Canada NewsWire
TORONTO, July 28, 2021
Canada's Challenger Bank™ Matches Ambitious Growth Targets with Strong Execution
TORONTO, July 28, 2021 /CNW/ - Equitable Group Inc. (TSX: EQB) (TSX: EQB.PR.C) ("Equitable" or the "Bank") today reported record earnings for the three and six months ended June 30, 2021, as Equitable Bank (Canada's Challenger Bank™) continued to deliver on its ambitious annual growth targets while investing in the expansion of its services and technology to drive change that enriches the lives of Canadians.
Q2 Net Earnings $70.8 million, +$18.3 million or +35% from 2020
ROE 16.5% with $100 million in Excess Capital
Book Value Surpasses $100 per share
Customers and Digital – Growing & Deepening
Conventional Lending Driving Asset Growth
"Earlier this year, we significantly upgraded our growth forecast and in so doing, challenged ourselves to do more for customers, partners, and shareholders. Through Q2, Equitable delivered to this guidance. On the strength of great execution by our team and meaningful innovations in our challenger bank services, each area of the Bank registered growth. EQ Bank deposits grew 99% over 2020 to a record $6.5 billion, an indication that digital services like our new US Dollar Account are driving the kind of change that enriches the lives of our customers. This past quarter was also an excellent illustration of how we're positioning to drive future earnings, with double-digit loan origination growth reflecting strong contributions from alternative single family, reverse mortgages, Cash Surrender Value lines of credit and conventional commercial loans where Equitable stands out for responsive service, effective underwriting, and risk management. For shareholders, Q2 featured record earnings, high ROE, and an industry best efficiency ratio, even as we purposely drive higher investment to seed future growth. With the tailwinds of an improving economy and the positive impact of service expansions, Equitable is in a great position to realize its objectives this year and beyond, on behalf of almost 300,000 customers, our valued shareholders, and business partners," said Andrew Moor, President and Chief Executive Officer.
Record Results Put Equitable on Pace to Achieve Ambitious 2021 Outlook
EQ Bank Now Serves approximately 222,000 Canadians, Deposits Exceed $6.5 Billion
New EQ Bank US Dollar Account Expands Challenger Bank Services
Equitable Bank Receives CMHC Approval to Launch $2 Billion Covered Bond Program
Total Deposits Top $18.4 Billion on Diversified Customer and Channel Growth
Loans Under Management Reach $35.4 Billion with Strong Growth in Alternative Single Family and Conventional Commercial
Wealth Decumulation Book Reaches $165 Million, On Track to 2021 200%+ Target
Credit Metrics Reflect Long-Term Prudence, Q2 Reserve Release $5.3 Million
Strong Capital and Liquidity Combined with Positive Credit Rating
ESG – Meaningful Progress in Scope 3 Measurement and Diversity Goals
Proposed Two-for-One Stock Split Reflects Growing Market Recognition of Value
Board of Directors Declares Dividends for Third Quarter 2021
"As a leading digital bank, Equitable is challenging not just to enrich lives today or next quarter but for the long term and we are guided accordingly as we plan and invest in our people, technology, customer service innovations and business partnerships," said Mr. Moor. "In that context, the remaining months of 2021 will feature growth that we expect will hit our targets for the year, but also platform expansions that will set us up for another strong year in 2022."
Analyst Conference Call and Webcast: 8:30 a.m. Eastern Thursday, July 29, 2021
Equitable's Andrew Moor, President and Chief Executive Officer, Chadwick Westlake, Chief Financial Officer, and Ron Tratch, Chief Risk Officer will host the second quarter conference call and webcast. To access the call live, please dial (416) 764-8609 five minutes prior to the start time. The listen-only webcast with accompanying slides will be available at eqbank.investorroom.com/events-webcasts.
Call Archive
A replay of the call will be available until August 5, 2021 at midnight at (416) 764-8677 (passcode 015442 followed by the number sign). Alternatively, the webcast will be archived on the Bank's website.
INTERIM CONSOLIDATED FINANCIAL STATEMENTS | |||
Consolidated balance sheets (unaudited) | |||
($000s) As at | June 30, 2021 | December 31, 2020 | June 30, 2020 |
Assets: | |||
Cash and cash equivalents | 591,752 | 557,743 | 569,688 |
Restricted cash | 507,295 | 504,039 | 589,046 |
Securities purchased under reverse repurchase agreements | 100,015 | 450,203 | 200,370 |
Investments | 859,925 | 589,876 | 566,859 |
Loans – Personal | 20,225,222 | 19,445,386 | 19,135,799 |
Loans – Commercial | 9,667,652 | 8,826,182 | 8,573,118 |
Securitization retained interests | 203,491 | 184,844 | 149,307 |
Other assets | 186,901 | 188,045 | 173,059 |
32,342,253 | 30,746,318 | 29,957,246 | |
Liabilities and Shareholders' Equity | |||
Liabilities: | |||
Deposits | 18,588,223 | 16,585,043 | 15,861,725 |
Securitization liabilities | 11,483,635 | 11,991,964 | 11,190,224 |
Obligations under repurchase agreements | 201,271 | 251,877 | 598,956 |
Deferred tax liabilities | 67,520 | 60,880 | 50,546 |
Other liabilities | 200,067 | 208,852 | 256,038 |
Funding facilities | - | - | 500,374 |
30,540,716 | 29,098,616 | 28,457,863 | |
Shareholders' equity: | |||
Preferred shares | 72,001 | 72,477 | 72,557 |
Common shares | 224,997 | 218,166 | 213,701 |
Contributed surplus | 8,237 | 8,092 | 7,818 |
Retained earnings | 1,513,118 | 1,387,919 | 1,257,268 |
Accumulated other comprehensive loss | (16,816) | (38,952) | (51,961) |
1,801,537 | 1,647,702 | 1,499,383 | |
32,342,253 | 30,746,318 | 29,957,246 |
Consolidated statements of income (unaudited) | ||||
($000s, except per share amounts) | Three months ended | Six months ended | ||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |
Interest income: | ||||
Loans – Personal | 164,363 | 172,019 | 325,420 | 353,576 |
Loans – Commercial | 103,169 | 98,974 | 204,427 | 199,180 |
Investments | 3,824 | 3,315 | 6,723 | 5,803 |
Other | 2,606 | 3,220 | 5,226 | 9,167 |
273,962 | 277,528 | 541,796 | 567,726 | |
Interest expense: | ||||
Deposits | 76,693 | 94,022 | 154,478 | 195,842 |
Securitization liabilities | 55,278 | 63,302 | 111,170 | 130,323 |
Funding facilities | 152 | 1,497 | 343 | 2,703 |
132,123 | 158,821 | 265,991 | 328,868 | |
Net interest income | 141,839 | 118,707 | 275,805 | 238,858 |
Non-interest income: | ||||
Fees and other income | 5,598 | 5,130 | 11,173 | 11,853 |
Net gain on loans and investments | 4,907 | 8,653 | 3,446 | 122 |
Gains (losses) on securitization activities and income from | 6,430 | (1,160) | 18,520 | 5,342 |
16,935 | 12,623 | 33,139 | 17,317 | |
Revenue | 158,774 | 131,330 | 308,944 | 256,175 |
Provision for credit losses | (1,982) | 8,847 | (2,754) | 44,534 |
Revenue after provision for credit losses | 160,756 | 122,483 | 311,698 | 211,641 |
Non-interest expenses: | ||||
Compensation and benefits | 32,396 | 26,253 | 61,369 | 53,148 |
Other | 32,594 | 25,214 | 60,938 | 52,499 |
64,990 | 51,467 | 122,307 | 105,647 | |
Income before income taxes | 95,766 | 71,016 | 189,391 | 105,994 |
Income taxes: | ||||
Current | 20,698 | 16,106 | 42,740 | 31,686 |
Deferred | 4,267 | 2,428 | 6,656 | (4,144) |
24,965 | 18,534 | 49,396 | 27,542 | |
Net income | 70,801 | 52,482 | 139,995 | 78,452 |
Dividends on preferred shares | 1,111 | 1,119 | 2,225 | 2,238 |
Net income available to common shareholders | 69,690 | 51,363 | 137,770 | 76,214 |
Earnings per share: | ||||
Basic | 4.11 | 3.06 | 8.13 | 4.54 |
Diluted | 4.05 | 3.05 | 8.02 | 4.50 |
Consolidated statements of comprehensive income (unaudited) | ||||
($000s) | Three months ended | Six months ended | ||
June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |
Net income | 70,801 | 52,482 | 139,995 | 78,452 |
Other comprehensive income – items that will be | ||||
Debt instruments at Fair Value through Other | ||||
Net unrealized (losses) gains from change in fair | (1,570) | 3,899 | (3,228) | 3,074 |
Reclassification of net losses (gains) to income | 178 | (351) | 1,317 | (1,019) |
Other comprehensive income – items that will not be | ||||
Equity instruments designated at Fair Value through | ||||
Net unrealized gains (losses) from change in fair | 6,374 | 6,239 | 16,102 | (16,669) |
4,982 | 9,787 | 14,191 | (14,614) | |
Income tax (expense) recovery | (1,307) | (2,586) | (3,725) | 3,861 |
3,675 | 7,201 | 10,466 | (10,753) | |
Cash flow hedges: | ||||
Net unrealized gains (losses) from change in fair | 2,155 | (5,293) | 16,065 | (33,354) |
Reclassification of net losses (gains) to income | 231 | (245) | (234) | 2,610 |
2,386 | (5,538) | 15,831 | (30,744) | |
Income tax (expense) recovery | (628) | 1,463 | (4,161) | 8,122 |
1,758 | (4,075) | 11,670 | (22,622) | |
Total other comprehensive income (loss) | 5,433 | 3,126 | 22,136 | (33,375) |
Total comprehensive income | 76,234 | 55,608 | 162,131 | 45,077 |
Consolidated statements of changes in shareholders' equity (unaudited) | ||||||||
($000s) Three month period ended | June 30, 2021 | |||||||
Preferred | Common | Contributed | Retained | Accumulated other | ||||
Cash Flow | Financial | Total | Total | |||||
Balance, beginning of period | 72,194 | 224,397 | 7,722 | 1,449,715 | (10,031) | (12,218) | (22,249) | 1,731,779 |
Net Income | - | - | - | 70,801 | - | - | - | 70,801 |
Other comprehensive income, net of tax | - | - | - | - | 1,758 | 3,675 | 5,433 | 5,433 |
Exercise of stock options | - | 489 | - | - | - | - | - | 489 |
Purchase of treasury preferred shares | (193) | - | - | - | - | - | - | (193) |
Net loss on cancellation of treasury | - | - | - | (10) | - | - | - | (10) |
Dividends: | ||||||||
Preferred shares | - | - | - | (1,111) | - | - | - | (1,111) |
Common shares | - | - | - | (6,277) | - | - | - | (6,277) |
Stock-based compensation | - | - | 626 | - | - | - | - | 626 |
Transfer relating to the exercise of stock | - | 111 | (111) | - | - | - | - | - |
Balance, end of period | 72,001 | 224,997 | 8,237 | 1,513,118 | (8,273) | (8,543) | (16,816) | 1,801,537 |
($000s) | June 30, 2020 | |||||||
Balance, beginning of period | 72,557 | 213,701 | 7,405 | 1,212,125 | (18,306) | (36,781) | (55,087) | 1,450,701 |
Net Income | - | - | - | 52,482 | - | - | - | 52,482 |
Other comprehensive loss, net of tax | - | - | - | - | (4,075) | 7,201 | 3,126 | 3,126 |
Dividends: | ||||||||
Preferred shares | - | - | - | (1,119) | - | - | - | (1,119) |
Common shares | - | - | - | (6,220) | - | - | - | (6,220) |
Stock-based compensation | - | - | 413 | - | - | - | - | 413 |
Balance, end of period | 72,557 | 213,701 | 7,818 | 1,257,268 | (22,381) | (29,580) | (51,961) | 1,499,383 |
Consolidated statements of changes in shareholders' equity (unaudited) | ||||||||
($000s) Six month period ended | June 30, 2021 | |||||||
Preferred | Common | Contributed | Retained | Accumulated other | ||||
Cash Flow | Financial | Total | Total | |||||
Balance, beginning of period | 72,477 | 218,166 | 8,092 | 1,387,919 | (19,943) | (19,009) | (38,952) | 1,647,702 |
Net Income | - | - | - | 139,995 | - | - | - | 139,995 |
Other comprehensive income, net of tax | - | - | - | - | 11,670 | 10,466 | 22,136 | 22,136 |
Exercise of stock options | - | 5,715 | - | - | - | - | - | 5,715 |
Purchase of treasury preferred shares | (476) | - | - | - | - | - | - | (476) |
Net loss on cancellation of treasury | - | - | - | (20) | - | - | - | (20) |
Dividends: | ||||||||
Preferred shares | - | - | - | (2,225) | - | - | - | (2,225) |
Common shares | - | - | - | (12,551) | - | - | - | (12,551) |
Stock-based compensation | - | - | 1,261 | - | - | - | - | 1,261 |
Transfer relating to the exercise of stock | - | 1,116 | (1,116) | - | - | - | - | - |
Balance, end of period | 72,001 | 224,997 | 8,237 | 1,513,118 | (8,273) | (8,543) | (16,816) | 1,801,537 |
($000s) | June 30, 2020 | |||||||
Balance, beginning of period | 72,557 | 213,277 | 6,973 | 1,193,493 | 241 | (18,827) | (18,586) | 1,467,714 |
Net Income | - | - | - | 78,452 | - | - | - | 78,452 |
Other comprehensive loss, net of tax | - | - | - | - | (22,622) | (10,753) | (33,375) | (33,375) |
Exercise of stock options | - | 357 | - | - | - | - | - | 357 |
Dividends: | ||||||||
Preferred shares | - | - | - | (2,238) | - | - | - | (2,238) |
Common shares | - | - | - | (12,439) | - | - | - | (12,439) |
Stock-based compensation | - | - | 912 | - | - | - | - | 912 |
Transfer relating to the exercise of stock | - | 67 | (67) | - | - | - | - | - |
Balance, end of period | 72,557 | 213,701 | 7,818 | 1,257,268 | (22,381) | (29,580) | (51,961) | 1,499,383 |
Consolidated statements of cash flows (unaudited) | ||||
($000s) | Three months ended | Six months ended | ||
Three and six month periods ended | June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | 70,801 | 52,482 | 139,995 | 78,452 |
Adjustments for non-cash items in net income: | ||||
Financial instruments at fair value through income | 1,778 | 982 | (5,612) | 14,344 |
Amortization of premiums/discount on investments | 28 | 1,148 | 46 | 1,457 |
Amortization of capital assets and intangible costs | 7,897 | 5,504 | 15,234 | 10,735 |
Provision for credit losses | (1,982) | 8,847 | (2,754) | 44,534 |
Securitization gains | (8,177) | (2,516) | (12,355) | (5,283) |
Stock-based compensation | 626 | 413 | 1261 | 912 |
Income taxes | 24,965 | 18,534 | 49,396 | 27,542 |
Securitization retained interests | 11,221 | 518 | 21,900 | 8,998 |
Changes in operating assets and liabilities: | ||||
Restricted cash | 25,398 | (198,648) | (3,256) | (126,054) |
Securities purchased under reverse repurchase agreements | 250,022 | 299,594 | 350,188 | (50,303) |
Loans receivable, net of securitizations | (1,025,059) | (939,714) | (1,672,166) | (1,145,281) |
Other assets | (709) | (1,520) | 5,198 | (3,990) |
Deposits | 980,721 | 168,440 | 2,008,887 | 404,314 |
Securitization liabilities | (247,738) | 412,120 | (508,067) | 478,239 |
Obligations under repurchase agreements | 201,271 | 169,609 | (50,606) | 91,912 |
Funding facilities | - | 386 | - | 500,374 |
Other liabilities | (23,931) | (8,057) | 11,647 | 13,803 |
Income taxes paid | (15,306) | (420) | (32,531) | (37,919) |
Cash flows from (used in) operating activities | 251,826 | (12,298) | 316,405 | 306,786 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from issuance of common shares | 489 | - | 5,715 | 357 |
Dividends paid on preferred shares | (1,111) | (1,119) | (2,225) | (2,238) |
Dividends paid on common shares | (6,277) | (6,220) | (12,551) | (12,439) |
Cash flows used in financing activities | (6,899) | (7,339) | (9,061) | (14,320) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchase of investments | (453,543) | (153,815) | (484,850) | (269,777) |
Proceeds on sale or redemption of investments | 213,111 | 50,045 | 229,466 | 112,226 |
Net change in Canada Housing Trust re-investment accounts | 336 | (36,997) | (89) | (60,667) |
Purchase of capital assets and system development costs | (9,346) | (7,243) | (17,862) | (13,413) |
Cash flows used in investing activities | (249,442) | (148,010) | (273,335) | (231,631) |
Net (decrease) increase in cash and cash equivalents | (4,515) | (167,647) | 34,009 | 60,835 |
Cash and cash equivalents, beginning of period | 596,267 | 737,335 | 557,743 | 508,853 |
Cash and cash equivalents, end of period | 591,752 | 569,688 | 591,752 | 569,688 |
Cash flows from operating activities include: | ||||
Interest received | 250,337 | 275,050 | 508,152 | 555,359 |
Interest paid | (134,229) | (150,628) | (274,186) | (293,723) |
Dividends received | 1,434 | 1,522 | 2,916 | 3,076 |
About Equitable
Equitable Group Inc. trades on the Toronto Stock Exchange (TSX: EQB and EQB.PR.C) and serves nearly three hundred thousand Canadians through Equitable Bank, Canada's Challenger Bank™. Equitable Bank has grown to become the country's eighth largest independent Schedule I bank with a clear mandate to drive real change in Canadian banking to enrich people's lives. Founded over 50 years ago, Equitable Bank provides diversified personal and commercial banking and through its EQ Bank platform (eqbank.ca) has been named #1 Bank in Canada on the Forbes World's Best Banks 2021 list. Please visit equitablebank.ca for details.
Cautionary Note Regarding Forward-Looking Statements
Statements made by the Bank in the sections of this news release, in other filings with Canadian securities regulators and in other communications include forward-looking statements within the meaning of applicable securities laws (forward-looking statements). These statements include, but are not limited to, statements about the Bank's objectives, strategies and initiatives, financial performance expectations and other statements made herein, whether with respect to the Bank's businesses or the Canadian economy. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "planned", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases which state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved", or other similar expressions of future or conditional verbs. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, closing of transactions, performance or achievements of the Bank to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to capital markets and additional funding requirements, fluctuating interest rates and general economic conditions, legislative and regulatory developments, changes in accounting standards, the nature of our customers and rates of default, and competition as well as those factors discussed under the heading "Risk Management" in the MD&A and in the Bank's documents filed on SEDAR at www.sedar.com. All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends, including their knowledge of the current credit, interest rate and liquidity conditions affecting the Bank and the Canadian economy. Although the Bank believes the assumptions used to make such statements are reasonable at this time and has attempted to identify in its continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Certain material assumptions are applied by the Bank in making forward-looking statements, including without limitation, assumptions regarding its continued ability to fund its mortgage business, a continuation of the current level of economic uncertainty that affects real estate market conditions, continued acceptance of its products in the marketplace, as well as no material changes in its operating cost structure and the current tax regime. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Bank does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws.
Non-Generally Accepted Accounting Principles ("GAAP") Financial Measures
This news release references certain non-GAAP measures such as Return on equity, Book value per common share, Loans under management, Efficiency ratio, CET1 Capital Ratio, Assets under management, Liquid assets, and Liquidity Coverage Ratio that management believes provide useful information to investors regarding the Bank's financial condition and results of operations. The "NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") FINANCIAL MEASURES" section of the Bank's Q2 2021 MD&A provides a detailed description of each non-GAAP measure and should be read in conjunction with this release. The MD&A also provides a reconciliation between all non-GAAP measures and the most directly comparable GAAP measure, where applicable. Readers are cautioned that non-GAAP measures often do not have any standardized meaning, and therefore, may not be comparable to similar measures presented by other companies.
SOURCE Equitable Group Inc.
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