Ping An’s first-half profit hit as China’s largest insurer sets aside provisions of US$5.5 billion related to troubled mainland developer

China’s largest insurer by market capitalisation said net profit for the six months to June fell 15.5 per cent to 58 billion yuan (US$8.94 billion) from 68.7 billion yuan a year earlier, missing market estimates of a single-digit decline by five analysts polled by the Post. This was the second year in a row the company reported a profit decline for the first half.

First-half profit fell mainly because of a provision of 35.9 billion yuan for impairment losses and adjusted valuation of its investments in China Fortune Land Development. The provisions accounted for 66 per cent of its total exposure of 54 billion yuan in the mainland developer.

China Fortune Land had 81.57 billion yuan of overdue interest and principal on bank loans and bonds as of end July, according to a filing to Shanghai Stock Exchange where the developer is listed.

Ping An, the second largest shareholder of the developer with a 25.25 per cent stake, said the provision reduced its first-half net profit by 20.8 billion yuan. The insurer had set aside 17.7 billion yuan for impairments in the second quarter following provisions of 18.2 billion yuan in the first quarter.

“Despite a complicated, difficult business environment, we increased interim dividends and will repurchase shares again to maximise shareholder returns,” chairman Peter Ma Mingzhe said in the results announcement to Hong Kong stock exchange.