EQB releases Q2 results marked by continued loan growth as dividend increases 18% y/y and total AUM and AUA climb to $134 billion

TORONTO, May 28, 2025 /PRNewswire/ - EQB Inc. (TSX: EQB) today reported earnings for the three and six months ended April 30, 2025, that reflected diversified, high-quality growth in loans under management, higher net interest income and core non-revenue from fees and multi-unit securitization, offset by credit provisions driven by the macroeconomic environment.

Q2 2025 highlights compared to Q2 2024:

• Adjusted ROE¹ 11.9% (reported 11.4%)
• Adjusted diluted EPS¹ $2.31, -18% y/y, -22% q/q (reported $2.21, -17% y/y, -20% q/q)
• Book value per share $80.99, +10% y/y, +2% q/q
• Revenue $316.0 million, -0.2% y/y, -2% q/q with non-interest revenue contributing 14% of total
• Adjusted PPPT^1,3 $160.1 million, -8% y/y, -6% q/q (reported $154.8 million, -7% y/y, -5% q/q)
• Adjusted net income¹ $94.2 million, -15% y/y, -19% q/q (reported $90.3 million, -15% y/y, -16% q/q)
• Net interest margin (NIM)²: 2.20%, +9 bps y/y, +13 bps q/q
• Net interest income (NII): $271.1 million, +1% y/y, +3% q/q
• Total AUM + AUA² $134 billion, +8% y/y, +2% q/q
• EQ Bank customers, +23% y/y, +4% q/q to 560,000
• Common share dividends declared $0.53 per share, +4% q/q, +18% y/y

YTD 2025 (six months) highlights compared to YTD 2024:

• Adjusted ROE¹ 13.6% (reported 12.8%)
• Adjusted diluted EPS¹ $5.29, -5% y/y (reported $4.98, -7% y/y)
• Adjusted net income¹ $ 210.4 million, -4% y/y (reported $198.0 million, -6% y/y)
• Total capital ratio 15.6% and CET1 ratio of 13.2%

"Amid economic uncertainty globally and in Canada, EQB experienced one of our strongest quarters for uninsured single family loan originations, and we are pleased with notable increases in EQ Bank customers and deposits as we continued to flex our Challenger Bank muscles," said Andrew Moor, president and CEO. "Our fundamentals remain resilient despite credit provisions made necessary by tariff-driven changes in the economy and the residual impact of higher interest rates on certain borrowers. Our uncompromising focus on customer service and innovation that enriches people's lives, disciplined capital allocation to diversified market segments, dynamic risk management approach and proven loan resolution capabilities support our expectations of continued shareholder value creation in the second half of 2025 and positive outlook for 2026."

EQ Bank welcomes 24,000 new customers, bringing total to 560,000 +23% y/y, 4% q/q

• The EQ Bank Notice Savings Account, an innovative and powerful alternative to GICs and traditional savings vehicles, continued to drive customer and deposit growth as it nears one year in market, bolstered by its Québécois debut as Banque EQ meets new demand for Challenger Bank offerings
• Increase in payroll customers continued to confirm EQ Bank's position as bank of choice and go-to source for innovative and valuable savings and spending options
• Strong customer response to recently refreshed CAD/USD foreign exchange rates within the no-fee, high interest US Dollar Account and the broader suite of international banking solutions including cost-effective global transfers with Wise and on-the-go spending with the EQ Bank Card
• Experienced Equitable Bank executive, Dan Broten, recently named to lead strategy, product, marketing and digital delivery in the new role of SVP and Head of EQ Bank, while Janet Lin, SVP and Chief Information Officer, will advance culture of innovation and technological excellence at Equitable Bank

Residential Lending portfolio benefits from one of the strongest periods of originations and retention

• Consistent with Q1 momentum, single-family uninsured originations grew +28% y/y as application volumes translated into high-quality asset growth, supported by renewed market activity compared to a year ago and gains in share in the mortgage broker channel; Equitable Bank's approach to credit and risk management is rigorous, demonstrated by conservative average LTV for single-family uninsured loans of 63% and credit scores consistent at 711
• Portfolio balances grew +4% y/y, +2% q/q to $20.6 billion on new originations and exceptional renewal rates on responsive customer service
• Decumulation lending (including reverse mortgages and insurance lending) reached $2.5 billion +45% y/y, +8% q/q; momentum reflected broker support, value to borrowers of choosing Equitable Bank's differentiated solutions and continued expansion of the available market as Canadians retire and realize the advantages of converting real asset-based equity into funds to live in place

Commercial Banking portfolio driven by insured lending for multi-unit residential properties

• EQB continued to prioritize insured lending for multi-unit residential properties in major cities across the country with over 80% of total commercial LUM insured through various CMHC programs
• CMHC-insured multi-unit residential LUM grew +29% y/y, +6% q/q to $29.1 billion, while the commercial portfolio's uninsured businesses also delivered healthy growth despite subdued market conditions
• EQB's insured commercial construction lending grew +31% y/y, +10% q/q to $3.3 billion, driven by both new originations and construction draws on existing commitments

Provisions reflect change in macroeconomic environment, new formation rate slowing

• EQB's provision for credit losses (PCL) of $30.2 million was split almost equally across each of its business lines and reflects the impacts of evolving macroeconomic forecasts, expected credit loss modelling and Stage 3 provisions of $24.5 million, 1% y/y, 77% q/q
• Net impaired loans increased by $58.5 million in Q2 to $741.5 million, or 156 bps of total loan assets compared to 147 bps at Q1, 132 bps at Q4 2024 and 92 bps at Q2 2024; the increase, despite slowing formations, was driven by two newly impaired commercial loans and a decelerating pace of resolution  
• The Bank is appropriately reserved for credit losses with net allowances as a percentage of total loan assets of 29 bps, compared to 28 bps at Q1 2025 and 23 bps at Q2 2024; the increase in net allowance rate was across all segments and driven by a deterioration in forecasts for GDP and employment as a result of economic uncertainty related to tariffs and their potential impact
• Focus remains on de-risking the equipment financing portfolio in light of challenges in the long-haul transportation market; reflecting EQB's risk appetite and a new management approach, exposure to long-haul transportation is down to 33% from Q1 while higher-quality prime leases now account for 51% of the portfolio

EQB increases common share dividend, buys back shares and reaffirms capital management guidance

• EQB's Board of Directors declared a dividend of $0.53 per common share payable on June 30, 2025, to shareholders of record as of June 13, 2025, representing a 4% increase from the dividend paid in March 2025 and 18% above the payment made in June 2024
• As part of management's plan to continually optimize its capital structure to support strategic objectives and maintain strong overall capital levels, the Bank also completed a $200 million subordinated debt issuance to EQB, bringing Equitable Bank's Total Capital Ratio to 15.6%; this is consistent with the Bank's intention to operate above 15% Total Capital with expectations that up to 300 bps of Total Capital could be contributed by Alternative Tier 1 and Tier 2 capital in 2027 onward and CET1 guidance for 2025 reaffirmed at 13%+
• Equitable Bank's consistent organic capital generation and strength in CET1 enabled it to make a $200 million dividend to parent EQB in Q2; inclusive of dividends and the semi-annual $4.4 million payment to holders of the Bank's Limited Recourse Capital Notes, the Bank's CET1 ratio was 13.2%
• In Q2, EQB repurchased 271,117 common shares through its NCIB, which allows for the repurchase and cancellation of up to 2,300,000 common shares or 8.4% of the public float of common shares outstanding at January 2, 2025

EQ Bank Tower unveiled, marking new chapter for Canada's Challenger Bank

• New Toronto-based national headquarters opened subsequent to quarter end, bringing talented employees together for more effective collaboration supported by sustainable design and intentional use of Canadian furniture and fittings

"In the second quarter, we responded to an increasingly volatile environment by focusing on unique, high-quality market opportunities that are available to Canada's Challenger Bank by growing our uninsured and insured loan portfolios in a risk-managed way and adding strength and depth to our cost-effective funding sources," said David Wilkes, VP and head of finance. "Recent strength in loan originations will benefit future revenue while gains from insured multi-unit securitizations are expected to contribute to performance in the second half of fiscal 2025. By focusing on our fundamentals, which are strong, and investing through the business cycle, we are well-positioned to navigate uncertain economic conditions, target growth opportunities and sustain EQB's long track record as an industry performance leader."

Analyst conference call and webcast: 10:30 a.m. ETMay 29, 2025

EQB's Andrew Moor, president and CEO, Marlene Lenarduzzi, CRO, and David Wilkes, VP and head of finance, will host EQB's second quarter earnings call and webcast. The listen-only webcast with accompanying slides will be available at eqb.investorrom.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 $134 billion in combined assets under management and administration (as at April 30, 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 742,000 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: 
David Wilkes
VP and Head of Finance
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 Q2 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:

Q2 2025

• $3.4 million new office lease related expenses prior to occupancy, and
• $2.0 million intangible asset amortization.

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.

Q2 2024

• $5.7 million non-recurring operational effectiveness expenses and acquisition and integration-related costs; and
• $1.6 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.