|Corporate Profile ||Business Summary: |
The principal activities of the Group comprise the provision of a wide range of financial products and services with a focus on the three core businesses namely, insurance, banking and investment.
Performance for the year:
Net profit attributable to shareholders of the parent company reached RMB39,279 million, up by 39.5% compared to last year.
LIFE INSURANCE BUSINESS
In 2014, the central government carried out in-depth reforms with stable development of economy and society. The economy grew within a reasonable range with an active adjustment to the economic structure. China made great strides in its in-depth reform, as living standards continued to improve. The life insurance industry maintained a positive trend. The “Several Opinions of the State Council on Accelerating the Development of the Modern Insurance Service Industry” and other positive policies such as expanding investment channels for insurance fund boosted the development of the industry. The growth of total premiums rose steadily. Based on the principles of risk prevention and compliance, the Company steadily developed individual life business with high profitability, diversified its product lines and optimized the product structure. It advocated the protection function of insurance, promoted the sales of product portfolios, and focused on building up a scalable and efficient sales network. As a result, it achieved steady and valuable business growth and its market competitiveness increased as the year progressed.
Ping An Life
Ping An Life, through its nationwide service network of 41 branches, including six telemarketing centers, and over 2,800 business outlets, provides individual customers and institutional clients with life insurance products. As at December 31, 2014, Ping An Life had a registered capital of RMB33.8 billion, net assets of RMB92,057 million and total assets of RMB1,378,695 million.
The group’s life insurance products are primarily distributed through a network that includes a sales force of over 635 thousand individual life insurance sales agents, 3,913 group insurance sales representatives, and over 68 thousand commercial bank outlets that have made bancassurance arrangements with Ping An Life.
Ping An Life placed value-focused operation at its core. In particular, it focused on teamwork as the foundation, benevolence as the root, customer experience and innovation as the driving forces. The group promoted the synergetic development of multiple channels such as individual sales agents, bancassurance outlets, telemarketing and internet marketing, striving to achieve the sustained, healthy and stable development of its embedded value and scale. In 2014, Ping An Life achieved written premiums of RMB241,009 million, of which the written premiums of new business realized RMB63,480 million, representing an increase of 20.5% over the same period last year. Written premiums of renewal business reached RMB177,529 million. The individual life insurance business strengthened its agencies’ team managementand built a solid foundation as a result. The number of Ping An Life agents rose by 14.1% from the end of the previous year to more than 635 thousand, which reached a record high. There were continuous increases in the productivity per capita. First-year written premiums per agent per month amounted to RMB6,244 and new individual life insurance policies per agent per month reached 1.1. The written premiums of individual life insurance business was RMB225,311 million, up by 14.4% over the previous year, among which the written premiums of new business was RMB53,269 million, and the written premiums of renewal business reached RMB172,042 million, up by 20.7% and 12.5% over the last year, respectively. Based on industry characteristics and market development trends, in order to fulfill channel demand, the bancassurance introduced insurance products for malignant tumors which were “Low Price, Easy to Purchase, High Coverage”. It attempted to promote the sales of insurance products with protection function in the bancassurance channel, further implemented transformation, optimized business structure and returned to insurance coverage. Also, building on thebalanced development of existing channels, Ping An Life strove to develop new channels such as telemarketing and internet marketing. Written premiums of telemarketing sales was RMB9,354 million in 2014, up by 41.5% over the previous year. This was a high growth rate compared with traditional sales channel, which enabled Ping An Life to maintain the first position in the telemarket.
Ping An Annuity
Ping An Annuity was set up in 2004 and is the first professional annuity company in China. Its business scope includes pension insurance, health insurance, accident insurance, insurance fund investment management, annuity, asset management products for pension and entrusted pension management, with business outlets throughout the country. As at December 31, 2014, Ping An Annuity had a paidin capital of RMB4.36 billion, and is the largest annuity company in China.
Ping An Annuity recorded a net profit of RMB495 million in 2014, up by 29.2% over the previous year. The accumulated business scale of Ping An Annuity reached RMB89,727 million in 2014. Of this, long-term and short-term insurance business reached RMB8,239 million and RMB8,854 million, respectively, whose market shares maintained leading positions in the industry. Corporate annuity entrusted payments reached RMB17,701 million, corporate annuity invested payments amounted to RMB28,531 million, and other entrusted management business payments was RMB26,402 million.
Ping An Health
In 2014, Ping An Health made rapid progress in its business development, with an increase of 35.0% in premium income. Ping An Health focused on providing high quality medical insurance service to clients, market share and industry influence gradually increased. Ping An Health continually optimized its operation and improved client experience, building brand recognition. It has implemented a multi-dimensional risk management system and a broad range of measures for control and monitoring, using global advanced medical insurance claim and risk management system technology, resulted in operation optimization. The competitive advantage of Ping An Health in the mid-to-high end medical insurance market gradually expanded.
PROPERTY AND CASUALTY INSURANCE BUSINESS
In 2014, the property and casualty insurance market maintained rapid growth. Automobile insurance is still the mainstay of property and casualty insurance. The promulgation of the new “Ten National Rules” created favorable external conditions to boost the mid-to-long-term rapid growth of the industry. Reforms for commercial automobile insurance rates and the emergence of internet insurance brought new growth opportunities to the industry, but it also tested the entire industry’s operation and service capabilities. Ping An Property & Casualty continued to regard risk filtering as the root of operation, enhanced its capabilities on risk filtering, optimized cost structure and improved resource utilization efficiency. Ping An Property & Casualty pushed through the operating service concept of “providing customers with the best experience” as its business grew steadily. Embracing the advantage of mobile internet, Ping An Property & Casualty innovated the self-serve services for policy application and claim in the mobile terminal, provided customers with diversified service channels and convenient service experience, and led its service into the “fingertip era”. In 2014, premium income of Ping An Property & Casualty was RMB142,857 million, up by 23.8% over the previous year. Of this, automobile insurance premium exceeded RMB100 billion and was ranked as the top automobile insurance brand in China. Premium income of cross-selling, telemarketing and internet marketing reached RMB62,053 million, up by 22.3% over the previous year. Premium income from car dealers reached RMB29,241 million, up by 24.0% over the previous year. According to China’s insurance industry statistics published by the CIRC, premium income of Ping An Property & Casualty accounted for 18.9% of total premium income of Chinese property and casualty insurance companies. Ping An Property & Casualty is the second largest property insurance company in China in terms of premium income.
Ping An Property & Casualty distributes its products mainly through its network of 41 branches and over 2,200 sub-branches across the country. Main distribution channels include in-house sales representatives, sales agents, insurance brokers, telemarketing and cross-selling.
In 2014, Ping An Property & Casualty’s outward reinsurance premiums amounted to RMB19,949 million in total, of which, RMB14,455 million and RMB5,468 million were from the automobile and non-automobile insurance businesses, respectively, while RMB26 million came from the accident and health insurance division. Ping An Property & Casualty’s gross inward reinsurance premiums amounted to RMB22 million, all of which were from the non-automobile insurance business.
In 2014, Ping An Property & Casualty continued to be actively engaged in reinsurance arrangements that helped to enhance its underwriting capabilities, diversify its operational risks and ensure its long-term healthy and steady growth. It has endeavoured to widen the scope of collaboration by stepping up efforts to work with reinsurers to expand reinsurance channels. Ping An Property & Casualty has gained strong support from the world’s major reinsurance markets including Europe, the United States, Bermuda and Asia and so on. Currently, it has established extensive and close partnerships with nearly 100 reinsurance companies and reinsurance brokers worldwide. Its major reinsurance partners include China Property & Casualty Reinsurance Company Ltd., Swiss Re, Munich Re and Hannover Re Group.
The Company runs its banking business through Ping An Bank, which is a national joint-stock commercial bank headquartered in Shenzhen and listed on Shenzhen Stock Exchange under the stock name “Ping An Bank” and stock code “000001”. As at December 31, 2014, Ping An Bank had total assets of RMB2.19 trillion, net assets of RMB130,949 million and registered capital of RMB11,425 million. It provides a broad range of financial services to corporate, retail, and government customers, through a network of 747 branches and sub-branches across the country.
In 2014, with a complex and volatile international market environment, China carried out comprehensive and far-reaching reforms, and implemented proactive fiscal policies and stable monetary policies, which underpinned the sustainable and steady development of the economy and society. Meanwhile, the development of the banking industry achieved new normal stage: with the acceleration of interest rate marketization and financial disintermediation, competition from the side of liability was intensified and cost rigidity increased; banking regulations were becoming more prudent and stringent; and the development of private banks and internet finance also had a great impact on the traditional operation models of banks.
Confronted with opportunities and challenges, Ping An Bank ran its business under the “customer-centric” management concept, which highlighted the business’s four features of specialization, intensification, integrated finance and internet finance. It achieved remarkable growth in business scale, profitability, productsand services and operating efficiency through reforms, innovation, transformation and development, which further raised its market competitiveness.
In 2014, Ping An Bank achieved a net profit of RMB19,802 million, up by 30.0% over last year. Profit contributed to the Group reached RMB11,297 million, up by 44.7% compared with 2013. As at December 31, 2014, total deposits amounted to RMB1,533,183 million, representing a market-leading growth rate of 26.0% compared with the beginning of the year, and laying a good foundation for business development. The total loans reached RMB1,024,734 million, up by 20.9% over the beginning of the year.
Business structure was further optimized, while profitability was improved continuously. Ping An Bank actively adjusted the structure of assets and liabilities and performed pricing management to improve profitability and efficiency, while strengthening cost control simultaneously. In 2014, Ping An Bank’s cost/ income ratio was 36.33%, decreased by 4.44 percentage points over last year. Deposit-loan spread, net interest spread, and net interest margin increased by 0.54, 0.26, 0.26 percentage points, respectively, over last year. Ping An Bank actively adjusted its business structure and focused on developing its intermediary business. Investment banking, depository, bill and gold lending business have been the major force driving the increase of business. In 2014, net non-interest income was RMB20,361 million, up by 77.0% over last year. Net non-interest income’s contribution to operating income rose from 22.0% in 2013 to 27.7% in 2014, with a further optimized income structure.
Business innovation was promoted comprehensively, and the characteristics of internet finance were emerging. In terms of platform innovation, Ping An Bank established new channels for business and income growth through “Orange-e-Platform”, an online integrated financial service platform for SMEs, with the successive launch of Business Manager, Orange-E-Note and Orange-e- Financing and other systems. Products sold through the “Hang-E-Tong” internet platform reached RMB126 billion. It also launched the first professional gold asset management platform in the industry, which combines gold investments and financing, actual gold trading, gold deposit and gold wealth management. In terms of product innovation, the Bank launched “Pocket Bank”, a mobile financial services platform which combines debit card, credit card, wealth management, mobile bill payment and mobile life services. It also successfully issued a securitization project backed by micro consumption credit assets, which was the first of this kind of projects issued in stock exchange in China and had a good impact on the market. The Company launched new Trade Finance products such as Credit- Enhanced Loan and Buyer-Credit-Enhanced Factoring to fulfill customer demands at multiple levels. In terms of model innovation, it launched the industry fund business model and created the Factoring Cloud online platform. The Bank established the “Golden Orange Factoring Club”, attracting 190 members which accounted for over 50% of commercial factoring companies in China.
Comprehensive risk management was strengthened, with asset quality remaining stable. Ping An Bank kept to the principle of “Risk Control at the Heart of Operations” and further implemented comprehensive risk management to support the real economy and ensure stable operations. In 2014, affected by the economic slowdown and industry structural adjustments and advancement, some companies, especially for private SMEs, experienced difficulties in operations, which affected the asset quality of Ping An Bank to a certain extent. Although the nonperforming loan ratio rose slightly, asset quality remained stable and overall risk stayed at a manageable level. As at December 31, 2014, the non-performing loan ratio was 1.02%, up slightly by 0.13 percentage points over the beginning of the year. The loan loss provision ratio was 2.06%, up slightly by 0.27 percentage points over the beginning of the year. The provision coverage ratio was 200.90%, down slightly by 0.16 percentage points over the beginning of the year. Ping An Bank has adopted a series of measures to dissolve and dispose of non-performing assets, as well as increased provisions and write-offs to raise its risk resistance capacity. In 2014, the Company made a sound performance on recovery, with total recovered non-performing assets for the year reaching RMB3,325 million. Ping An Bank will further strengthen the credit structure to avoid and minimize potential risks that may arise in connection with existing loans, exercise strict control over new non-performing loans, strengthen efforts to dispose of nonperforming loans and maintain relatively sound asset quality.
Capital strength was further increased, and outlets establishment speeded up. Ping An Bank actively expanded its capital replenishment channels and instruments. In 2014, it issued RMB15 billion tier-2 capital bonds, which effectively boosted its capital strength, and meanwhile, actively worked on the application of the issuance of non-public ordinary shares and preference shares. As at December 31, 2014, the capital adequacy ratio of Ping An Bank was 10.86%, with a tier 1 capital adequacy ratio of 8.64% and core tier 1 capital adequacy ratio of 8.64%, calculated under the “Capital Rules for Commercial Banks (Provisional)” enforced by the CBRC. The Bank met regulatory requirements in all aforementioned indicators. Ping An Bank continued to accelerate network expansion and step up extension development. It opened 5 new branches and 214 new sub-branches in 2014. As at the end of 2014, Ping An Bank had 43 branches and 747 business outlets in total, among which, there were 129 community subbranches.
The Company offers high net-worth customers integrated, diversified, comprehensive and high-quality investment and financing services through Ping An Trust. In addition, Ping An Trust directly provides asset management services to institutional customers and other subsidiaries of the Company. Ping An Trust had RMB6,988 million in registered capital, RMB19,670 million in net assets, and RMB21,308 million in total assets.
In 2014, the global economy recovered at a slow pace, with varying performances across different economies. Developed economies recovered well, while emerging economies slowed down. The global economy still faced many uncertainties. Currently, Chinese economy is affected by three sequential stages, comprising the shift in economic growth, structural adjustments with short-term pain and the pre-stimulus transitional period. “New normal” are emerging in the economy, creating downward pressure for the macroeconomic environment. With the facilitation of interest rate marketization, expansion of the asset management business, cutting of excess production capabilities and structural risk in the real estate industry, as well as tightened restrictions for shadow banking by industry regulators, the trust business faces tremendous challenges.
Faced with the uncertainties of a changing market and ever-intensifying competition within the industry in 2014, Ping An Trust actively tackled adverse factors. It continued to strengthen and transform its business model as it made steady inroads in business operations. It set a strategic goal of becoming a China’s leading trust company with largest size, and implemented integration and upgrades to its business models on the back of its original core businesses of “wealth management business” and “alternative investments business”. A brand-new business model covering the four core businesses of “private wealth management business”, “institutional asset management business”, “interbank business” and “private investment banking/equity investment business” was created. A light capital model was adopted where the main income sources comprise management fees and performance fees. In addition, the combination of strong risk management capabilities, product platform, diversified funding channels and post-investment management capabilities enable the Company to meet strategic targets. In 2014, management income of trust products was RMB4,123 million, up by 46.2% over the previous year. Total investment income was RMB1,661 million, up by 39.7% over the previous year.
The Company conducts securities business through Ping An Securities, providing brokerage, investment banking, asset management, and financial advisory services. In 1996, Ping An Securities formed a subsidiary, Ping An Futures, which conducts futures brokerage business. It became an innovative securities company in 2006. In 2008, it formed a wholly-owned subsidiary, Ping An Caizhi, which conducts direct investment business. In 2009, it set up another subsidiary in Hong Kong, Ping An Securities (Hong Kong). In 2012, it formed a wholly-owned subsidiary, Ping An Pioneer Capital, to conduct alternative investment business. As at December 31, 2014, Ping An Securities had RMB5.5 billion in registered capital, RMB10,198 million in net assets and RMB61,878 million in total assets.
In 2014, the fallout of internet finance and financial disintermediation continued to intensify in the securities market. Driven by market and regulatory policies, new opportunities were presented to the securities business. In primary markets, the volume of stocks and bonds underwriting increased, resulting in a substantial rise in the industry’s underwriting income. In the secondary market, securities and bond indices as well as single-day transaction volumes reached new heights, leading to a surge in industry investment returns and net income of securities trading agency services. In addition, innovative businesses grew rapidly as the scale of margin trading and securities lending business and share pledge business rose by 196.0% and 298.8%, respectively, as compared with last year.
Ping An Securities continued to adapt to the opportunities and challenges arising from market reforms, and set the development strategy of becoming “one of China’s leading asset management companies”. It established differentiated competitive advantages and actively promoted strategic transformation. In 2014, Ping An Securities realized a net profit of RMB924 million, up by 81.2% as compared with last year. Its fixed income business completed 23 credit bonds issuance projects and 6 SME private bonds issuance projects. Its bonds transaction volume through the exchanges and inter-bank market both took the industry lead. Innovative businesses such as structural products and transaction agency reached RMB48,348 million, up by 75.9% over last year. The structure of the securities brokerage business continued to be optimized. In 2014, income from the intermediary business accounted for 38.9% of the total brokerage income, up from 26.6% in 2013. As at December 31, 2014, the margin trading and securities lending business reached RMB10,542 million, up by 224.4% compared with the beginning of the year. The scale of asset management business reached RMB106,452 million, up by 97.0% compared with the beginning of the year. The scale of services similar to assets securitization business achieved a breakthrough and reached RMB33,510 million. The equity investment business positioned itself as the investment bank providing full services for the whole lifecycle of a corporation, while promoted business model to transform towards the model of “customer service manager plus product manager”, which focused on offering customers diversified comprehensive services in every part of the supply chain. Ping An Securities developed non-channel business, with the scale of share pledge and block transaction business amounting to RMB10,262 million, up by 219.8% as compared with last year. To raise its capital strength and expand financing channels, Ping An Securities successfully issued RMB3 billion of subordinated bonds and issued RMB1,874 million of beneficiary certificates in 2014. Ping An Securities actively explored the internet finance business, and was granted “internet securities business pilot” qualifications, becoming one of the five pilot securities vendors. In July 2014, Shanghai Securities News named Ping An Securities as the “Most Potential Internet Securities Vendor in China”. It was also named as “2014 Chinese Asset Management Securities Vendor with Most Potential” by Securities Times. In November 2014, it was named as “Annual Outstanding Wealth Management Securities Company” by the China Economic Observer. In December 2014, Ping An Securities qualified as one of the first pilot locations for fast track of clients’ information from insurance accounts for new stock accounts, deepening the Group’s integrated financial resources.
Looking ahead, Ping An Securities will continue to implement new strategies decisively and leverage the Group’s advantages in integrated finance to become the best chief financial consultant for companies and best wealth management platform for individual customers.
INVESTMENT MANAGEMENT BUSINESS
The Company provides investment management services primarily through two subsidiaries of the Group, Ping An Asset Management and Ping An Asset Management (Hong Kong).
Ping An Asset Management is responsible for domestic investment management business. It is entrusted to manage the insurance funds of the Group as well as the investment assets of other subsidiaries under the Group. It also provides investment products and third-party asset management services to other investors through various channels. As at December 31, 2014, Ping An Asset Management had RMB500 million in registered capital.
In 2014, China’s macroeconomic environment was stable overall, while reforms and structural adjustments continued to achieve traction. Economic growth remained within a reasonable range. But investment growth waned, and financing reached a bottleneck, with evident operational difficulties of corporations. The downward pressure and risks for the economy remained high. As the central bank lowered interest rates, along with government policies such as “One Belt and One Road”, as well as various growth stabilizing policies, Chinese stock market grew substantially in 2014, but was highly fragmented. The SSE Composite Index achieved annual accumulated growth of 52.9%. The SZSE Component Index had annual growth of 35.6%, while the growth of second-board market grew by 12.8%. Impacted by enhanced liquidity and loose fiscal policy, the bond market became bullish in 2014.
Ping An Asset Management leveraged its professional investment know-how and seized opportunities in the movements in the domestic bond and stock market. It tapped the Company’s advantages in the fixed income investment and seized investment opportunities in individual stocks to enhance investment returns. The third-party business developed well as service standards were enhanced and sales support was strengthened. Confronted with volatile environment in the market, Ping An Asset Management still placed top priority on risk management, continuously strengthening the development of its risk control system and risk control team to bring stable and reliable investment returns to investors. At the same time, the Company continuously reformed and upgraded its system platforms, and optimized its workflows, establishing a solid foundation for its domestic and foreign investments as well as business expansion. After nearly ten years of development, Ping An Asset Management has become the third largest asset management company in China. As at December 31, 2014, assets under management of Ping An Asset Management amounted to RMB1,631,952 million, representing an increase of 28.0% compared to the beginning of the year; among which, the scale of its third-party asset management business reached RMB169,336 million, up by 103.9% over the beginning of the year. In 2014, Ping An Asset Management realized net profit of RMB977 million, up by 44.5% over the same period last year, and its third-party asset management business fees income was RMB726 million, up by 38.0% over the previous year.
Ping An-UOB Fund, established in 2011, has a registered capital of RMB300 million. Ping An-UOB Fund mainly engages in raising securities investment funds, sales, assets management business, and provides professional investment products and related services to retail and institutional investors.
Funds under the Ping An-UOB Fund performed well overall, and the long-term performance of investment in shares was remarkable. As at December 31, 2014, research by Haitong Securities showed Ping An-UOB equity funds were ranked No. 4 among 64 companies in terms of absolute returns, and ranked No. 5 among 64 companies in terms of abnormal returns. The Company’s money market fund yield is among the best in the market, the scale of its money market fund grew rapidly. At the end of 2014, the total scale of “Ping An-UOB Daily profit money market fund” and “Ping An-UOB Caifubao money market fund” reached RMB11.3 billion.
FINANCIAL LEASING BUSINESS
The Company conducts financial leasing business through Ping An Financial Leasing. Ping An Financial Leasing was formed in September 2012. Leveraging on the Group’s solid capital strength, outstanding brand influence and synergies of the full financial licenses, as well as the integrated financial services platform, Ping An Financial Leasing strove to become the specialized leader in the fields of SME customer and professional market with unique commercial vitality and extension capabilities in the industry, providing customers with more flexible and diversified financial products and more comprehensive value-added services. At the end of 2014, Ping An Financial Leasing has accumulated total assets of over RMB50 billion while maintaining a high level of asset quality, which was in the forefront among foreign-funded financial leasing companies.
Leveraging 27 years of personal financial services experience, the profound understanding of customers, and the full applications of modern technology, Ping An has been actively expanding its internet finance business. The Company focuses on the health, food, housing, transportation and entertainment, integrating its services into very fabric of everyday life of its internet users, to establish various internet finance platforms, which has initiated the strategic framework of
“One Gate, Two Focuses, Four Markets”. “One Gate” refers to the “Magic Gate” of Ping An. It realized the seamless connection to the daily living scenarios of health, food, housing, transportation and entertainment. Users can use the “Magic Gate” according to their needs to enjoy one-stop service in a comprehensive financial and daily living environment. The “Magic Gate” will establish a social financial service platform which manages the wealth, health and lives of the widespread social users.
“Two Focuses” refers to the focuses on Asset Management and Health Management. The Asset Management is developed on the “One Account Management Services” account platform, and the Health Management is developed on the health e-portfolio and “Ping An Doctor” mobile platform, which promotes the mining, analyzing and the application of big data of Asset and Health Management and plays a crucial role in the development of each internet finance business.
The “Four Markets” are namely asset transaction market, loyalty points transaction market, automobile transaction market and real estate financing market. Of which, Lufax is the major participant in the online financial assets transaction market. Through constant breakthroughs and innovations, Lufax has achieved remarkable development in 2014. The number of P2P users and transaction volume had increased substantially. Wanlitong strived to establish China’s largest loyalty points transaction market, and loyalty points platform structure is growing more well-equipped. PA Haoche has been expanding rapidly and has become the largest second-hand automobile trade platform in China. PA Haofang has officially embarked on the real estate financial market with a series of internet real estate financial products, which has gained widespread attention and positive feedback from the market.
In 2014, the Company continued to promote the development of integrated finance business and the optimization of service platforms, aiming to steadily enhance customer experience. It stepped up the application of technology and new internet techniques to boost the innovation and development of the business. In terms of its personal integrated finance business, the Company pursued its “customer-oriented” philosophy, better carried out cross-selling, actively took advantage of internet channels and steadily promoted customer migration, which led to a stable growth in the overall number of customers and business scale. For the group integrated finance business, each subsidiary kept to the philosophy of providing support for corporate customers with one-stop service, and steadily implemented the comprehensive development of integrated finance, which saw significant results in business cooperation and increasingly synergistic effects. Meanwhile, the Company further focused on strengthening its service platforms to enhance customer experience, and adopted technology and new internet techniques in depth to support business development.
BUSINESS PLANS FOR 2015
The group’s business and operation plans remain consistent and stable as no major changes have been made to the group’s long-term operating objectives as compared with those announced last year and at the time when the group’s A shares were listed.
In 2014, the Company was committed to driving and implementing its business plans effectively. The three pillar businesses – insurance, banking and investment -maintained sound operation and sustainable growth. The group steadily enhanced profitability and achieved the performance indicators of all operating plans as set out last year.
In 2015, the Company will remain resolute and continue to forge ahead with the development plans formulated by the Board of Directors to achieve reasonable growth and optimize its internal structure. The Company is actively preparing for the future with a close attention to global technological development trends, so as to seize valuable opportunities arising from the change of traditional finance business model led by mobile internet technology. It will explore internet finance model in depth and bring the group’s strategic goal of becoming “a world-leading personal financial services provider” to a higher stage.
• Ping An Life placed value-focused operation at its core, sticking to the principles of teamwork as the foundation, benevolence as the root, customer experience and innovation as the driving forces. It focuses on the synergetic development of multiple channels, namely individual sales agents, bancassurance outlets, telemarketing and internet marketing. Ping Life also strives to achieve the sustained, healthy and stable development of the intrinsic value and business scale, to fulfill the vision of “becoming the most respected life insurance company in China”. Ping An Property & Casualty will continue to build up its differentiated competitive advantages and raise its level of refined management capability, while providing better customer experience and improving customer satisfaction through matching specific products and services with customer attributes. With the vision of “becoming the leading annuity asset management institution and leading medical insurance services provider in China”, the business of Ping An Annuity has been proactively transitioning from a sole annuity business to asset management focused on annuity. It is shifting from solely operating the annuity business to annuity-based asset management businesses and traditional group insurance business to medical health insurance business mainly consisted of governmental projects, and is also undergoing an operational shift from currently serving group customers consisting mainly of corporations to corporations and governments and their individual customers. Ping An Health will strengthen the organic integration of health insurance and health management to create the No.1 brand of health insurance and services in China.
• In 2015, Ping An Bank will continue to focus on its strategic objective to establish the “Best Bank”. Leveraging the advantages of the Group’s integrated finance platform, it will further promote cross-selling and accelerate the transformation to investment banking to create a unique and competitive brand. At the same time, Ping An Bank will emphasize business structure adjustments, organizational innovation and business model innovation, expedite the development of internet finance, build an industry chain of financial eco-circle, and serve to the real economy through professional operation. Ping An Bank will ensure the stable implementation of strategic businesses, as well as the sustained and reasonable growth of profits.
• The group will continue to promote Ping An’s investment business as a leading investment management platform. By leveraging strength in the Group’s integrated financial service, it offers customers a comprehensive range of services which include securities and bonds financing, security brokerage, financial advisors and asset management, improving the customer experience. The group will enhance the market value of the group’s investment projects by strengthening the group’s management of the post-investment process. The group will make reference to global experience in managing the group’s insurance funds and further improving the group’s investment management system. In compliance with CIRC requirements, the group will actively explore and promote alternative asset investments, to improve the stability and returns of the group’s insurance fund investments, and to advance the competitiveness of the group’s insurance products.
• The group will continue to refine the “One Customer, One Account, Multiple Products and One-Stop Services” integrated financial structure and platform, further develop the front and middle office, enhance the group’s customer service model along with the group’s customer experience, and thoroughly explore the customer value to promote customer migration and intensify synergy effect.
• Ping An internet finance business will continue to establish the strategic framework of “One Gate, Two Focuses, Four Markets” and promote the conversion of non-financial business customers into financial customers through “obtaining customers online, migrating customers offline”. It will focus on daily living scenarios of health, food, housing, transportation and entertainment, to build a leading internet finance products and services platform, providing Ping An users with high-quality one-stop service in a comprehensive financial and daily living environment. The Company expects to maintain a steady growth in its performance in 2015. The insurance businesses are expected to keep sustainable and solid growth. The banking business promotes its strategic transformation steadily, and the Company also expects more diversified returns for its investment business. The internet finance business will grow rapidly. In light of changes in the macroeconomic environment, market competition, investment market conditions and other factors, the Company will make dynamic and timely adjustments to its business development goal to ensure the continuous improvement of market competitiveness.
THE DEVELOPMENT TREND OF THE MAJOR INDUSTRIES THAT THE GROUP ARE INVOLVED IN AND MARKET COMPETITION FACED BY THE COMPANY
Insurance business is one of the group’s core businesses. In August 2014, the State Council promulgated the “Several Opinions of the State Council on Accelerating the Development of the Modern Insurance Service Industry” (hereinafter the new “Ten National Rules”). The new “Ten National Rules” place the insurance industry as one of the priorities in national economy, mapping out the industry development direction in a top-level manner. On one hand, it outlines the “double pillar effect” of the insurance industry in optimizing the financial system and social insurance system. On the other hand, emphasizing the support and guide from the policies upon insurance industry, which cover a wide scope and provide strong support. The issuance of new “Ten National Rules” will certainly generate a profound effect on the insurance industry and bring new development opportunities to the industry.
The new “Ten National Rules” clearly stipulate that “to take the development of the modern insurance services industry as a significant measure in upgrading the economy, transforming the function of the government, driving and increasing social employment, guaranteeing the stable operation of the society, enhancing the society’s sense of security and improving the people’s quality of life”. This signifies that China’s insurance industry has entered a historic new stage of development. The new “Ten National Rules” have created opportunities for the development of group property and casualty insurance, in particular, creating favorable external conditions for the development of liability insurance, credit insurance and catastrophe and agricultural insurance.
In 2014, China’s insurance business realized a total premium income of RMB2,023,481 million, representing an increase of 17.5% over 2013. Of which, premium income from life insurance was RMB1,090,169 million; premium income from property and casualty insurance was RMB720,338 million; premium income from health insurance was RMB158,718 million; premium income from accident insurance was RMB54,257 million. Total assets of insurance companies were RMB10.16 trillion, representing an increase of 22.6% as compared with the end of 2013. In terms of premium income, Ping An Life and Ping An Property & Casualty are the second largest life insurance company and the second largest property and casualty insurance company in China, respectively. The insurance industry is among the fastest growing industries in Chinese national economy. As Chinese economy keeps growing and personal wealth is expanding, such rapid growth of the group’s insurance business is expected to continue in future.
In 2015, the banking business was affected by interest rate marketization, financial disintermediation, increasingly stringent regulations, and competition from privately-owned banks and internet finance. Under the guidance of “controlling the total budget and adjusting the structure”, it is predicted that overall liquidity in the banking industry will remain optimal and directional laxer policies will be strengthened to support economic growth.
Adjustments to national strategies and deepening financial reforms brought new opportunities to the development of the banking industry under the “New Normal”. First, there are opportunities arising from the transformation of business strategies. The banking industry should follow government policies closely to accelerate business transformation. Second, there are opportunities arising from the great development of the retail business, which means seizing opportunities arising from upgrading of consumption and the development of internet technology. Third, there are opportunities arising from the development of key industries and economic areas, especially in modern agriculture and modern logistics industry. Fourth, there are the opportunities arising from product and business innovation, which will strengthen banks’ asset management capabilities to achieve the growth model of “high yield, high intermediary business income, light capital”.
At the same time, banking operations faced various challenges and pressures. The first is pressure from risk management, which arises from the elimination and exit of the industries with excessive production capacity and interbank reorganization, as well as the increased fluctuations of the Renminbi exchange rate and market liquidity. Second, there is pressure from asset and liability operation. The interest rate marketization, the deposit insurance system and diversification of competing entities in the financial market have brought new challenges to banks’ operations and business model innovation. The pressure from demand for service quality enhancement is the third pressure. This pressure arises from changes in daily life and industry environment with the development of internet, which has led to customers’ fast-changing demand for various financial services and better customer experience. Fourth, there is pressure from capital requirement. With vast market opportunities, the requirements of replenishing capital in time, saving capital and raising the efficiency of capital for banks are higher.
Ping An Bank will seize opportunities, face challenges head-on, and continue to follow its strategy and plan. It will leverage on the integrated financial platform of Ping An Group to continue to offer customers comprehensive integrated financial services with the service philosophy of integration, investment banking directed and specialization. With the idea of cross-industry business integration on the internet, the bank aims to create new financial business for the internet era. It will reinforce the building of its business, product and platform departments, to enhance the intensity and professionalism in terms of its operating capabilities. Driven by the four engines namely “corporate, retail, interbank and investment banking”, Ping an Bank will form the four characteristics of “specialization, intensification, integrated finance and internet finance” and continually create its core competitive advantages.
OPPORTUNITIES AND CHALLENGES FOR FUTURE DEVELOPMENT
In 2014, the global economy still recovered slowly. Chinese macroeconomic environment was stable overall with its main indicators within a reasonable range. There was continuous structural optimization while the economic growth gradually slowed. Looking ahead, China is still in an important strategic development phase. As the wealth of national citizens continues to grow along with the implementation of various reform measures, Chinese economy will continue to grow at a stable and healthy pace. It has staged the substantial development for personal financial services industry, which has presented valuable developmental opportunities for the Company to achieve its targeted strategic goal.
Further, while opportunities abound, the Company still faces future developmental challenges. On one hand, traditional finance institutions are actively promoting internet finance. On the other hand, non-traditional finance companies have expedited deployment in the financial field. New technologies, with the internet at its core, are developing even faster. With technological revolution and business model innovations, nearly all traditional businesses, including the finance industry, are about to face massive changes. WeBank is the first privately-owned bank to obtain approval for operations in 2014. As its banking business is fully conducted online and there is no branch or outlets, it has attracted more and more attention both domestically and abroad. It will also gain more industry attention and cross-industry collaboration opportunities for internet finance business.
Confronted with opportunities and challenges, Ping An will ensure the core finance business maintain above-market growth and quality. It will also take steps in strategic layout and investment to promote future growth, and exert great efforts on the development of the internet finance business, achieving concurrent development of both core finance and internet finance businesses.