Prudential profits boosted by cautious recovery in Chinese economy
Prudential posted a solid rise in annual profit on Thursday, bolstered by strong growth in most of its divisions, and robust demand for insurance products in Hong Kong and Singapore.
The London and Hong Kong listed insurer expects to grow new business profit and basic earnings per share, based on adjusted operating profit and operating free surplus, by more than 10 per cent this year on a constant exchange rate basis.
Prudential also estimated that dividends per share would increase by at least 10 per cent this year, after declaring a second interim cash dividend of 16.29 cents per share, and a total dividend of 23.13 cents per share for 2024.
The group posted an adjusted pre-tax operating profit of $3.13billion for the 12 months ending 31 December, representing a 10 per cent increase compared with the previous year, on a constant exchange rate basis.
Total new business profit jumped 11 per cent to $3.08billion.
The annual premium equivalent sales, a gauge of sales volume, for Hong Kong grew 5 per cent, while the Singapore segment posted a 10 per cent increase. The company registered growth in 18 of its 22 markets.
Results: Prudential posted a solid rise in annual profit on Thursday
But, it flagged a challenging macroeconomic environment in China, with a substantial reduction in long-dated government bond yields, which it expects to continue through 2025.
Chief executive Anil Wadhwani, chief executive of Prudential, highlighted growing demand for long term savings and protection products across the company's markets, and a need for wealth management and retirement planning, particularly in the higher income Asian markets.
'Insurance penetration rates in Asia are low. We have seen good progress in 2024 with improved cash signatures for new business, growth in the number of active agents in the second half (of the year), and actions undertaken to improve our variances,' Wadhwani said.
Analysts at Jefferies, said: 'In our view, the most important development is that Prudential is guiding to more than 10 per cent growth in 2025 for all key metrics.'
Richard Hunter, head of markets at Interactive Investor, said: 'Prudential has a new strategy and fresh purpose, and the early signs of this renewed focus are extremely encouraging.
'The improving fortunes of the Chinese economy and indeed the Hong Kong market have propelled the shares higher by 21 per cent so far this year.
'Over the last year, progress has been more pedestrian, with a gain of 4 per cent comparing to a spike of 12.5 per cent for the wider FTSE 100.
'For investors, however, it seems that there is still much to go for. A share price decline of 28 per cent over the last three years leaves the stock on a modest valuation by historic standards, let alone the potential and significant promise of both Asia and Africa. As such, the market consensus of Prudential not only as a buy, but also as a core portfolio constituent, is likely to continue.'
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