UBS expects Ping An's operating profit to grow steadily last year, with a slowdown in impairment pressure

UBS research report pointed out that Ping An (02318.HK) plans to announce its 2025 performance after the market closes on March 26. On a comparable basis, the bank expects the group's attributable operating profit to increase by 9% year-on-year, implying a year-on-year growth of 23% in the fourth quarter. The bank stated that the acceleration in the group's fourth-quarter growth is mainly due to a decrease in impairment losses in asset management and a stronger growth in property and casualty underwriting profits.

Regarding the group's net profit attributable to shareholders, UBS expects a year-on-year increase of 5% for the full year of 2025; net asset value is expected to grow by 7% year-on-year, indicating moderate quarter-on-quarter growth in the fourth quarter; the total dividend for the full year of 2025 is expected to be RMB 2.68 per share, a year-on-year increase of 5%. In the long term, UBS believes that the total dividend should ultimately grow in line with the attributable operating profit.

UBS also expects the group's new business value for the full year of 2025 to grow by 30% year-on-year. Compared to traditional products, participating policies have lower interest rate risk and profit volatility. The bank believes that Ping An will record a new business value growth of 25% to 30% in the first quarter of 2026; it forecasts an 18% growth in new business value for the full year of 2026, which is expected to be industry-leading.

UBS believes that Ping An, leveraging its scale advantages (such as brand and bargaining power with banks) and its commitment to expanding bancassurance channels, is well-positioned to capture opportunities from deposit migration and bancassurance cooperation. However, it expects the combined cost ratio for property and casualty insurance to decrease by 1 percentage point year-on-year to 97.3%, with a more significant improvement in the combined cost ratio in the fourth quarter compared to the first nine months (a decrease of 0.8 percentage points).

UBS has slightly adjusted its Ping An model, but the forecast for net profit attributable to shareholders remains largely unchanged, maintaining a target price of HKD 88; rating "Buy."