What To Expect From Manulife’s Q3 Earnings

Manulife (NYSE:MFC) is scheduled to report earnings for the third quarter of 2016 on Thursday, November 10. In the second quarter ended June 30, the company reported a 12% decline in core earnings to $647 million owing to low interest rates, heightened market volatility and the absence of core investment gains. However, the company’s net income increased 17% over the prior year quarter to $667 million or 34 cents a share, driven by growth in the Asia and Canada markets.

In the upcoming Q3 results, we expect Manulife to build on the growth momentum in Asia. Analysts polled by Reuters expect an average of $0.34 per share for the third quarter, implying a growth of 4 cents or 13% over the prior year quarter.

Asia In Focus

In Asia, Manulife has operations in Japan, China, Hong Kong, Thailand, Malaysia, Indonesia, Singapore and the Philippines, which together account for about a third of the company’s insurance premiums. In the second quarter, the company’s core earnings in Asia grew over 15% to $266 million, driven by strong Annualized Premium Equivalent (APE) sales and New Business Value sales, which grew 34% and 47%, respectively.

With the exception of  Japan, where the company faced headwinds due to pricing competition and declining interest rates, growth was seen in all the other Asian markets. The company’s bancassurance partnership with DBS yielded positive results in Singapore, the Philippines and Vietnam, where the company reported a 92% y-o-y increase in annualized premium sales to $259 million.

Manulife Japan is crucial for Manulife’s Asian operations, as half of the company’s Asian insurance sales and 30% of its wealth management product sales come from Japan. The strengthening of the Japanese Yen is likely to impact Manulife’s Q3 results. 

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