DBRS Confirms Manulife Bank of Canada at A (high), R-1 (middle), Stable Trends

DBRS Limited (DBRS) has today confirmed the Long-Term Deposits and Senior Debt rating and the Short-Term Debt rating of Manulife Bank of Canada (Manulife Bank or the Bank) at A (high) and R-1 (middle), respectively. All trends remain Stable.

Under “DBRS Criteria: Support Assessments for Banks and Banking Organisations,” Manulife Bank’s support assessment is assessed to be SA1, reflecting very strong to good likelihood and predictability of timely support. The Bank receives this support from its parent, The Manufacturers Life Insurance Company (MLI; Issuer Rating of AA (low) by DBRS), given its ownership of the Bank and strategic relationship; however, it is difficult for implicit support to match the clarity and legality of an unconditional guarantee. DBRS considers this difference to be worth one notch lower on the long-term rating scale for the long-term rating of Manulife Bank relative to the long-term rating of MLI. Manulife Bank also benefits from having a common regulator with MLI, the Office of the Superintendent of Financial Institutions, which regulates the operations of both institutions.

Manulife Bank has solid asset quality, a strong earnings platform and sound liquidity, funding and capital profiles. The Bank’s challenges include its reliance on spread income, which leaves it exposed to the prevailing low interest rate environment, and its reliance on a narrow range of key products. Manulife Bank continues to deliver strong earnings through solid loan and deposit growth generated by its sizable independent advisor network, while taking minimal credit losses as a result of its primarily secured lending book. The Bank’s funding and liquidity capabilities have broadened over the past several years with a well-diversified funding profile split between a suite of retail products and wholesale funding issuances, including securitization programs.

Notes:
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating
Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodologies are Global Methodology for Rating Banks and Banking Organisations and DBRS Criteria: Support Assessments for Banks and Banking Organisations, which can be found on the DBRS website.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The sources of information used for this rating include company documents. DBRS considers the information available to it for the purposes of providing this rating to be of satisfactory quality.

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