Ping An of China 24Q1: Rapid growth in new business, slight decline in net profit

On the evening of April 23, 2024, Ping An Insurance (Group) Company of China, Ltd. released its first-quarter performance report for 2024.

The announcement showed that in the first quarter of 2024, Ping An's net profit attributable to parent company shareholders was RMB 36.709 billion, a year-on-year decrease of 4.3%. The three core businesses of life & health insurance, property & casualty insurance, and banking resumed growth, with combined operating profit reaching RMB 39.816 billion, a year-on-year increase of 0.3%.

During the period, the new business value of the life & health insurance business reached RMB 12.890 billion, a year-on-year increase of 20.7% on a comparable basis, and the new business value per agent channel increased by 56.4% year-on-year; the new business value margin was 22.8%, an increase of 6.5 percentage points year-on-year on a comparable basis.

Ping An Property & Casualty Insurance's insurance service income was RMB 80.627 billion, a year-on-year increase of 5.7%. The overall combined ratio of Ping An Property & Casualty Insurance, excluding credit guarantee insurance, was 98.4%.

Ping An Bank achieved a net profit of RMB 14.932 billion, a year-on-year increase of 2.3%. As of March 31, 2024, the core tier 1 capital adequacy ratio rose to 9.59%, and the provision coverage ratio was 261.66%.

From the overall operating situation of Ping An in the first quarter of 2024, the company may have to tighten its belt for a while.

On the revenue side, the company's overall revenue showed a downward trend. Generally, the first quarter is the "good start" phase for major insurance companies and also the quarter with the highest revenue for the whole year. From the overall trend, Ping An's revenue decline in the first quarter was relatively obvious, which affected the company's performance in the quarter.

From the profit perspective, the company's operating profit still showed slight growth, indicating that the company's cost control has had some effect. The life & health insurance business achieved its target and maintained positive growth, which is still commendable. In addition, the banking business's net profit increased slightly by 2.3%, reflecting the stability of business quality.

However, the decline in property & casualty insurance and other businesses was somewhat related to changes in the macroeconomic and industry external environment.

Domestic property & casualty insurance is mainly auto insurance. In the first quarter of 2024, the domestic auto industry gradually recovered, and the auto insurance market overall rebounded.

In March 2024, China's retail sales of passenger vehicles increased by 6.2% year-on-year, and the cumulative increase in the first three months was 13.1%. With the subsequent implementation of the auto trade-in policy, local car purchase subsidies, and the launch of several highly anticipated new models, consumer enthusiasm for car purchases is expected to be further stimulated. However, at the same time, snow disasters in the first quarter of 2024 increased the combined ratio by 2.0 percentage points.

However, asset management and technology businesses were indeed affected in the first quarter of 2024. In particular, the recent bomb of Ping An Trust somewhat impacted the company's profitability.

Ping An's first-quarter report, although the company highlighted many bright spots, still showed a downward trend in both revenue and profit. The bright spots the company emphasized are hardly outstanding compared to peers. The year-on-year weakness is an undeniable fact.

If this continues throughout the year, especially without substantial changes in the second and third quarters, the pressure will still be significant.