Ping An’s profit rises as stock market rally boosts returns

[BEIJING] Ping An Insurance (Group) Co’s profit rose 36 per cent in the first half, as China’s stock-market rally bolstered investment returns. 

Net income climbed to 92.6 billion yuan (US$13.8 billion) in the six months ended June 30, from a year earlier, the Shenzhen-based company said in a filing to the Hong Kong stock exchange on Thursday (Aug 20).

Operating profit, which the insurer says better reflects performance by stripping out short-term investment volatility and one-time items, increased 8.3 per cent.

China’s benchmark CSI 300 Index rose 8 per cent in the first half as artificial intelligence-related stocks surged, boosting the value of insurers’ stock portfolios as the industry expanded equity holdings. New business value of Ping An’s backbone life operations maintained solid growth amid demand for savings products, while profit at its banking unit also expanded.

Total investment income expanded 42 per cent to 136.9 billion yuan, according to the filing. Net realised and unrealised gains on investments jumped about 20 times to 60.4 billion yuan. Net impairment losses on financial assets rose 37 per cent to 39.5 billion yuan.

Larger rival China Life Insurance’s preliminary results last month showed net income may jump as much as 235 per cent for the first half. That was likely aided by the strong equity market performance and the company’s greater exposure to high-dividend yield and growth-theme stocks such as those tied to AI, Bloomberg Intelligence analyst Steven Lam wrote in a note.

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Ping An holds a bigger proportion of its equity holdings under an accounting category known as OCI, whose fair-value changes can only be booked as “other comprehensive income” rather than profit or loss, reducing the sensitivity of its investment returns to stock market movements.

China’s equity market rally has run out of steam this quarter, as global appetite for AI stocks weakened. Ping An shares have fared worse, falling 17 per cent in Hong Kong trading this year. The stock fell 0.4 per cent before the results. 

New business value, which measures the profitability of new life policies sold, grew 11.2 per cent in the first half. That slowed from a 21 per cent expansion in the first three months. BLOOMBERG