Great Eastern Q4 earnings rise 19% to $341.3m on one-off tax impact

The latest set of quarterly results brings Great Eastern's net profit for the full year to $960.6 million.
The latest set of quarterly results brings Great Eastern's net profit for the full year to $960.6 million.PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - Great Eastern Holdings on Tuesday (Feb 23) reported a 19 per cent increase in net profit to $341.3 million for the fourth quarter ended Dec 31, 2020, from $287 million a year ago.

The increase was mainly due to a one-off positive tax impact arising from the finalisation of prior years' tax assessments, said the insurance arm of OCBC in its results filing.

Operating profit for Q4 fell 56 per cent year on year to $76.5 million for Q4 from $173.2 million, due to provision for higher expected future insurance claims.

Non-operating profit slipped 25 per cent to $47.6 million from $63.7 million in the corresponding year despite partial recovery from mark-to-market losses from unfavourable market conditions in Q1 of 2020.

Profit from shareholders' fund, however, quadrupled to $228.1 million from just $54.6 million for Q4 of FY2019, due to the abovementioned one-off positive tax impact.

Total weighted new sales for the quarter rose 34 per cent to $527.6 million from $394.5 million in the Q4 a year ago, which Great Eastern attributes to strong momentum from its Singapore and Malaysia business.

Amid the growth in sales, new business embedded value grew 42 per cent to $274.8 million from $193.4 million in the previous year.

Directors of the group have recommended a final dividend of 50 cents per ordinary share, unchanged from a year ago.

The final dividend will be payable on May 5 upon approval by shareholders at an annual general meeting to be convened. Including an interim dividend of 10 cents per ordinary share paid in August 2020, this would bring the total dividend for the full year to 60 cents per ordinary share.

The latest set of quarterly results brings Great Eastern's net profit for the full year to $960.6 million, down 4 per cent from its net profit of $1 billion for FY2019.

The group attributes this decline mainly to the lower valuation of the group's investments which resulted from less-favourable financial market conditions for the year, particularly in Q1 of 2020 which saw a 90 per cent drop in net profit due to non-operating losses.

"The group's solid distribution capabilities and innovative product strategy, supported by the focused execution of our digital and technology infrastructure initiatives have put us in a position of growth this year. Our timely implementation of such initiatives has helped us overcome the business challenges brought by the Covid-19 pandemic, changed the way we operate for the better and built greater resilience," commented group chief executive Khor Hock Seng.

"In the near future, while uncertainties are likely to persist, we remain positive on the long-term growth potential of the markets we operate in. We will continue to strengthen our business model and build a resilient and sustainable business for the long term," he added.

Shares of Great Eastern closed $0.07, or 0.3 per cent, lower at $20.50 on Monday.