Great Eastern Q2 profit up 76% to S$297.5m on improved financial market conditions

GREAT Eastern Holdings on Tuesday posted a net profit of S$297.5 million for the second quarter ended June 30, 2020, 76 per cent higher than the S$169 million a year ago.

This was due to higher operating profit and the higher valuation of investments as a result of improved financial market conditions during the quarter, the insurance arm of OCBC Bank said in a regulatory update.

Operating profit net of tax from the insurance business rose 16 per cent to S$185.7 million from S$159.4 million for the year-ago period. Meanwhile, non-operating profit came in at S$35 million, reversing from a loss of S$23.7 million.

Profit net of tax from shareholders' fund came in at S$85.3 million for the quarter, more than double the S$36.6 million the year before.

Due to a slow down of new business volume in Q2 amid restricted sales activities, particularly from the bancassurance channel, total weighted new sales fell 4 per cent to S$286.1 million, from S$296.8 million a year ago

New business embedded value was down 28 per cent to S$109.1 million, from S$151.4 million a year ago, mainly due to lower sales in Malaysia.

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For the first half ended June 30, 2020, net profit fell 35 per cent to S$331.4 million from S$511.7 million a year ago. This came amid unfavourable market conditions in the first quarter, Great Eastern said.

Earnings per share was S$0.70 for the first half, down 35 per cent from S$1.08 for the preceding year.

Driven by the Singapore business which registered a strong growth for the first six months of 2020, total weighted new sales for the first half rose 7 per cent to S$584.9 million, from S$544.2 million a year ago.

Meanwhile, profit net of tax from shareholders' fund declined 73 per cent to S$43.4 million, from S$160.8 million a year ago. New business embedded value for the first half fell 10 per cent to S$235.2 million, from S$261.2 million a year ago.

The board declared an interim one-tier tax-exempt dividend of 10 Singapore cents per ordinary share for the financial year ending Dec 31, 2020. This will be paid on Aug 26, after books closure on Aug 14.

Great Eastern group chief executive Khor Hock Seng said sales in core markets for Q2 were affected by the tighter movement restriction measures implemented due to the Covid-19 situation.

The bancassurance channel was significantly impacted as sales activities, which were largely conducted at bank branches, were restricted.

However, Great Eastern's agency force in Singapore was able to adapt swiftly and transition to operating digitally. This helped cushion the impact of restricted sales activities, according to Mr Khor.

Looking ahead, Great Eastern expects the economic outlook to be challenging, with volatility in the financial markets and the low interest rate environment continuing. This could impact the group's performance, it said.

Shares of Great Eastern closed at S$19.37 on Monday, down S$0.03 or 0.2 per cent.