Ping An Insurance (Group), China’s largest insurer by value, posted the biggest jump in interim net profit since 2015, bolstered by a one-time tax benefit, a stock market rally and growth in its new business units.
Net income soared 68 per cent to 97.7 billion yuan in the six months ended June 30, beating the 19 per cent increased expected in a Bloomberg survey of analysts. Revenue rose 17 per cent to 690.25 billion yuan (US$98 billion), while basic earnings per share rose 23.7 per cent to 4.12 yuan.
The company, established three decades ago in China’s technology hub of Shenzhen, is also one of China’s largest financial conglomerates, involved in a range of businesses on top of insurance, including banking, wealth management, technology, health care online lending and virtual banking. According to Forbes’ 2019 Global 2000 list, Ping An is the world’s seventh-largest company by capitalisation, behind Apple and ahead of Royal Dutch Shell.
The insurer made a one-time gain of 10.45 billion yuan from tax incentives on its life and property insurance businesses, which benefited from a new tax regime that kicked in three months ago.
Operating profit, a better reflection of performance as it removes one-off items, rose 24 per cent, Ping An said. Operating profit on its core insurance business rose 36.1 per cent to 48.43 billion yuan, while income from property and casualty insurance jumped 69.5 per cent o 10.03 billion yuan.
“As financial macro-control tightens, China is shifting the economic focus to high-quality development,” said Peter Ma Mingzhe, founding chairman and chief executive of Ping An in the result statement. “We implement our ecosystem strategy steadfastly. We develop our technology business rapidly by building open platforms for pan financial assets and pan health care.”
Net profit from banking rose 15.2 per cent to 15.4 billion yuan. Ping An is HSBC’s second-largest shareholder, with a 7 per cent stake.
Ping An’s net income was helped by China’s stock market rally, where the Shanghai Composite Index had jumped 19.5 per cent in the first half, as the world’s sixth-biggest gaining stock index. Total net investment income doubled to 93.86 billion yuan, as a result of increasing returns on its bond investment, higher dividend income and higher valuations from its stock holdings. Its securities business rose 31 per cent to 1.25 billion yuan.
Profit margin widened, as Ping An focused on developing products that were more profitable, raising its new business value by 4.7 per cent, compared with 0.2 per cent a year ago.
Ping An’s shares rose for the second day in four, advancing by as much as 0.4 per cent to HK$87.20 in Hong Kong before earnings were announced.
The company has also been a big investor in technology, making abundant use of artificial intelligence (AI) and big data analysis to enhance its car insurance, wealth management and even health care businesses. As many as 576 million internet users make use of Ping An’s online platform at the end of June, 6.9 per cent more than the start of the year, the company said.
Ping An OneConnect, the financial technology arm of Ping An which was awarded a virtual bank licence by the Hong Kong Monetary Authority (HKMA) in May, plans to provide the technology to help other financial institutions in the city manage fraud and loan default risks.
The online population is a resource for Ping An, helping the insurer cross sell financial products to customers. Still, the operating profit from the technology business fell 28.9 per cent to 3.27 billion yuan, Ping An said.
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