Ping An Insurance Group Co of China Ltd

SSE:601318

Earnings Call Analysis

Ping An's H1 2023 Performance Soars with Effective Reform

Ping An experienced robust growth in H1 2023, driven by an effective reform strategy resulting in a 45% rise in new business value (NBV), integrated finance growth, and deepened strategy. Operating profit hit RMB 82 billion, with 18.2% operating ROE. Despite a slight decrease in the parent company's operating profit by 3%, the foundational Closing Service Margin (CSM) stands strong at RMB 817.5 billion. The financial strength is solid with a solvency ratio double the regulatory requirement, and an investment strategy that yielded 4.1%. Real estate investments offer stable returns, accounting for 4.5% of the portfolio, and debt schemes with over 96.2% AAA credit ratings. Shareholders saw a dividend hike of 1.1%, marking 11 years of consecutive increase.

Strategic Growth and Performance

The company's growth narrative is markedly positive, with the New Business Value (NBV) of life insurance growing by 45%, underscored by a significant 43% growth in the agent channel and a dramatic 175% growth in the bank insurance channel. This growth momentum can be attributed to the company's successful integrated financial model, which is reflected by an increasing customer base, contracts, and sales migrations. Specifically, they've accomplished an impressive feat, with 50% of new financial customers coming through the healthcare ecosystem, which accounts for over 68% of life insurance's new business value.

Investment Insights and Market Outlook

On the investment front, optimism prevails concerning the performance of the Asia market and its future prospects, especially post-pandemic. The company optimistically views the transformation from high-speed to high-quality growth in China. This aligns with their investment principles, which favor segments with strong cash flows and valuations that reflect Chinese characteristics. They are hence committed to aligning their investments with national development objectives and the needs of the real economy.

Operational Excellence

In terms of operational metrics, productivity per agent improved by a compelling 94%, with monthly revenue per agent surpassing RMB 10,000. The company has expanded its unique banking insurance channel in collaboration with Ping An Bank, growing from 2,000 to an impressive 10,000 outlets. This expansion, along with their focus on combining insurance with healthcare, medical care, and elderly care services, has been pivotal in their first-half success, driving an impactful reform across four channels and three products.

The Integrated Finance and Healthcare Strategy

The integrated finance plus healthcare strategy is robust and aims at a significant market segment — the middle-income class in China, which consists of 400 million individuals. The company has captured a substantial portion of this market, with 227 million customers already onboard. They have effectively leveraged cross-selling, evidenced by more than 12 million cross-sells with three main products. This strategy, combined with the low likelihood of contract termination, is set to enhance customer profitability over time.

Fiscal Stability and Dividend Growth

The financial stability of the company seems sound with a reported profit of 82 billion attributable to shareholders and a well-maintained annualized yield. The company has a commendable track record, with dividends growing for 11 consecutive years, and a specific growth in dividend per share by 1.1 basis points in the period under consideration.

Earnings Call Transcript 2023-Q2

[Ruisheng Sheng, Board Secretary]

Thank you. Please take your seats. Good morning, ladies and gentlemen. Thank you for joining us today for the 2023 Interim Results Announcement Conference of Ping An Group. I'm Richard Sheng, the Secretary of the Board and I'll be hosting the meeting together with Gareth Hewitt, Head of International Public Relations and ESG of our Group in Hong Kong venue. We're running the meeting simultaneously via onsite webcast and conference call. I believe that friends from the press who've been following us are very familiar with this model.

Now, let me introduce our management team members who are attending today's meeting. Gareth will kick off by introducing the management in Hong Kong.

[Gareth Hewett, Head of International Public Relations and ESG]

Thank you. In Hong Kong we have Mr. Peter Ma, Chairman; Ms. Jessica Tan, Co-CEO; Mr. Benjamin Deng, Chief Investment Officer.

Mr. Richard Sheng will now introduce the management team joining us in Shanghai.

[Ruisheng Sheng, Board Secretary]

Thank you. In Shanghai we have Mr. Xie Yonglin, President and Group Co-CEO; Ms. Fu Xin, Group Chief Operating Officer; Ms. Zhang Zhichun, Group Chief Financial Officer. Today's meeting will begin with first half business overview by Miss Fu Xin, after which I will open the floor for questions.

Now let's welcome Miss Fu Xin.

[Fu Xin, Chief Operating Officer]

Good morning, ladies and gentlemen. Thank you for joining us in this 2023 interim results announcement conference. Thank you for your support to Ping An Group. On behalf of management, I will introduce to you the performance review of 2023.

Page five, please. Page five is an overview of our strategy. Our goal is to become a world-leading integrated financial and healthcare company, and we will promote our development with technological empowerment. Page six shows the H1 performance. I think there are three key words. Effective reform is the first one.

On this page, these figures are achieved, thanks to our commitment to life insurance reform in four channels and three products, as well as the market demand picking up. On like for like basis, NBV in 2023 first half was up 45%.

Secondly, deepened strategy. Our integrated finance has been very effective with stable growth in the number of customers, and we have seen increase in migrant customers among different businesses. Thirdly, very importantly, high quality development. Despite different challenges, we have kept robust growth. Our operating profit is at RMB82 billion. Operating ROE is at 18.2%, and this is not realized without the support of shareholders. We attach great importance to shareholder return, and the interim dividend is at RMB0.93, up 1.1%. After retrospective adjustments, our dividend per share has seen increase for 11 consecutive years, which shows our long-term investment value and stable cash return.

Page seven shows the contribution of different business segments. Bank and P&C have seen 14.9 and 7.4% growth respectively, a rather big highlight. And thanks to the slowdown of NBV, life and health have seen year-on-year decrease, but with the inflection point in NBV growth, we believe in the future we're going to see growth in profit, and our profit has been diversified, and the total operating profit has been stable.

Page eight, life insurance in the first half operating profit before tax is up 1.9%. Thanks to income tax and consolidated subsidiary business, operating profit for parent company is down 3%. The change in operating profit comes with a lag. As you can see forward-looking indicator, NBV has seen positive growth, 45%. In 2023, CSM, it was rather similar to residual margin. This is at 817.5 billion, a rather sizable scale, which lays a strong foundation for future profit release.

And page nine shows the NBV contribution from different channels. Thanks to our reformative measures over the past three years and market demand picking up, agency and bank insurance have seen strong growth. Life and health NBV have been up by 45% on a like-for-like basis. We have seen higher comprehensive capability and diversified capability on top 43% in agency channel. In bank insurance, we have seized market opportunity and achieved 174.7% in the first half as a growth margin. And bank insurance has a margin of 19.7%, much higher than industry average. There is a lot to deliver in bank insurance.

Page 10 shows interim dividends. As we said, we take shareholder return very seriously, and we continue to improve cash dividends. We propose to pay dividend of 0.93 per share for interim, 1.1% year-on-year rate. As we said, after retrospective adjustment, dividend per share has seen 11 years of continuous growth since 2011. And this year, we're going to maintain very robust dividend payout ratio. And the parent company has kept its free cash at a very healthy level.

Page 11 shows solvency margin ratios. In the first half, under C-ROSS Phase II, our solvency ratio is higher than regulatory requirement. The group health, life and P&C have been twice the regulatory requirement of 50%. In the first half, Ping An aimed at long-term strategic asset allocation. Major assets have seen stable shares, including 72% of debt financial assets, and they have extended duration and contributed to stable return. Equity accounted for 14% contributing to excess return.

In our investment portfolio, real estate investments account for 4.5%, 0.2% points down compared with the beginning of the year. Among all the investment portfolios, real estate accounts for 76%, primarily commercial office buildings, which can offer stable expected investment return, including commercial office buildings, logistics, industrial parks, and long lease apartments. These are high quality assets, and they will be able to offer very stable rental income and help us resist inflation and maintain the value of our assets, which is highly compatible with our investment objectives.

On page 13, debt schemes and debt wealth management products account for 9.4% of total investment, down by 0.9% points compared with the beginning of the year. Nominally yield 5%, remaining maturity 3.9 years. We have established very stringent internal credit risk management system through credit review, investment access, and post-investment management.

We have strengthened the risk management of debt schemes. Over 96.2% of debt schemes and trust schemes have AAA credit ratings. Aside from some high credit entities, which do not need credit enhancement for financing, most of the assets held by the company have guarantees or collateral. Most of the assets are mainly in economically developed regions, including Beijing, Shanghai, and Guangzhou. These assets are of very high quality.

Page 14. In the first half, faced with a very complex market environment in both China and overseas, we committed to value investment and riding through economic cycles. The comprehensive investment yield of insurance income is 4.1%, up by 0.7% points. In long-term return, 10-year average investment return reached 5.5%, which is higher than EV long-run investment return assumption, which is 5%.

Page 15 shows how Ping An as a responsible group contributed to sustainable development. The figures on the left side have behind our tangible efforts in green development, social responsibility, and other aspects. And on the right side, these accolades speak volumes of our recognition by institutions in both China and abroad.

Page 16 shows our rewards and accolades with robust business performance. We ranked 33 among the world's Fortune 500 companies, 9th in China, and number one in global insurance industry. This is an overview of our business, and we will now take some questions. Thank you.

[Operator]

Thank you very much, and thanks for Jessica, Ms. Fu. And now, we're going to get into the Q&A session. And we're going to rotate the question between Hong Kong and Shanghai. And please identify yourself before you raise a question, and making sure you raise no more than two questions per time.

Now, let's welcome a journalist from Shanghai to raise the first question, please. The gentleman, please. Hello.

[Unidentified Analyst]

I come from a CCTV Finance Channel. My name is Gu Zhiyi [ph]. I have two questions. My first question, it's regarding the Ping An Group performance. In H1 of this year, your operating profit has already grown very fast, and NBV also grew very fast. How are you going to comment on your performance? What's a key driver of your performance in H1 of this year?

My second question is regarding the Asia market. Recently regulators rolled out a lot of new policies. Evaluation of the Asia market sounds to be low, so I'd like to ask for Ping An, how you're going to comment on the Asia market in China now? Because as a very important force in the Asia market, many people pay much attention to companies like Ping An. So for Ping An, are you going to actually have any further insurance of the equity product in the market, in the Asia market?

[Unidentified Company Representative]

Thank you very much. Thanks for Mr. Gu from CCTV Finance Channel regarding how we're going to comment on the H1 performance of 2023. So I think I'm going to help you to review our comment. The first one, effective reform. Effective reform means due to our three-year life insurance reform covering four channels and three products and always recover the demand of the market. On comparison basis, in 2023, NBV of life insurance grow by 45% among which agent channel grow by 43%. Bank insurance channel also grow by 175%.

My second keyword is strategic upgrading. In other words, we can say our integrated financial model already works. Our retail customer, contract -- number per customer all on the rising trend and the C-ROSS sales or the migration of the customer continue to be improved. I was also talking about in the presentation, our healthcare and elderly care service ecosystems being continue established which will empower our financial business. We have a 50% of the new financial customer that are coming from the healthcare ecosystem. They can indeed enjoy our product plus service. They have already covered more than 68% of the new business value for life insurance.

The third keyword I'd like to share with you is high-quality growth. In H1 of this year, because of the very complicated landscape and internal and external challenge, we'll still be able to stabilize our business and we have 82 billion profit attributable to the shareholders. And the annualized yield also be maintained at a very good level. For the dividend, it was growing by 11 consecutive years with 0.93 of the dividend per share grow by 1.1 bps.

Okay, let me just respond to a second question. That is the investment allocation. For sure, insurance funds is for long-term and a very stable funds. It's always been taken as a stabilizer in the capital market in China and also the corner store for the capital market of China. For our investment, we'd like to riding through the micro-industrial circle through long-term strategic allocation, strategic allocation, and value investment. We hope that we can generate the delta that is the fundamental philosophy of our allocation.

Insurance funds allocation, equity-based allocation probably be the Asia market in China. It's going to be a long-term yet very important destination for us to go for. So for Ping An, we're going to continue with our stable allocation. We're taking a look at the Asia market performance. We're still positive on its future prospects. After the COVID-19, there are more policies being issued by the regulator. So China started to shift from high-speed growth to high-quality growth. The shift and the transformation has been intensified. So I think in the near future, the market still have a greater room for the growth.

Regarding our investment, we need to in line with national development rather take care of the high-quality growth, meeting the need of the real economy. Our allocation is going to be more focused in the segment with good cash flow, comply with Chinese valuation system of Chinese characteristics. Those are all going to be the future criteria for us to decide the allocation of the funds in the near future. Thank you.

[Unidentified Analyst]

Good morning, management. I have a question on NBV. Your NBV is better than industry peers. So what do you think are the reasons behind that achievement? Behind the strong growth in the first half, was it because of the pent-up demand during the pandemic? Does it mean that in the second half, the growth will slow down? Recently, Mainland China residents have very strong intention to increase their savings. Does it affect their intention to buy more insurance products? I've seen that you have reduced your exposure to country garden, and your exposure also include other Mainland property developers, including [indiscernible]. Will you continue to reduce your positions in these companies, and do you see any problems in repaying local government financing vehicle debts? Thank you.

[Unidentified Company Representative]

Well, let me respond to your question on NBV. There are two factors. One is more macro, the other, thanks to our reform. As you said, there was some pent-up demand behind the growth, and there is also this reason of product switch from 3 to 5 to 3. But I think most importantly, it should be attributed to our reform in the past three years, which helped us stand out in the market.

As Ms. Fu said, we have four high-quality channels, and our products and services are very competitive after being reinvented. You can see that per agent productivity is up 94%. The per month revenue per agent is over RMB10,000. Apart from that, we have a new bank insurance channel in collaboration with Ping An Bank, and community grids, these are very unique to Ping An. We have increased the outlets from 2,000 to 10,000.

As for our product, as you can see, in the first half, the growth was 45%, and 68% comes from insurance plus healthcare, medical care, and elderly care. We were able to use Ping An Health and PKU, the two subsidiaries, to consolidate the best resources in healthcare and elderly care services. That's why we have achieved a lot in the first half, and that's thanks to our reform in four channels and three products.

Your second question has to do with assets. Let me respond to the question in two aspects. First, you asked about non-standard assets and LGFV. I'm sure you're asking about the format. In general LGFV, our exposure are concentrated in most developed Tier 1 cities. I think to sum up as an answer, I would say our exposure and risk are both under control.

As for non-standard debts, there are a few points that I would like to get across. First, we established top-notch internal credit assessment management system and management team. We have a very established concentration management system with early warning features. We have very limited exposure. We have very limited exposure, which is fully under control. We have been reducing the size of our real property investment from the year before last, and our focus is now rather on long-term lease apartments, which can deliver long-term investment return and are compatible with our investment objective. And real property accounted for 45% of investment from insurance revenue. They are concentrated in first-tier cities, and in terms of counting standards, they're booked with cost method. So we believe property is something that we feel that we can totally control the exposure and risks, and at the same time, they're going to deliver a lot of embedded value in the future from Shanghai.

[Unidentified Analyst]

Thank you very much. Thanks for management team. I come from Huaxiang [ph] News. I have two questions. My first question, China Ping An Group always emphasize on integrated finance plus healthcare service. In your interim report, you also mentioned there are some quantitative data to show your performance. So for the management team, how you're going to comment on the development stage of integrated finance plus healthcare? Are you going to upgrade this model? And what would be the trend for your future strategy? Is there any new master plan?

And my second question, I noticed in northern part of China, there used to be a heavy rainfall, which actually generated huge casualties and property damage. Many insurance companies are helping the Northern Province in China in handling those extreme weather accident events. So how many damage or compensation that Ping An going to pay for those extreme weather events? As a responsible company, how you're going to support the local city to restore the production and the life?

[Unidentified Company Representative]

Thank you very much. Let me just comment on integrated finance plus healthcare service strategy. My first point, remember nine characters. People all need auto product house and also the healthcare product along with credit card. So the nine characters actually help to further validate our strategy. We do hope we can provide the nice services, as I mentioned just now, to our 227 million customers. So how we're going to see the strategy for integrated finance, customer base, contract per customer, and profit per customer means a lot.

You know that we are targeting 400 million of the middle income class in China. We have already harvested 227 million of them. And every year we're doing the cross selling in each one of this year. We have already did the cross selling for more than 12 million times with three major product. In our interim result, you see, if the customer has four contracts with us, they have 1.9 in every 10,000 possibility to drop us. So that's the reason profitability per customer naturally will go up. So those are the three sets of the statistics to show you how robust our integrated finance strategy would be.

The second point you were asking about healthcare. Let me just elaborate on two points, on demand and on supply. Regarding the demand, you see, Ping An three years ago, we are the first mover in this market proposing we're not only providing financial solution and wealth appreciation service to our customer. What we need to provide more is healthcare and elderly care service to our customer. So we have financial solution plus wealth management plus healthcare service to the customer. This is indeed what's being needed by the Chinese population.

Regarding healthcare, you see, healthcare cost per capita is RMB5,000 per year in China. And in Singapore, the number was 24,000. And in Japan, this number was 30,000. So we still see in China as we can further seize opportunity to improve the healthcare service. In China, we have 210 million people above the age of 65 years old. People always say Japan is an aging population, but in Japan, they only have 37 million of the population above 65 years old. In China, this number is even four times higher than that of Japan. With the aging population, and you can see till now, supporting the elderly citizens still going to be a huge unmet need in Chinese society. On one side, we notice there's the unmet need. Customer not only need our insurance product, but also healthcare plus elderly care service.

And the second part, let's talk about the supply. As there is a demand in the market, but overallly speaking, in the market, healthcare and elderly care, we do have 500,000 suppliers in the market providing tens of thousands of service. Without the industrial criteria or standard, supply and demand are indeed imbalanced. So that's the reason Ping An, we leverage Ping An Good Doctor and PKU Healthcare of integrating the primary healthcare resources in China along with elderly care service, providing those integrated service to our customer with in-store and to-store, a two-door service. In H1 of this year, we have already integrated more than 200,000 suppliers of providing the customer very robust performance with very good transactions being made. So healthcare and elderly care are going to be a key strategy for us to go for. We have already have 21 million healthcare and elderly care members with 47 million service volume times and 25 million number of the purchase. And for union health, they actually have a similar profit with us, but their market value was 30 times higher than ours. So that's the reason for Ping An. Hoping in the near future, we can use integrated finance plus healthcare as the dual wealth to support our future and sustainable growth.

[Operator]

We'll take the next question from Hong Kong, the gentleman down in the front.

[Unidentified Analyst]

[Technical Difficulty]

[Unidentified Company Representative]

Let me just respond to the flood question. For Ping An, we're deeply rooted in insurance business. We have a very angel emergency plan and strategy. We carry out work in four aspects, the same as this round of the extreme weather events. First of all, we have the pre-event alarms. We have the DRSA 2.0 system, which can forecast any of the extreme weather events. By 4th of August, we have already issued more than 160 million notices pre-extreme events.

And secondly, we have the emergency system. When the extreme events happen, we have four subsidiaries along with our local subsidiaries in the striking cities to establish a special task force to make fast decision-making and responding to the needs of the local citizens. And thirdly, we carry out multiple measures. For example, we'll provide the express channel for claim and also providing the special case handling strategy and also having the faster transfer of the funds or even supporting some of the residents to pay for their medical service.

And another point is emergency rescue. We're working with our local subsidiaries of providing support to the local citizens, working with the government at different levels for the rescue plan. We have a claim expert, investigators, and volunteers to go to the front line to be a part of the rescue work and helping to transfer the residents in the striking areas and helping to restore the production and the life and the social order.

And the fourth one is to exercise our practice to the local region. We attach great importance and also making sure we leverage our insurance system. We have already received RMB1.14 billion claim sum. So no matter for flooding or for earthquake, we have the same practice which has been operated for multiple decades. Ping An has been established for 35 years. We have a complete and angel system responding to any extreme events. When any event happens, we will kick off this emergency plan. Thank you.

[Operator]

[Foreign Language]

[Unidentified Analyst]

[Indiscernible]. I have two questions. On 11th August, you reduced your shareholding of Country Garden to 4.99%. But you haven't disclosed any further information. So what's the current shareholding? Can you please talk about future investment in this company? Will you reduce a shareholding in the future? You mentioned credit assessment system. Can you please share with us more figures on how you will foresee the exposure of real estate companies? And in credit assessment system, how do you foresee the exposure of Country Garden in the future?

[Unidentified Company Representative]

Thank you for the question. First of all, we're not able to comment on individual investment projects. But when I was answering another question, I said our exposure to real estate companies can be described as a controllable exposure and risks. So we are fully confident that real estate, especially long-term lease apartments, are compatible with our investment objectives. Thank you.

Back to the Shanghai venue. This lady.

[Operator]

Let me just hand my microphone to you.

[Unidentified Analyst]

Thank you very much and thanks for the management team. I come from the First Finance. I have two questions. The first question is regarding dividend. And Ping An has already claimed dividend going to in line with operating profit, which is very unique in the market. We do see you have a decreased profit attributable to the shareholders, but the dividend still be elevated. What's the reason? And is it going to be continued in the near future? The dividend ratio, is it going to be impacted by the new accounting rules, I-17.

And my second question is regarding investment. Mr. Sheng has already mentioned you have a full complex, a combo of the investment strategy. We also notice CSRC also mentioned they're going to actually introduce more high long-term capital investment into the market. In some of the policy, it also mentioned the insurance funds and the long-term evaluation and optimizing the accounting rules for the equity-based investment. So I would like to ask you, with all the newly released policies, what are those policies going to benefit Ping An? If those policies being translated into fact, whether the new policy going to further activate the equity-based investment from Ping An perspective? Thank you.

[Unidentified Company Representative]

Thank you very much. Thanks for your question. Let me just respond to the first question regarding the dividend. Yes, indeed, Ping An continue with a very stable dividend, stay very stable. Stable continuous dividend would be our policy, which remain unchanged. And the second point, we clearly notice that dividends means a lot to our shareholders. It touches great importance to pay back to the shareholders. We continue to improve the absolute dividend for 11 consecutive years, starting from 2018 to now and in the new accounting rules, and it was being improved by 28.8%.

And I'd like to say that when switching to I-17, what is going to impact our business? I have to say that accounting rules is only a way of accounting. They will not change the nature and the result of our business. So in the long run, I-17 is not going to impact our value proposition, not also going to impact our dividend ratio. And in 2022, we did the retrospective review based upon I-17. And you can see, and our operating profit actually have a 3% growth without impacting the actual number too much. So Ping An, we are having our dividend ratio based upon the operating profit. I-17 is not going to impact our overall and future dividend strategy. While our operating profit payback to the shareholders was on the decrease, but the dividend ratio is being upregulated.

You know that generally speaking, the decreased operating profit to the shareholders are being decreased due to multiple reasons. Even if it actually facing a short-term downward movement due to the I-17, but we still improve our dividend ratio because we have every confidence for our long-term operation of the business.

Regarding your second question, let me respond it in this way. For Ping An, we are fully confident for the economic development of China. For this year, we continue to see the rollout of the new policies from the central government. It actually help to further promote the economic and social development. As a long-term investor for Chinese market and a promoter and also participants of the Chinese market development, we are happy to see those new policies. We are also going to work with the central government, focus on the real economy, and also be compliant with evaluation system of Chinese characteristics and invest in the high-value target company. Those are going to be the overarching strategy for future investment. Altogether, we are going to be a key participant for the high-quality development of China. Thank you.

[Unidentified Analyst]

Thank you, management. [Indiscernible] I have two questions. In new life insurance policies in Mainland China, they changed the 3.5% cap. So in the future, how does it impact your life insurance product, especially in margin?

Second, I'd like to ask about the new updates on the business progress after the HSBC's Asia business was spinned off.

[Unidentified Company Representative]

Well, 3.5 is replaced by 3 as a policy switch in traditional insurance. I don't think there is any significant impact. Why? Number one, in China, there is a RMB278 trillion of personal savings. Now we're talking about 5% for 10-year treasury bonds, and traditional insurance is the only one product that can provide guaranteed principal and interest of 3%. Participating insurance will offer a guaranteed interest rate of 2.5%, but in the past few years, our investment return has been over 4%, so we don't worry about that because our life product will probably undergo two or three months of product switch, but they are going to be very competitive in the future.

Secondly, thanks to our reform over the past three years in four channels and also in product and services, we are going to be an integrated finance company with a very competitive product from healthcare to elderly care. 68% of NBV in the first half comes from insurance plus healthcare and home-based elderly care and policy-based elderly care. They are going to be very competitive, so we don't think that the product switch is going to affect us anything differently, so we are very confident about that. That's why I said we are fully confident for our Op margin, and this is why our payout ratio is only 29.5% of our operating margin, so we are going to maintain our dividend at a very stable level.

Second question, I think as I said when I was answering another question, we are not commenting on any individual investment project. As a financial investor, we are more interested in the portfolio and how they can deliver long-term good performance in the future. This is of more interest.

Thank you. From Shanghai.

[Unidentified Analyst]

Hello, management team. I come from Shanghai Security News. Congratulations for the robust performance in H1 of this year. I'd like to ask you, NBV grows dramatically, especially from the bank insurance channel, but I also notice life insurance product is in shifting stage, so I'd like to ask …

[Operator]

Sorry, let's just wait. We need to change for another microphone.

[Unidentified Analyst]

We also notice in H1 of this year, the agents' team being downsized by 70,000, a huge job, but the productivity per agent has been greatly improved. Are you going to continue with life insurance reform? What's going to be in the near future?

My second question, and the company mentioned you're going to take care of the high-quality growth, so do you have any concrete measures to go for high-quality growth in the near future?

[Unidentified Company Representative]

Thank you very much. Let me just respond to life insurance reform. As I have already mentioned, we have a very plausible life insurance reform. You can see it from our quality. NBV of life insurance grow by 45%, and the persistence ratio continues. Renewal rate also be having a very positive growth. From the result perspective, no matter for deliverables or the quality, we do have a very good and nice growth. It is also going to be sustainable in the near future.

For life insurance reform, we cover four channels and also having the product and the service growth. We not only count on the agents channel, we have bank insurance channel, community grade channel. As you probably heard from Ms. Fu, bank insurance growth is 174% community grade, and we have already covered more than 10,000 people there working for us. We are seeking for high-quality growth rather than blindly seeking for the size growth. Even if the agent team has been downsized, but the productivity of our agent grow by 94%, income per agent reach more than 10,000. Around 85% of our agents have been part of us for three to five years. It's a very stable team. So that's the reason I do believe we're going to see the high-quality growth of our channel.

And I also mentioned about we have a product plus a service plus elderly care and healthcare. We believe we have a successful life insurance reform for the past three years. We're confident for our future growth.

Talking about high-quality growth, what are we going to do in the near future? Let me just comment on it further. For Ping An Group, we continue keep ourselves strategically committed to high-quality growth. Our operations still be very robust. We not only be strategically committed to our business, we also continue to pay back to the shareholders.

In H1 of this year, and our operating profit reach 80.2%, continue to improve dividend ratio. Where for Ping An Group, we continue to deepen our strategy of integrated finance plus healthcare. And we also grab and seize opportunities for the insurance industry and the healthcare industry. Jessica has already mentioned about insurance plus healthcare, insurance plus home-based elderly care, insurance plus the high-end elderly care, how it can support life insurance development in the near future. Jessica has already elaborated on that with a lot of validated information.

Supporting real economy and supporting SMEs also going to be our strategy. In the mid of 2023, we have already spend 8.27 trillion in supporting real economy. We have diversified the financial product, helping the SMEs to have accessible financing with low cost. We also have very special insurance policies and financial service to SMEs. We also exercised insurance company to the guarantee responsibility. You can see during the flood event, altogether we need to pay for a claim of more than a huge sum. We are also supporting the social development. On one side, we need to deepen our integrated finance. By having models and the technology, we can further reduce the threshold of making financial service more accessible, more inclusive, creating the new supply for the financial industry. And our -- has already supported the real economy with a total financing of more than 800 billion, as Jessica has already mentioned or repeatedly mentioned.

In the healthcare and elderly care, as there is a huge unmet demand in the market, we go for healthcare and elderly care. We've been proactively exploring and also making some very good achievements here.

My fourth point, we also exercise a sustainable development, promote green finance and continue with responsible investment. In the mid of this year, our responsible investment from the insurance funds has already reaching more than 800 billion, which can make sure financial resources can be given to more green and low-carbon industry. And you can see green and low-carbon investment from insurance funds is already more than 140 billion. Green loans accounted for 135 billion, and in other words, at MSCI, we were being rated with A-level and ranking number one in Asia-Pacific region as an insurance company.

We're also going to exercise our social responsibility, support rural revitalization, and making sure integrated finance and healthcare resources could be mobilized to provide insurance plus healthcare plus financial solution to support rural revitalization. Starting from 2018, we have already started to provide more than 96 billion of the revitalization funds, building more health schools in China. We have already recruited more than 10,000 volunteers for the school teaching. All the actions being taken by Ping An are actually exercise the high-quality growth of the financial and insurance industry. We're going to continue to do so in the near future. Thank you.

[Operator]

So we'll take another question from Hong Kong.

[Unidentified Analyst]

Good morning, management, Hong Kong Economic Journal. Your stock price hovered between 40 to 50 for some time. How do you look at this rather sluggish stock price over the past year? Do you have any plans to repurchase your stocks? And how do you look at the challenges in insurance industry in the second half of the year? Thank you.

[Unidentified Company Representative]

Our stock prices are severely undervalued. Why? Our PE is only six times, and our dividend payout ratio in China is 5.8%. Maybe Hong Kong has higher interest rates, but you cannot find better investment in Mainland China. So look at our integrated finance, healthcare, our main business. Ping An is committed to long-term business. Our long-term business value and profit are going to be very robust. I hope you can all buy our stocks from today. Thank you.

[Operator]

[Foreign Language]

[Unidentified Analyst]

A question from the Shanghai management team. I do have a question regarding the funder and funder group. How it's being prepared? How the financial assets being disposed? How it's going to be integrated into Ping An?

[Unidentified Company Representative]

Thank you very much. For funder, I'd like to see the asset delivery process. It's been quite smooth. But for the integration or restructuring, our fundamental philosophy is to take a look at different business segments and to accelerate the disposal where, to be more specific, the healthcare industry. And it's actually the key reason why we're there for the restructuring of the funder group. We hope that the healthcare services could be fully integrated into Ping An Group to support our future healthcare business growth.

On one side, we are mobilizing the resources to build the special team for the healthcare business to continue to improve the operational efficiency from January to July of this year, revenue of the Peking University Hospital grow by 20%. And we also make sure the medical resources from funder group could be worked with our life insurance product. For example, for the elderly care team, our life insurance team has already leveraged funder team resources to provide rehabilitation along with the elderly support service. All those rehabilitation service is already in the pilot stage in Beijing with very good achievements being made.

The second part is financial business. We are deeply empower the value restore for funder group. We are going to leverage our great strengths. We are actually empower the funder securities. Funder also have some extra value to provide to Ping An. And Ping An Life Insurance can also empower the funder life insurance. So from IT to human resources, we do provide the comprehensive empowerment to funder. And like funder securities, after the empowerment's been done by Ping An Group, you probably notice in 2022 and its profit growth is ranking number one in China, ROE is being further elevated by the sheet being restored. And even the financing cost being further diluted for funder group after the comprehensive empowerment from Ping An Group. And also funder group, its product sales reaching the new historical highs. So for financial business, we do provide them comprehensive and deep empowerment to restore the value for funder group.

While for other businesses, we accelerate the disposal and the process is on the due track. For the fixed assets, we have already proposed to the manager right before the delivery. We have already accelerated the asset disposal before the delivery has been made. So we do have the first move advantage for assets. Disposal is being accelerated. The result of the disposal is exceeding our expectation. And there are some high-quality assets, for example, chipset business, as well as some of the information and telecommunication technology which can generate good revenues. So we leverage the power of the capital market. On one side, supporting those companies to be stronger, where on the other side, we are doing the accelerated disposal of sales and business. There are some good value from the telecommunication technology from a funder group. On one side, we're disposing the assets. On the other side, we're finding some industrial investors to hand over the assets for the industrial investors to boost the future development of those companies. So from delivery to disposal to empowerment and to integration, everything's on the right track, sometimes even perform better than what we expected. Thank you.

[Operator]

Thank you. Last -- Hong Kong to raise the last question.

[Unidentified Analyst]

Thank you. [Indiscernible] Daily. I'd like to ask a question about your financial metrics. Life NBV saw a big growth, but value ratio has come down. How do you interpret the decline of that metric, and what's the reason? Management mentioned the decline of operator profit in the first half and the reason related to release. But in the first half, profit margin has seen its growth narrowed. Was there some reason behind, or was it because of the high base number last year?

A follow-up question on the floods in Hebei. How does it affect your business?

[Unidentified Company Representative]

I think you asked two questions, and as Mr. Xie said, it's earning 1.14 billion, so it's totally under control. I'll answer your question about NBV, and the second question will go to Ms. Zhang Zhichun. So our new business value was at 27 billion in the first half, and agency channel takes up 30%, and bank insurance has risen a lot. It stood at 20% now. 20% will be four times the average level of bank insurance, so we believe the NBV of 27.1% is a rather stable and healthy indicator.

[Zhang Zhichun, Group Chief Financial Officer]

Regarding margin, it's a great question. We've been guiding our investors and shareholders to look at our operating profit. In the first half, we faced a rather complex operating environment. Life insurance, the Op margin saw 1.9% in operating profit before tax, and there were one-half income tax and consolidated -- subsidiary business reasons, but excluding that, we will see positive growth of operating profit in life business.

As Jessica said, over the past few years, NBV had the impact of CSM release, but fortunately we have seen effective reform in life insurance business, and NBV growth was 45% in the first half, so there is a lot to deliver in the future, and it offers a very strong foundation for future profit release. You asked about net profit and its impact on the first quarter. We are not interested in the impact on net profit because of short-term investment turbulence. There was a negative growth of 1%, but I think it was because of capital market changes, and I think in the future we are going to deliver very robust operating profit. Thank you.

[Unidentified Company Representative]

Thank you, friends from the media. Now we have to close this session. Mr. Wu Chengye [ph], our independent director, is also present here. Let me thank you again for your interest and support to the group. If you have any further questions, feel free to get in touch with our teams in Hong Kong and Mainland China. Thank you very much.