Ping An Continuously Improves Shareholder Returns with Cash Dividend and Share Repurchase Totaling RMB17.1 Billion in 1H 2019
HONG KONG and SHANGHAI, Aug. 15, 2019 /PRNewswire/ -- Ping An Insurance (Group) Company of China, Ltd. (hereafter "Ping An" or the "Group" or the "Company", HKEX: 2318; SSE: 601318) today announced its 2019 interim results for the six month period ended 30 June 2019.
Ping An achieved steady overall and core business growth for the first half of 2019 with operating profit attributable to shareholders of the parent company rising 23.8% year on year to RMB73,464 million. Benefiting from an RMB10,453 million one-off gain from a tax law change on commission expenses in the period, net profit grew 63.3% year on year to RMB105,738 million and net profit attributable to shareholders of the parent company rose 68.1% year on year to RMB97,676 million. With continuing financial sector restructuring, the Company continued to transform toward high-value businesses and improved its business portfolio. New business value ("NBV") margin of the life and health insurance business grew by 5.7 pps year on year to 44.7%.
In light of the robust operating profit growth and strong solvency position, Ping An continued to improve its dividend payout level and proposed an interim cash dividend of RMB13,680 million (equivalent to RMB0.75 per share), up 21.0% year on year. In addition, Ping An has been successfully implementing its A-share repurchase plan. As of 30 June 2019, the Company had repurchased RMB3,421 million worth of its A-shares by centralized bidding. (As of 31 July, the Company had repurchased about RMB5 billion worth of its A-shares in aggregate.) In the first half of 2017, the cash dividend and share repurchase totaled RMB17,101 million.
Adhering to its two-pronged "finance + technology" and "finance + ecosystem" strategies, Ping An continued to increase its investment in technology and strengthen its technological capabilities to empower its five ecosystems, namely financial services, health care, real estate services, auto services, and smart city services. The Group continued to expand its technology business by exporting innovative products and services. In the first half of 2019, the total revenue from the Group's technology businesses increased significantly by 33.6% year on year to RMB38,431 million.
Eight business highlights in the first half of 2019:
- Operating profit attributable to shareholders of the parent company grew 23.8% year on year, recording an unannualized operating return on equity ("Operating ROE") of 12.3%. Net profit attributable to shareholders of the parent company rose 68.1% year on year. The Group's unannualized operating return on embedded value ("Operating ROEV") was 11.2%.
- Retail operating profit rose 32.1% year on year, benefiting from a 9.5% rise in the number of retail customers, a 7.9% rise in the number of contracts per customer, and a 20.9% rise in operating profit per customer. The retail business accounted for 90.6% of the Group's operating profit attributable to shareholders of the parent company. As at 30 June 2019, Ping An had 196 million retail customers, 35.4% of whom held multiple contracts with different subsidiaries.
- The Group acquired 20.09 million new retail financial customers in the first half of 2019, 33.8% of whom were sourced from its five internet ecosystems. The number of the Group's internet users increased by 6.9% from the beginning of the year to 576 million.
- The life and health insurance business delivered an unannualized Operating ROEV of 14.2% in the first six months of the year, with Embedded Value rising 16.3% year on year. Business quality improved as evidenced by NBV margin rising 5.7 pps year on year to 44.7%.
- Total revenue of the technology business grew by 33.6% year on year to RMB38,431 million. As at 30 June 2019, the technology companies had a total valuation of USD70 billion.
- Ping An's technology patent applications increased to 18,050, up by 5,779 from the beginning of the year, covering fields including financial services, health care and smart city services. The applications include 3,959 filed under the Patent Cooperation Treaty (PCT) and abroad. In terms of the number of patents, Ping An has moved to the top tier among international financial institutions. As at 30 June 2019, Ping An Group had 101,000 employees working within its technology business, 32,000 of whom are in technological R&D.
- Artificial intelligence ("AI") powered interviews, training and sales assistance for insurance agents have been widely adopted by Ping An Life Insurance. AI now covers 100% of sales agent recruitment interviews. Ping An Property & Casualty has applied technologies such as smart robots and optical character recognition ("OCR"), achieving cost savings of approximately RMB100 million. Speech robots have been widely used in businesses including banking and insurance, increasing customer service efficiency by 20%.
- Over 40 AI-based disease prediction models have gone live, with an accuracy rate of over 90%. Our 50 plus smart medical image recognition models cover nine human body systems, with an accuracy rate of over 90%. AskBob, an AI-based medical decision support tool, now supports consultation and treatment of over 1,500 diseases, with an accuracy rate of over 95% for common diseases. AskBob has been deployed at over 1,200 medical institutions. Empirical evidence shows that AskBob can save doctors nearly 30% of time of diagnosis/treatment.
Significant achievement in customer development, with retail operating profit growing by 32.1% year on year
As of 30 June 2019, the total number of Ping An's retail customers reached 196 million, up 6.6% from the beginning of the year. In the first half of 2019, Ping An acquired 20.09 million new customers, of whom 33.8% were sourced from the Group's five internet ecosystems. The operating profit per customer grew 20.9% year on year to about RMB340, while each customer held approximately 2.58 contracts on average, up 7.9% from the beginning of 2019.
Cross-selling of retail customers further increased and customer value grew steadily. In the first half of 2019, the Group posted a 32.1% increase year on year in its retail operating profit to RMB66,576 million, representing 90.6% of the Group's operating profit attributable to shareholders of the parent company, up 5.7 pps year on year. A total of 69.37 million retail customers of the Group held multiple contracts with different subsidiaries, up 9.0% from the beginning of the year, accounting for 35.4% of total customers, up 0.8 pps from the beginning of the year.
Peter Ma, Chairman and CEO of Ping An, said, "We will always be customer-centric and continuously enhance our technological capabilities to empower product innovation and optimization as well as service improvement. We will continue to upgrade customer experiences and boost both retail customer value and corporate value."
Financial businesses: Life & Health NBV margin improved to 44.7%, Property & Casualty operating profit grew 69.5% year on year, and Banking achieved more than 70% of its net profit from retail business
Ping An consolidated its strong financial foundations and sought technological empowerment to develop innovative applications for its core business pillars. All core lines of its business grew steadily.
Ping An continued to implement the two major strategies of "product +" and "technology +." The life & health insurance business grew steadily. Thanks to high-value, high-protection product sales strategies, the Life & Health NBV margin grew by 5.7 pps year on year to 44.7%. NBV grew by 4.7% year on year to RMB41,052 million against a challenging backdrop. Life & Health's operating profit after tax rose 36.1% year on year to RMB48,433 million. The residual margin stood at RMB867,390 million, up 10.3% from the beginning of 2019.
Technological applications to the life and health insurance business have continuously evolved. The AI interview robot has been applied to 100% of sales agent recruitment interviews. AskBob, our smart chatbot, can achieve a Q&A accuracy rate of 95% when answering questions from agents. AskBob's task inquiry and smart processing functionalities cover 90% of frequent requirements of agents.
Property & Casualty maintained high business quality with strong management and risk screening capabilities. In the first half of 2019, Ping An Property & Casualty recorded a premium income of RMB130,466 million, up 9.7% year on year, while achieving a better-than-industry combined ratio of 96.6%. Property & Casualty achieved an unannualized operating ROE of 12.4%, with the operating profit up by 69.5% year on year to RMB10,039 million.
Ping An Property & Casualty developed AI-powered image-based loss assessment and precise customer profiling technologies. Capitalizing on these technologies, Ping An Property & Casualty launched the "Ping An Motor Insurance Trust Claim" service for auto owners with safe driving behaviors. Through this service, Ping An Property & Casualty shortened the average turnaround time of a single claim to 168 seconds, with no back-end manual operation involved.
The Company continued to optimize the asset allocation of insurance funds. In the first half of 2019, the investment portfolio's annualized net investment yield reached 4.5%, up 0.3 pps year on year. The Company's annualized total investment yield was 5.5%, up 1.5 pps year on year, surpassing the Group's ultimate assumption.
Banking business maintained steady growth through continued transformation toward retail banking and empowering services with technology. During the Reporting Period, Ping An Bank ("the Bank") recorded RMB15,403 million in net profit, up 15.2% year on year. The Bank made significant progress in its transformation toward retail banking, with retail business accounting for 56.9% of revenue and 70.2% of net profit, representing increases of 5.7 pps and 2.3 pps, respectively. Asset quality continued to improve, with the non-performing loan ratio and percentage of special mention loans down 0.07 pps and 0.25 pps respectively from the beginning of 2019.
In the first half of 2019, Ping An Bank increased its investment in technology, with IT capital expenditures and expenses increasing 36.9% year on year. Ping An Bank has built an AI middle office, a data middle office, a private cloud, and a distributed Platform as a Service (PaaS) to promote fintech applications and empower business development.
Technology business: Rapid growth in revenues, continuously increasing technological R&D investments and technology export
Ping An continued to build its five ecosystems, namely financial services, health care, auto services, real estate services, and smart city services. Capitalizing on Ping An's innovative business model and state-of-the-art technology capabilities, the Company has achieved rapid growth in financial services, health care and smart city services. In the first half of 2019, the technology business recorded RMB38,431 million in revenue, up 33.6% year on year.
Lufax Holding maintained steady profit growth by seeking innovations in wealth management, retail lending and government finance. In the first half of 2019, the number of registered users of its platform reached 42.74 million, representing an increase of 5.9% from the beginning of the year. As at 30 June 2019, the balance of loans under management rose by 8.8% to RMB407,855 million compared with the beginning of 2019. The ratio of loans more than 30 days overdue was 2.2%, significantly better than the industry. As of 30 June 2019, Lufax Holding had launched Smart Fiscal Cloud projects in nine provinces and cities across China, providing them with customized smart fiscal management solutions.
OneConnect continued to provide comprehensive fintech solutions for financial institutions across the industry. As of 30 June 2019, OneConnect had provided services to 3,707 financial institutions, including 615 banks, 81 insurers, and 3,011 other non-bank financial institutions. OneConnect entered into cooperation agreements with 27 institutions in 10 overseas countries or regions and secured a virtual banking license from the Hong Kong Monetary Authority.
Ping An Good Doctor continued to enhance its healthcare service network and recorded significant revenue growth, benefiting from the rapid growth of its core businesses. As of 30 June 2019, Ping An Good Doctor had provided services to 289 million users through 1,193 in-house medical staff members. During the Reporting Period, Ping An Good Doctor's revenue grew by 102.4% year on year to RMB2,273 million, and its net loss narrowed 38.3% year on year to RMB274 million. The number of paying members of online health care services reached 1,438,600.
Ping An HealthKonnect won the bids for the macro-decision making big data application subsystem and the operation monitoring subsystem of the National Healthcare Security Administration to empower social health insurance (SHI) management services. As of 30 June 2019, Ping An HealthKonnect had provided SHI management services for SHI fund managers in over 200 cities, covering over 800 million insured members.
Autohome continued to provide auto customers with diverse products and services and achieved rapid growth in all lines of business. During the Reporting Period, Autohome recorded RMB3,921 million in revenue, representing a year-on-year growth of 24.2%. Net profit grew 23.1% year on year to RMB1,556 million. In the second quarter of the year, revenue increased by 23.5% year on year to RMB2,309 million. Autohome continued to vigorously develop its data business to increase conversion rates of automakers and dealers. Thanks to an increase in revenue from data products and auto finance, Autohome grew its online sales revenue in the second quarter of the year by 97.2% year on year to RMB392 million.
Under the three philosophies of "smart planning & decision, smart management & operation, and smart impact assessment," Ping An serves the country and society in government services, economic development, and people's livelihood. Ping An's smart city business covers over 100 cities across China. Ping An's integrated business credit platform covers over three million business entities, with an accuracy rate of 90% in identifying enterprises with abnormal credit profiles. In cities where Ping An's smart integrated traffic management platform was adopted, their traffic accident rates dropped by 10%, and the time of traffic jams on key roads dropped by 30%.
We proactively fulfill our responsibilities to all stakeholders. Regarding sustainable development as a strategy of the Group, Ping An has fully integrated ESG (Environment, Social and Governance) standards into business operations and established the ESG policy regime to ensure long-term steady growth. Also, we have furthered the Ping An Rural Communities Support comprising the Village Officer Program, Village Doctor Program and Village Teacher Program for smart poverty alleviation via industry promotion, health care and education support. As of 30 June 2019, we had implemented the Ping An Rural Communities Support in 13 provinces or autonomous regions across China. We had input RMB10,373 million for poverty alleviation, built or upgraded 622 rural clinics and 607 rural schools, and trained 6,926 village doctors and 5,898 village teachers.
Ping An Chairman and CEO Peter 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. Despite current global economic complexities, we firmly believe that China's economy will grow strongly in the long run. Under the 'finance + technology' and 'finance + ecosystem' strategies, we will adhere firmly to our original aspiration, strengthen our core financial businesses, and fulfill our duties as an insurer. We will give back to society by empowering villages through the Ping An Rural Communities Support. We will promote data-driven smart operations, grow our technology business, and develop innovative ecosystem services including smart city services. We will continue to gain better insight into customer needs, optimize consumer experience, and improve our integrated one-stop financial services. We will continue to create value for customers and shareholders by delivering sustainable business growth and take steady steps to become a world-leading technology-powered retail financial services group.
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 196 million retail customers and 576 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 healthcare," 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 + ecosystems" strategies aim to provide customers and internet users with innovative and simple products and services. As China's first joint stock insurance company, Ping An Group is committed to upholding the highest standards of corporate reporting and corporate governance. The Company is listed on the stock exchanges in Hong Kong and Shanghai.
Ping An ranked 7th on the Forbes Global 2000 list and 29th on the Fortune Global 500 list. Ping An also ranked 40th on the 2019 WPP Millward Brown BrandZ(TM) Top 100 Most Valuable Global Brands list. For more information, please visit www.pingan.cn.
SOURCE Ping An Insurance (Group) Company of China, Ltd.