Equitable Group closed 2021 with its “best” fourth quarter, which saw profits increase by 12%.

The alternative mortgage lender reported a 19% increase in originations in the fourth quarter and a 31% jump in total net income for the year. Single-family loan balances rose 30% year-over-year to $14.4 billion.

“Once again, the talented members of the Equitable team have punched above their weight to far exceed the ambitious growth targets we set for ourselves,” said Equitable President and CEO Andrew Moor, in a statement. “We have leveraged our differentiated service and products for personal and business customers, including our EQ Bank fintech capabilities which now serve over 250,000 Canadians and are creating real change in digital banking.

As part of its earnings release, Equitable said it would increase its quarterly dividend by 51%, starting in the first quarter. This is the bank’s first dividend increase since March 20, when OSFI temporarily prohibited all federally regulated institutions from increasing regular dividends, conducting common share buybacks and increase executive compensation.

Fourth Quarter Earnings Report Highlights

  • 4th quarter net profit: $72.5 million (+2% year-over-year)
  • 2021 Total Net Income: $292.5 million (+31% YoY)
  • Assets under administration: $42 billion (+17%)
  • Loan originations: $3.8 billion (+19%)
  • Net interest margin: 1.81% (+7 bps)
  • Reverse mortgages: $247 million (+325%)

Notables of his calling

  • Total loan growth in 2021 was 16%, above Equitable’s forecast of 8% to 12%, noted chief financial officer Chadwick Westlake.
  • Westlake said the bank had a “conventional lending bias,” which grew 31% in 2021 to $21.1 billion.
  • “A big storyline has been the growth of Equitable’s alternative single-family business,” Westlake said. “This loan portfolio balance grew 30% year-over-year to $14.4 billion, significantly beating the 12% to 15% growth forecast for 2021.”
  • Commenting on Equitable’s continued growth in its reverse mortgage portfolio, Westlake said: “We continue to like our outlook here due to recent share gains from Canada’s growing senior population, many of whom will reach the age of the house with the help of a reverse mortgage. Equitable is rapidly taking a larger share of this segment in Canada, as evidenced by growing origins. The addition of Concentra’s reverse mortgage business will further improve our competitiveness.
  • Equitable saw a 53% increase in deposits to $7 billion.
  • Net interest income (NII) of $583 million increased 17% for the year, driven by a 10% increase in average assets and higher net interest margin. “As expected, the primary driver of NIM’s growth in the fourth quarter and for all of 2021 was a planned shift in asset mix to our higher yielding conventional loans,” Westlake said.
  • Equitable released $7.7 million of its provisions for credit losses (PCL) in 2021, of which $1.4 million was released in the fourth quarter.
  • Due to the current acquisition of Concentra Bank by Equitable, executives were unable to answer questions from analysts on the call.

To note: Transcripts are provided as is by the companies and/or third-party sources, and their accuracy cannot be guaranteed to be 100%.

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