20260820-招银国际-友邦保险-01299.HK-1H26_first_take_VONB_largely_in_line_OPAT_lift_a_slight_beat,_with_no_additional_2H26_buyback_4页_777kb

AIA Group Ltd. (1299 HK) 1H26 Summary

Core Content

AIA Group Ltd. (1299 HK) reported its first-half of 2026 (1H26) results, highlighting strong performance in various markets and a positive outlook for shareholder returns. The report is issued by CMB International Global Markets, which maintains a BUY rating with an unchanged target price of HK$112.00.

Key Financial Highlights

• Group VONB (Value of New Business):

  • Rose 10%/13% YoY (CER/AER) to US$3,212mn, translating into 7% YoY growth in 2Q26 (vs. 1Q26: +13%).
  • Slightly below estimates of US$3,265mn (CMBI) and US$3,254mn (Bloomberg consensus).

• OPAT (Operating Profit After Tax):

  • Grew 11%/15% YoY (CER/AER) to US$4,163mn in 1H26.
  • Outperformed estimates of US$4,057mn (CMBI) and US$3,935mn (Bloomberg consensus).
  • OPAT/share increased 13%/18% YoY to US$0.40, surpassing the management's 9%-11% annual CAGR target for FY23-26E.

• Underlying Free Surplus Generation (UFSG):

  • Rose 8%/10% YoY (CER) to US$3.9bn/US$2.8bn.
  • Per share growth was 10%/12% YoY.
  • Shareholder Capital Ratio (TSR) declined to 210%, down 11pct from the previous quarter.

• Dividend per Share (DPS):

  • Increased 10% YoY to HK$0.54/share.
  • Total dividends in 1H26 amounted to US$1,906mn.

• Shareholder Returns:

  • Total shareholder returns (including buybacks) reached US$3,649mn in 1H26.
  • No additional buyback budget was announced for 2H26, as expected, due to the company's capital management policy based on annual net FSG results.
  • Total shareholder return (TSR) estimate for the next 12 months remains at ~4.0% (3.1% dividend + 0.9% buyback).

Regional Performance

• AIA HK:

  • VONB grew 10% YoY (CER) to US$1.17bn, slightly below the estimate of US$1.21bn (+14% YoY).
  • Domestic/MCV segment VONB increased 23% YoY, with a 72% margin, up 6.2pct YoY.

• AIA China:

  • VONB rose 20% YoY (CER) to US$937mn, in line with CMBI's estimate.
  • Supported by a 30% YoY increase in ANP but faced a 4.5pct YoY margin dip due to higher exposure to participating products.

• Bancassurance VONB:

  • Declined 6% YoY in 1H26, attributed to intensified competition and tightening regulations.

• Nine New Regions:

  • VONB reached US$103mn (11% mix), up 69% YoY, outperforming the 40% CAGR target.

• AIA TH:

  • VONB fell 6% YoY (CER) to US$514mn, in line with CMBI's estimate.
  • Margin normalized to 96.9% (vs. 1H25/FY25: 116%/111%), aligning with guidance for par & unit-linked (UL) product exposure.

• AIA SG:

  • VONB increased 10% YoY (CER) to US$294mn.
  • Driven by UL long-term savings products for high-net-worth clients, partially offset by 1.7pct YoY margin compression to 45.6%.

• AIA MY:

  • VONB rose 10% YoY (CER) to US$232mn, with continued agency sales recovery.

• Other Markets:

  • VONB grew 7% YoY (CER) to US$260mn, with India, Vietnam, and the Philippines contributing significantly.
  • TATA AIA (India's JV) showed double-digit growth in VONB.

Key Operational Insights

• EV (Enterprise Value):

  • Increased 5% HoH to US$80.6bn.
  • Driven by 13% YoY rise in EV operating profit to US$6.6bn and positive investment variances of US$1.0bn (vs. 1H25: US$1.4bn loss).

• Operating Margin:

  • Reached 15.2%, up 0.1pct YoY.

• Operating ROE:

  • Hit a record 17.5%, up 2pct YoY due to strong OPAT performance.

• Contractual Service Margin (CSM):

  • Grew 4% HoH to US$67.8bn in 1H26, slightly below CMBI's estimate of US$69.1bn.
  • Supported by new business contribution (+11%) and expected return on in-force.

Analyst Briefing Call

• Date: 20 August 2026, 9:00-11:00am (HKT).
• Platform: Zoom Webinar Link.

Key Market Concerns

1. AIA HK's VONB breakdown by domestic/MCV segment in 1H26.
2. Cross-border new business sales outlook for the MCV segment in HK.
3. Implications of offshore insurance tax levies proposed by Chinese tax authorities.
4. Shareholder Capital Ratio (SCR) trajectory and balancing between returns and management guidance (>200%).
5. Bancassurance VONB growth in China amid regulatory tightening and geographic expansion approvals.
6. Margin normalization in ASEAN markets and its impact on VONB growth.

Focus Charts

• Fig 1: AIA P/EV Valuation Band (Source: Bloomberg, CMBIGM estimates)
• Fig 2: AIA P/B Valuation Band (Source: Bloomberg, CMBIGM estimates)

CMBIGM Ratings

• BUY: Potential return of over 15% over the next 12 months.
• HOLD: Potential return of +15% to -10%.
• SELL: Potential loss of over 10%.
• NOT RATED: Not rated by CMBIGM.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

Disclaimer

• The report is for informational purposes only and does not constitute investment advice.
• Past performance does not guarantee future results.
• Investors should independently evaluate their investments and consult with a professional financial advisor.

Legal & Distribution Notes

• The report is issued by CMB International Global Markets Limited (CMBIGM), a subsidiary of China Merchants Bank.
• It is not available to the general public and is intended for major US institutional investors.
• In Singapore, the report is distributed by CMBISG, an exempt financial adviser.
• In the UK, the report is only for persons falling under Article 19(5) or Article 49(2) of the Financial Services and Markets Act 2000.
• CMBIGM does not provide individually tailored investment advice and disclaims liability for any losses or damages arising from reliance on the report.