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Manulife, Sun Life profits up amid cost-cutting, trade uncertainty

Manulife and Sun Life both have offices in Waterloo Region
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Manulife
THE CANADIAN PRESS/Aaron Vincent Elkaim

Two of Canada's biggest financial services firms saw an earnings uptick in the latest quarter but signs of caution loom.

Sun Life Financial Inc. said Thursday its investor clients are cautious amid trade uncertainty, while Manulife Financial Corp. is cutting back the firm's physical footprint and workforce.

Sun Life CEO Dean Connor says clients of its MFS investment management arm were "derisking," and net outflows for the latest quarter were "outsized" at US$11.5 billion.

"The trade backdrop has clearly got people cautious, sitting on their hands a little bit," he told analysts on a conference call on Thursday.

Meanwhile, Manulife gave more details Thursday on the aggressive cost-cutting initiative it announced at its investor day in June, aimed at generating savings of $300-million per year.

Manulife's chief financial officer Philip Witherington told analysts that the company intends to combine its head office footprints in the U.S. and Canada to a single building in each market, consolidate its legacy IT systems in the U.S., in addition to a previously-announced cut of 700 jobs.

"Execution of those actions will be completed over the next 12 to 18 months," Witherington told analysts.

Both companies recorded an increase in profit during their fiscal second quarter, with adjusted earnings beating analyst expectations, as the industry players invest in technology to stay competitive and the broader macroeconomic outlook is clouded by concerns over trade tensions between Canada and the U.S.

Manulife recorded a second quarter profit of $1.26 billion, slightly higher than during the same period ended June 30 a year ago.

Sun Life's net income during the quarter was $729 million, up six per cent from the same period a year earlier.

Both Manulife and Sun Life benefited from their international presence.

Despite softness in its MFS results, Sun Life's U.S. and Asia businesses saw a 24 per cent increase and 18 per cent increase to underlying net income, respectively, compared to a year ago.

Manulife's core earnings from its U.S. and Asia businesses rose 16 per cent and 27 per cent, respectively, during the quarter compared to a year earlier.

Manulife and Sun Life both have offices in Waterloo Region.




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