Ping An’s 9M18 operating profit attributable to shareholders of parent company rose 19.5%, Life VNB growth rate improved in Q3
(Shanghai, Hong Kong, October 29, 2018) Ping An Insurance (Group) Company of China, Ltd. (hereafter “Ping An”, the “Company” or the “Group”, HKEX: 2318; SSE: 601318) today announced its results for the nine months ended September 30, 2018.
In the first nine months of 2018, Ping An achieved an operating profit attributable to shareholders of the parent company of RMB85,637 million, up 19.5% year on year. Net profit attributable to shareholders of the parent company rose 19.7% year on year to RMB79,397 million although the net profit growth was 35.1% under the old accounting standards for financial instruments.
Ping An’s retail customers and users continued to increase. As at September 30, 2018, the Group had 182 million retail customers, up 18.7% year on year; of which 32.5% held contracts with multiple subsidiaries. In the first nine months, the Group’s internet users exceeded half a billion, and 34.8% of the Group’s new customers were sourced from internet users within the Group’s five ecosystems.
9M 2018 business highlights:
· Operating profit attributable to shareholders of the parent company rose by 19.5% year on year to RMB85,637 million.
· Value of New Business (VNB) of the life and health insurance business grew by 3.2% year on year in the first nine months, and by 10.9% year on year in the third quarter.
· Fintech and healthtech business’s operating profit attributable to shareholders of the parent company rose by 700.4% year on year, accounting for 6.3% of the Group’s.
· The Group’s internet users exceeded half a billion, and 34.8% of the Group’s new customers were sourced from internet users within the Group’s five ecosystems.
· Ping An Bank’s non-performing loan ratio and percentage of special mention loans dropped by 0.02 pps and 0.63 pps respectively from the beginning of 2018. The percentage of loans more than 90 days overdue declined by 0.43 pps from the beginning of 2018. The deviation of non-performing loans was 119%, down 24 pps from the beginning of 2018.
Strong performance in core financial businesses; Life and health VNB rose 3.2% YoY in 9M 2018, property and casualty combined ratio improved to 96.0%, and Ping An Bank's asset quality improved.
In the first nine months of 2018, the life and health insurance business recorded an operating profit attributable to shareholders of the parent company of RMB52,136 million, up 23.3% year on year. Amid the industry-wide structural adjustment, VNB of the life and health insurance business rose 3.2% year on year to RMB 55,425 million in the first three quarters of 2018. We note that Q3 VNB growth was 10.9% year on year, the highest quarterly growth rate this year. VNB margin for the first three quarters was 42.1%, up 4.3 pps year on year. Agent force grew steadily to 1.43 million persons, up 3.2% from the beginning of 2018. Ping An Life continues to develop business under the “product +” and “technology +” strategies, focus on high-value long-term protection products, and strengthen its capabilities including sales support and customer services through technology innovation.
During the Reporting Period, Ping An Property & Casualty premium income rose 15.0% year on year. On the basis of robust corporate governance and risk screening, Ping An Property & Casualty combined ratio improved 0.1%, with a better-than-industry combined ratio of 96.0%.
The Company continued to improve asset allocation of insurance funds amidst volatile market performance and changes brought on by the adoption of a new accounting standard. As at September 30, 2018, the Company's investment portfolio of insurance funds grew to nearly RMB2.65 trillion by 8.1% from the beginning of 2018.
Ping An Bank improved its overall business, and retail assets under management (AUM) rose by 20.8% from the beginning of 2018, and retail deposits and loans increased by 23.4% and 27.4% respectively from the beginning of 2018. More encouraging still, the Bank's asset quality improved as the non-performing loan ratio and the percentage of special mention loans dropped by 0.02 pps and 0.63 pps since the beginning of the year. The percentage of loans more than 90 days overdue declined by 0.43 pps to 2.00% from the beginning of 2018 with the Bank's deviation of non-performing loans falling to 119%.
In the first three quarters of 2018, the overall asset management business recorded a net profit of RMB12,525 million, up 19.4% year on year.
Fintech and Healthtech Business accelerates: Ping An continues to implement the “finance + technology” strategy, boosting business with technologies.
The Group further implemented fintech and healthtech strategies, and recorded rapid growth in various businesses. In the first three quarters of 2018, the fintech and healthtech business recorded an operating profit attributable to shareholders of the parent company of RMB5,403 million, up 700.4% year on year and accounting for 6.3% of the Group versus 0.9% in comparable period last year. As of September 30, 2018, Ping An had filed 8,534 technology patent applications, up from 5,504 at the beginning of the year.
Lufax Holding is China’s leading online wealth management and retail lending technology platform. In the first three quarters of 2018, Lufax Holding’s revenue and profit increased steadily. In wealth management business, affected by deleveraging and new regulations, Lufax Holding's assets under management (AUM) dropped by 6.1% QoQ in Q3. In retail lending, Lufax Holding's loans under management rose by 11.0% QoQ in Q3. In government financial services, smart fiscal management projects have been delivered in Nanning and Changsha.
OneConnect is the biggest fintech service cloud platform in China and had provided most fintech services for 483 banks, 42 insurers and nearly 2500 non-bank financial institutions. In the first three quarters of 2018, its risk management products were used 882 million times.
Ping An Good Doctor is committed to “building the world's largest health care ecosystem and using technology to make people healthier.” Ping An Good Doctor provides users with convenient, quality family doctor services via the AI-assisted in-house medical team, and satisfies users' demands for various offline healthcare services by integrating healthcare networks.
Ping An Healthcare Technology is committed to becoming China’s leading tech-powered managed care service platform. Ping An Healthcare Technology provides domestic social health insurance (SHI) fund managers with comprehensive "Smart Social Health Insurance" solutions. Application scenarios include data governance, smart SHI management, smart risk management, scientific decision making, and precise services. Ping An Healthcare Technology has developed nearly 20 mature, reliable risk management models. The services of Ping An Healthcare Technology have covered over 200 cities across China.
In order to actively respond to the decision to amend company law and the policy direction of the regulatory authorities, the Third Session of the 11th Board of Directors of Ping An reviewed and approved “the review of the repurchase of company shares and related authorizations Plan", to stabilize the capital market, and to promote the maximization of shareholders’ value. The Board of Directors agrees to buy-back its outstanding domestic and/or overseas shares as appropriate and at suitable times based on volatility and changes in the capital market and the share price of the Company, with a maximum amount of no more than 10% of the total number of Shares of the Company in issue. The Plan still needs to be reviewed and authorized by the shareholders meeting before implementation.
In order to adapt to new strategies of “finance + ecosystem” and to ensure sustainable growth of the Group’s future value, the Board of Directors reviewed and approved “the Long-term Service Plan (Draft)” to encourage core talent to stay in the Company, strengthen the long-term binding of the Company's interests and employee's interests, improve the corporate governance structure and the Company's long-term incentive and restraint mechanism, promote sustainable development of the Company's long-term operations and create sustainable value for shareholders.
The Plan is issued on an annual basis. If the actual net profit growth rate meets the target set by the Board of Directors, a certain proportion of the net profit will be used to pay back to the employees enrolled in the Plan. All the amount granted under the Long-term Service Plan will be used to purchase and hold shares of Ping An from the secondary market through the Asset Management Plan. The Plan will be valid for ten years from the date of approval, and may be extended after its expiration subject to approval of the Board of Directors. The relevant interests of the Plan shall be vested in the Plan Participants, subject to the confirmation of their applications made when they reach the retirement age as well as the payment of the applicable taxes.
Prospects of Future Development
Ping An Chairman and Chief Executive Officer Ma Mingzhe says, “In 2018, China's economy has been generally stable, while the international environment has become increasingly challenging. Adhering to the policies of the Communist Party of China (CPC) and the state, Ping An will enhance its capability of serving the real economy while preventing and mitigating financial risks, and help poverty-stricken areas to fight poverty through the Three-Village Project. Amid challenges and opportunities, Ping An will remain true to its original aspiration; to strengthen business, seek innovations, create value for customers and shareholders, and contribute to economic and social development of the country.”