Analysts expect the bottom line of Ping An Insurance to get a boost from the mainland's economic recovery after the company missed market expectations with a 3 per cent rise in net profit last year amid a lacklustre stock market.
The mainland's second-largest insurer by premium income said net profit grew to 20.05 billion yuan (HK$24.78 billion), giving it earnings per share of 2.53 yuan, lower than the 2.79 yuan estimated by Thomson Reuters.
Castor Pang Wai-sun, the research head at Core Pacific-Yamaichi, said the poor results were mainly caused by the sluggish performance in the mainland's stock market, in particular in the first half of last year.
"The decline in the A-share market heavily weighed down the insurer's investment income," he said.
Ping An's investment income was down 13 per cent from the previous year to 25.68 billion yuan while investment yield dropped 1.1 percentage points to 2.9 per cent.
The net realised and unrealised losses from security investment and fair-value change widened to 9.52 billion yuan from 961 million yuan amid the continued weakness in the domestic stock market, the insurer said in a statement to the Hong Kong stock exchange.
Yet the insurance business remained stable last year, with total premium income increasing 8.7 per cent to 134.85 billion yuan.
Pang said Ping An's poor performance was within expectations and a rebound was likely this year.
"The mainland economy has seen signs of recovery in the fourth quarter, and the A-share market has also bottomed out," he said.
He added that the insurer's synergy with its banking subsidiary, Ping An Bank, would likely help it outpace its counterparts amid fierce competition in the insurance business.
"Ping An Bank's network will be an efficient channel for the insurer to sell its products," Pang said. The unit contributed 6.8 billion yuan in profit to the group last year, the statement said.
Shares of Ping An closed 0.32 per cent lower at HK$61.90 yesterday.