Equitable Group ((TSE:EQB)) has held its Q1 earnings call. Read on for the main highlights of the call.
Equitable Group’s recent earnings call painted a generally positive picture, highlighting strong earnings and growth in key areas despite some challenges. The company reported robust earnings, growth in uninsured lending, and an expanding customer base, although issues with impaired loans and the Pride Group bankruptcy remain. Overall, the positive aspects significantly outweighed the negatives.
Strong Quarterly Earnings and ROE
Equitable Group reported milestone quarterly earnings with a Return on Equity (ROE) of 15.2%. The earnings per share reached $2.98, marking a 19% increase sequentially and an 8% rise year-over-year. This performance underscores the company’s strong financial health and effective management strategies.
Growth in Uninsured Single-Family Residential Lending
The company saw a significant boost in its uninsured single-family residential lending, with originations up 23% compared to the previous year and 13% from the last quarter. This growth highlights Equitable Group’s successful focus on expanding its lending portfolio.
Increase in EQ Bank Customers
EQ Bank ended the first quarter with 536,000 customers, a 26% increase year-over-year. This growth indicates a rising number of customers choosing EQ Bank as their primary banking institution, reflecting the bank’s strong market presence and customer satisfaction.
Record Non-Interest Revenue
Non-interest revenue reached a record $59 million, up 4% from the last quarter and 40% higher than the same period last year. This achievement reflects the company’s successful diversification strategy and its ability to generate revenue beyond traditional interest income.
Increased Net Impaired Loans
The quarter saw an increase in net impaired commercial loans by $68 million, with $17 million associated with a single CMHC insured loan. Additionally, net impaired personal loans rose by $11 million, representing 98 basis points of personal loan assets, indicating areas that require attention.
Pride Group Bankruptcy Exposure
Equitable Group reported a $5 million provision related to the bankruptcy of the Pride Group. The outcome is still pending court decisions, which adds an element of uncertainty to the company’s financial outlook.
Challenges in Equipment Financing
Equipment financing PCLs were $8 million for the quarter, reflecting ongoing challenges, although this was a decrease from $16 million in the previous quarter. This indicates some progress in addressing issues within this segment.
Forward-Looking Guidance
Looking ahead, Equitable Group remains optimistic about future growth, supported by recent interest rate reductions and stable housing prices. The company expects continued demand in its key lending markets and has committed to a 15% annual dividend growth over the medium term. Proactive risk management strategies, including improvements in equipment financing and commercial real estate resolutions, are expected to support robust credit performance.
In summary, Equitable Group’s earnings call highlighted a strong financial performance with significant growth in key areas, despite some challenges. The company’s positive outlook and strategic initiatives indicate a promising future, making it an attractive prospect for investors.