Great Eastern Q4 profit falls 33% but posts full-year increase
GREAT Eastern Holdings G07 on Tuesday (Feb 22) posted a net profit of S$229.8 million for the fourth quarter ended Dec 31, 2021, down 33 per cent year on year from S$341.3 million.
The insurance arm of local bank OCBC said in its financial results this dip was due to the year-ago period recognising a one-off positive tax impact that arose from the finalisation of prior years' tax assessments.
In an earnings call on Tuesday, group chief financial officer Ronnie Tan also noted that the company's profits were affected significantly by market movement. While equity markets in 2020 experienced a strong rebound after they initially crashed due to the Covid-19 pandemic, they had been relatively stable in 2021.
For the quarter, the group saw operating profit, net of tax, from its insurance business increasing by 126 per cent to S$173.9 million, from S$76.8 million the previous year.
Non-operating profit for the insurance business for Q4 FY2021, however, dipped by 6 per cent on-year to S$44.7 million, from S$47.3 million.
Its Q4 FY2021 profit from shareholders' fund also tumbled 93 per cent to S$17 million from S$228.1 million in Q4 FY2020.
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Total weighted new sales (TWNS) for the 3 months sank 6 per cent year on year to S$496.9 million, from S$527.9 million, contrasting the quarter's new business embedded value (NBEV), which went up 9 per cent year on year to S$262 million from S$239.4 million.
Its directors have recommended a final dividend of S$0.55 per share, up from S$0.50 in H2 FY2020, for the second half-year ended Dec 31, 2021.
Upon approval by shareholders at the next annual general meeting, the dividend will be paid on May 5, 2022. Including an interim dividend of S$0.10 paid in August 2021, this would bring the full FY2021 dividend up to S$0.65 per share, increasing from S$0.60 in FY2020.
Overall in FY2021, net profit attributable to shareholders climbed 16 per cent to S$1.11 billion, from S$960.6 million in FY2020.
This translated to full-year earnings per share going up by 16 per cent year on year to S$2.35, from S$2.03.
The group said the increase in net profit was due to more favourable financial market conditions and higher operating profit from the insurance business, which inched up 3 per cent to S$752.9 million from S$730.7 million.
The full-year non-operating profit from the insurance business also returned to the black at S$289.7 million, from a non-operating loss of S$88.7 million in FY2020.
Gross premiums for the year went up 22 per cent to S$19 billion, from S$15.5 billion in FY2020.
Meanwhile, TWNS for FY2021 recorded an increase of 28 per cent year on year to SS1.97 billion from S$1.54 billion, driven by the strong contribution from all markets. NBEV ended the financial year 21 per cent higher at S$808 million, from S$669.5 million the previous year.
NBEV margin for the full year was down at 41 per cent from 43.4 per cent in FY2020, while NBEV margin for the fourth quarter of 2021 was up at 52.7 per cent, compared to 45.3 per cent a year earlier.
Tan said short-term savings products launched in the second and third quarters of 2021 resulted in "significantly higher sales".
He also noted that TWNS for the company's other channels in Singapore also rose to S$40.9 million for FY2021 from S$21.4 million a year earlier, with notable contributions from the Dependants' Protection Scheme (DPS). In April 2021, the company had become the sole insurer of the DPS, which is the term-life insurance scheme by the Central Provident Fund board.
Looking ahead, the group expects underlying headwinds from Covid-19 will persist, while rising interest rates, growing inflation concerns and geopolitical tensions are likely key factors that may impact its performance.
Group chief executive Khor Hock Seng noted that a key challenge for 2022 would be to manoeuvre the volatile markets and to look out for customer behavioural changes.
"But despite the volatility, we are doing well and are more resilient, and we hope to continue this resiliency going forward," Khor said.
Shares of Great Eastern finished Monday at S$21.58, declining 0.4 per cent or S$0.08.
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