[EXPIRED] 3.25% (for everybody) or 3.35% (for group benefits) for 6 months in new Advantage Accounts | Page 3 | Manulife Bank | Discussion forum

Thanks Doug and all for your valuable comments

hotmony said
Organic Doug i dont think so either a mistake or asset re-adjustment. They say insurers can do better when rates rise  

That's true, though I'm not quite sure why insurers do better in a rising interest rate environment. I think it's different than banks (i.e., wider net interest margins), though insurers do issue mortgages (Great West Life, for example, does issue home mortgages) so that wider net interest margin does benefit insurers, to a certain extent, too. Haven't check if Asian interest rates are rising, but I do know that Asians tend to buy life insurance in far greater numbers than we do in Canada. Insurance is very important to them. So, I think it could be a variety of factors; their digital improvements could be benefiting them with a high digital clientele able to buy coverage online or with their mobile apps, for instance. They could've also made some tuck-in acquisitions that they didn't have to announce because they fell below the value required for public disclosure.

Also, a big reason why insurers benefit from rising rates is it affects their future modeling, since they typically, like pension funds, have long duration bond and fixed income portfolios and higher interest rates will mean their solvency ratios are improved for their life insurance and annuities that they peddle.

Cheers,
Doug

Doug said

Thanks, tc. I should clarify the reason for my initial hesitance to state whether to exceed your CDIC deposit insurance limit is because it's a personal decision and because being part of a larger parent company may have no bearing in the CDIC member entity. That being said, I do think CDIC and OSFI would likely not let Manulife Bank to "fail" without touching the parent company's assets, which they likely could do.

When it comes to my personal preference(s) on exceeding CDIC deposit insurance limits, I actually tend to be a little riskier than most, I suspect, in that respect. I'll look more to how well capitalized the institution is, their loan impairments and write-offs relative to their peers, and, importantly, for how long I'd exceed my CDIC limits. For 3-6 months, I'd likely even exceed my CDIC limits with Home Trust/Home Bank and even a Peoples Trust, if I banked with them. Thankfully, though, they tend not to play those targeted, short-term HISA promo offer games, which I like. But yeah, I'd have no issues with exceeding my CDIC limits with Manulife Bank for 3 months or even for a 1- or 2-year GIC.

Cheers,
Doug  

I agree with Doug re Manulife - it is a major well established profitable financial institution part of a much larger Group and I would have no hesitation to exceed the CDIC limits. I also believe risk is very low. However, I would not exceed CDIC limits for Oaken and Home Group (they have likely moved on from their rather unstable time in the last few years) but they are still a B level institution. Same goes for Peoples Trust, I personally would not exceed the CDIC limits.
I think CWB and Motive are higher risk than Manulife but still relatively low risk and I would probably exceed CDIC levels to some degree but not to the same degree as with Manulife and the big banks.

Doug -

Thought National would be in the same category as the other big banks but of course it is smaller and more regional (Quebec).

Surprised to see Canadian Tire Bank at the C level. But it must be very small and exist mainly for credit card operations of CT. I have no interest to deal with them.

I agree that provincial Credit Unions are in the C category. I do not have the same level of security as with the larger banks. The unlimited guarantee of the Manitoba CUs through an Agency (but NO guarantee explicit by the Manitoba Govt) cannot be considered equivalent to other guarantees such as the CDIC 100K or the Ont CU 250K .

Sometimes I feel it is best to deal with the large banks (even if the returns may be lower) simply because you are getting high safety for your funds - at the cost of course of lower return. Everything has its price! Some of my business friends have all their assets/dealings with the big banks - they would never run around to these smaller banks. Convenience and simplicity in organizing one's affairs is worth something.

I have been looking a bit further into Manulife Bank's financials, products and services, brand refresh, and the like, and I have to do a bit of a mea culpa. Where I said previously in this thread this offer was "not particularly compelling" due to the minimum balance requirement to waive fees, I was under the impression that the product still either had a monthly fee or transaction fees.

Indeed, according to the "Rates & fees" section of the Advantage Account product information page, as others in this thread have rightly pointed out, pre-authorized payments (which include self-to-self, bank-to-bank transfers) and even cheques (which are permitted on the account) have no debit transaction fees even without a minimum monthly balance. I also said that minimum monthly balance to have unlimited fee-free ATM withdrawals, Interac e-Transfers, and Interac point-of-sale purchaes was also not all that compelling in light of similar free chequing offers from Tangerine, Simplii, Motus, Motive, and various provincially- and federally-regulated credit unions. That's definitely still true, but when you compare this account to even the Manitoba credit unions' virtual banking divisions, which only give you 1 free debit transaction (including cheques), this product is equal to or even better than them on fees (not on deposit rates). As well, this product is exactly equal to (and maybe slightly better than Vancity's popular E-Package account that carries a $7.75/month unless you have a minimum monthly balance of $1,000 (this product's account interest rate is significantly higher than Vancity's E-Package account, so, on that basis, this product is better).

In sum, while its interest rate is not all that attractive, they also offer other products like a secured or unsecured line of credit and they even issue their own Visa credit card (always thought that they co-branded with Desjardins, MBNA, or similar) that even has a no annual fee option with 2% on groceries and a full 1% on all other purchases in cash back (none of this 0.5% garbage like Tangerine). So, that's intrigued me and, come next year when I'm working full time again, has them at least on my "short list" as a potential new primary credit card provider (which is unheard of as I rarely switch credit cards; during my entire time with HSBC, I never did open up an HSBC Advance MasterCard account ).

What I'm going to look into further: they mention that you can request them to mail out deposit slips to you (by phone, I believe). Since they also offer a USD Savings Account, without fees, I believe, if I end up leaving Coast Capital Savings, I'll need a USD Savings Account somewhere and if they will also mail out postage paid envelopes with those deposit slips, that's a game changer, for me anyway, in terms of being able to mail in my quarterly HSBC USD dividend cheques without having to pay postage each time. I also intend to look into whether they still have that arrangement with RBC Royal Bank about using special deposit slips to deposit, for same-day credit, to your Manulife bank account(s) and whether that applies to the Advantage and USD accounts. I'd also like to find out whether you can open an Advantage Account and GICs under Manulife Trust as a second CDIC issuer. I know you can open Manulife Trust GICs in brokerage accounts, but what about thru the direct-to-consumer channel?

So, I know that there are currently deliberations underway in terms of potentially crystallizing what is meant by "competitive" for inclusion in the HISA "comparison chart" and one proposal, which Vatox and a couple others supported in another thread, was to simply adopt the Bank of Canada's current Policy Interest Rate as the baseline for what "competitive" means in terms of regular, posted rate of interest (currently set at 1.75%). If Peter ultimately decides to adopt that, which I'd definitely support, then - at current rates - Manulife Bank wouldn't be eligible for inclusion (neither would Canadian Tire Bank and Meridian Credit Union, at a paltry 1.50% and 1.40%, respectively). If, however, he decides not to formalize and further define what is "competitive" - or settles on some other metric as a baseline - then, ultimately, Manulife Bank should be included. Accounts can be opened entirely online once again (thankfully) and, according to their website, customers can apparently link an unlimited number of external bank accounts online. Their outgoing bank-to-bank transfer limit is a comparatively generous $50,000, too. And, there's just no debit transaction fees at all for cheques and pre-authorized debits (no debit transaction fees for all types of transactions, including Interac e-Transfers and bill payments, with only $1,000 minimum balance).

Their online banking system may look a bit outdated still and, while initially I didn't like the website refresh and updated Manulife logo, it's won me over. It's fairly intuitive and has lots of clean lines.

We could, potentially, be looking at a bit of a "sleeper" digital banking disruptor in Manulife. They could potentially be a competitor than Motus Bank hadn't considered and decide to further make the Advantage Account even more competitive by removing the minimum monthly balance or launching other products, like additional credit cards. We should keep a close eye on Manulife Bank.

Cheers,
Doug

hotmony said
Hsbc canada sub is way bigger than Manulife's bank. I find cwb common stock rather volatile.. so i rank:
1.Hsbc
2a.Manulife
2b.cwb  

With respect to subsidiary asset size, I've found that what matters more is geographic diversification, asset mix, and asset quality. For example, despite Scotiabank growing wealth management through acquisitions, it's mostly been in high cost actively managed and often sub-par mutual fund businesses so I rank their wealth management business somewhat sub-part to, say, an RBC or a BMO. A lot of HSBC's loan book is commercial lending and is heavily oriented towards volatile sectors, like oil & gas. Looking at the top line data, in terms of assets, more than half of it comes from Commercial Banking (not small- and medium-sized enterprises, which they jettisoned in 2014 and earlier and are only now trying, desperately, to re-enter the space) and Global Banking and Markets. Their credit card division is 1/4 the size of Wal-Mart Canada Bank (oops, Duo Bank of Canada now). HSBC InvestDirect is a solid platform, but has some major limitations, like the ability to link only one external bank account through their online platform.

As for CWB, they, too, are tilted more regionally and do have some oil & gas heavy exposure like HSBC, but they also have, in my view, a better personal lending book than HSBC. They don't have a self-directed discount brokerage, which is odd, and their mutual funds are high cost (but also minimal in size, so have less room to fall in "value" to CWB versus an HSBC). They really do focus on the "bread-and-butter" business of banking, that is making money on the net interest margin between their deposits and lending. They're very customer-focused...a former colleague of mine, from HSBC, was impressed by their "Scratch & Earn" GIC rate bonuses, which can range from 5-10 bps to significantly more than that. And, HSBC, despite its cost cutting, can't match CWB's consistent efficiency ration in the low to mid 40s while it meanders in the upper 50s to low 60s. Perhaps, after all, the mantra of bigger is better in banking isn't all that true? 😉

Yes, CWB's stock is more volatile than, say, the "Big 5" banks, but have you looked at HSBC's stock? It's had a lot more big swings than the "Big 5" have. It's gone from $11-12 down to $5-6 in U.S. trading in New York - and it does that every few years. You also need to factor in currency fluctuations into HSBC's stock price. The stock primarily trades in London, but also trades in New York, Bermuda, and Hong Kong. The company reports its earnings in USD and calculates its dividends in USD. Unless you hold the ADRs in New York, you're going to be experiencing underlying currency exchange, which is essentially lost for the purposes of adjusting one's cost base, between the dividend rate calculated and the dividend paid, if that makes sense. Plus, CWB is just a smaller company so is going to be more volatile.

In short, I wouldn't assess HSBC or CWB's "safety" on their stock price. I'd look, primarily, at their loan books and how well capitalized they are.

Cheers,
Doug

canadian.100 said
Impressed with Doug s reassessment of Manulife Bank. I found a few posters on this blog tend to be overly negative anyways. (Doug not one of those.) I thought the Manulife Advantage Chequing Savings combo acct with no or minimal service charges and 1.5% interest was not all that bad, for a chequing product coming from a major institution.
So I am impressed Doug - good re evaluation - I agree.
I dont think I will use them as a Chequing acct as Simplii fills that bill for now for a cheap no fee chequing even no cost for blank cheques or interac e transfers - but any investment $ will continue to go either to discount brokerage or HISA and GICs issuers elsewhere.  

Thanks for the kind words, canadian.100, and for your thoughtful, intelligent commentary.

I agree that I wouldn't use them as a chequing account as there are now plenty of no-fee chequing account options, many with Interac e-Transfers, and no minimum balance requirements. However, when you compare them with even Vancity's popular E-Package Account (no idea if he still does, but I remember during the Citizens Bank of Canada days, I think Peter even had this account with Vancity, so it's a popular product in the Metro Vancouver area), which has only a $1,000 minimum balance requirement to waive all fees, Manulife's Advantage account, surprisingly, comes out ahead. It could be argued it also comes out ahead of even Cambrian Credit Union's Unfee Package, which requires a "recurring payroll direct deposit" each month to waive its monthly fee. In terms of the Manitoba credit union virtual banking divisions, while it doesn't beat them on rates, it definitely does beat them on access and on fees (save for maybe Implicity Financial, which only charges for Interac point-of-sale purchases but which also doesn't allow bill payments).

From the sounds of it, Manulife's account linking and opening processes are slick and streamlined, which are both electronic and largely automated. We definitely could be seeing them making a significant attempt, with technology and product improvements, at growing this into a direct banking competitor to Tangerine, Simplii, and Motus. They've already got a significant customer base to market to, which Motus doesn't have (outside of Ontario anyway, and only if Meridian members have allowed Meridian to share their personal information with subsidiary entities).

Will be curious to see if:
- they have postage paid envelopes with their deposit forms they can send out;
- they allow you to select either Manulife Bank or Manulife Trust as the GIC issuer in the direct-to-consumer channel; and,
- they still allow you to make in-branch deposits with an RBC Royal Bank teller via a special Manulife/RBC deposit slip. (That's, potentially, game changing. None of the direct banks offer this.)

Cheers,
Doug

savemoresaveoften said
Once account is opened (They sent me account number, login credentials immediately after being approved online), one can log in and able to select "link account". Upload a scan or pic of a void cheque and thats all it needs to link external account.

Yeah, that's simple, and I assume they'd probably accept a Direct Deposit Form/Account Verification Form/recent Bank or Credit Union e-Statement in lieu of void cheque?

Re in branch RBC deposit or deposit slip, I am not sure as I plan to use the account exclusively just like an online bank. I usually take a screen shot of the account balance etc as proof. Since I am in GTA, I will be fine if ever need to track down / speak to someone on the Manulife side in person.

I am fine as well with not going in-branch to deposit, but would be nice if they still have this arrangement, particularly for U.S. deposits.

Their GIC rate hasnt been too competitive so will look at Bank or Trust as issuer name when time comes to purchase their GICs.  

Thanks, that'd be great. You've been very helpful!

Cheers,
Doug