SHANGHAI: Ping An Insurance (Group) of China the world's second-largest life insurer by market value, posted a record quarterly profit on Wednesday, helped by rapid growth in non-insurance businesses.
Ping An's net profit during the January-March period rose 28 percent to 5.81 billion yuan ($891.6 million) from 4.55 billion a year earlier, in line with the expectations of two analysts surveyed by Reuters.
That contrasts with a 22 percent decline in rival China Life's profit during the same period, underscoring Ping An's growth potential and management strength in a volatile investment environment.
Premium and policy fee income jumped by nearly half during the first quarter, while its non-insurance business, including commercial and investment banking, also grew rapidly, Ping An said in a statement to the Hong Kong Stock Exchange.
"Looking into the next three quarters ahead, under the impacts of climbing commodity prices, increasing inflation pressures and other factors, the domestic and global macroeconomic conditions and the financial industry will inevitably undergo new changes," Ping said.
BENEFITING FROM RATE HIKES
Chinese insurers, which place most of their assets in fixed-income products, are benefiting from a string of interest rate hikes by the central bank that have pushed up bond yields.
They typically hold bonds to maturity, and use a continuous influx of fresh premium income to buy new bonds with higher yields.
But their equity investments have suffered from a sluggish domestic stock market.
Ping An, partly owned by HSBC last week unveiled plans to raise $2.5 billion through a private share placement to shore up its banking arm Shenzhen Development Bank.
The company, which aims to become a financial conglomerate, aims to draw half of its profit from non-insurance operations within three to five years, up from about 30 percent now.
Ping An shares fell 1.1 percent in Hong Kong on Wednesday before the earnings were released. The stock has fallen 2.6 percent this year, compared with a 3.7 percent increase in the benchmark Hang Seng Index.
Timothy Chan, head of Ping An's asset management arm, said earlier this month that he expected more increases in interest rates and banks' required reserve ratios, potentially benefiting the company's earnings.
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