Morningstar DBRS Confirms Manulife Bank of Canada's LT Issuer Rating at AA (low), Stable Trends

DBRS Limited (Morningstar DBRS) confirmed the credit ratings of Manulife Bank of Canada (Manulife Bank or the Bank), including the Long-Term Issuer Rating at AA (low) and the Short-Term Instruments rating at R-1 (middle). All trends are Stable. Manulife Bank's credit ratings reflect the expectation of timely internal support from The Manufacturers Life Insurance Company (MLI or the Parent; rated AA with a Stable trend).

KEY CREDIT RATING CONSIDERATIONS
As a wholly owned, strategically important subsidiary of MLI, Manulife Bank's credit ratings are primarily driven by the Financial Strength Rating (FSR) of the Parent. As per Morningstar DBRS's insurance methodology, the one-notch credit rating differential between MLI and Manulife Bank reflects the standard notching for a noninsurance subsidiary.

CREDIT RATING DRIVERS
Given that Manulife Bank's credit ratings are notched from MLI's FSR credit rating, any credit ratings upgrade of MLI would result in a credit ratings upgrade of Manulife Bank. Conversely, a downgrade of MLI's FSR would also result in a credit ratings downgrade of Manulife Bank. In addition, any indications of a reduced ability or willingness of MLI to support Manulife Bank would result in a credit ratings downgrade.

CREDIT RATING RATIONALE
Manulife Bank's credit ratings reflect its position as an important name-bearing wholly owned subsidiary of MLI that enables it to offer banking products and services to clients. The Bank is an integral element of MLI's strategy in Canada, with the mutually beneficial relationship between the two entities supporting their individual franchises. Manulife Bank is linked to its Parent through the significant integration of the Bank with MLI's branding and distribution through MLI's network of financial advisors in Canada, as well as shared governance, risk reporting, and IT systems. Manulife Bank is well integrated into the overall risk management infrastructure of its Parent, which provides support to the credit ratings. Morningstar DBRS also notes that in addition to the integrated framework, the Bank has a standalone liquidity risk management framework and a liquidity funding and contingency plan.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (23 January 2024) https://dbrs.morningstar.com/research/427030

Notes:
All figures are in Canadian Dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Insurance Companies and Insurance Organizations (15 April 2024) https://dbrs.morningstar.com/research/431180. In addition Morningstar DBRS uses the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (23 January 2024) https://dbrs.morningstar.com/research/427030 in its consideration of ESG factors.

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found on the issuer page at
dbrs.morningstar.com

The credit rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for this credit rating action.

Morningstar DBRS had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

These credit ratings are endorsed by DBRS Ratings Limited for use in the United Kingdom, and by DBRS Ratings GmbH for use in the European Union, respectively. The following additional regulatory disclosures apply to endorsed credit ratings:

The last credit rating action on this issuer took place on July 19, 2023.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS's outlooks and credit ratings are monitored.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

Lead Analyst: Nadja Dreff, Senior Vice President, Sector Lead
Rating Committee Chair: Michael Driscoll, Managing Director
Initial Rating Date: January 14, 2002

For more information on this credit or on this industry, visit dbrs.morningstar.com.

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