Manulife profits helped by business challenges in Asia

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The Asian operations of Manulife Financial Corporation – once the largest contributor to the earnings of the Canadian life insurer – are showing resilience in the face of the region’s additional challenges.The COVID-19 pandemic, social unrest in Hong Kong and new rules for corporate-owned life insurance products in Japan have hampered Manulife’s Asian operations in recent months. Still, Manulife ignored these issues in its second quarter, as the Asia division returned to growth after declining profits in the prior period. Overall profits for the Toronto-based company have beaten analysts’ estimates.

Key ideas

  • Growth in Asia last year outperformed the Canadian and US divisions. While no longer the case, profits rose 3.8% to C $ 489 million (US $ 369 million) in Asia in the quarter.
  • A market rebound added US $ 12.3 trillion to the world’s stock market value between April and June, helping fund managers around the world regain ground after a coronavirus crisis earlier in the year . For Manulife’s Wealth Division, assets under management and administration totaled C $ 696.9 billion, compared to C $ 653.1 billion a year earlier. Global wealth and asset management revenues fell 1.7% to C $ 238 million.
  • Manulife’s US business, through its John Hancock business, has been the largest contributor to earnings after Asia since the start of 2019. US core earnings increased 37% to 602 million Canadian dollars, making it the largest contributor to overall profit in the second quarter.
  • Analysts including Darko Mihelic of RBC Capital Markets have predicted that the credit losses will weigh on Manulife’s domestic earnings. Canada’s core profits increased 9.6% to C $ 342 million.

Market reaction

  • Manulife shares have fallen 29% this year, after the S & P / TSX Composite Financial Services Index fell 17%.

Core profits rose 7.5% to C $ 1.56 billion, or 78 cents Cdn per share, beating the average estimate of 62% of 14 analysts in a Bloomberg survey.

Net income totaled C $ 727 million, or 35 cents per share, compared to C $ 1.48 billion, or 73 cents, a year earlier.



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