What To Expect From Manulife’s Q1 Earnings

Manulife (NYSE:MFC) is scheduled to report earnings for the first quarter of 2017 on Wednesday, May 3rd. In Q4 2016, Manulife reported investment related gains of $180 million, driving up total core earnings and investment gains by 50% year-over-year (y-o-y) to about $1.3 billion. However, net income for the company declined 74% to $63 million, or 1 cent per share, in the three-month period ending December 2016.

In the upcoming Q1 results, we expect Manulife to build on the growth momentum in Asia. Analysts polled by Reuters expect an average of $0.39 per share for the first quarter, implying a growth of 5 cents or 15% 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. Asia operations continue to drive earnings growth for Manulife. In the fourth quarter of 2016, the company reported core earnings growth of 16% y-o-y to $388 million for its Asia operations, driven by strong Annualized Premium Equivalent (APE) sales and New Business Value (NBV) sales, partially offset by lower favorable policyholder experience and the impact of declining interest rates.

With the exception of  Japan and Thailand, where the company faced headwinds due to pricing competition and declining interest rates, there was double-digit growth in all other Asian markets.

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 slight strengthening of the Japanese Yen is likely to have impacted Manulife’s Q1 results.

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