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Manulife Financial Corp. is the first Canadian insurer to announce a dividend hike after Canada’s banking regulator lifted pandemic-related restrictions.

Manulife announced on Friday that its board has approved a dividend increase of 18 per cent, or five cents per share, bringing its total quarterly dividend to 33 cents a share.

In addition, subject to regulatory approval, the insurer said it intends to repurchase up to 39 million of its common shares, representing about 2 per cent of its outstanding shares.

The hike follows Thursday’s announcement by the Office of the Superintendent of Financial Institutions (OSFI) that temporary measures that had prohibited dividend hikes and share buybacks by financial institutions since March, 2020, were no longer in place, effective immediately.

Manulife’s last dividend increase was on February 12, 2020, shortly before the OSFI’s March 13, 2020, announcement.

The restraints were intended to force financial institutions to preserve capital so they could continue making loans in the early stages of the COVID-19 crisis.

Manulife, which typically increases its dividend in the first quarter, said in a release that the 18-per-cent boost combines the company’s annual increase for 2021 as well as its planned increase for 2022.

Barclay Capital Inc. research analyst John Aiken said “being the first out of the gates” could remove some of “the sting from the disappointment” from Manulife’s Wednesday earnings report, which disclosed a drop in its third-quarter net income to $1.6-billion, compared with $2.06-billion a year prior.

“Further, putting the payout ratio slightly above its guided range [on a core basis] illustrates the company’s confidence in its outlook,” Mr. Aiken added. “While we are pleased that Manulife is also pursuing a buyback, the 2-per-cent level does not appear to be overly inspiring next to the level of excess capital [Manulife] is carrying.”

Canada’s six largest banks aren’t expected to announce their plans for dividend increases and share buybacks until they report quarterly earnings in late November and early December. The banks are in a quiet period leading up to the release of those financial results.

With a report from James Bradshaw

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