(Adds details on Ping An Bank)
HONG KONG, Aug 29 (Reuters) - The world's second-largest insurer by market capitalisation, Ping An Insurance Group Co of China Ltd, reported stronger-than-expected profits on Thursday despite a smaller contribution from its banking business.
The company said it earned 17.9 billion yuan ($2.92 billion) in the first six months of the year, up 28.3 percent from 13.96 billion yuan in the same period a year earlier. Estimates from three analysts polled by Reuters had centred on 13.6 billion yuan.
Ping An's conglomerate business model, which ranges from insurance and banking to securities, trust and brokerage, is unique among Chinese insurers and banking has bolstered earnings as a weak A-share market has wrecked competitors focused solely on insurance.
But in the first half of 2013, 22 percent of the company's profit came from Ping An Bank, which generated 3.9 billion yuan of net profit attributable to shareholders of the parent company - less than the roughly 25 percent it contributed in the first half of 2012.
As Beijing clamps down on certain risky lending practices, the contribution of Ping An Bank could fall further.
Beijing has expressed particular concern about shadow banking and wealth management products, which have spread credit risk to institutions and individuals that may not be able to handle it.
With one of the smaller branch networks in China, Ping An Bank is among the institutions that has turned to shorter-term and more volatile wealth management and trust products to attract depositors. Such products, along with acceptances, letters of credit and guarantees, accounted for about a third of the bank's outstanding credit at the end of last year, according to a June analysis by Fitch Ratings.
Ping An Bank also has one of the higher loan-to-deposit ratios in China, a high overall cost of deposits, and a growing number of bad loans.
No one is saying Ping An's earnings will immediately collapse but they are under pressure - and any problem would be significant: last month, the G-20's Financial Stability Board designated the company as one of the globally "systemically important" insurers, the only Asian insurer that made the list.
As far as its insurance business goes, Ping An will see less of an impact from a recent rule change removing the interest rate cap on certain life insurance products than larger rival China Life Insurance Co Ltd , because Ping An sells very few of those products.
China Life reported a higher-than-expected 68 percent increase in earnings on Wednesday, but will come under pressure in the latter half of the year from the rule change, competition for bancassurance sales and a still-faltering A-share market.
The Hong Kong-listed shares of Ping An have fallen 17 percent this year compared with a 4.2 percent fall in the benchmark Hang Seng index. The Shanghai-listed shares are down 25.4 percent versus the 7.6 percent drop in the Shanghai Composite Index. ($1 = 6.1202 Chinese yuan) (Reporting by Clare Baldwin; Editing by Miral Fahmy/Ruth Pitchford)