Ping An Insurance (Group) Company of China, Ltd., 2019 Earnings Call, Feb 21, 2020 - SEHK:2318

SEHK:2318

** Summary of Executives' Speeches**

Introduction and Overview:
- Welcomed participants to the Ping An 2019 Annual Results Announcement Meeting.
- Highlighted the company's solid growth in revenues, profits, and other metrics despite a challenging global economic environment.
- Emphasized the company's new strategy of finance and technology, and finance and ecosystems.
- Discussed the strong and consistent track record of the company, with earnings per share growing by more than 25% CAGR and total ROE averaging 17% over the past five years.
- Noted the 2019 performance, including 18% growth in operating profit, 39% growth in net profit, and 19% growth in dividend per share.
- Highlighted the customer contribution, with retail accounting for more than 92% of operating profit.
- Discussed the operating profit in different units, emphasizing strong growth in life and health, property and casualty, and technology.
- Mentioned the dividend and capital situation, with a 19% increase in dividend per share and a 28.1% dividend payout ratio.
- Addressed the investment portfolio, noting the high solvency level and the focus on operating profit to reflect performance trends.
- Touched on sustainability and honors, including the company's ESG standards and recognition as the first Chinese company to join the UN Principles for Responsible Investment.

Retail Integrated Finance and Insurance Business:
- Introduced the 2019 performance of the retail integrated finance and insurance business.
- Highlighted 26% growth in retail operating profit, driven by a 13% increase in operating profit per customer and an 11% increase in retail customer base.
- Emphasized the potential for converting internet users into customers, with 340 million users not yet purchasing any products from Ping An.
- Noted a significant increase in cross-selling penetration from 19% to 36%.
- Discussed the life and health insurance business, with a 24% CAGR in embedded value over the past five years.
- Highlighted the 25% operating ROEV in 2019, despite a slowdown in new business, due to high ROEV and conservative discount rates.
- Detailed the distribution channels, with a 5.1% increase in NBV, driven by steady growth in the agent channel and strong performance in bancassurance.
- Addressed the proactive measures taken to improve agent productivity, including business reforms and AI-driven training.
- Discussed the technology empowerment in life insurance, including AI interviews, smart personal assistants, and data-driven customer service.

Corporate Financial Services and Banking Business:
- Introduced the 2019 performance of the corporate integrated finance, emphasizing the growth in customer base and technological support.
- Highlighted the establishment of a corporate financial service committee to improve collaboration and efficiency.
- Noted the sharp growth in corporate integrated finance, with a 24% increase in premium size and 140% growth in integrated financing.
- Discussed the profitability and risk management, with a 13.6% Y-o-Y increase in net profit and improved risk metrics.
- Addressed the digital transformation, including the completion of a RMB 26 billion convertible bond conversion and the improvement in tier 1 capital adequacy ratios.
- Outlined the strategic direction for the bank, focusing on ecos bank, digital bank, and platform bank.
- Highlighted the growth in retail, corporate, and interbanking business lines, with a 40% increase in AUM and a 60% increase in private banking AUM.
- Discussed the synergies between the bank and the group, including the redirection of high-quality traffic and the sale of insurance products through bank channels.
- Addressed the corporate business, noting the growth in deposit and loan balances and the asset- and capital-light strategies.
- Highlighted the strong performance in interbank business, with 152% growth in transaction business and the approval of a wealth management subsidiary.

Technology Business:
- Introduced the 2019 performance of the technology subsidiaries, with 27% revenue growth to CNY 82.1 billion.
- Highlighted the innovation in technology, including 57 labs, 8 institutions, 110,000 engineers, and 35,000 R&D employees.
- Noted the company's 21,000 patents, including 96% invention patents, and its leading positions in fintech and medicine technology.
- Discussed the fundamental technology, including 47 world championships in various technologies.
- Highlighted the use of technology to improve efficiency, reduce costs, and reduce risks in the insurance and banking businesses.
- Detailed the performance of Lufax, OneConnect, Ping An Good Doctor, and Autohome, noting their respective growth and contributions.
- Addressed the Smart City business, serving 115 cities and 50 million citizens, with a focus on supporting government services, promoting business development, and improving people's livelihood.
- Discussed the impact of the epidemic on the company's operations, including the use of technology to support online office activities and the potential opportunities in fintech, medical technology, and smart cities.
- Addressed the operational variance, explaining the reasons for the higher surrender rate and the company's preparations for future challenges.