<Results first take> 4Q23 VNB up 20% y-o-y, beating expectations by 20%
- Manulife posted 4Q23 VNB of C$630m, up 20% y-o-y, with an upside surprise in Canada and the US
- 4Q23 net profit of C$1.7b under IFRS9/17 largely in line, driven by robust core earnings growth with rising interest rates and business growth
- Moving into FY24F, we expect low-double digit y-o-y growth of VNB, maintain BUY, TP under review
Manulife posted 4Q23 VNB of C$630m, up 20% y-o-y, with an upside surprise in Canada and US. In 4Q23, Asia value of new business (VNB) rose by 5% y-o-y, mainly driven by growth of insurance sales in mainland Chinese visitors (MCV) segment and favorable product mix in HK, partially offset by lingering regulatory restrictions in Vietnam. Canada VNB increased by 60% y-o-y in 4Q23, driven by higher sales volumes in a large group sale and higher margin in group insurance and annuities. In the US, VNB rose by 74% y-o-y, mainly driven by pricing actions, changes of product mix and higher interest rates.
4Q23 net profit of C$1.7bn under IFRS9/17, largely in line with expectations. 4Q23 net profit of C$1.7b, which was C$0.4b higher than transitional 4Q22, with core earnings increased by double-digit y-o-y growth across all four operating segments, mainly driven by robust business growth, higher interest rates in the insurance segments and higher average AUM and fee spread in the wealth management segment, while was partially offset by a higher credit costs and IT expenses.
Low-double digit y-o-y growth of VNB expected in FY24F, maintain BUY, TP under review. We expect Canada VNB growth to be high single-digit y-o-y growth if we exclude the one-off impact from the large group sales in 2H23. Asia market should see high single-digit y-o-y growth to continue, mainly driven by HK market with strong new business sales growth in MCV segment. Vietnam markets may be constrained by strict regulations on sales practices. Based on robust VNB growth outlook in FY24F, we maintain BUY with TP under review.