<Results first take> 3Q23 results in-line with VNB up 15% y-o-y
- Manulife posted 3Q23 VNB of CA$600m, up 15% y-o-y, in-line with expectations
- 3Q23 net profit of CA$1.0b under IFRS9/17 in line, driven by robust core earnings growth with rising interest rates and higher investment returns
- Moving into FY24F, we expect low-double digit y-o-y growth of VNB if we exclude 3Q one-off impact
Manulife posted 3Q23 VNB of CA$600m, up 15% y-o-y, in-line with expectations. Asia value of new business (VNB) rose by 7% y-o-y, mainly driven by growth of insurance sales in mainland Chinese visitors (MCV) segment in HK from broker and bancassurance channels and low base effect, partially offset by unfavorable product mix change. China and Singapore also saw higher sales in the bancassurance and broker channels. Canada VNB increased by 72% y-o-y in 3Q23, driven by higher sales volumes in an one-off large group sale and higher margin in Group Insurance. In US, VNB decreased 29% y-o-y due to lower sales volumes and unfavorable product mix change.
3Q23 net profit of CA$1.0bn under IFRS9/17, largely in line with expectations. 3Q23 net profit of CA$1.0b, which was CA$0.2b higher than 3Q22, was mainly driven by growth in core earnings and a one-time tax relaxed benefit of $290m, partially offset by a larger net charge from market experience, including lower-than-expected returns in real estate and public equity. Core earnings grew 28% y-o-y to CA$1.7b in 3Q23 mainly driven by the non-recurrence of a CA$256m provision in P&C Reinsurance and favorable impact of higher interest rates on expected investment earnings and on surplus.
Low-double digit y-o-y growth of VNB expected in FY24F if we exclude 3Q one-off impact. We expect Canada VNB growth to return to a normal trajectory of high single digit y-o-y growth if we exclude the one-off impact from the large group sales in 3Q23. Asia market should see mid double-digit y-o-y growth to continue, mainly driven by HK market with strong new business sales growth in MCV segment to offset unfavorable product mix change. China and Vietnam markets may be constrained by stricter regulations on sales practices. We currently have BUY with TP of HK$182 for Manulife based on resilient VNB and earnings growth.