building a world-leading, strategically-empowering fintech service cloud platform. As of June 30, 2018, OneConnect had provided fintech services for 441 banks, 38 insurers, and nearly 2,200 non-bank financial institutions. Ping An has launched a blockchain-based trade finance platform in cooperation with Hong Kong Monetary Authority (HKMA) and several major Hong Kong-based banks.
 

Ping An’s smart city services have been implemented in over 200 cities across China. The smart city ecosystem includes businesses such as smart government, fiscal management, health care and transportation. Ping An has established an online citizen service platform to provide over 2,000 services. The smart traffic flow monitoring platform has reduced traffic jam alerts by over 90%. The Smart Fiscal Cloud project with Nanning has saved the city RMB127 million of financing costs.

In early 2018, the Company launched the “Three-Village Project”, which has been fully implemented in four provinces and municipalities such as Guangxi. Under the Village Officer Program, Ping An granted loans of RMB330 million for industry promotion, and aided 5,529 poor people. Under the Village Doctor Program, Ping An established a smart health care platform, and provided village people with 3,210 times of free medical services. Under the Village Teacher Program, Ping An channeled urban education resources to rural areas by providing over 100 rural primary schools with remote classrooms.
 

Mr. Ma says, “Looking 30 years ahead, we will remain true to our original aspiration and strengthen our core financial businesses. By fulfilling our duties as an insurer, we will help more people to seek better lives, take care of family members, and enjoy protection in the future. We will give back to society by developing rural areas under the Three-Village Project. We will proactively develop in the industries of fintech and healthtech, and seek tech-based innovations including smart city services. We will research carefully to gain insights into customer demands. We will optimize customer experience via excellent one-stop integrated financial services. We will continue to create value for customers and shareholders by sustaining strong business growth. In short, we are embarking on a new journey for another 30 glorious years."