Find out how the bank fared
Equitable Bank (EQB) has reported its financial results for the third quarter of 2024, reflecting steady growth across various sectors despite the challenges posed by higher interest rates.
The banking giant saw its revenue rise to $327.2 million, a 3% increase from the previous quarter and a 15% jump from the same period last year. EQB’s adjusted net income for the quarter was $117.2 million, up 6% from the previous quarter and 1% higher than a year ago.
Its total assets under management and administration also grew, reaching $125.4 billion, a 2% increase quarter-over-quarter and a 16% increase year over year. Net interest margin was 2.09%, slightly down (two basis points) from the previous quarter but up by 10 basis points year-over-year.
"This was another quarter of strong financial performance from Canada's Challenger Bank despite the moderating effects of higher interest rates on real estate market activity," EQB president and CEO Andrew Moor said in a media release.
Moor noted that the company's portfolio remained strong, with the single-family uninsured portfolio holding steady at $19.8 billion. The decumulation lending assets, including reverse mortgages and insurance lending, grew by 11% quarter over quarter and 56% year over year, reaching $1.9 billion. This growth was attributed to successful consumer advertising and strong broker services.
EQB also continued to focus on insured multi-unit residential lending in major cities across Canada. Nearly 80% of its total commercial loans under management are insured through various Canada Mortgage and Housing Corporation (CMHC) programs. The insured multi-unit residential loans under management grew by 7% from the previous quarter and 33% year-over-year, reaching $24.1 billion.
The bank's exposure to the Canadian commercial office real estate market remained limited, accounting for only about 0.5% of its loan assets. Commercial office lending was largely confined to multi-tenanted, mixed-use properties occupied by medical and professional businesses.
The company's credit risk management also remained strong, with adjusted provisions for credit losses (PCL) at $19.6 million for the quarter. Net impaired loans increased by $84.7 million to $526.6 million, primarily due to increases in commercial lending and equipment finance, though the bank does not expect to incur losses on these loans.
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"With three quarters of the fiscal year complete, we are trending well relative to expectations with record quarterly revenue and another quarter of ROE at nearly 16%," said Chadwick Westlake, chief financial officer of EQB. "We've built a resilient and diverse business model that should gain even more traction as economic activity improves and we enter a lower rate environment with higher consumer confidence.
“We remain focused on allocating capital to benefit long-term franchise value, while increasing our emphasis on business mix and operational effectiveness as we scale EQB."
The bank noted that it changed its fiscal year in 2023 to end October 31, resulting in a one-time ten-month transition year and a four-month final quarter of 2023. Because of this, when comparing financial results, EQB is using the second quarter of 2023 (ending June 30) as the best point of comparison for year-over-year analysis.
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