2012 Interim Results August 2012 Cautionary Statements Regarding Forward-Looking Statements To the extent any statements made in this presentation containing information that is not historical are essentially forward-looking. These forward-looking statements include but are not limited to projections, targets, estimates and business plans that the Company expects or anticipates will or may occur in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may be general or specific. Certain statements, such as those including the words or phrases "potential", "estimates", "expects", "anticipates", "objective", "intends", "plans", "believes", "will", "may", "should", and similar expressions or variations on such expressions may be considered forward-looking statements. Readers should be cautioned that a variety of factors, many of which may be beyond the Company's control, affect the performance, operations and results of the Company, and could cause actual results to differ materially from the expectations expressed in any of the Company's forward-looking statements. These factors include, but are not limited to, exchange rate fluctuations, market shares, competition, environmental risks, changes in legal, financial and regulatory frameworks, international economic and financial market conditions and other risks and factors beyond our control. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. In addition, the Company undertakes no obligation to publicly update or revise any forward-looking statement that is contained in this presentation as a result of new information, future events or otherwise. None of the Company, or any of its employees or affiliates is responsible for, or is making, any representations concerning the future performance of the Company. Agenda Topic Speaker Position Overview Peter Ma Group Chairman & CEO Executive Director & Operating Highlights Alex Ren Group President Financial Analysis and Executive Director & Jason Yao Embedded Value Group CFO Insurance Business Yuansiong Lee Group Chief Insurance Review Business Officer Banking Business Richard Jackson President of Ping An Bank Review Investment Business Group Chief Investment Timothy Chan Officer Review 2 Overview Overview In the first half of 2012, the global market was fraught with uncertainty due to the European debt crisis, and domestic economic growth slowed as a result of the weakening investment and exports stimulus, lower domestic demands, and rising operating costs for enterprises, all of which put greater pressures on the financial industry. Thus growth in insurance market slowed down, competition in banking industry intensified, and volatility of capital market intensified. Faced with these challenges, we adhered to our overall strategy and plans, managed our business prudently and achieved above-market performance. In the second half, we will actively respond to the challenges in line with our established integrated financial strategy, continue improving structure and quality of business, optimize cost structure, and develop new areas for profit growth to ensure stable growth of our core business. Furthermore, we will take full advantage of technologies to promote our integrated financial strategy; realize our goal of “one customer, one account, multiple products, and one-stop services”; create a new customer experience of “expertise makes life simple”; further strengthen the Group’s synergies and core competitiveness; lay a solid foundation for value-added, sustainable and above-market future growth; and accomplish yet more outstanding performance in return for the lasting trust and support from our shareholders. 4 Operating Highlights Operating Highlights of Our Three Core Businesses Insurance Business Written premiums of life insurance business amounted to RMB114.8 billion, with those from the more profitable individual life business increasing by 7.9% to RMB102.4 billion; number of sales agents increased 1.4% to nearly half million from the end of 2011 Premium income of Ping An P&C amounted to RMB48.75 billion, representing an increase of 19.7%; combined ratio remained at a sound level of 93.1% Ping An Annuity maintained its leading position in the annuity industry Banking Business Break-through was achieved in the integration of SDB and the Original Ping An Bank; the two banks officially merged as one legal entity, and the new entity was renamed as Ping An Bank on July 27 Banking business performance was steady, with profit contribution of RMB3.47 billion to the Group Total deposits amounted to RMB949.6 billion, of which retail deposits amounted to RMB176.6 billion, up11.6% and 16.0% from the end of 2011, respectively ; the number of credit cards in circulation reached 9.89 million Investment Business Investment portfolio of insurance funds were rebalanced and optimized. Net investment yield and total investment yield were 4.5% and 3.7%, respectively The personal wealth management business of Ping An Trust achieved stable growth, with the number of high net worth customers exceeding 15,000, up 21.3% from the end of 2011; the volume of assets held in trust amounted to RMB236.2 billion, up 20.4% from the end of last year Ping An Securities completed 22 corporate bond issuances as lead underwriter, increasing by 14; ranked third in terms of the number of stocks issued 6 Financial Highlights (In RMB million) 1H2011 1H2012 Growth Total Income(PRC GAAP basis) 129,749 159,531 23.0% Net Profit 12,998 17,527 34.8% Net Profit Attributable to Shareholders of the Parent Company 12,757 13,959 9.4% EPS(in RMB) 1.67 1.76 5.4% 31/12/2011 30/06/2012 Growth Total Assets 2,285,424 2,644,999 15.7% Total Equity 171,342 193,681 13.0% Equity Attributable to Shareholders 130,867 146,762 12.1% of the Parent Company 7 Strengthen Integrated Financial Services with Innovative Technologies and Upgrade Customer Services Enhanced Back-office Centralization The Company optimized service procedures through one-stop service channels, including comprehensive service counters, remote service terminals and unified customer service hotline, as well as innovative technologies such as mobile phone locators and caller ID Strengthened E-operation Platform The e-integrated financial business platform has covered our insurance One Customer sector, also facilitating customers to open multiple accounts in banking and One Account securities, therefore providing a platform across insurance, banking and investment services Multiple Products As at June 30, 2012, more than 95% of agents of Ping An Life have adopted MIT, and over 5 million customers were insured through MIT. The MIT usage One-stop rate for the automobile insurance business of Ping An P&C exceeded 30% Services Upgraded Services Ping An P&C became the first in the industry to commit to ―settlement within 72 hours from reporting to receiving benefit payment for claims below RMB10,000‖, achieving a success rate of 94.5% with an average processing time of 1.7 days Ping An Life has committed to ―settlement within 72 hours for standard cases with full documentation‖, achieving a success rate of 99.7% with an average processing time of 2.1 days 8 Enhanced Depth and Width in Cross-selling New Business Acquired through Cross-selling (In RMB million) Amount Business Contribution Property and casualty insurance Premium income 7,264 14.9% Group short-term insurance of Ping An Annuity Sales volume 1,457 41.6% Trust business Trust schemes 28,473 17.9% Banking business Retail deposits (increase of daily average size)(1) 3,652 13.5% Credit cards (in ten thousands)(2) 77 41.5% Notes:(1) These retail deposits were through cross-selling by SDB and the Original Ping An Bank (2) These new credit cards were issued through cross-selling by SDB and the Original Ping An Bank 9 Financial Analysis and Embedded Value Net Profit and Equity Attributable to Shareholders of the Parent Company Increased Steadily (In RMB million) Net Profit Attributable to Equity Attributable to Shareholders of the Parent Company Shareholders of the Parent Company 9.4% 12.1% 146,762 13,959 130,867 12,757 1H2011 1H2012 31/12/2011 30/06/2012 11 Income Growth by Business Segment (In RMB million) Insurance Business Banking Business Investment Business (Written Premiums) 6.6% 276.8% 2.8% 163,751 19,830 153,552 2,652 2,726 Securities Securities 1,775 1,745 5,263 Trust Trust 877 981 1H2011 1H2012 1H2011 1H2012 1H2011 1H2012 Notes: (1) Written premiums of insurance business mean all premiums received from the policies underwritten by the Company, which are prior to the significant insurance risk testing and unbundling of hybrid risk contracts (2) The incomes from banking and investment businesses are based on PRC GAAP (3) The investment business income came from securities and trust, excluding other businesses and elimination (4) The banking business income in 2011 included the investment income from SDB based on the equity method, RMB1,183 million; the figure in 2012 reflected the consolidation of SDB 12 Net Profit Growth by Business Segment (In RMB million) Insurance Business Banking Business Investment Business 3.4% 180.8% 1.3% 6,731 9,455 9,777 P&C P&C 1,058 1,072 2,693 2,746 Securities Securities Life Life 2,397 Contribution 715 663 6,762 7,031 to the Group 3,467 Trust Trust 343 409 1H2011 1H2012 1H2011 1H2012 1H2011 1H2012 Notes: (1) Net profit from insurance pillar covered life insurance business and property and casualty insurance business (2) Net profit from banking business in 2011 included the investment income from SDB based on the equity method, RMB1,183 million; the figure in 2012 reflected the consolidation of SDB (3) Net profit from investment business came from securities and trust, excluding other businesses and elimination 13 Solvency Margin and Capital Adequacy Ratio 31/12/2011 30/06/2012 Group (Total) 166.7% 176.7% Ping An Life 156.1% 167.3% Ping An Property & Casualty 166.1% 164.5% (1) Ping An Bank 11.51% 11.40% Note:(1) On July 27, 2012, SDB formally changed its name to ―Ping An Bank Co., Ltd.‖, ―Ping An Bank‖ for short 14 Composition of Embedded Value (In RMB million) 137,977 259,005 (23,547) Life Insurance 152,826 156,198 Life Insurance (8,251) 50,019 Other businesses Other Businesses 102,807 102,807 Adjusted value of net Value of in-force insurance Value of in-force insurance Cost of solvency margin Embedded value at assets at 30/06/2012 business written prior to business written since 30/06/2012 06/1999 06/1999 Notes: (1) Figures may not match totals due to rounding (2) Life insurance business includes business conducted through Ping An Life, Ping An Annuity and Ping An Health (3) Above risk discount rates for the value of business in-force were earned rate/11.0% 15 Growth of Embedded Value The value of business in-force Adjusted value of net assets (In RMB million) 9.9% 259,005 235,627 106,180 10.4% 96,181 9.6% 139,446 152,826 31/12/2011 30/06/2012 Notes: (1) Figures may not match totals due to rounding (2) Above risk discount rates for the value of business in-force were earned rate/11.0% 16 Growth of NBEV Margin NBEV margin increased from 21.6% in 1H2011 to 27.3% in 1H2012 (In RMB million) FYP Used to Calculate Value of New New Business Value Business 8.6% 46,409 27.8% 10,019 433 9,160 12,490 33,502 403 5,954 367 6,060 394 6,404 27,965 9,219 21,038 8,363 1H2011 1H2012 1H2011 1H2012 Individual Life Group Life Bancassurance Note: Above new business value, with cost of solvency margin deducted and risk discount rate at 11.0% 17 Insurance Business Review Insurance Business Highlights Life Insurance Written premiums of life insurance business amounted to RMB 114.8 billion, with those from the more profitable individual life business increasing by 7.9% to RMB102.4 billion The number of sales agents of individual life insurance business increased by 1.4% to nearly half million Property and Casualty Insurance Premium income of Ping An P&C amounted to RMB48.75 billion, representing an increase of 19.7%; Of this, premium income from cross-selling and telephone marketing increased by 31.7%, with contribution of these channels to the business increasing to 41.9% The quality of P&C business remained sound with a combined ratio at 93.1% Corporate Annuity Ping An Annuity’s three major performance indicators - annuity payments received, assets entrusted, and assets under investment management – all maintained leading positions in the annuity industry Notes: (1) Life insurance business includes business conducted through Ping An Life, Ping An Annuity and Ping An Health (2) Property and casualty insurance includes business conducted through Ping An P&C and Ping An Hong Kong 19 Life Insurance Business: Stable Growth and Business Quality Written Premiums/Premium Income Policy Persistency Ratio (In RMB million) 13-month 25-month 2.0% 95% 94.2% 93.7% 114,837 93.1% 112,630 Written 90% Premiums 91.6% 89.5% 85% 87.0% Including: 5.0% 78,898 Premium 75,158 80% Income 75% 1H2011 1H2012 2010 2011 1H2012 Notes: (1) Written premiums mean all premiums received from the policies underwritten by the Company, which are prior to the significant insurance risk testing and unbundling of hybrid risk contracts (2) Premium income means premiums after the significant insurance risk testing and unbundling of hybrid risk contracts (3) Life insurance business includes business conducted through Ping An Life, Ping An Annuity and Ping An Health 20 Product Structure of Life Business (In RMB million) 1H2011 1H2012 Participating Participating Universal life 51.9% Universal life 52.0% 33.8% 32.8% Annuity 0.9% Annuity 0.8% Investment-linked Investment-linked 2.2% 1.5% Traditional life 3.7% Traditional life 3.0% Accident and short- Accident and Long-term health term health 3.6% Long-term health short-term 4.6% 5.2% health 4.0% 100% = 112,630 100% = 114,837 Notes: (1) The above premiums mean written premiums (2) Life insurance business includes business conducted through Ping An Life, Ping An Annuity and Ping An Health 21 Individual Life Written Premiums (In RMB million) 1H2011 1H2012 Growth Individual life First-year regular premiums 22,963 21,822 5.0% First-year single premiums 5,894 429 92.7% Short-term accident and health premiums 998 1,040 4.2% Total new business 29,855 23,291 22.0% Renewal business 65,005 79,076 21.6% Total individual life 94,860 102,367 7.9% Notes: (1) Above premiums are written premiums (2) Life insurance business includes business conducted through Ping An Life, Ping An Annuity and Ping An Health 22 Group Insurance Written Premiums Increased and Bancassurance Decreased (In RMB million) 1H2011 1H2012 Growth Bancassurance First-year regular premiums 735 1,327 80.5% First-year single premiums 11,743 4,716 59.8% Short-term accident and health premiums 1 1 — Total new business 12,479 6,044 51.6% Renewal business 980 1,554 58.6% Total Bancassurance 13,459 7,598 43.5% Group Insurance First-year regular premiums 77 123 59.7% First-year single premiums 1,196 1,155 3.4% Short-term accident and health premiums 3,003 3,514 17.0% Total new business 4,276 4,792 12.1% Renewal business 35 80 128.6% Total Group Insurance 4,311 4,872 13.0% Notes: (1) Above premiums are written premiums (2) Life insurance business includes business conducted through Ping An Life, Ping An Annuity and Ping An Health 23 Property and Casualty: Steady Growth in Premiums with Sound Quality of Business Premium Income Combined Ratio (In RMB million) 48,914 0.2 pp 19.5% 40,922 92.9% 93.1% 1H2011 1H2011 1H2012 1H2012 Auto Non-Auto Accident and Health Expense Ratio Loss Ratio Note: Property and casualty insurance business includes business conducted through Ping An P&C and Ping An Hong Kong 24 Continuous Growth in Corporate Annuity Business (In RMB million) Assets under Investment Assets Entrusted Management 61,649 35.8% 14.3% 50,794 53,930 37,400 31/12/2011 30/06/2012 31/12/2011 30/06/2012 25 Banking Business Review Banking Business Highlights Smooth Integration of the Two Banks Break-through was achieved in the integration of SDB and the Original Ping An Bank; the two banks officially merged as one legal entity SDB was formally renamed as Ping An Bank(1) on July 27 Profit Contribution In the first half of 2012, Ping An Bank achieved a profit of RMB6.87 billion and contributed RMB3.47 billion to the Group Business Scale and Asset Quality Total deposits amounted to RMB949.6 billion, of which retail deposits amounted to RMB176.6 billion, up 11.6% and 16.0% from the end of 2011, respectively Trade finance facilities balance amounted to RMB277.5 billion, representing an increase of 18.9% from the end of 2011; the number of the credit cards in circulation reached 9.89 million The non-performing loan ratio was 0.73%; the capital adequacy ratio stood at 11.40% Note:(1) On July 27, 2012, SDB formally changed its name to ―Ping An Bank Co., Ltd.‖, ―Ping An Bank‖ for short 27 Steady Growth in Deposits and Loans (In RMB million) Total Deposits Total Loans 11.6% 949,578 10.0% 682,906 850,845 620,642 31/12/2011 30/06/2012 31/12/2011 30/06/2012 28 Key Ratios of Ping An Bank(1) 1H2011 1H2012 Net Interest Spread 2.50% 2.22% Net Interest Margin 2.63% 2.42% Cost/Income Ratio 36.30% 38.13% Return on Average Total Assets 1.20% 0.98% 31/12/2011 30/06/2012 Non-performing Loan Ratio 0.53% 0.73% Provision Coverage Ratio 320.66% 237.96% Capital Adequacy Ratio 11.51% 11.40% Core Capital Adequacy Ratio 8.46% 8.44% Note:(1) On July 27, 2012, SDB formally changed its name to ―Ping An Bank Co., Ltd.‖, ―Ping An Bank‖ for short 29 Investment Business Review Investment Business Highlights Investment Management Ping An Asset Management maintained the flexibility of equity assets and optimized asset allocation with prudent steps to increase high-interest fixed income investments. Net investment yield and total investment yield for insurance funds were 4.5% and 3.7%, respectively The business remains innovative and Ping An Asset Management (Hong Kong) has launched three HKEx-listed ETF funds, strengthening the influence of Ping An in overseas market Trust The personal wealth management business of Ping An Trust achieved stable growth, with the number of high net worth customers exceeding 15,000, up 21.3% from the end of 2011 The volume of assets held in trust amounted to RMB236.2 billion, up 20.4% from the end of 2011 Securities Ping An Securities successfully sponsored 11 IPOs and two refinancing projects as lead underwriter, ranked third and fourth in terms of the number of deals and underwriting revenues for IPO transactions, respectively While bond market stepping up the pace of issuance, our fixed income business completed 22 corporate bond issuances as lead underwriter, increasing by 14 31 Net Investment Yield and Total Investment Yield (In RMB million) Net Investment Income/Yield Total Investment Income/Yield 20,944 29.1% 12.2% 16,225 15,836 13,902 Yield Yield 4.3% 4.5% Yield Yield 4.2% 3.7% 0.8% 1H2011 1H2012 1H2011 1H2012 Notes: (1)The data above is based on insurance fund investment portfolio (2) As a result of the volatile domestic stock market, net realized and unrealized gains decreased to a loss of RMB3,212 million in the first half of 2012 from a gain of RMB551 million in the same period 2011, and impairment losses on the available-for-sale equity investments increased greatly to RMB3,912 million in the first half of 2012 from RMB942 million in the same period 2011 32 Optimize Portfolio Allocation and Steadily Increase Investment in High-interest Fixed Income Assets (In RMB million) 31/12/2011 30/06/2012 Change (1) Portfolio Fixed Maturity Investments 81.0% 78.0% 3.0% (2) Term Deposits 19.6% 22.9% 3.3% (2) Bond Investments 58.2% 52.9% 5.3% (2) Other Fixed Maturity Investments 3.2% 2.2% 1.0% (2) Equity Investments 11.5% 12.7% 1.2% Infrastructure Investments 1.0% 0.9% 0.1% Cash, Cash Equivalent and Others 6.5% 8.4% 1.9% 100% =867,301 100% =986,047 Notes: (1) The above investment portfolio is our insurance fund investment portfolio (2) The data above exclude items that are classified as cash and cash equivalent 33 Thank you!
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