03/12/2019 | Press release | Distributed by Public on 03/12/2019 09:48
Ping An Reports Steady Growth of 18.9% in Operating Profit Attributable to Shareholders of the Parent Company
Cash Dividend Growth of 28% and Adoption of Its First Share Repurchase Plan
(Hong Kong, Shanghai, 12 March 2019) Ping An Insurance (Group) Company of China, Ltd. (hereafter 'Ping An' or the 'Group' or the 'Company', HKEX: 2318; SSE: 601318) announced today its 2018 annual results for the year ended December 31, 2018.
Ping An achieved steady growth overall for 2018, operating profit and NBV growth exceed market expectations and operating profit attributable to shareholders of the parent company rose 18.9% year on year to RMB112,573 million. Net profit grew 20.5% year on year to RMB120,452 million, and net profit attributable to shareholders of the parent company rose 20.6% year on year to RMB107, 404 million. Under the old accounting standards for financial instruments, the Company's net profit attributable to shareholders of the parent company would have risen 39.5% year on year to RMB124, 245 million. Under the circumstances of industrial restructuring, NBV of the life and health insurance business grew by 7.3% year on year after growing 16.9% year on year in the second half of 2018.
Ping An increased its cash dividend for the 10th consecutive year in light of robust operating profit growth and strong solvency position. The Group proposed a final cash dividend of RMB 1.10 per share to shareholders which brings total ordinary dividend per share to RMB 1.72 per share, up 14.7% year on year. In addition to the 30th Anniversary Special Dividend of RMB0.20 in cash per share declared in the first quarter in 2018, total dividend for the year amounted to RMB1.92 per share, up 28.0% year on year.
In order to proactively respond to policy guidance from the central government and regulatory bodies, the Company will adopt its first share repurchase plan so as to provide stability to the capital market while maximizing the shareholders' interests. The total capital required for the repurchase plan will not be less than RMB5 billion and not exceed RMB10 billion. The repurchase plan will be financed from the Company's internal resources.
In 2018, adhering to its two-pronged 'finance + technology' and 'finance + ecosystem' strategies, Ping An continued to pursue the initiative of 'empower finance with technology, empower ecosystem with technology, and empower finance with ecosystem'. During the year, the Group's core finance business remained strong and stable, while profit contribution from technology business increased significantly. The fintech and healthtech business recorded RMB 6,770 million in operating profit attributable to shareholders of the parent company, accounting for 6.0% of the Group's operating profit attributable to shareholders of the parent company.
Business highlights in 2018:
Expanding customer scale and profitability, with operating profit of retail business significantly growing 31.1% year-on-year
As at 31 December 2018, the number of Ping An's retail customers reached 184 million, up 11.0% on the year. The number of new customers amounted to 40.78 million, of which, 35.6% were sourced from internet users who joined us from one of the Group's five ecosystems, namely, financial services, health care, auto services, real estate services, and smart city services. The operating profit per customer grew 18.1% year on year to RMB531, while each customer held approximately 2.53 contracts on average, up 9.1% from the beginning of the year.
In 2018, the Group posted a 31.1% increase year on year in its retail business's operating profit to RMB97,729 million, representing 86.8% of the Group's operating profit attributable to shareholders of the parent company, driven by increasing cross-selling and customer value enhancement. For the year, about 63.64 million retail customers of the Group held contracts with multiple subsidiaries, up 34.7% from the beginning of the year, which accounted for 34.6% of total customers, up 6.1 pps from the beginning of the year.
Peter Ma, Chairman and CEO of Ping An, said, 'Focusing on retail customers, Ping An is committed to becoming a world-leading technology-powered retail financial services group. We continue to improve service efficiency and the quality of our products and channels, to enhance customer experience, and boost both retail customer value and corporate value.'
Empower financial services with technologies: Return on Embedded Value ('ROEV') of the life and health insurance business reached 30.8%, the combined ratio of the property and casualty insurance business was 96.0%, and the net profit contribution of the retail banking business increased to 69.0 %
By leveraging its world-leading technologies in AI, blockchain, and cloud computing, Ping An's financial offerings gained competitiveness, and core financial businesses grew steadily through reduced costs, boosted efficiency, enhanced risk management, and improved customer experience.The life and health insurance business posted steady growth, thanks to AI-enhancing competitiveness.In 2018, against a backdrop of industry transformation, the Group carried out the strategies of 'product+' and 'technology+'. In 2018, NBV of the life and health insurance business grew by 7.3% year on year to RMB72, 294 million. NBV grew by 16.9% year on year in the second half of 2018. Operating ROEV reached 30.8%, operating profit after tax rose 35.1 % year on year to RMB 71,345 million and the residual margin stood at RMB786, 633 million, up 27.6 % from the beginning of 2018.
AI is widely used within our life and health insurance business. Since AI-based screening and interview functionalities went live, they have been applied to screening of over 11 million potential agents. Via back testing on historical data, AI-based screening model achieved an accuracy rate of 95.4% in identifying agents who would remain with us for 13 months.The property and casualty insurance business continued to see faster-than-industry premium growth while combined ratio further improved, as a result of improving services innovation.In 2018, Ping An Property & Casualty's premium income grew by 14.6% year on year, 3.0 pps faster than the market average. The combined ratio was 96.0%, improved by 0.2 pps year on year; the ROE was 16.7%, indicating the high quality of business.
Ping An Property & Casualty enhanced claims services to build differentiated advantages. Through upgraded '510 City Superfast Onsite Investigation' services, 96.4% of the urban onsite auto claim investigations were processed within 5-10 minutes in daytime in 2018.
In 2018, Ping An continued to improve asset allocation. The net investment yield of the investment portfolio of insurance funds was 5.2%, and the total investment yield was 3.7%. On the basis of the insurance subsidiaries' statutory financial statements prepared under the old accounting standards for financial instruments, the portfolio's total investment yield was 5.2%.Ping An Bank made significant progress and remarkable results in strategic transformation towards retail banking.In 2018, retail banking accounted for 53.0% and 69.0% of the Bank's revenue and net profit, up 8.9 pps and 1.4 pps year on year. Ping An Bank continued to de-risk itself. The deviation of non-performing loans was 97%, down 46 pps from the beginning of 2018. Both the balance and percentage of loans more than 90 days overdue declined from the beginning of 2018.
Empower ecosystems with technologies: proactively creating value, with tech-powered business posting an operating profit attributable to shareholders of the parent company of RMB6, 770 million
In 2018, the Company persisted in strengthening its leading technology know-how and exported innovative products and services with a focus on five ecosystems, namely financial services, health care, auto services, real estate services, and smart city services.
The Group has incubated a number of technology companies from scratch in recent years, two of which have listed and three received external financing, with a total valuation of approximately USD70 billion
In 2018, turning 30 years old, Ping An gratefully promoted 'Ping An Rural Communities Support'. This three-pronged project comprises the Village Officer Program, Village Doctor Program and Village Teacher Program for smart poverty alleviation through the promotion of industry development, health care and education support in rural areas. As at the end of 2018, the Company had implemented 'Ping An Rural Communities Support' in nine provinces or autonomous regions across China. The Company contributed RMB 5,394 million for poverty alleviation, built or upgraded over 400 rural clinics, trained 5,702 village doctors, built or upgraded 391 rural schools, and trained 4,819 village teachers.
Looking forward, Mr. Ma said:'The year 2019 marks the 70th anniversary of the founding of the People's Republic of China and is the beginning of Ping An's fourth decade, a crucial period for our strategic transformation. In 2019, we will maintain stable, healthy growth of core businesses, optimize the business mix, strictly manage risks, and build the foundation of our future. We will continue to pursue 'finance + ecosystem,' and enhance our data-driven smart operations to create value for customers, shareholders and society. Ping An will bravely navigate through the uncharted deep waters ahead toward a brighter future.'