Desjardins 11:11 AM EST, 11/19/2020 (MT Newswires) -- Sun Life Financial's (SLF.TO, SLF) US$370 million deal to establish a 15-year exclusive bancassurance partnership with Asia Commercial Joint Stock Bank (ACB) in Vietnam is a positive development that is on strategy, said Desjardins analyst Doug Young. Desjardins rates Sun Life shares a Buy with a $65 price target.
"Management has talked about wanting more distribution in underdeveloped and under penetrated markets where it lacks scale," Young said in a note to clients.
Sun Life's subsidiary SLF Vietnam will also make ongoing variable payments to ACB based on the partnership's success, while the deal is expected to be accretive to the bank's underlying earnings per share following 2022.
ACB is one of Vietnam's largest private-sector banks with approximately 3.6 million customers and 371 branches.
"Distribution is even more important in underdeveloped markets, in our view, where products are less known and understood," Young said.
The analyst noted that ACB has more than 400 insurance specialists that will offer Sun Life's product suit through ACB's established bancassurance infrastructure.
"Management has been vocal about wanting additional distribution in Vietnam and this fits the bill," Young said.
In November 2019, Sun Life formed a similar 15-year bancassurance partnership in Vietnam with Tien Phong Commercial Bank.
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