Ping An's net profit in the first three quarters increased by over 30%, leading in both the scale and growth rate of the insurance business

Ping An of China (601318.SH) has submitted the first "report card" for the third quarter of A-share listed insurance companies.

On the evening of October 21st, Ping An of China disclosed that the company's revenue for the first three quarters increased by 10% year-on-year to 775.383 billion yuan, and net profit attributable to the parent company increased by 36.1% to 119.182 billion yuan.

Among them, net profits attributable to the parent company of the three core businesses of life insurance and health insurance, property insurance, and banking all increased, with growth rates of 34.99%, 39.72%, and 0.24% respectively.

In terms of insurance business, Ping An of China performed well on both the liability side and the investment side.

Total premiums of Ping An Life, Ping An Property & Casualty, Ping An Health, and Ping An Pension increased by 8.42% year-on-year to 689.175 billion yuan, making it the leader in premium scale and growth rate among the five A-share listed insurance companies.

On the investment side, the size of the insurance fund investment portfolio at the end of the third quarter increased by 12.7% from the beginning of the year to 53.2 trillion yuan, and the annualized comprehensive investment yield increased by 1.3 percentage points year-on-year to 5.0%.

However, in terms of investment performance alone, Ping An of China may still lag behind its peers.

Benefiting from the A-share market in September, New China Life Insurance, PICC, China Taiping, and China Life Insurance have successively stated that the company's investment performance has improved significantly year-on-year, driving a substantial improvement in net profit.

Among them, China Life Insurance's net profit is expected to increase by more than 1.5 times year-on-year, while the other three companies are between 60-115%.

Even the lowest increase of 60% for China Taiping significantly exceeds the actual increase of 36.1% for Ping An of China.

With significantly higher income on the liability side, this gap may come from the investment side.

The third-quarter report did not disclose detailed investment portfolios, but based on the performance in the second quarter, Ping An of China had fewer equity allocations among the five A-share listed insurance companies, with the proportion of stock assets to total assets only higher than PICC.

However, Ping An of China still stated that in the third quarter, the government introduced a series of policies such as monetary, fiscal, stabilizing the capital market, and promoting employment, and the capital market responded positively, with the stock market rebounding rapidly.

Previously, Ping An of China's former chief investment officer Deng Bin revealed in an interview that Ping An's asset allocation is a "dumbbell shape".

Deng Bin stated that the first "dumbbell" consists of long-term interest rate bonds and risky assets at both ends; the second "dumbbell" consists of growth stocks and high-yield stocks at both ends.

Compared to the double growth of revenue and net profit in insurance, the performance of Ping An Bank's business appears slightly flat.

In the first three quarters, operating income decreased by 12.6% year-on-year to 111.582 billion yuan, and net profit attributable to the parent company increased slightly by 0.24% year-on-year to 39.729 billion yuan.

Looking back, "increasing profit without increasing revenue" has become the norm for Ping An Bank.

Wind data shows that Ping An Bank (000001.SZ) has seen a year-on-year decline in revenue growth since 2019, falling to -8.45% in 2023 Some of the income adjustments were made voluntarily.

In 2023, Ji Guangheng, who helped Lufax to list on the New York Stock Exchange, became the President of Ping An Bank.

Upon taking office, Ji Guangheng pointed out that the high interest spread and high interest rate retail business, which had made significant contributions to revenue in the past, are no longer suitable for the new situation. He mentioned that the "quantity compensates for price" approach carries too much risk, and business and customer structure should be actively optimized.

Currently, the key focus of Ping An Bank's reform is to promote the transformation of retail business from high risk, high cost, high return to medium risk, medium return, gradually improving the quality of retail customer base, asset quality, and asset structure.

As of the end of the third quarter, Ping An Bank's corporate loan balance increased by 11.6% compared to the end of the previous year, while the personal loan balance decreased by 9.6%.

During the interim report conference, Ji Guangheng admitted, "There were also internal discussions about whether to engage in some high-risk products, but ultimately resisted the temptation."

Ji Guangheng stated that with the deepening of the reform, the retail business has stabilized. "The most challenging part of the strategic reform is this year. From the current overall progress, this round of reform has met expectations."

In terms of asset quality, Ping An Bank's non-performing loan ratio remained stable at 1.06% at the end of the third quarter, compared to the end of the previous year; the provision coverage ratio decreased by 26.44 percentage points from the end of the previous year to 251.19%