EQB releases Q1 results with milestone adjusted EPS and total AUM and AUA reaching $132 billion, increases dividend 21% y/y

TORONTO, Feb. 25, 2025 /CNW/ - EQB Inc. (TSX: EQB) today reported strong financial results for the three months ended January 31, 2025, supported by accelerated year-over-year growth in loans under management and net interest income, as well as increasing non-interest revenue from higher multi-unit residential securitization and contributions from its alternative asset manager, ACM Advisors.

Highlights from Q1 2025 compared to the previous quarter and year include:

• Adjusted ROE¹ 15.2% (reported 14.1%)
• Adjusted diluted EPS¹$2.98, +8% y/y, +19% q/q (reported $2.77, +4% y/y, +42% q/q)
• Book value per share$79.71, +12% y/y, +3% q/q
• Adjusted revenue $323 million, +8% y/y, +0.3% q/q (reported +8% y/y, +3% q/q)
• Net interest margin²2.07%, +6bps y/y, 0 bps q/q (reported +7bps q/q)
• Adjusted PPPT³$170 million, +3% y/y, -2% q/q (reported $163 million, +3% y/y, +3% q/q)
• Adjusted net income¹$116 million, +7% y/y, +11% q/q (reported $108 million, +3% y/y, +36% q/q)
• Total AUM + AUA²$132 billion, +11% y/y, +4% q/q
• EQ Bank customer growth +26% y/y, +4% q/q to over 536,000
• Common share dividends$0.51 per share, +21% y/y, +4% q/q 
• Total capital ratio 15.5% with CET1 of 14.1% and liquidity coverage ratio well in excess of 100%

"We enter fiscal 2025 confident in EQB's growth opportunities and ready to build on our exceptional performance this quarter," said Andrew Moor, president and CEO, EQB. "Our confidence is well-founded. Canadians – in growing numbers – are responding to our innovative EQ Bank digital offerings and choosing us as their primary bank. We enjoy leadership positions in insured multi-unit residential, single-family residential and decumulation markets where needs for capital are substantial. The tailwind of recent interest rate cuts provides a constructive backdrop for enhanced loan growth and improving credit metrics. While we will need to manage second-order effects of cross-border tariff threats carefully, our purely domestic market presence, focus on lending in large Canadian urban centres with diversified economies and the highly competitive nature of our Challenger Bank services support a positive outlook."

EQ Bank experiences double-digit customer growth +26% y/y, +4% q/q to 536,000

• Steady increase in payroll customers, now representing an accelerating ratio of total demand balances, confirm EQ Bank's growing reputation as a primary bank of choice and go-to source for innovative savings and spending options with long-term relationship intent
• Strong US Dollar Account deposit growth as customers embrace refreshed CAD/USD foreign exchange rates and no fee, high interest offering, further elevating full suite of international banking features – including cost-effective global transfers with Wise and seamless spending with the EQ Bank Card – in line with commitment to redefining value and convenience
• The Notice Savings Account, an innovative and powerful alternative to GICs and traditional savings vehicles, continued to drive customer growth and launched in Québec subsequent to quarter end, uniquely positioning Banque EQ to meet surging demand for challenger bank offerings in the province

Personal Banking LUM steady on strong customer retention and promising origination levels, bolstered by significant decumulation growth +47% y/y

• Single-family uninsured originations grew +23% in Q1 reflecting stronger activity in the housing market and Equitable Bank's leadership position based on customer service excellence and well-regarded advocacy of the broker channel; loan growth expected to accelerate with the spring housing market as borrowers respond to a more favourable interest rate environment
• Decumulation lending (including reverse mortgages and insurance lending) grew +47% y/y, +9% q/q as successful advertising, exceptional broker service and value to borrowers worked to broaden category awareness among growing number of Canadians choosing to enjoy the benefits of a reverse mortgage
• Loans undermanagement (LUM) grew +2% y/y, +1% q/q to $20.2 billion with sequential growth fueled by strong originations and renewals, despite reduction in single-family insured lending (-15% y/y, -4% q/q to $8.8 billion) reflecting EQB's earlier decision to exit this part of the market

Commercial Banking LUM +18% y/y to $37.0 billion, supported by +30% y/y expansion in multi-unit residential loans LUM

• EQB continues to prioritize insured lending for multi-unit residential properties (primarily rental apartments) in major cities across the country with 82% of its total commercial LUM insured through various CMHC programs
• CMHC-insured multi-unit residential LUM grew +30% y/y, +5% q/q to $27.5 billion and insured commercial construction lending grew +48% y/y, +13% q/q to $3.0 billion, driven by both new originations and construction draws on existing commitments

Provisions in-line with EQB's expectations and reflect anticipated moderation in equipment finance

• Adjusted provision for credit losses (PCL)² of $13.7 million (reported $18.7 million in Q1) reflects the impacts of evolving macroeconomic forecasts, expected credit loss modelling and improved Stage 3 provisions of $10.1 million (reported $13.8 million), down -12% y/y, -62% q/q
• Net impaired loans increased by $59.3 million in Q1 to $683.0 million, corresponding to 147 bps of total loan assets compared to 132 bps at Q4 2024 and 94 bps at Q1 2024; nearly one-third of new impaired loans are attributable to a single multi-unit residential loan insured by CMHC
• The Bank is appropriately reserved for credit losses with net allowances as a percentage of total loan assets of 28 bps, compared to 32 bps at Q4 2024 and 22 bps at Q1 2024; decline in Q1 net allowance rate driven by writing down loans to expected recoverable amount
• Following decisive action in previous quarters related to equipment finance, long-haul transportation portfolio fundamentals continued to progress as expected with an improvement in delinquency rates; exposure to this market continues to tighten in favour of higher-quality, prime leases

EQB increases common share dividend and shares capital management guidance

• EQB's Board of Directors declared a dividend of $0.51 per common share payable on March 31, 2025, to shareholders of record as of March 14, 2025, representing a 4% increase from the dividend paid in December 2024 and 21% above the payment made in March 2024
• For the purposes of the Income Tax Act (Canada) and any similar provincial legislation, dividends declared are eligible dividends, unless otherwise indicated
• Equitable Bank continually optimizes its capital structure to support strategic objectives and maintain strong overall capital levels; following its recent Internal Capital Adequacy Assessment Process (ICAAP) for 2025, the Bank established that it will operate above 15% Total Capital and expects that up to 300 bps of Total Capital could be contributed by Alternative Tier 1 and Tier 2 capital in 2027 and beyond, while maintaining consistent CET1 guidance at 13%+ for the balance of fiscal 2025

"We are pleased with EQB's strong start to 2025 and are invigorated by external recognition of our growth potential, reinforcing the calibre of our challenger business model and ability to consistently generate 15%+ ROE," said Chadwick Westlake, CFO, EQB. "EQB has excellent momentum from purposeful asset class expansion with strategic funding diversification progress importantly in EQ Bank. We continue to cement our position as a leading player in multi-unit residential lending and, paired with growing real estate market activity, these positive dynamics validate our outlook for the year as we remain well-positioned to deliver long-term shareholder value."

Analyst conference call and webcast: 8:00 a.m. ETFebruary 26, 2025 

Andrew Moor, president and CEO, Chadwick Westlake, CFO, and Marlene Lenarduzzi, CRO, will host EQB's first quarter conference call and webcast. The listen-only webcast with accompanying slides will be available at: eqb.investorroom.com. To access the conference call with operator assistance, dial 416-945-7677 five minutes prior to the start time.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet (unaudited)

Consolidated statement of income (unaudited)

Consolidated statement of comprehensive income (unaudited)

Consolidated statement of changes in shareholders' equity (unaudited)

Consolidated statement of cash flows (unaudited)

About EQB Inc. 

EQB Inc. (TSX: EQB) is a leading digital financial services company with $132 billion in combined assets under management and administration (as at January 31, 2025). It offers banking services through Equitable Bank, a wholly owned subsidiary and Canada's seventh largest bank by assets, and wealth management through ACM Advisors, a majority owned subsidiary specializing in alternative assets. As Canada's Challenger Bank™, Equitable Bank has a clear mission to drive change in Canadian banking to enrich people's lives. It leverages technology to deliver exceptional personal and commercial banking experiences and services to over 700,000 customers and more than six million credit union members through its businesses. Through its digital EQ Bank platform (eqbank.ca), its customers have named it one of Canada's top banks on the Forbes World's Best Banks list since 2021. 

Please visit eqb.investorroom.com for more details. 

Investor contact: 
Mike Rizvanovic 
Managing Director, Investor Relations 
investor_enquiry@eqb.com 

Media contact: 
Maggie Hall 
Director, PR & Communications
maggie.hall@eqb.com

Cautionary Note Regarding Forward-Looking Statements

Statements made by EQB in the sections of this news release, in other filings with Canadian securities regulators and in other communications include forward-looking statements within the meaning of applicable securities laws (forward-looking statements). These statements include, but are not limited to, statements about EQB's objectives, strategies and initiatives, financial performance expectation, statements with respect to EQB's intention to renew and/or make share repurchases under its NCIB, and other statements made herein, whether with respect to EQB's businesses or the Canadian economy. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "intends", "scheduled", "planned", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases which state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved", or other similar expressions of future or conditional verbs. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, closing of transactions, performance or achievements of EQB to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to capital markets and additional funding requirements, fluctuating interest rates and general economic conditions including, without limitation global geopolitical risk, uncertainty arising from ongoing United States/Canada tariff concerns and related impacts, business acquisition, legislative and regulatory developments, changes in accounting standards, the nature of our customers and rates of default, and competition as well as those factors discussed under the heading "Risk Management" in EQB's Q1 MD&A and in EQB's documents filed on SEDAR+ at www.sedarplus.ca. All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends, including their knowledge of the current credit, interest rate and liquidity conditions affecting EQB and the Canadian economy. Although EQB believes the assumptions used to make such statements are reasonable at this time and has attempted to identify in its continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Certain material assumptions are applied by EQB in making forward-looking statements, including without limitation, assumptions regarding its continued ability to fund its mortgage business, a continuation of the current level of economic uncertainty that affects real estate market conditions, continued acceptance of its products in the marketplace, as well as no material changes in its operating cost structure and the current tax regime. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. EQB does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws.

Non-Generally Accepted Accounting Principles (GAAP) Financial Measures and Ratios

In addition to GAAP prescribed measures, this news release references certain non-GAAP measures, including adjusted financial results, that we believe provide useful information to investors regarding EQB's financial condition and results of operations. Readers are cautioned that non-GAAP measures often do not have any standardized meaning, and therefore, are unlikely to be comparable to similar measures presented by other companies.

Adjustments listed below are presented on a pre-tax basis:

Q1 2025

• $2.8 million new office lease related expenses prior to occupancy,
• $1.8 million non-recurring operational effectiveness expenses and acquisition and integration-related costs,
• $2.0 million intangible asset amortization, and
• $5.0 million provision for credit losses associated with an equipment financing purchase facility⁽¹⁾.

Q4 2024

• $8.8 million fair value adjustment on a covered bond maturity,
• $2.2 million new office lease related expenses prior to occupancy,
• $0.8 million non-recurring operational effectiveness expenses and acquisition and integration-related costs,
• $2.1 million intangible asset amortization, and
• $16.1 million provision for credit losses associated with an equipment financing purchase facility⁽¹⁾.

Q1 2024

• $2.1 million acquisition and integration-related costs, and
• $3.4 million intangible asset amortization.

The following table presents a reconciliation of GAAP reported financial results to non-GAAP adjusted financial results (unaudited).

Other non-GAAP financial measures and ratios:

• Adjusted return on equity (ROE) is calculated on an annualized basis and is defined as adjusted net income available to common shareholders as a percentage of weighted average common shareholders' equity (reported) outstanding during the period.
• Assets under administration (AUA): is sum of (1) assets over which EQB's subsidiaries have been named as trustee, custodian, executor, administrator, or other similar role; (2) loans held by credit unions for which EQB's subsidiaries act as servicer.
• Assets under management (AUM): is the sum of total balance sheet assets, loan principal derecognized but still managed by EQB, and assets managed on behalf on investors.
• Loans under management (LUM): is the sum of loan principal reported on the consolidated balance sheet and loan principal derecognized but still managed by EQB.
• Net interest margin (NIM): this profitability measure is calculated on an annualized basis by dividing net interest income by the average total interest earning assets for the period.
• Pre-provision pre-tax income (PPPT): this is the difference between revenue and non-interest expenses.
• Total loan assets: this is calculated on a gross basis (prior to allowance for credit losses) as the sum of both Loans – Personal and Loans – Commercial on the balance sheet and adding their associated allowance for credit losses.

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SOURCE EQB Inc.