See how the banking giant fared in a challenging market
EQB said it has met its expectations for strong earnings growth in the second quarter of 2024, driven by growth in its decumulation lending and insured multi-unit residential lending.
Decumulation lending, which includes reverse mortgages and insurance lending, saw a 57% jump compared to the same period last year, reaching $1.7 billion. EQB attributed this growth to successful advertising campaigns and strong broker relationships.
"Growth accelerated as a result of successful consumer advertising that bolstered public awareness, strong broker service and value to the borrower," the company said in its Q2 financial report.
Personal banking loans under management grew to $32.8 billion, buoyed by strong customer retention. The single-family uninsured portfolio increased 0.5% quarter-over-quarter to $19.9 billion.
The bank's focus on insured multi-unit residential lending also proved fruitful, with a 35% year-over-year increase, reaching $22.6 billion. This focus contributed to the overall growth of the bank's commercial loan portfolio, which increased by $1.5 billion to $32.7 billion during the quarter.
Nearly 77% of those loans are now insured multi-unit residential properties across major Canadian cities, a segment that grew 7% from Q1 2024 and 35% year-over-year to $22.6 billion.
Despite challenges in the commercial office real estate market, EQB's limited exposure to this sector, at approximately 1% of loan assets, resulted in minimal impact.
“The first half of 2024 has been trending to our expectations with strong revenue, earnings growth and ROE well-above target at nearly 16% year-to-date," said EQB chief financial officer Chadwick Westlake. “This reflects how the EQB business model is positioned to perform across economic cycles.”
Q2 performance
Overall, EQB posted an adjusted return on equity of 15.9% and adjusted diluted earnings per share of $2.81, up 2% from the prior quarter and 7% year over year. Revenue reached $317 million, a 6% increase from Q1 2024 and 20% higher than the same period last year.
Its adjusted net income rose 2% from the previous quarter and 9% from a year ago to $111 million in Q2 2024. Net interest margin was up 10 basis points quarter over quarter and 16 bps year over year to 2.11%.
Read next: Mortgage growth slows to two-decade low in Canada
Credit provisions
EQB reported a provision for credit losses of $22.2 million in Q2, reflecting expected future losses as well as specific provisions for residential, commercial and equipment financing loans.
Net impaired loans decreased $10.8 million to $441.9 million or 92 basis points of total loan assets. Commercial impaired loans fell $68.4 million to 133 basis points after several loans were resolved.
"We have momentum for strong performance in the second half of the year and have high confidence in the quality of our credit book," Westlake said. "We continue to expect moderation in PCLs in the second half of 2024."
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
