Банк EQ Financial отчитался о росте чистой процентной прибыли на 22% и увеличении дивидендов до $0,63 на акцию

This article first appeared on GuruFocus. - Diluted EPS: $2.12, up 4% sequentially. - ROE: 10.3%, improved sequentially and year-over-year. - ROTCE: 11.1%, up 40 basis points. - Revenue: Generated over $1 billion through the first nine months of fiscal 2026. - Net Interest Income: $319 million, up 22% year-over-year and quarter-over-quarter. - Net Interest Margin: 2.41%, up 33 basis points. - Non-Interest Revenue: $73.9 million, up 55% year-over-year and 77% sequentially. - Adjusted Non-Interest Expenses: Up 19% year-over-year and 32% sequentially. - Efficiency Ratio: 50.1%. - Loans Under Management: $82.5 billion, up 12% year-over-year and 7% sequentially. - Total Deposits: Up 3% year-over-year and 2% sequentially. - CET1 Ratio: 13.4%. - Dividend: Increased to $0.63 per share, up 3% quarter-over-quarter and 15% year-over-year. - PC Financial Contribution: Approximately $10 million of earnings in the first month, excluding favorable purchase price accounting impacts. - Performing Provisions: $35.2 million, largely driven by the acquired credit card portfolio. - Impaired PCLs: 42 basis points, up 7 basis points sequentially. - ACL Coverage Ratio: 95 basis points, or 50 basis points excluding the credit card portfolio. Release Date: August 27, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points - EQB Inc (EQGPF) successfully closed the PC Financial transaction, marking a historic inflection point and significantly expanding its reach and capabilities. - PC Financial contributed approximately $10 million in earnings in its first month, excluding favorable purchase price accounting impacts, reinforcing confidence in long-term value. - The company achieved 50% of its $30 million cost synergy target on an annualized basis within the first month, ahead of expectations. - EQB Inc (EQGPF) reported strong growth in non-interest revenue, up 55% year-over-year and 77% sequentially, driven by the addition of PC Financial's fee-based income. - The acquisition diversified the balance sheet and revenue mix, with retail deposits now representing 29% of total funding, the highest level ever. - Credit card applications increased 3% month-over-month, and new PC insurance policies reached a record 93,000 in force, indicating strong customer engagement. - The company maintained strong capital ratios, with CET1 at 13.4%, and increased its dividend by 3% quarter-over-quarter and 15% year-over-year. - Early-stage delinquency trends across the portfolio are stable to improving, and the company believes it is well-positioned across a range of economic outcomes. - EQB Inc (EQGPF) is on track to achieve its 2026 loan growth outlook, expecting to land at the upper end of the high single-digit to low double-digit range. - The company's cloud-native, API-first technology infrastructure is enabling efficient integration and scaling, providing a structural advantage over larger institutions. Negative Points - The quarter included a $219 million day one provision on performing acquired credit card receivables, which negatively impacted reported results. - Higher performing and impaired credit provisions were a primary headwind, reflecting proactive updates due to economic uncertainty and portfolio review. - Impaired PCLs increased 7 basis points sequentially to 42 basis points, driven by pressures in personal and commercial lending, particularly in select GTA suburbs. - Commercial real estate remains challenging, with extended resolution times on a small number of previously impaired loans leading to increased provisions. - Equipment financing provisions increased to $8.4 million due to higher formations during the quarter, despite repositioning efforts. - The housing market remains subdued with limited industry-wide growth, and the company's growth is partly dependent on market recovery. - Court backlog and enforcement timelines for mortgage resolutions have lengthened, now pushing to 18-24 months, particularly in Quebec. - The company faces ongoing geopolitical and macro uncertainty, which could impact Canadian employment and the economy, potentially affecting credit performance. - Net interest margin performance was impacted by a seasonally dynamic cards business, and the quarter is not a clean reflection of the combined franchise's earnings power. - The company expects continued volatility and uncertainty, which could add sensitivity to its ROE and ROTCE guidance for fiscal 2026. Q & A Highlights Q: Can you provide more color on the timing and magnitude of expected growth in retail deposits from the acquired PC Financial business?A: Daniel Rethazy, EVP Personal Banking, explained that growth is now viewed from a customer perspective across all product areas. The strategy involves looking within the existing customer base and the PC Optimum customer base to attract multi-product customers new to the bank, as well as cross-selling existing customersmoving card customers into deposits and GICs, and moving core EQ Bank deposit customers into card products. Q: Have impaired PCLs peaked, or is there more to come? What metrics support your view?A: Puneesh Arora, CRO, stated that the bank has taken a comprehensive look at its models and applied judgment to ensure provisions are appropriate. Chadwick Westlake, CEO, added that the bank proactively built provisions for the current environment of uncertainty. Key indicators like formations, delinquencies, and days past due are stable to improving, which should be seen as encouraging trends. Q: When should we expect the growth strategy from the PC Financial acquisition to really manifest? Does it take a year of integration?A: Chadwick Westlake, CEO, emphasized that growth started on day one, with momentum expected to build by day 100 and day 365. Daniel Rethazy, EVP Personal Banking, noted that the bank immediately offered PC Mastercards to EQ Bank customers with great results. While platform and branding integration work continues, the bank is already bringing value to its combined 4 million customers and expects continued momentum in deepening relationships and acquiring new active customers. Q: Are you doing a deep dive review of the loan portfolio as the new CRO, and will it be complete by year-end?A: Puneesh Arora, CRO, confirmed he has already spent his first 45 days conducting a deep dive across the portfolio, including SFR, commercial, and equipment financing. He has incorporated findings from models and applied judgment into the current provisions, stating he is comfortable with the numbers booked. He will spend time in Q4 on a couple of other areas, but the core review is complete. Q: Regarding the commercial portfolio, was the increase in impaired provisions due to new formations or extended resolution times on existing loans?A: Puneesh Arora, CRO, clarified there were no major new formations. Darren Lorimer, EVP Commercial Banking, added that the majority of the increase was on a handful of larger, existing commercial loans where distressed asset values have softened. He feels the loans are well provisioned and does not expect material new provisions next quarter, all else equal. Q: How will expenses evolve in the coming quarters as the PC Financial integration advances, given potential costs for promos and rebranding?A: Chadwick Westlake, CEO, confirmed there will be an integration budget for converging brands and digital platforms, which is part of the business case. Anilisa Sainani, CFO, stated the philosophy is to keep expenses in line with revenues, targeting an efficiency ratio in the low 50s. While loyalty-linked cards have a higher expense base, the bank will be intentional about investing in cross-selling opportunities and growth. Q: Can you dissect the impaired PCL in the mortgage book? Is it from new formations or catch-up provisions on previously impaired loans, and is the pressure broadening geographically?A: Puneesh Arora, CRO, stated the provisions are from both new formations and increases to previously impaired loans. The pressure remains concentrated in the GTA shoulder vintages where property values have fallen and resolution times are longer. The bank has not seen the issues spread to other regions. Q: Regarding the credit and interest rate marks from the acquisition, does the sizable amount in core earnings set up a tough comp for 2028 when it runs off?A: Anilisa Sainani, CFO, explained that the fair value marks are a true reflection of the economics of the purchased portfolio, similar to buying a bond at a premium. While they don't last forever, as they come down, the bank gains momentum from its cost synergy targets (50% of the $30 million target already achieved) and cross-selling opportunities, giving confidence in the deal thesis. Q: Has the court backlog for resolving impaired loans started to improve?A: Daniel Rethazy, EVP Personal Banking, reported that collection timelines are actually getting longer, pushing from 12-18 months to 18-24 months for enforcement. This is a national issue, with Quebec being the most challenging, and it continues to be a headwind for resolutions. Q: Is the guidance for ROTCE in the 12% range conservative, given the potential for PCL normalization and increased housing activity?A: Chadwick Westlake, CEO, clarified the guidance is for expansion from Q3 levels with ROTCE in the 12% range. He described the outlook as practical and thoughtful, applying judgment in the current operating environment. While the bank could pick up the pace if conditions improve, it is comfortable with its provisioning and momentum, and expects ROE and ROTCE to continue to improve. For the complete transcript of the earnings call, please refer to the full earnings call transcript.