CIBC has revised its price target for EQB Inc (EQGPF, Financial), reducing it from C$130 to C$126. Despite the adjustment, the firm continues to rate the stock as an Outperformer, indicating confidence in its future performance.
EQGPF Key Business Developments
Release Date: February 26, 2025
- Return on Equity (ROE): 15.2% for Q1 2025.
- Earnings Per Share (EPS): $2.98, up 19% sequentially and 8% year-over-year.
- Provision for Credit Losses (PCLs): $13.7 million, down from $31.9 million in Q4 2024.
- Net Interest Margin (NIM): 2.07%, up 6 basis points compared to last year.
- Noninterest Revenue: $59 million, up 4% from last quarter and 40% year-over-year.
- Total Loans Under Management: $69.3 billion, up 2% from last quarter and 8% year-over-year.
- Uninsured Single-Family Originations: Up 23% year-over-year and 13% from last quarter.
- Deposit Growth: 3% quarter-over-quarter and 7% year-over-year.
- Customer Growth: EQ Bank customers increased by 26% year-over-year to 536,000.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- EQB Inc (EQGPF, Financial) reported a strong start to 2025 with milestone quarterly earnings and a return on equity (ROE) of 15.2%.
- The company saw a significant increase in uninsured single-family residential lending, with originations up 23% year-over-year.
- EQB Inc (EQGPF) increased its dividend, reflecting the board's commitment to a 15% annual growth in dividends over the medium term.
- The bank's equipment financing portfolio showed signs of improvement, with provisions for credit losses (PCLs) decreasing significantly from the previous quarter.
- EQ Bank's customer base grew by 26% year-over-year, with a notable increase in customers choosing EQ Bank as their primary bank, contributing to deposit growth.
Negative Points
- The economic and geopolitical environment has shifted, with potential impacts from cross-border tariffs posing risks to the Canadian economy.
- Net impaired commercial loans increased by $68 million during the quarter, with a significant portion associated with a single CMHC insured loan.
- The personal loan book saw an increase in net impaired loans, representing 98 basis points of personal loan assets.
- There is ongoing uncertainty regarding the resolution of impaired commercial real estate loans, with expectations for resolutions to accelerate later in the year.
- The company faces challenges from macroeconomic and geopolitical uncertainties, which could impact credit performance and provisions for credit losses.
