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Great Eastern's Q2 net profit falls 63% from a year ago without disposal gain
GREAT Eastern Holdings reported on Wednesday that its net profit for the second quarter ended June 30, 2016, fell 63 per cent to S$102.2 million, compared to S$277.7 million a year ago.
As a result, net profit for the first-half fell 60 per cent to S$199.1 million from S$498.2 million a year ago.
The insurance arm of OCBC Group said the lower profit was attributed to the S$18.7 million loss on disposal of the group's Vietnam subsidiary, unfavourable financial markets and low interest rate environment.
"This was brought about mainly by unrealised fair value losses from the valuation of assets and liabilities in the insurance business amid unfavourable financial market conditions,'' it explained.
Net profit from a year ago (Q2 2015) also included a S$119.9 million gain on disposal of its investments in New China Life Insurance Company Ltd.
Gross premiums for Q2 increased 25 per cent to S$2,276.3 million, compared to S$1,823.0 million a year ago.
Profit from insurance business was S$116.2 million in Q2, compared to S$139.1 million a year ago. This was 16 per cent lower mainly because of unrealised losses from the widening of credit spreads and sharp decline of the long term interest rates.
Profit from general insurance stood at S$8.4 million in Q2, compared to S$6.9 million a year ago due to a release of reserves in Malaysia.
Chief executive officer, Khor Hock Seng said the group remained positive on the long term prospects of the insurance business in Southeast Asia and would continue to implement initiatives to support its distribution partners and improve customer experience.
"Our positive Q2-16 performance is a direct result of building upon, and even surpassing, our Q1-16's sales momentum for our major markets, Singapore and Malaysia. While we maintain our focus to grow our core markets, we will increase efforts to build our business in Indonesia,'' Mr Khor said.
"I am confident that the group will be able to ride through the global macroeconomic uncertainty with our strong fundamentals and robust financial position,'' he added.
The board has declared an interim dividend of 10 cents per share, unchanged from a year ago.