China’s largest insurer Ping An Insurance Group, reported a 7.7% rise in net profit year over year for the third quarter, its first quarterly increase in a year, but the company warned that demand for insurance and other financial services will continue to be weak in the short term due to the global pandemic.
In the third quarter, Ping An’s net profit stood at CNY 34.36 billion ($5.12 billion), up from CNY 31.89 billion ($4.76 billion) a year earlier, the insurer said in a filing Tuesday. This compares to a decrease of nearly 30% in first-half profit.
The uptick in net profit comes as China is “promoting COVID-19 prevention and containment as well as economic and social development,” the insurer said, adding that those measures are helping the domestic economy to recover. However, it still sees COVID-19 impacting the global economy, causing it to be weak and international markets to contract.
“In the short run, consumer demands for insurance and other financial services, though having recovered to some extent, will still be weaker than before the epidemic due to COVID-19,” Ping An said.
However, the company remains optimistic about the long-term outlook of the economy. The insurer forecasts that there will be a growth in demand for insurance and other financial services in the long run.
Ping An is also bullish on the accelerating development of the health care sector, driven by technology and new policies, saying it sees “growth opportunities in the upstream and downstream of the industry.”
Ping An’s operating profit, which excludes items that are of “short-term, volatile or one-off nature,” increased by 4.5% to CNY 108.69 billion ($16.2 billion) in the first nine months of the year, the insurer said, asserting that this metric provides a better picture of the company’s business performance. Its life and health insurance operating profit also grew 9.2%, while its property and casualty insurance business’ premium income grew by 11.5%., both year over year in the first nine months of the year.
However, in the same period, the company’s net profit decreased by 20.5% year over year to CNY 103 billion ($15.4 billion), as COVID-19 adversely affected its long-term protection business, Ping An said.
“Domestic consumption demand was still recovering, large-scale offline events were still restricted in China, and offline face-to-face meetings had not increased to pre-epidemic levels yet,” it said, adding that it has implemented various measures like strengthening its risk management to “mitigate adverse impacts and lay a solid foundation for future sustainable growth.”
Other notable developments of the company include a rise in retail customers, which grew by 7% from January to over 214.47 million, it said. In addition, its “Ping An Auto Owner” app, which is the largest automotive app in China, had over 117 million registered users as of September, up 26.5% year to date.
Ping An continues to make efforts to further its technology development, the insurer said. In the first nine months of this year, total revenue of the technology business increased by 8.3% year over year to CNY 65 billion ($9.69 billion).
This unit of the company includes OneConnect, which is technology-as-a-service platform for financial institutions in China, and Lufax Holding, an online wealth management platform. At the end of September, OneConnect’s virtual bank officially opened for business in Hong Kong, while this month, Lufax filed to list in the U.S. and said it was seeking to raise about $2.4 billion.