Manulife Financial Corp. today increased its quarterly dividend by 8% to 26¢ a share even though second-quarter net income dropped by 8.5%.

Toronto-based Manulife said it earned $1.01 billion, or 66¢ a share, in the three months ending June 30. That compares with profit of $1.1 billion, or 71¢ a share, in the year-earlier period.

The insurance giant said weak U.S. and Hong Kong equity markets, a stronger Canadian dollar and tax related provisions weighed on results.

The stronger loonie trimmed earnings by $41 million in the quarter, Manulife said. About 70% of the firm’s income is denominated in foreign currencies.

In addition, upfront charges from the growth in insurance sales, less favorable credit and equity market experience and tax related charges on leveraged lease investments more than offset earnings growth from a higher insurance in-force base and investment gains, it said.

Equity market declines, primarily in the U.S. and Hong Kong, have reduced its fee income in recent quarters.

Premiums and deposits rose 5% to $17.26 billion during the quarter.

Despite the drop in earnings, “operating results are excellent, our credit experience remains quite satisfactory and our expenses are under good control,” Peter Rubenovitch, the company’s chief financial officer, said in a news release.

Premiums and deposits rose 5% to $17.26 billion during the quarter.

Annualized return on equity was 17% in the quarter, down from 18.5% a year earlier.