Ping An Reports Steady YoY Growth of 4.9% in Operating Profit Attributable to Shareholders of the Parent Company in 2020
HONG KONG andSHANGHAI,Feb. 3,2021 --Ping An Insurance (Group) Company of China,Ltd. (hereafter "Ping An",the "Company" or the "Group",HKEX: 2318; SSE: 601318) today announced its financial results for the year ended December 31,2020.
The year 2020 was extraordinary. We were challenged by COVID-19 and the economic fallout from the pandemic. Ping An went all out in three fields,namely financial services,technology,and community support,to prevent and contain COVID-19,as well as help resume work and production. The Group provided more than RMB18 billion in financial support to enterprises,customers and front-line medical institutions affected by the epidemic,donated over RMB180 million in money and materials,provided approximately 8 million healthcare workers and 15,000 front-line workers with free exclusive insurance with a total insured amount of over RMB13.5 trillion. In addition,the year 2020 witnessed the endgame of China's battle against poverty. The Company further advanced Ping An Rural Communities Support by capitalizing on its "finance + technology" capabilities and advantages. The Group increased industrial poverty alleviation loans by over RMB14 billion year on year in poverty-stricken areas in the Three Regions and Three Prefectures. In 2020,Ping An actively responded to the state's call to improve the quality and efficiency of financial services for the real economy. As of December 31,2020,the Company invested a cumulative total of over RMB5 trillion of financial resources,including insurance funds and bank credit,to support the real economy and China's "dual circulation" strategy.
In 2020,facing the challenges of COVID-19,Ping An achieved sustained and steady business growth for the year. The Group continued to further pursue its "finance + technology" and "finance + ecosystem" transformation strategies and continued to enhance its data-driven operational capabilities. In 2020,the Group achieved a 19.5% operating ROE with operating profit attributable to shareholders of the parent company rising by 4.9% year on year to RMB 139,470 million. Net profit attributable to shareholders of the parent company declined 4.2% year on year to RMB143,099 million.
Despite the short-term adverse impact of COVID-19,Ping An continued to reward its shareholders. The annual cash dividend per share for 2020 grew by 7.3% year on year to RMB2.20.
In addition,The Board held a meeting on February 3,2021,reviewing and resolving the Resolutions regarding Considering Director Candidates for the 12th Session of the Board. In order to continuously improve corporate governance and adopt the best practices of global corporate governance,and to ensure that the number of Independent Non-executive Directors represent more than one-third of the Board,it is proposed that one Independent Non-executive Director seat will be added to the 12th session of the Board and one Executive Director seat will correspondingly be reduced. As such,the total number of Directors will remain at 15.These changes are intended to ensure the decision-making professionalism and independence of the Board of Directors is further enhanced and is in line with the best standards of international corporate governance.
Ten business highlights in 2020:
1. Profit grew steadily.The Group achieved a 19.5% operating ROE with operating profit attributable to shareholders of the parent company rising by 4.9% year on year to RMB139,470 million.
2. Cash dividends continued to increase. Despite the short-term adverse impact of COVID-19,Ping An continued to reward its shareholders. The annual cash dividend per share for 2020 grew by 7.3% year on year to RMB2.20.
3. Retail customer development yielded strong results. As of December 31,the Group's retail customers increased to over 218 million,up 9.0% from the beginning of 2020. In total 37.02 million new customers were acquired,36.0% of whom were sourced from internet users of the Group's ecosystems. Contracts per customer rose by 4.5% from the beginning of 2020 to 2.76. The number of internet users grew 16.0% from the beginning of 2020 to over 598 million.
4. The corporate business cross-selling model achieved steady growth.Ping An continued to extend its "1+N" integrated financial business model to the corporate business,and took a segmented approach to customer development. Ping An provided national strategic customers and regional key customers with integrated "commercial banking + investment banking + investment" services,while serving small and micro-business customers online. In 2020,the new financing scale achieved through corporate business cross-selling rose 69.7% year on year. The written premium of the corporate channel achieved through cross-selling grew by 84.8% year on year.
5. Insurance business grew steadily.In quick response to COVID-19,Life & Health established an industry-leading online operations model,and increased operating profit after tax by 5.3% year on year to RMB93,666 million. Against the backdrop of auto insurance pricing reform and a complex business environment,Ping An Property & Casualty's premium income grew by 5.5% year on year and maintained better-than-industry business quality,with a combined ratio of 99.1%.
6. Ping An Bank maintained stable business operations and strengthened provisions. During the COVID-19 epidemic,Ping An Bank quickly responded by advancing online digital operations. In 2020,revenue grew by 11.3% year on year to RMB153,542 million and net profit rose by 2.6% year on year to RMB28,928 million. As of December 31,the non-performing loan ratio was 1.18%,down 0.47pps from the beginning of 2020. The provision coverage ratio rose by 18.28pps from the beginning of 2020 to 201.4%. In addition,Ping An Bank actively responded to the new regulatory requirements regards asset management and became the first in the industry to fully move non-standard wealth management assets back onto the balance sheet one year ahead of schedule with sufficient provisions and write-offs,thus significantly increasing the capability to prevent and withstand risks.
7. Ping An continued to develop its technological capabilities. As of December 31,Ping An's technology patent applications increased by 10,029 from the beginning of 2020 to 31,412. In global patent application rankings,Ping An ranked first for fintech and digital healthcare,and third for AI and blockchain.
8. Ping An's innovative businesses grew rapidly.Ping An Good Doctor's online medical services registered strong growth,with revenue up 82.4% year on year. Autohome's revenue from the online marketplace and other business grew by 34.4% year on year against the backdrop of a weak auto market. OneConnect's revenue grew rapidly by 42.3% year on year to RMB 3,312 million in 2020.
9. Ping An developed new China ESG benchmarks and diligently fulfilled its social responsibilities.Morgan Stanley Capital International (MSCI) upgraded Ping An's ESG rating to A in June 2020. Ping An rolled out its AI-ESG smart management platform to support responsible investments. Meanwhile,Ping An launched the "Xinhua CN-ESG Evaluation System",together with Xinhua News Agency's China Economic Information Service,to set new national ESG evaluation standards with Chinese characteristics. As of December 31,Ping An's responsible investments exceeded RMB1.03 trillion. Moreover,Ping An provided RMB 29,834million for targeted industrial poverty alleviation through Ping An Rural Communities Support.
10. Ping An's brand value continued to increase.In 2020,the Company ranked 21st in the FortuneGlobal 500 list,7th in the ForbesGlobal 2000 list,and 38th in the BrandZTM Top 100 Most Valuable Global Brands list (1st among global insurance brands for the fifth consecutive year).
Customer development: with its deepened integrated financial services strategy,the Company's retail business and corporate business continued to grow.
In 2020,the Group's retail operating profit grew by 0.1% year on year to RMB 122,977 million,reversing the negative growth in the first half of 2020 despite the impact of the COVID-19 epidemic. Retail business accounted for 88.2% of the Group's operating profit attributable to shareholders of the parent company.
Under the Company "finance + ecosystem" transformation strategy,the Group's retail business grew steadily.Ping An retail customers reached over 218million as of December 31,up 9.0% from the beginning of 2020.Of the 37million new retail customers Ping An acquired in 2020,36.0% were sourced from the Group's internet user base. Contracts per customer rose by 4.5% from the beginning of 2020 to 2.76. As the Group's retail cross-selling continued to deepen,retail customers holding multiple contracts with different subsidiaries accounted for 38.0% of total customers,up by 1.2 pps from the beginning of 2020. The Group's internet users increased by 16.0% from the beginning of 2020 to over 598 million,of which 404 million had not yet become its retail customers,indicating future growth potential ahead for Ping An. Five of Ping An's portfolio of apps have each accumulated more than 100 million registered users. In the last 5 years,the Company doubled the size of the retail customer base and also doubled the proportion of retail customers holding multiple contracts of the Group.
Corporate business grew steadily under the philosophy of integrated financial services,namely "one customer,multiple products and services."In 2020,the written premium of the corporate channel achieved through cross-selling rose by 84.8% year on year and new financing scale achieved through corporate business cross-selling increased by 69.7% year on year. As of December 31,the outstanding balance of retail assets referred by corporate business was RMB1.21trillion,while the underlying assets invested by insurance funds sourced from corporate business amounted to RMB519,022 million,with an increment of RMB147,906 million in 2020.
Financial services businesses: Ping An life and health insurance business's operating profit after tax increased by 5.3% year on year. Ping An Property & Casualty's premium income grew by 5.5% year on year. Banking business maintained stable and healthy business growth.
Ping An's life and health insurance business continued to solidify its business foundation for long-term sustainable growth. In 2020,life and health insurance business delivered a 35.0% operating ROE with operating profit after tax rising 5.3% year on year to RMB93,666 million. In 2020,COVID-19 hindered Ping An's traditional offline operations and temporarily tempered consumer spending on long-term protection products amid uncertainties over macroeconomic growth and personal income. As a result,NBV of Life & Health dropped by 34.7% year on year to RMB49,575 million. The Company responded by optimizing product strategies to attract and maintain customer stickiness to prepare for the anticipated market recovery. In 2020,Ping An Life completed the top-level design of its reform and implemented and promoted key projects. Going forward,Ping An Life will continue to advance and promote its reform to develop into a world-leading life insurer.
Ping An Property & Casualty maintained stable growth by applying technologies and improving the services system.In 2020,Ping An Property & Casualty's premium income grew by 5.5% year on year. Ping An Property & Casualty maintained better-than-industry business quality,despite its combined ratio rising by 2.7 pps year on year to 99.1%. In the year,Ping An Property & Casualty continued to apply technologies. As of December 31,Ping An Property & Casualty's "Ping An Auto Owner" app had over 126 million registered users,who had linked over 81 million vehicles with the app,and 90% of insurance claims for family cars were settled via "One-click Claims Services".
Ping An Bank maintained stable business growth and upgraded its retail business transformation. In 2020,928 million. Retail banking revenue grew by 10.8% year on year. The number of registered users of the "Ping An Pocket Bank" app exceeded 100 million in the period.Retail assets under management (AUM) rose by 32.4% from the beginning of 2020 to RMB2,624,762 million. As of December 31,down 0.47 pps from the beginning of 2020. The provision coverage ratio rose by 18.28 pps from the beginning of 2020 to 201.40%.
The Company's investment portfolio of insurance funds grew 16.6% from the beginning of 2020 to RMB3.74 trillion as of December 31,2020 with 18.9% of the financial assets carried at fair value through profit or loss under IFRS 9. The Company continued to increase the efficiency of insurance fund investment as well as ensure the safety and soundness of the investment portfolio. In 2020,the net investment yield was 5.1%,and the total investment yield was 6.2%. For the past ten years,the average total investment yield and the average comprehensive investment yield of the Company's investment portfolio of insurance funds were 5.3% and 5.5%,respectively; both are above the 5% long-term investment return assumption.
Technology business: Ping An continued to develop its technological capabilities and the innovative businesses grew rapidly.
In 2020,Ping An further developed the financial services ecosystem,healthcare ecosystem,auto services ecosystem,and smart city ecosystem and promoted the rapid development of innovative businesses. As of December 31,four technology companies have gone public,with a total market cap of USD68.4 billion. The total operating profit of the technology business for 2020 increased by 76.4% year on year to RMB8,221 million.
Ping An continued to invest heavily in research and development (R&D) and made significant progress in ecosystem development. As of December 31,Ping An ranked first for fintech and digital healthcare. The Company made significant progress in its ecosystem development,providing comprehensive scenarios,services and synergies for its over 598 million internet users as of December 31,2020.
Lufax Holding saw stable business growth. As of December 31,Lufax Holding achieved a 17.9% increase in the balance of retail credit facilitated from the beginning of 2020. The ratio of loans more than 30 days overdue was 2.0%,down sharply from June 30,2020. The online wealth management business grew steadily,with client assets up by 23.0% from the beginning of 2020.
OneConnect's revenue grew rapidly and loss narrowed. In 2020,OneConnect' s revenue grew by 42.3% year on year to RMB3,312 million. As of December 31,OneConnect served a total of 642 banks and 106 insurance institutions,of which premium customers grew from 473 to 594.
Ping An Good Doctor initiated a comprehensive strategic upgrade in channels,services and capabilities to capture the long-term growth opportunity of the Chinese online medical services market. As of December 31,Ping An Good Doctor achieved a total of 373 million registered users. In 2020,Ping An Good Doctor's revenue rose by 35.5% year on year to RMB6,866 million,driven by a strong year-on-year increase of 82.4% in the revenue from online medical services. Ping An HealthKonnect continues to develop as a smart technology company that fully empowers the healthcare ecosystem. In 2020,Ping An HealthKonnect won bids to construct ten provincial-level social health insurance (SHI) platforms in provinces including Qinghai,Guangdong and Hainan. In response to COVID-19,Ping An applied advanced healthcare technology to prevent and contain COVID-19. Ping An Good Doctor launched a 24-hour free online consultation service,receiving 1.11 billion visits during the peak of the epidemic. Ping An HealthKonnect dispatched to Wuhan a vehicle equipped with a mobile CT scanner,assisted diagnosis through remote online image reading,and became one of the first institutions designated to conduct nucleic acid tests for COVID-19.
Autohome responded to the impact of COVID-19 to realize business growth against the weakened market backdrop. In 2020,despite a 6% year-on-year decline in domestic passenger vehicle sales,Autohome's revenue increased by 2.8% year on year to RMB8,659 million and net profit rose by 6.2% year on year to RMB3,621 million. Revenue of the online marketplace and other businesses grew by 34.4% year on year to RMB2,005 million,driven by automakers' and auto dealers' increased demand for online marketing services.
Centering on government services,business development,and citizen services,Ping An's smart city business offers comprehensive solutions,and served 151 cities,1.6 million companies,and 104 million citizens in the period.In respect of government services,Ping An's smart fiscal system served more than 10,000 administrative units,businesses and public institutions,and enabled the management of over RMB20 trillion in assets. In respect of business development,Ping An's smart market supervision platform has an accuracy rate of over 92% in enterprise supervisory risk warning and an accuracy rate of 90% in enterprise risk identification. In respect of people's livelihoods,Ping An's citizen services platform was accessed by 31 million users in 21cities and supported the online processing of nearly 8,000 service items on mobile devices. In addition,Ping An Smart City provided relevant state ministries and commissions and local governments with technology platforms to predict the epidemic development to help resume work and production. The accuracy of prediction made 24 hours in advance reached above 98%.
Ping An diligently fulfilled its social responsibilities and built China's ESG benchmarks. During the COVID-19 epidemic in 2020,the Company donated over RMB180 million in money and materials. Through the Ping An Rural Communities Support program,Ping An provided a total of over RMB29,834 million in poverty alleviation funds,benefiting an impoverished population of 730,000. The Company helped build or upgrade1,228 rural clinics and 1,054 rural schools,and trained 11,843 village doctors and 14,110 village teachers. Ping An invested a cumulative total of over RMB5 trillion of financial resources,to support the real economy. The Company rolled out its AI-ESG smart management platform to support and enable responsible investments. It also launched the "Xinhua CN-ESG Evaluation System",to set national ESG evaluation standards with Chinese characteristics. As of December 31,Ping An's responsible investments exceeded RMB1.03 trillion.
Looking ahead,Ma Mingzhe,Chairman of Ping An,said,"The year 2020 was extraordinary. We were challenged by COVID-19. In this challenging year,we remained true to our original aspiration of serving the national economy and people's livelihoods and supporting the real economy. We furthered the ecosystem-based strategic transformation,conducted research and development in technologies,and continued to build a healthcare ecosystem to create a new engine for future value growth. The year 2021 marks the 100th anniversary of the Communist Party of China and the beginning of China's 14th Five-Year Plan. In 2021,Ping An will continue to seek steady growth,optimize our structure,and plan for the future,aiming to drive the steady development of the Group's businesses. We will continue promoting smart data-driven operations. While growing our core financial businesses,we will empower industries and smart city development,and advance the healthcare ecosystem strategy. By consolidating and developing the results of poverty alleviation,we will engage deeply in China's rural vitalization strategy. We will remain true to our original aspirations and keep in mind our mission,and work together to contribute to the Chinese nation's great rejuvenation."
