Equitable Group ((TSE:EQB)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Equitable Group presented a mixed sentiment, reflecting both achievements and challenges. While the company reported impressive growth in its loan portfolio and customer acquisition at EQ Bank, financial performance fell short of expectations due to increased credit provisions, a decline in net income, and rising expenses. Strategic leadership changes were highlighted as a move towards future growth and resilience.
Loan Portfolio Growth
Equitable Group reported a significant increase in its loan portfolio, with loans under management rising by 3% sequentially and 10% year-over-year, reaching approximately $74 billion. When combined with administrative assets, the total reached a record $137 billion, marking a 9% increase from the previous year.
Commercial Lending Strength
The company’s commercial lending segment showed robust performance, particularly in CMHC-insured multi-unit residential loans, which grew by 8% sequentially and 30% year-over-year, totaling $31.4 billion.
EQ Bank Customer Growth
EQ Bank demonstrated strong customer acquisition, adding 26,000 new customers, a 21% increase year-over-year. Deposits at EQ Bank reached $9.7 billion, growing at the fastest sequential rate observed in the past three years.
Record Decumulation Lending Portfolio
The decumulation lending portfolio reached a new high of $2.7 billion, reflecting an 8% sequential increase and a 41% rise year-over-year.
Strategic Leadership Appointments
The appointment of Chadwick Westlake as President and CEO, alongside Anilisa Sainani as the new CFO, signals a strategic shift in EQB’s leadership, aimed at steering the company towards future growth and resilience.
Below Expectation Revenue and Earnings
Despite growth in certain areas, Equitable Group’s revenue and earnings fell below expectations. The company reported a return on equity (ROE) of 12.4% year-to-date, with a forecasted ROE of around 11.5% for fiscal 2025.
Increased Credit Provisions
Credit provisions increased, with total Stage 1 and 2 allowances for credit losses rising to 27 basis points, up from 25 basis points in Q2 2025 and 20 basis points in Q3 2024. The overall allowance reached $174.4 million, marking a sequential increase.
Net Income Decline
Net income for the quarter was reported at $80.3 million, representing a 15% decline from Q2 and a 32% drop year-over-year. Diluted EPS was $2.07, with an ROE of 10.1%.
Rising Expenses
Noninterest expenses increased to $166 million in the quarter, up 6% from Q2. This rise was attributed to investments in the Challenger team, technology spending, and increased premises expenses.
Challenges in Personal Lending
The personal lending segment faced challenges, with gross impaired loans increasing to $352 million, a 9.5% rise from Q2. This was largely driven by credit migration and a softening housing market.
Forward-Looking Guidance
Looking ahead, Equitable Group remains focused on strategic growth despite ongoing challenges. The company plans to host an Investor Day in 2026 to outline its long-term objectives. While loans under management and customer acquisition continue to grow, the company anticipates a return on equity of around 11.5% for the full fiscal year, reflecting the impact of elevated credit provisions and a declining net interest margin.
In conclusion, Equitable Group’s earnings call highlighted a mixed performance, with notable achievements in loan and customer growth overshadowed by financial challenges. The strategic leadership changes and forward-looking guidance suggest a focus on resilience and long-term growth, despite current headwinds.