HONG KONG - Ping An Insurance, China's second largest insurer listed in Hong Kong and Shanghai stock exchanges, said Tuesday that its net profit rose 27.9 percent year-on-year in the first half of 2010.
Ping An's net profit hit 9.87 billion yuan ($1.46 billion) in the first half, and its first-half-year revenue reached 93.8 billion yuan, up 28 percent from a year earlier, Ping An Chairman Ma Mingzhe said in a filing to the Hong Kong stock exchange.
Ping An's earnings per share stood at 1.3 yuan, up 27.5 percent year-on-year, said the company, which was based in South China's boomtown Shenzhen.
Strong growth in the first half was partly attributable to the sharp increase in written premiums of the insurance business, and partly due to the strong growth in profit generated by banking, securities and trust businesses, said Ping An.
On insurance business, Ping An said net profit in the first half rose 10 percent year-on-year to 7.64 billion yuan, from 6.94 billion yuan of the first half of 2009.
According to the statement, Ping An's first-year written premiums from individual life insurance business soared 52.1 percent year-on-year, and its premium income from property and casualty insurance business jumped 61.1 percent from a year earlier.
On banking operations, Ping An said its strategic investment in Shenzhen Development Bank made breakthrough progress and Ping An Bank delivered strong results and robust business growth in the first half.
Net profit from the banking division amounted to 1.10 billion yuan in the first half, a 91-percent surge from 577 million yuan a year earlier, it said.
Ping An said it held controlling 29.99 percent of shares of Shenzhen Development Bank, which had already started to contribute profit to Ping An since May.
"Our investment in the banking business achieved substantive results as we made steady progress in our strategic investment in Shenzhen Development Bank," said Ma.
While Ping An Bank achieved good performance, realizing a net profit of 900 million yuan in the first half of this year, a year-on-year increase of 56 percent. The bank's non-performing loan ratio was controlled at an industry leading level of 0.45 percent and capital adequacy ratio stood at 11.8 percent, according to the statement.
In future, Ping An said it would pursue on the restructuring and integration of Shenzhen Development Bank and Ping An Bank, aiming at a "win-win" situation for different parties.
Ping An said in June it was mulling over merging Ping An Bank and Shenzhen Development Bank as part of its long-term ambition to become "a leading international integrated financial services provider" with equal strength in banking, asset management and insurance.
Regarding securities business, Ping An said its net income of its brokerage unit more than doubled to 828 million yuan from 367 million yuan for the same period of 2009.
Strong results from its insurance, securities and banking businesses more than offset Ping An's weak performance in equity investments.
The company said as total investment income declined by 25.6 percent to 10,365 million yuan in the first half of this year, total investment yield fell to 3.7 percent from 4.8 percent, which was mainly due to the significant reduction in net realized and unrealized gains as a result of the depressed and volatile domestic stock market.
As the equity market remained volatile, Ping An shifted more funds to fixed maturity investments. As at June 30, the percentage of fixed-income products increased to 79.3 percent of total investments from 76 percent as at the end of last year, while the equity investments decreased from 10.8 percent to 8.1 percent.
According to the statement, Ping An again made Fortune's Global 500 list this year and was ranked top among the non-state owned enterprises in China's mainland. It occupied the 383rd position in the overall list.
In the first half, Ma said the world's financial markets were preoccupied with fears on Europe's sovereign debt crisis and concerns of a setback in the global economic recovery, while the Chinese economy continued its robust and steady growth.
Challenges remained, however, said Ma. In the second half this year, the Chinese economy would be facing challenges caused by the fade out of stimulus monetary policies and economic structural adjustments.
"As market expectations on the timing and magnitude of interest rates increase ease, it is possible that the bond yields will remain at a relatively low level. Together with the volatile stock market, all these will put pressure on our second half year results," he said.
Ma said Ping An would accelerate development of banking and investment businesses and take measures to reinforce foundations of the integrated platform of financial services and to fully support enhanced cross-selling in the second half this year.
