Great Eastern Q4 profit falls 33%; full-year earnings up 16%

Great Eastern's non-operating profit for the fourth quarter dipped by 6 per cent year on year to $44.7 million from $47.3 million. PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - Great Eastern Holdings on Tuesday (Feb 22) posted a net profit of $229.8 million for the fourth quarter ended Dec 31, 2021, down 33 per cent year on year from $341.3 million.

The insurance arm of local bank OCBC said the drop was due to the year-ago period recognising a one-off positive tax impact that arose from the finalisation of prior years’ tax assessments.

For the quarter, the group saw operating profit, net of tax, from its insurance business increasing by 126 per cent to $173.9 million, from $76.8 million the previous year.

Non-operating profit for the insurance business for the fourth quarter, however, dipped by 6 per cent year on year to $44.7 million from $47.3 million.

Its fourth-quarter profit from shareholders’ fund tumbled 93 per cent to $17 million from $228.1 million a year ago.

Total weighted new sales (TWNS) for the three months fell 6 per cent year on year to $496.9 million, from $527.9 million, contrasting with the quarter’s new business embedded value (NBEV), which went up 9 per cent year on year to $262 million from $239.4 million.

Directors of the group have recommended a final dividend of 55 cents per share, up from 50 cents a year ago.

Upon approval by shareholders at the next annual general meeting, the dividend will be paid on May 5, 2022. Including an interim dividend of 10 cents paid in August 2021, this would bring the full-year dividend up to 65 cents a share, increasing from 60 cents in the previous year.

Great Eastern's full-year net profit climbed 16 per cent to $1.11 billion from $960.6 million a year ago.

This translated to full-year earnings per share going up by 16 per cent year on year to $2.35 from $2.03. 

The group said the increase in net profit was due to more favourable financial market conditions and higher operating profit from the insurance business, which inched up 3 per cent to $752.9 million from $730.7 million. 

The full-year non-operating profit from the insurance business also returned to the black at $289.7 million, from a non-operating loss of $88.7 million in financial year 2020.

Gross premiums for the year went up 22 per cent to $19 billion, from $15.5 billion in FY2020.

Meanwhile, full-year TWNS saw an increase of 28 per cent year on year to $1.97 billion from $1.54 billion, driven by the strong contribution from all markets. NBEV ended the financial year 21 per cent higher at $808 million, from $669.5 million the previous year.

Looking ahead, Great Eastern said underlying headwinds from Covid-19 are expected to persist, while major central banks’ anticipated tightening of monetary policy, growing inflation concerns and geopolitical tensions are key factors that may impact its performance.

It also expects continued volatility in the financial markets, resulting in fluctuations in the mark-to-market valuation of its assets and liabilities that will impact its profit, with notable indicators being the direction of interest rates, credit spreads and equity prices.

The insurer added that its bonds are mostly investment-grade and the default risk is therefore likely to be low.

Great Eastern shares dipped four cents, or 0.2 per cent, to $21.54 at 11.02am, while the broader market was down 0.8 per cent.

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