KUALA LUMPUR (Aug 22): Manulife Holdings Bhd's net profit plunged 98% to RM493,000 for second quarter ended June 30, 2022 (2QFY22), from RM20.89 million a year earlier, as higher interest rate weighed on its life insurance business.

Earnings from the group’s asset management services also came under pressure due to lower unit trust sales, the group said in a stock exchange filing.

Manulife’s revenue also contracted by 48% to RM194.82 million, from RM377.65 million in 2QFY21.

For the first half of FY22, the insurance provider reported a net profit of RM1.59 million, down 97% from RM47.19 million in the previous corresponding period, while revenue declined 36% to RM468.91 million from RM734.78 million.

Going into the second half,  Manulife said it remains cautious on the possibility of a further slowdown in global economic growth under persistent inflationary pressures.

“With the US rate hike on a steep path, the differential between the Fed Funds rate and Bank Negara Malaysia’s overnight policy rate cannot be very wide, in order to prevent financial market imbalances,” it said.

Commenting on its asset management business, the group said given the current challenging macro backdrop, defensive sectors are expected to outperform the rest, buffered by consistent dividend and stable earnings.

“Continued restoration of economic activity to pre-pandemic levels would contribute to an improvement in the outlook of the local market,” it said.

Shares of Manulife closed unchanged at RM2.10 on Monday (Aug 22), giving the group a market capitalisation of RM454.15 million.