Equitable Bank earnings break record as alternative lenders thrive amid high interest rates
Equitable Bank reported its best ever quarterly earnings per share in the second quarter as high interest rates push Canadians to look for alternatives to traditional banking.
The challenger bank’s adjusted net income in the second quarter jumped 88 per cent to $115.5 million and adjusted diluted earnings for the quarter were up 70 per cent to $2.98 per share.
“It certainly is nice to see us outperforming all the leaders on Wall Street and Canada’s largest banks on this important outcome for shareholders,” chief executive Andrew Moor told investors during Wednesday’s earnings call.
Moor said EQB’s strong year-to-date performance allowed it to increase its 12-month earnings growth guidance, including diluted EPS guidance, to a range of 18 to 22 per cent from the previous guidance of 10 to 15 per cent.
Adjusted revenue for the three months ended June 30 was up 72 per cent year-over-year to $284.6 million, led by lending growth, net interest margin expansion and higher non-interest revenue.
EQ Bank, the online-only offshoot of Equitable, also reported a 50 per cent year-over-year increase in adjusted net interest income to $251.7 million, exceeding analyst expectations. Its non-interest income of $33 million also significantly beat the street’s $26-million target, National Bank analyst Jaeme Gloyn wrote in a note to clients.
“The only real miss came from PCLs [provision for credit losses] of $13 million, or a PCL rate of 0.11 per cent, above the street (expectation) of 0.08 per cent and NBF PCL rate of 0.09 per cent,” Gloyn said.
EQ Bank said its customer base had grown to 367,790 at June 30 with a 133 per cent increase in sign-ups compared to the same quarter last year, while customer everyday engagement remained at a
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