Manulife Profit Slumped

Manulife Holdings Bhd’s net profit for the fourth quarter ended Dec 31, 2017 (4QFY17) fell 76.4% to RM6.64 million or 3.28 sen a share, from RM28.1 million or 13.88 sen a share a year earlier. 

This is despite a 76.7% jump in revenue to RM401.5 million from RM227.3 million in 4QFY16.

In a filing with Bursa Malaysia,the group said its investment holding segment, life insurance business and asset management services all saw weaker performance in 4QFY17.

For the investment holding segment, operating revenue fell 11.6% due to lower investment income from fixed income securities. The loss before tax (LBT) widened to RM2.7 million following higher management expenses.

The life insurance business saw a decline in profit before tax (PBT) of RM19.4 million due to higher reserving of actuarial liabilities as a result of lower Malaysian Government Securities (MGS) yield and worsened claims experience.

This was despite operating revenue for the segment rising by RM56.2 million mainly due to higher single premium income recorded from investment-linked fund.

Manulife’s asset management services slipped into the red as it recorded a LBT of RM1.6 million, compared to a PBT of about RM700,000 in Q4FY16, mainly due to higher management expenses and allowance of impairment of intangible asset in current quarter.

For FY17, the group’s net profit fell 39.7% to RM28 million, from RM46.4 million in FY16.

This was despite revenue increasing 30.4% to RM1.35 billion, from RM1.04 billion in FY16.

Manulife has declared a first and final dividend of 8 sen per share to be paid on a date to be fixed later.

Moving forward, the group remains cautiously optimistic on the back of strong economic growth, a buoyant stock market and its growing asset management business.

“Within our life insurance segment, we are expecting to return to growth in our top line, primarily facilitated by a recovery in our bancassurance segment and commencing sales within the group’s newly established Labuan subsidiary,” it said.

Manulife, however, pointed that medical claims continued to be a challenge for its life insurance segment.

It added that it targets to achieve its first year of profitability for its wealth and asset management business in 2018 as it expects to see continued growth in gross flows and asset management business.

In the medium term, Manulife believes there is a growth trend in Malaysia for the life insurance industry, supported by the under penetration of life insurance coupled with growing affluent population, which creates a need for insurance and investment solutions.

Manulife’s share price was last traded at RM3.30, giving it a market capitalization of RM667.8 million.