Manulife surpasses forecasts with asset management gains, aims for 18% return on equity
Shares of Manulife Financial Corp. reached a record high in midday trading on Thursday following the company’s third-quarter earnings report, which exceeded market expectations, as reported by BNN Bloomberg.
Manulife’s global chief financial officer, Colin Simpson, attributed the strong performance to significant growth in its asset management sector, which saw a 39 percent increase in earnings.
He also noted solid growth in Manulife’s Asia business, where core earnings rose by 17 percent compared to the same quarter last year.
The Toronto-based insurer reported a quarterly profit of $1.84bn, up from $1.01bn the previous year, with earnings per share reaching $1, an increase from 52 cents a year prior.
Simpson noted that Manulife’s Canadian operations also performed well due to diversification efforts made in recent years.
“Our book value grew by 9 percent and 14 percent on an adjusted basis, surpassing analyst expectations,” Simpson said, adding that the company is “particularly pleased with this quarter’s results.”
Manulife’s previous all-time high of just over $44 was last seen in 2007, before the financial crisis of 2008 drove shares to lows of less than $10 in 2009. On Thursday, shares were trading above $45.
These earnings results were released one week after Manulife announced a workforce reduction of 2.5 percent within its global wealth and asset management unit, affecting approximately 225 positions.
A Manulife spokesperson explained that the reduction aimed to “leverage our global operating model and focus on high growth priorities” and that the company would “continue to invest in strategic opportunities to scale the business.”
Simpson highlighted a strategic shift for Manulife initiated in 2017 towards a “lower risk, higher return” business model, which he said has since transformed the company.
By offloading or reinsuring certain liabilities, Manulife has worked to minimize legacy business risks while accelerating growth in asset management and its Asia operations.
This shift has allowed the company to improve its return on equity, which it aims to reach at 18 percent this year.
For the third quarter, Manulife achieved a return on equity of 16.6 percent, with Simpson stating that “reasonable progress” has been made toward the 18 percent target.
As Manulife continues to focus on enhancing returns, Simpson expressed confidence that the company will soon be recognized as a “high-quality” institution in the industry.
