Equitable Bank reports record earnings as rental construction loans post strong growth
The parent company of alternative mortgage lender Equitable Bank reported record annual results for its 2023 fiscal year, with its fast-growing multi-unit lending space among the bright spots.
EQB Inc. changed its reporting period to align with the rest of the Canadian banking sector, making comparisons with other periods difficult. But in its fiscal fourth quarter period, which consisted of the four months ending Oct. 31, the company reported adjusted net income of $147 million and adjusted diluted earnings of $3.80 per share.
For the 10 months ended Oct. 31, net income was $371.59 million, up from $270.18 million for the full year ended Dec. 31 2022.
Equitable Bank said that its commercial lending operation is primarily financing the development and renovation of rental housing and the construction of condominium buildings in Canada’s major cities.
The bank has $20 billion in multi-unit loans under management, marking a sequential quarterly increase of 11 per cent and a year-over-year increase of 27 per cent, EQB chief executive Andrew Moor said during the conference call.
Out of this amount, $15 billion is insured against default through Canada Mortgage and Housing Corp.’s mortgage bond and NHA Mortgage Backed Securities programs. The assets are recognized when they are securitized and sold, leading to upfront non-interest revenue. In the fourth quarter, this revenue amounted to $25.9 million, and for fiscal year 2023, it reached $56 million, doubling year over year.
In August, CMHC revealed a temporary reduction in dividend payments to the federal government, redirecting the funds toward supporting rental housing construction
“We’re definitely seeing lots of demand from our clients to build purpose-built rentals to
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