Manulife Holdings Berhad Q1 2025: Revenue Growth Amidst Investment Headwinds

Greetings, fellow investors! Today, we’re diving into the latest financial disclosures from Manulife Holdings Berhad, a prominent player in Malaysia’s insurance and asset management sectors. The company has just released its interim financial statements for the first quarter ended 31 March 2025, and while there’s positive movement in revenue, the profit picture tells a more nuanced story. Let’s unpack the key figures and understand what’s driving Manulife’s performance this quarter.

Unpacking the Numbers: A Deep Dive into Q1 2025 Performance

Manulife Holdings Berhad’s overall performance for the first quarter of 2025 presents a mixed bag. While the top line grew, profitability was impacted by market dynamics.

Group Performance Highlights (Q1 2025 vs Q1 2024)

The Group’s operating revenue for the financial period ended 31 March 2025 rose by RM11.8 million, demonstrating a healthy increase in business activity. This growth signals Manulife’s ability to expand its revenue streams across its various segments.

Despite the revenue increase, profit before tax saw a substantial decrease of RM34.2 million. This significant drop warrants a closer look at the individual business segments.

The lower profit before tax directly translated into a reduced earnings per share for the quarter.

On a positive note, the net assets per share attributable to ordinary equity holders saw a marginal increase, indicating a stable underlying asset base for shareholders.

Segmental Performance Analysis

Investment Holding

This segment saw its operating revenue improve by RM1.0 million, mainly driven by higher interest income from bonds and increased dividend income from equities. Profit before tax for this segment remained stable, increasing by RM0.1 million. The report attributes this to higher investment income being largely offset by higher unrealised fair value loss arising from equities.

Life Insurance Business

The life insurance business recorded a revenue increase of RM9.7 million, primarily due to higher expected profits on in-force business, specifically from increased Premium Allocation Approach (“PAA”) contract release and higher Contractual Service Margin (“CSM”) amortisation. However, this segment’s profit before tax decreased significantly by RM36.9 million. The primary culprit here was a higher unrealised fair value loss from equity investments, highlighting the impact of market volatility on the investment portfolio.

Asset Management Services

This segment demonstrated solid growth, with operating revenue increasing by RM1.1 million and profit before tax rising by RM2.7 million. This positive performance was attributed to higher fee income earned on assets under management, reflecting effective management and potentially growing client portfolios.

Quarter-on-Quarter Comparison (Q1 2025 vs Q4 2024)

Comparing the current quarter with the immediate preceding quarter (Q4 2024) provides additional insights into recent trends.

The Group’s operating revenue increased by RM4.3 million quarter-on-quarter.

However, profit before tax decreased by RM25.6 million compared to Q4 2024. This was largely influenced by:

• Investment Holding: Profit before tax increased by RM2.7 million, mainly due to higher unrealised fair value gain from bonds.
• Life Insurance Business: Profit before tax decreased by RM28.9 million, primarily due to lower investment results during the quarter.
• Asset Management Services: Profit before tax increased slightly by RM0.7 million, driven by higher foreign exchange gains, despite lower initial service fees and reduced fee income on assets under management.

Navigating the Future: Risks, Prospects, and Strategies

Manulife Holdings Berhad operates within a dynamic economic landscape. Malaysia’s GDP growth for 2024 was a robust 5.1%, with a projected growth of 4.5% to 5.5% for 2025. However, this outlook is tempered by global uncertainties.

Macroeconomic Headwinds

International trade measures and potential reciprocal tariffs pose a risk, potentially leading to higher costs for imported goods and impacting consumer spending. Global trade tensions could also introduce market volatility. While Malaysia is not expected to face a recession, growth projections may be reviewed. The Overnight Policy Rate (OPR) is currently stable at 3.0%, but a potential rate cut in the second half of 2025 could influence investment strategies, depending on the outlook for growth, employment, and inflation.

Life Insurance Industry Outlook

Despite the macroeconomic uncertainties, the socio-demographic trends in Malaysia offer a favourable outlook for the life insurance industry. An aging population and a growing middle class are expanding the customer base, particularly for retirement and legacy planning products. However, the industry faces challenges from increasing medical costs and interim measures limiting premium increases on medical portfolios, which could affect short-term profitability. Manulife believes that rising awareness of medical insurance needs and commitment from stakeholders will lead to more affordable and sustainable medical coverage in the long run.

Manulife’s Strategic Pillars

In response to these opportunities and challenges, Manulife is focusing on several key strategies:

• Strengthening Growth: Expanding its agency force, driving bancassurance, and cultivating alternative partnerships to acquire new customers.
• Customer-Centricity: Developing compelling value propositions and continually improving customer experience with a digital-first approach.
• Accelerating Digitisation: Investing in technology to become a Digital Customer Leader, enabling its salesforce, and enhancing automation for operational efficiency.
• Elevating Talents: Building high-performing teams within a diverse, equitable, and inclusive (DEI) workplace culture.
• Enhancing Shareholder Value: Optimizing product mix, managing expenses efficiently, effective in-force management, and optimizing resource utilization.

Asset Management Business Outlook

The Asset Management business is adopting a cautious stance on the local equity market due to external shocks and international trade uncertainties, which could lead to increased market volatility. Nevertheless, several domestic factors are expected to support the market in 2025, including ongoing policy reforms, attractive valuations, appealing dividends, a potential strengthening of the Malaysian Ringgit, and a recovery in domestic consumption. These factors are anticipated to underpin market resilience and performance.

Final Thoughts and Your Perspective

Manulife Holdings Berhad’s latest report underscores the importance of a diversified business model in a challenging market. While the revenue growth is encouraging, the dip in profit due to investment losses reminds us that even stable sectors like insurance are not immune to market fluctuations. The company’s proactive strategies to embrace digital transformation and expand its reach are certainly positive indicators for the future.

What are your thoughts on Manulife’s Q1 2025 performance? Do you believe their strategic initiatives are robust enough to overcome the current market challenges and drive sustainable profit growth? Share your insights in the comments below!