Ping An Records Robust Net Profit Growth of 32.7%
Hong Kong, Shanghai, August 17, 2011 - Ping An Insurance (Group) Company of China, Ltd. (hereafter "Ping An" or "the Group", HKEX: 2318; SSE: 601318) today announced its 2011 interim results. In the first half of 2011, Ping An's businesses achieved value-added and sustainable growth, placing the Group at the front of the market and its three pillar businesses - insurance, banking and investment - all experienced healthy development. Due to the strong growth of profitability of property & casualty insurance and banking businesses, the Group achieved a more balanced profit composition, with net profit attributable to shareholders of the parent company amounting to RMB12,757 million, up 32.7% year-on-year, reaching records high. Earnings per share were RMB1.67 (2010 interim: RMB1.30). Profit contribution from non-insurance businesses rose 4.7 percentage points year-on-year to 27.3%.
To seize the development opportunity in banking business and support the merger of Ping An bank and SDB, the Group entered into the Share Subscription Agreement with Shenzhen Development Bank (SDB) pursuant to which the Group conditionally agreed to subscribe for not less than 892,325,997 and not more than 1,189,767,995 Subscription Shares for a cash consideration of not more than RMB 20 billion, The Subscription Price shall be RMB16.81 per share. Post the transaction, Ping An's holding in SDB will at least increase to 59.44%, and no more than 61.36%.
The subscription enables SDB enhance its core CAR and explore more fund raising channels without reducing the Group's solvency. Meanwhile, the transaction is expected to significantly enhance the balanced development of the Group's three pillar businesses and exert mostly the coordination effect among banking and other businesses, a remarkable step towards the goal of becoming a leading international provider of integrated financial services.
Summary of the Group's performance in the first half of 2011:
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Continuous and rapid business growth, significant synergy from integrated financial platform：
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Insurance business maintains healthy and rapid growth:
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Profitability of banking business experiences strong growth：
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Investment business sees steady development:
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Three core businesses are well positioned for further development; asset restructuring plan with SDB received formal regulatory approval and was successfully implemented
Mr. Ma Mingzhe, Ping An Chairman and Chief Executive Officer, said, "In the first half of 2011, the Group closely monitored changes in the external environment and seized opportunities to promote rapid and healthy growth in all business lines by taking full advantage of our integrated financial platform. As a result, our three pillar businesses, namely insurance, banking and investment, all achieved satisfactory growth. Meanwhile, our strategic investment in SDB made remarkable progress, laying a solid foundation for further implementation of our integrated financial strategy. In the first half of 2011, the increase in profit was in part attributable to the surge in written premiums of our insurance business, in particular the property and casualty insurance business, with a relatively low combined ratio alongside a rapid increase in premiums. Additionally, the fact that SDB becoming an associate of the Group as well as the improvement in profitability of Ping An Bank also contributed to the growth in profit. Profit contribution from banking and investment businesses increased by 4.7 percentage points to 27.3% as compared with the same period of last year, resulting in a more balanced profit composition."
"Since the first half of the year, we received enormous support and understanding from relevant regulatory bodies and the community at large. The Group's asset restructuring proposal with SDB was formally approved and the transaction is now completed, further accelerating the pace of development in our banking business. Following the integration of SDB and Ping An Bank, the bank would be one of the most quality bank, with total assets exceeding RMB1 trillion, over 10 million credit cards, net profit of more than RMB10 billion and approximately 370 business outlets across 28 provinces and cities, covering more than 80% of Ping An's 60 million customer base. The ‘win-win' alliance between SDB and the subsidiaries of the Group, with industry-leading platforms offered by Ping An Life, Ping An Property & Casualty, Ping An Annuity, Ping An Securities, Ping An Trust and Ping An Asset Management, will create sustainable value for our shareholders, customers, employees and the community as a whole. This will help enrich China's experiences in financial innovation and serve as an example for the implementation of an integrated operating model. We will fully support further integration of the two banks and leverage the synergies from the integration and other subsidiaries, continuing to work towards the goal of achieving rapid and healthy growth of the banking business and ultimately becoming a leading commercial bank in China."
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Summary of Ping An's consolidated results (Prepared in accordance with IFRS) |
|
|
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For the six months ended June 30 (RMB million) |
2011 |
2010 |
|
|
|
|
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Total income |
133,810 |
96,980 |
|
Net profit |
12,998 |
9,866 |
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Net profit attributable to shareholders of the parent company |
12,757 |
9,611 |
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Earnings per share (RMB) |
1.67 |
1.30 |
|
|
|
|
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Net profit by business segment: |
|
|
|
Life insurance |
6,762 |
6,551 |
|
Property and casualty insurance |
2,693 |
1,088 |
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Banking |
2,397 |
1,104 |
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Securities |
715 |
828 |
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Other businesses |
431 |
295 |
Life insurance business: Ping An Life saw robust growth of written premiums with the more profitable individual life insurance recorded a yoy increase of 29.3%
Ping An Life maintained a healthy and rapid business growth, in particular the more profitable individual life insurance business grew rapidly, achieving written premiums of RMB94,860 million for the six months ended June 30, 2011, representing an increase of 29.3% compared with the same period of last year. Both agency size and productivity improved. In terms of premium income, Ping An Life is the second largest life insurance company in China.
During the first half of 2011, by executing the strategies of "Reaching New Heights" and "Two-Tier Market Development", Ping An Life continued to optimize its operating platform, accelerated the growth of two-tier markets and achieved healthy and sustainable development. During the first half of 2011, written premiums of Ping An Life amounted to RMB109,351 million, representing an increase of 20.8% over the same period last year. Due to the continued improvement in the quantity and productivity of agency sales force, there was a 15.1% increase in first-year written premiums to RMB29,855 million in the first half of 2011 from RMB25,943 million in the same period 2010. In addition, renewal written premiums for individual life insurance business increased by 37.1% to RMB65,005 million in the first half of 2011 from RMB47,415 million in the same period of 2010.
Ping An Life continued to build the operation platform of branches and sub-branches, optimize operating workflows, and promote and enhance various automation functions. As a result, it achieved higher agent productivity and better customer service quality. As at the end of June 2011, Ping An Life had approximately 47.93 million individual customers and 718,000 corporate clients. The 13-month and 25-month persistency ratios for the individual life insurance customers were maintained at an excellent level of 95.2% and 90.6%, respectively.
The first half of 2011 witnessed the smooth development of Ping An Annuity with accumulated annuity payments received recorded at RMB4,971 million. As at June 30, 2011, assets entrusted amounted to RMB33,476 million, and assets under investment management amounted to RMB49,300 million. These figures firmly cemented Ping An Annuity's market leading position amongst domestic professional annuity companies.
The following table highlights key financial and operating data in Ping An's life insurance business:
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Life insurance business |
|
|
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For the six months ended June 30 (RMB million) |
2011 |
2010 |
|
|
|
|
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Written premiums |
112,630 |
93,125 |
|
Individual life |
94,860 |
73,358 |
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Bancassurance |
13,459 |
16,269 |
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Group insurance |
4,311 |
3,498 |
|
|
|
|
|
Premium income |
75,158 |
54,888 |
|
Individual life |
61,554 |
47,346 |
|
Bancassurance |
10,362 |
4,949 |
|
Group insurance |
3,242 |
2,593 |
Property and casualty insurance business achieved net profit growth of 147% and steady growth in market share, saw a yoy increase of 35.9% in premium income, and combined ratio decreased yoy to 92.9%
Leveraging its specialist distribution channels and enhanced marketing efforts, Ping An Property & Casualty achieved steady growth in market share. In the first half of 2011, under improved market conditions, Ping An Property & Casualty seized opportunities to drive business development and has been committed to improving its profitability in underwriting, Ping An's property and casualty insurance business realized a net profit of RMB2,693 million, surging from RMB1,088 million in the same period of 2010. For the six months ended June 30, 2011, Ping An Property & Casualty achieved a premium income of RMB 40,734 million, representing a year-on-year increase of 35.9%. Market share increased by 1.3 percentage points to 16.7% as compared to the end of 2010. Meanwhile, the development of sales channels achieved remarkable results, leading to premium income via cross-selling and telemarketing recording strong growth of 69.1%, with the contribution ratio up to 38.1%. Ping An Property & Casualty is the second largest property and casualty insurance company in China in terms of premium income.
In the first half of 2011, Ping An Property & Casualty focused efforts on refining the processes of its operation in automobile insurance business, resulting in significant improvement in profitability of this division. At the same time, the non-automobile insurance business has also been developed as another growth engine, and thus accelerating the development of the business and stabilizing the profitability of Ping An Property & Casualty. Combined ratio improved by 3.6 percentage points to 92.9% compared with the same period of 2010.
The following table highlights key financial and operating data in Ping An's property and casualty insurance business.
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Property and casualty insurance business |
|
|
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For the six months ended June 30 (RMB million) |
2011 |
2010 |
|
|
|
|
|
Premium income |
40,922 |
30,191 |
|
Automobile insurance |
30,792 |
22,990 |
|
Non-automobile insurance |
8,979 |
6,169 |
|
Accident and health insurance |
1,151 |
1,032 |
|
|
|
|
|
|
June 30, 2011 |
December 31, 2010 |
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Ping An Property & Casualty's market share by premium income |
16.7% |
15.4％ |
Banking business: profitability saw strong growth of 117.1%; SDB has become a subsidiary of the Group
During the first half of 2011, Ping An's banking business realized a net profit of RMB2,397 million, and profitability up 117.1%, which included net profit from Ping An Bank and the share of profits from SDB based on the equity method.
Ping An Bank realized a net profit of RMB1,214 million, representing an increase of 34.9% over the same period last year. This was mainly because Ping An Bank implemented a number of actions such as actively exploring opportunities for intermediate business, increasing focus on price management, and improving operational efficiency. As a result, NIS and net fees and commission income were successfully raised while reducing cost/ income ratio.
While keeping steady growth in profitability, assets and liabilities of Ping An Bank grew steadily with a sustained improvement in the business structure. In liability business, total deposits increased by 14.9% as compared to the end of 2010, among which the deposits surpassed RMB200 billion, with a growth rate above the industry average. Structure and channels optimized constantly, retail deposits increased by 34.3% as compared to the end of 2010, cementing the Group's leading position from the peers, 36.2% of new retail deposits attained via cross-selling. In asset business, loans to SMEs increased by 41.0% as compared to the end of 2010, accounting for 80.5% new corporate loans originated. While the business maintained fast growth, the non-performing loan ratio maintained at 0.32%, outpacing the industry average. In line with the regulatory requirements, Ping An Bank's capital adequacy ratio and provision coverage ratio weres 10.78% and 285.89% respectively.
Meanwhile, the Group's strategic investment in SDB recorded another breakthrough as the major asset restructuring plan between the Group and SDB was approved by the CSRC on 28 June 2011, and implementation of which was completed on 28 July. The transcation will enter into and be reflected in the Group's consolidated financial statements in the second half of 2011. Now, the Group and its subsidiaries hold approximately 2,684 million shares or 52.38% of the shares of SDB. SDB has become a subsidiary of the Group and the integration of banking business will enter the implementation stage. This will enable the Group to further accelerate the implementation of the integrated financial strategy as well as enhance long-term investment value.
The following table highlights key financial and operating data in Ping An Bank's business:
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Ping An Bank's business |
|
|
|
For the six months ended June 30 (RMB million) |
2011 |
2010 |
|
|
|
|
|
Net interest income |
3,308 |
2,457 |
|
Net fees and commission income |
794 |
320 |
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Net profit |
1,214 |
900 |
|
|
|
|
|
|
June 30, 2011 |
December 31, 2010 |
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Non-performing loan ratio |
0.32% |
0.41% |
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CAR |
10.78% |
10.96% |
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Core CAR |
8.80% |
9.26% |
The following table highlights key financial and operating data in SDB's business based on SDB's 2011 interim report:
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Shenzhen Development Bank： |
|
|
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For the six months ended June 30 (RMB million) |
2011 |
2010 |
|
|
|
|
|
Net interest income |
10,392 |
7,409 |
|
Net fees and commission income |
1,190 |
753 |
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Net profit |
4,732 |
3,033 |
|
|
|
|
|
|
June 30, 2011 |
December 31, 2010 |
|
Non-performing loan ratio |
0.44% |
0.58% |
|
CAR |
10.58% |
10.19% |
|
Core CAR |
7.01% |
7.10% |
Investment business: Ping An Securities continued to hold its leading position in the market, Ping An Trust's private wealth management business recorded rapid and steady growth
Ping An Securities delivered stable results in the first half of 2011. Investment banking business continued to excel in the primary market, sponsoring 18 IPOs and three refinancing projects as a lead underwriter. Ping An Securities is ranked top in terms of underwriting fees for IPO transactions and second in the league table by number of deals. It acted as lead underwriter and completed eight corporate bond issuances for its fixed income business. For the brokerage business, Ping An Securities expanded its sales channels and achieved a steady increase in the market share of newly opened customer accounts. As at the end of June, the number of accumulated customers for brokerage business reached 939,000. Ping An Securities actively expanded its business outlets and obtained approval for the opening of five more branch offices. Following the launch of those new offices, its network will increase from 33 outlets across 24 cities to 38 outlets across 29 cities.
Leveraging the advantage of the Group's integrated financial service platform, Ping An Trust achieved satisfactory growth in its fundamental business in the first half of 2011. The private wealth management business recorded rapid and steady growth and the number of high net worth customers exceeded ten thousand, representing an increase of over 100% as compared with the same period of last year. Management fees income of trust products amounted to RMB756 million, representing an increase of 175% yoy.
As at 30 June 2011, assets under management of Ping An Asset Management amounted to RMB762,436 million, representing an increase compared to the end of 2010. The increase was mainly attributable to an increase in investable assets generated from the steady growth in the insurance business.
The following table highlights the investment income of insurance funds:
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For the six months ended June 30 (RMB million) |
2011 |
2010 |
|
|
|
|
|
Net investment income |
16,225 |
12,618 |
|
Net realized and unrealized gains |
551 |
(2,156) |
|
Impairment losses |
(942) |
(89) |
|
Others |
2 |
(8) |
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Total investment income |
15,836 |
10,365 |
|
|
|
|
|
Net investment yield |
4.3% |
4.1% |
|
Total investment yield |
4.2% |
3.7% |
Strong progress was made in the depth and scope of cross-selling, results and benefits from synergies are increasingly visible
Through the implementation of the financial integration of back office functions, contributions from Ping An's cross-selling increased in the first half of 2011, highlighting the effectiveness of its strategic initiatives. Premiums of Ping An Property & Casualty contributed from cross-selling and telemarketing soared 69.1%, with the contribution ratio raised to 38.1%; cross-selling contributed 12.6% of Ping An Bank's new corporate deposits and 36.2% of new retail deposits.
Outlook
Mr. Ma Mingzhe said, "Currently, the economic and financial conditions both at home and abroad remain challenging and complicated, and the recovery of the global economy is uncertain. In the second half of the year, we will actively explore ways to further drive the growth of our businesses, expedite the development of our banking, investment and other businesses and maintain a healthy growth of our insurance business on the back of our integrated financial platform and competitive advantages. At the same time, we will continue to enhance the professional level of our operation, aiming to achieve above-market growth. To strengthen our core competitiveness, we will continue to implement the back-office centralization project, improve the cross-selling business management platform of the Group and take full advantage of the synergies from integrated financial services."
"Looking forward, China's economy will continue to maintain steady growth in the long term and the macroeconomic environment for the development of domestic financial industry will see gradual improvements. As personal wealth accrues in China, demand for diversified financial services is also on the rise. This offers huge potential for integrated financial products and services. Meanwhile, as the mobile internet and other modern technologies continue to exert their profound influence on the economy, our daily lives and the way business are run, we see changes and growth opportunities in the operating models as well as the competitive landscape of the financial industry. In the face of the abundant opportunities presented by these exciting challenges, we will relentlessly pursue the goal of becoming a leading international provider of integrated financial services, by combining comprehensive financial services with modern technology and striving to grow into a well-respected and enduring great company."
