Ping An Reports Steady Growth of 1.2% in Operating Profit Attributable to Shareholders of the Parent Company in 1H2020

Rhea-AI Summary

Ping An Insurance (Group) Company reported its interim results for the first half of 2020, with operating profit attributable to shareholders rising 1.2% year-on-year to RMB 74.31 billion. However, net profit fell by 28.2% to RMB 75.97 billion, with a 29.7% decline in net profit attributable to shareholders. The company will pay an interim dividend of RMB 0.80, a 6.7% increase. Retail customers grew by 4.6% to 210 million and technology revenue rose 11.2% to RMB 42.73 billion. Despite challenges, Ping An's operational resilience is highlighted by its focus on online operations and ecosystem development.

Positive

• Operating profit attributable to shareholders increased by 1.2% to RMB 74,310 million.
• Interim dividend raised by 6.7% to RMB 0.80 per share.
• Retail customer base expanded by 4.6% to 210 million.
• Technology business revenue grew by 11.2% to RMB 42,732 million.
• New corporate business financing increased by 170.2% year-on-year.

Negative

• Net profit decreased by 28.2% year-on-year to RMB 75,968 million.
• Net profit attributable to shareholders dropped by 29.7% to RMB 68,683 million.
• New business value in the life insurance sector fell by 24.4% year-on-year.

HONG KONG and SHANGHAI, Aug. 27, 2020 /PRNewswire/ -- Ping An Insurance (Group) Company of China, Ltd. (hereafter "Ping An" or the "Group", HKEX: 2318; SSE: 601318) today announced its 2020 interim results for the six month period ended 30 June 2020.

Despite strong headwinds in a difficult operating environment, Ping An maintained steady business performance in the period through the implementation of key measures, including the continuing transformation of the company toward online operations and the enhancement of risk management under the Group's "finance + technology" and "finance + ecosystem" strategies. Operating profit attributable to shareholders of the parent company in the first half of 2020 increased by 1.2% year on year to RMB74,310 million. The annualized operating ROE was 21.6%. Net profit declined by 28.2% year on year to RMB75,968 million and net profit attributable to shareholders of the parent company declined by 29.7% year on year to RMB68,683 million. Ping An attaches great importance to shareholder returns, therefore despite the difficult operating environment, Ping An will pay an interim dividend of RMB0.80 per share in cash, up 6.7% year on year.

Under the "finance + technology" and "finance + ecosystem" strategies, Ping An continued its transformation journey, applying leading technological capabilities to empower its core financial business and accelerate the development of its five ecosystems, in financial services, health care, auto services, real estate services, and smart city services. Total revenue contribution from the technology business in the first half of 2020 increased by 11.2% year on year to RMB42,732 million.

Top business highlights in 1H2020:

1. Ping An maintained steady business performance. In the first half of 2020, operating profit attributable to shareholders of the parent company rose by 1.2% year on year to RMB 74.310 million, culminating in a 21.6% annualized operating ROE.
2. Ping An continues to pay dividends to shareholders. Ping An attaches great importance to shareholder returns, therefore despite the difficult operating environment, Ping An will pay an interim dividend of RMB0.8 per share in cash, up by 6.7% year on year.
3. Retail customer development continued to yield strong results. As of June 30, 2020, retail customers increased by 4.6% from the beginning of 2020 to 210 million. In the first half of 2020, Ping An acquired 18.09 million new customers, of whom 35.4% were sourced from internet users of the Group's five ecosystems. Contracts per customer rose by 1.9% to 2.69 from the beginning of 2020.
4. The value contribution of corporate business cross-selling grew steadily. In the first half of 2020, new financing achieved through corporate business cross-selling climbed by 170.2% year on year. Written premium of the corporate channel achieved through cross-selling grew by 168.4% year on year.
5. Ping An Life utilized its technology to mitigate the impact of COVID-19 and continued to advance its reform program. In quick response to the epidemic, Ping An Life established an industry-leading online operations model. Sales agent numbers began to recover in the second quarter of 2020, with the number of agents increasing by 1.2% versus March 31, 2020. In the first half of 2020, operating profit after tax of the life and health insurance business rose by 6.4% year on year to RMB51,535 million. Meanwhile, Ping An Life steadily advanced multiple reform projects to ensure sustainable, high-quality and healthy growth.
6. The property and casualty insurance business grew steadily. In the first half of 2020, Ping An Property & Casualty's premium income grew by 10.5% year on year, despite the COVID-19 epidemic. The company maintained better-than-industry business quality, with a combined ratio of 98.1%. As of June 30, 2020, the "Ping An Auto Owner" app reached more than 109 million registered users, up 17.8% year to date, and recorded more than 27 million monthly active users in June 2020.
7. The banking business maintained stable business growth and strengthened risk provisions. In the first half of 2020, Ping An Bank's revenue increased by 15.5% year on year to RMB78,328 million. As of June 30, 2020, retail assets under management (AUM) exceeded RMB2.3 trillion and retail customers exceeded 100 million. The provision coverage ratio rose by 31.81pps to 214.93% from the beginning of 2020.
8. Health care ecosystem developed rapidly. During the peak of the COVID-19 epidemic, Ping An Good Doctor's online platform was accessed 1.11 billion times. In the first half of 2020, Ping An Good Doctor's revenue from online health care services grew strongly by 106.8% year on year. Ping An Smart Healthcare provided services to over 17,000 medical institutions in 90 cities across China and helped approximately 413,000 doctor. Ping An HealthKonnect covered more than 200 cities across China, serving more than 800 million people and building 544 diagnostics centers nationwide.
9. Ping An continued to develop its technological capabilities. As of June 30, 2020, Ping An's technology patent applications increased by 4,625 year to date to 26,008. Ping An topped the 2020 global fintech patent ranking list for the second consecutive year with more than 1,500 applications. Furthermore, the Group won multiple international honors in AI, healthtech and other fields. OneConnect's Gamma Lab topped the rankings in two sub-tasks at the Document Visual Question Answering (DocVQA) competition held by the Conference on Computer Vision and Pattern Recognition (CVPR 2020). Technology companies under the Group have been recognized by the market. As of June 30, 2020, the market values of Ping An Good Doctor and OneConnect increased by 108% and 84%, respectively compared to the beginning of the year.
10. Ping An diligently fulfilled its social responsibilities. Ping An's MSCI ESG rating has been upgraded to "A". The Group furthered sustainable development at the company and built the AI-ESG, a smart rating system to promote responsible investment. As of June 30, 2020, Ping An's responsible investments exceeded RMB1.18 trillion. Meanwhile, the Group focused its efforts on targeted poverty alleviation, and provided RMB24,905 million for industrial poverty alleviation through the Ping An Rural Communities Support initiative. Amid the COVID-19 epidemic, the Group rapidly acted to offer insurance protection, medical support, and donations. The donated supplies and cash totaled more than RMB175 million.
11. Ping An's brand value continued to increase. In 2020, the Group ranked 21^st in the Fortune Global 500 list, 7^th in the Forbes Global 2000 list, and 38^th in the BrandZ^TM Top 100 Most Valuable Global Brands list, taking the top spot among global insurance brands for the fifth time.

Customer Development: Under the integrated financial services model, retail customer development continued to yield strong results and corporate business achieved a steady increase in value contribution.

Affected by the COVID-19 epidemic, the Group's retail operating profit declined by 2.3% year on year to RMB65,025 million in the first half of 2020. Retail business accounted for 87.5% of the Group's operating profit attributable to shareholders of the parent company.

Retail customer development continued to yield strong results thanks to the Group ecosystem development. As of June 30, 2020, retail customers increased by 4.6% from the beginning of 2020 to 210 million. In the first half of 2020, Ping An acquired 18.09 million new customers, of whom 35.4% were sourced from internet users of the Group's five ecosystems. Contracts per customer rose by 1.9% from the beginning of 2020 to 2.69. With the continued expansion of the customer base, the Group's retail cross-selling also continued to develop. A total of 78.28 million retail customers held multiple contracts with different subsidiaries, up 6.2% year to date. The Group's cross-selling penetration rate rose 0.5 pps year to date to 37.3%. The Group's ecosystems continued to attracted new users. As of June 30, 2020, the Group's internet users increased by 8.7% year to date to 560 million. Five of Ping An's portfolio of apps have achieved more than 100 million registered users, respectively.

Corporate business achieved significant growth in scale and steady increase in value contribution. In the first half of 2020, the written premium of the corporate channel achieved through cross-selling rose 168.4% year on year. New financing scale achieved through corporate business cross-selling increased by 170.2% year on year. As of June 30, 2020, the outstanding balance of retail assets referred by corporate business was RMB1.34 trillion, while the underlying assets invested by insurance funds sourced from corporate business was RMB498,504 million, up RMB59,049 million year to date.

Financial Businesses: Operating profit after tax of the life and health insurance business rose by 6.4% year on year and sales agent activities recovered. Property & Casualty's premium income grew by 10.5% year on year. Banking business continued to improve the quality and efficiency of business operations.

Life and health insurance business proactively responded to the challenging environment by upgrading its online operating models and furthering its "product+" and "technology+" strategies to ensure long-term sustainable growth. In the first half of 2020, operating profit after tax of the life and health insurance business rose by 6.4% year on year to RMB51,535 million, with a 39.2% annualized operating ROE. With the impacted of the COVID-19 epidemic, new business value (NBV) of the life and health insurance business for the first half of 2020 decreased by 24.4% year on year to RMB31,031 million. Ping An Life continued to leverage technologies to innovate and upgrade online operations. As of June 30, 2020, sales agents increased by1.2% from March 31, 2020.

Property & Casualty business maintained stable growth and better-than-industry business quality. In the first half of 2020, Ping An Property & Casualty expanded its premium income as well as market share by 10.5% and 0.5 pps year on year, respectively. Overall combined ratio rose by 1.5 pps year on year to 98.1% driven by a short-term increase in guarantee insurance claims paid, resulting from COVID-19, indicating better-than-industry business quality. Operating profit declined by 17.6% year on year to RMB8,274 million. The company delivered an annualized operating ROE of 17.2%. As of June 30, 2020, the "Ping An Auto Owner" app had more than 109 million registered users. The online claims service is a market leader with user claim reporting now taking only two minutes on average and claims settlement within three minutes.

The Group's investment portfolio of insurance funds rose by 7.3% to RMB3.44 trillion, as of June 30, 2020, with 17.2% of these assets marked to market through the profit and loss under IFRS 9. Ping An secured the safety and soundness of the investment portfolio by taking effective measures to lower investment risks. In the first half of 2020, the portfolio generated an annualized net investment yield of 4.1% and an annualized total investment yield of 4.4%.

Bank business maintained stable business growth while further strengthened risk provisions. In the first half of 2020, Ping An bank's revenues grew by 15.5% year on year to RMB78,328 million. The net non-interest revenue for the first half of 2020 increased by 15.8% year on year as the bank continued to optimize its business portfolio. The cost rate of liabilities decreased by 27 pps year on year, retail customer assets exceeded RMB2.3 trillion, the retail AUM revenue per outlet increased by 45% year on year, and the number of retail customers exceeded 100 million. The bank further strengthened risk provisions and overall asset quality risk was under control, with a non-performing loan ratio of 1.65%, the same as that at the beginning of 2020. The provision coverage ratios for non-performing loans rose by 31.81 pps from the beginning of 2020 to 214.93%.

Technology Business: Ping An continued to invest heavily in R&D and explore new business models. The total revenue of technology business for the first half of 2020 increased by 11.2% year on year to RMB 42,732 million.

Ping An continued to explore innovative fintech and healthtech business models and accelerated the development of its five ecosystems, in financial services, health care, auto services, real estate services, and smart city services. The total revenue contribution of the technology business for the first half of 2020 increased by 11.2% year on year to RMB42,732 million. As of June 30, 2020, the total valuation of the technology companies reached USD70 billion, and the market values of Ping An Good Doctor and OneConnect increased by 108% and 84%, respectively, from the beginning of the year.

Ping An continued to invest heavily in R&D to build leading technological capabilities. As of June 30, 2020, Ping An's patent applications increased by 4,625 on the year to date to 26,008. It ranked first on the global fintech patent ranking list for the second consecutive year and won multiple international honors in AI, healthtech and other fields. As of June 30, 2020, Ping An made significant progress in developing its five ecosystems by providing comprehensive scenario services for its 560 million internet users. Empowering core financial services businesses with technology, the Group realized AI-driven product sales of RMB 176.3 billion in the first half of 2020.

Lufax Holding, a leading technology-empowered personal financial services platform in China, achieved steady business growth. As of June 30, 2020, Lufax Holding achieved a 12.4% year-to-date increase in the balance of loans under management. The online wealth management business recorded steady growth with client assets rising 8.0% year to date.

OneConnect, China's leading technology-as-a-service cloud platform for financial institutions, saw a strong rise in revenue. As of June 30, 2020, OneConnect served a total of 630 banks and 100 insurance institutions. In the first half of 2020, the company grew its revenue by 39.7% year on year despite the impact of COVID-19.

Ping An Good Doctor, China's leading online health care services platform, maintained strong growth in core business and continually improved business performance. As of June 30, 2020, the platform reached a total of more than 346 million registered users. In the first half of 2020, Ping An Good Doctor's average daily consultations increased significantly by 26.7% year on year to 831,200 times per day. Ping An Good Doctor's revenue amounted to RMB2,747 million in the first half of 2020, driven by a year-on-year increase of 106.8% in the revenue of the online health care business. Meanwhile, as operating efficiency improved, net loss for the first half of 2020 decreased to RMB213 million.

Ping An HealthKonnect aims to become a technology company that fully empowers the health care ecosystem. In the first half of 2020, Ping An HealthKonnect won the bid for the "macro-decision-making big data application system" and "system support software" construction projects for the social health insurance (SHI) platform of Qinghai Province. As of June 30, 2020, Ping An HealthKonnect covered more than 200 cities in nearly 30 provinces across China, serving more than 800 million people and building 544 diagnostics centers nationwide.

Autohome, China's leading online auto services platform, maintained stable business growth. In the first half of 2020, Autohome's revenue and net profit for the first half of 2020 fell slightly by 1.6% and 1.9% year on year respectively due to the 22.4% year-on-year decline of the passenger vehicle sales in China. While the revenue from the online marketplace business for the first half of 2020 grew strongly by 35.7% year on year as a result of higher demand for online marketing services from automakers and dealers amid the epidemic.

Ping An Smart City, which is committed to promoting sustainable city development with services to government, business, and citizen in China, served 118 cities, nearly 600,000 enterprises, and over 87 million citizens. In government services, Ping An helped local governments increase their efficiency in fiscal, performance and environmental management through its integrated smart government service platform. The smart government system has been deployed in 25 cities and 52 commissions, offices and bureaus throughout China. In business development, Ping An's smart market supervision platform covers more than 600 supervisory scenarios and more than 8000 risk points. The accuracy rate of early warning recorded was more than 90% and the accuracy rate of risk identification was as high as 85%. In citizen services, Ping An Smart Healthcare provides services to more than 17,000 medical institutions in 90 cities. AskBob, the Ping An developed smart consultation and treatment assistant tool, helped nearly 413,000 doctors improve their consultation and treatment efficiency and capacity.

Ping An diligently fulfilled its social responsibilities and furthered sustainable development. The Group's MSCI ESG rating has been upgraded to "A" and the Group completed the development of its AI-ESG platform, a smart rating system to promote responsible investment in China. As of June 30, 2020, the Group's responsible investments amounted to RMB1.18 trillion. The Group provided RMB 24,905 million for industrial poverty alleviation，built or upgraded 949 rural clinics and 1,054 rural schools, and trained 11,175village doctors and 13,987 village teachers through the Ping An Rural Communities Support initiative. Amid the COVID-19 epidemic, Ping An rapidly acted to offer insurance protection, medical support, and donations. The donated supplies and cash totaled more than RMB175 million.

Looking forward, Ma Mingzhe, Chairman of Ping An Group, said: "2020 has been challenging, having witnessed a complex fast-changing macro-environment, the dramatic impact of COVID-19, and highly volatile global markets. At Ping An, 2020 is a year of reform for the life insurance business as we pivot the business toward high-value protection products. With challenges come opportunities, now is the time for reform. At the heart of Ping An Life's efforts, to build platforms for long-term sustainable growth, are digital operations established under our "channel + product" strategy and digitization, under which we are completing the digitization of our life insurance business. The reform projects are progressing steadily and paying off gradually. We aim to become not only the largest life insurer, but also; a market leader, an industry benchmark, the customers' first choice, and a world-leading life insurer. Today, reform is Ping An's biggest historic mission and direction. We will uphold the faith in reform and walk the walk with a strong sense of mission and responsibility. We are determined to carry out the reform and transformation while maintaining daily operations. We will make the reform a resounding success by building platforms for Ping An's sustainable high-quality development, providing customers and society with reassuring, reliable insurance protection, and contributing our wisdom to the life insurance industry in China and beyond."

– End –

About Ping An Group

Ping An Insurance (Group) Company of China, Ltd. ("Ping An") is a world-leading technology-powered retail financial services group. With over 210 million retail customers and 560 million Internet users, Ping An is one of the largest financial services companies in the world.

Ping An has two over-arching strategies, "pan financial assets" and "pan health care", which focus on the provision of financial and healthcare services through our integrated financial services platform and our five ecosystems of financial services, health care, auto services, real estate services and smart city services. Our "finance + technology" and "finance + ecosystem" strategies aim to provide customers and internet users with innovative and simple products and services using technology. As China's first joint stock insurance company, Ping An is committed to upholding the highest standards of corporate reporting and corporate governance. The Group is listed on the stock exchanges in Hong Kong and Shanghai.

In 2020, Ping An ranked 7^th in the Forbes Global 2000 list and ranked 21^st in the Fortune Global 500 list. Ping An also ranked 38^th in the 2020 WPP Kantar Millward Brown BrandZ^TM Top 100 Most Valuable Global Brands list. For more information, please visit www.pingan.cn.

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SOURCE Ping An

FAQ

What were the key financial results for Ping An in the first half of 2020?

Ping An reported an operating profit of RMB 74.31 billion, up 1.2% year-on-year, while net profit decreased by 28.2% to RMB 75.97 billion.

How much is Ping An's interim dividend for 2020?

Ping An announced an interim dividend of RMB 0.80 per share, a 6.7% increase from the previous year.

What is the growth rate of Ping An's retail customer base?

As of June 30, 2020, Ping An's retail customer base grew by 4.6% to 210 million.

How did Ping An's technology business perform in the first half of 2020?

The technology business revenue increased by 11.2% year-on-year to RMB 42.73 billion.

What challenges did Ping An face in its life insurance segment?

The new business value for Ping An's life insurance sector fell by 24.4% year-on-year.