China’s Ping An Insurance posts slim profit growth as investments take a hit

Ping An Insurance(Group) reported a net profit growth of nearly 4 per cent for the first quarter of 2016, as headwind from the mainland capital markets continued to buffet mainland Chinese insurers.

The company’s net profit stood at 20.70 billion yuan (HK$24.73 billion), up 3.7 per cent over the same period last year. New business value (NBV) of life insurance surged by 38.3 per cent to 13.08 billion yuan, according to its filing to the Hong Kong stock exchange on Tuesday evening, after the market closed.

The Ping An stock inched up 0.27 per cent to close at HK$37 in Hong Kong.

Affected by equity market volatility, total investment income for the insurance funds portfolio came down 36.4 per cent to 20.45 billion yuan in the first quarter.

Leon Qi, an analyst at Daiwa Securities, said China-based companies are facing short-term accounting profit risks in the quarter, mainly due to impairment of A-share investments and a high base of the comparable period last year.

The debt-fuelled bull run of China’s A-share stock market in the first half of 2015 had pushed up the investment yields of Chinese insurers to historic highs. Although the market crashed after mid-June, most insurers had taken profit before the rout.