EQB (EQB) investor relations material

Strategic transformation and acquisition impact

• Acquisition of PC Financial increased customer base fivefold to 4 million, expanding reach and brand presence across nearly 5,000 physical locations nationwide.

• Exclusive partnership with PC Optimum loyalty program provides access to an ecosystem of 18 million Canadians, significantly boosting brand recognition and cross-selling opportunities.

• Revenue mix has shifted, reducing reliance on housing-related income from 85% and increasing fee-based and diversified income streams.

• Integration management office established early, with a focus on seamless customer experience and clear communication from day one.

• Rapid execution post-acquisition, including pop-up stores and strong initial credit card and insurance policy growth.

Financial performance, funding, and risk management

• Retail direct deposits rose from 27% to 29% of total deposits post-acquisition, with further growth potential from the expanded customer funnel.

• New wholesale funding sources, such as credit card securitization and callable deposit notes, have been introduced to optimize funding costs.

• Non-interest revenue now includes significant credit card interchange, annual fees, and insurance commissions, enhancing earnings stability.

• Integration risks are managed through aligned technology stacks, experienced leadership, and close monitoring of KPIs like deposit stability and customer retention.

• Cost synergy target of CAD 30 million over the first few years, with 50% achieved in the first month post-acquisition.

Credit quality and outlook

• Elevated credit losses in residential mortgages attributed to aggressive rate tightening and housing market stress, but early-stage delinquencies are trending down and losses remain concentrated in specific vintages and neighborhoods.

• Commercial loan impairments are lumpy but well-provisioned, with most of the book insured and slower resolution times impacting carrying costs.

• Credit card portfolio is super prime weighted, with through-the-cycle loss rates of 4.5%-5% and expected seasonal volatility.

• Expectation of credit normalization and improved GILs by 2027 as market conditions stabilize and workout times improve.