Equitable Group Reports Record Quarterly and Annual Earnings, Increases Dividend

TORONTO, Feb. 24, 2020 /CNW/ - Equitable Group Inc. (TSX: EQB and EQB.PR.C) ("Equitable" or the "Company") today reported record earnings for the three and twelve months ended December 31, 2019 on the strength of diversified growth in its wholly owned subsidiary, Equitable Bank ("Canada's Challenger Bank™" or "Bank") and the contribution of Bennington Financial Corp. ("Bennington").

FOURTH QUARTER HIGHLIGHTS

• Adjusted Diluted earnings per share were a quarterly record $3.22, up 21% from $2.66 in Q4 2018.
• Adjusted Return on Shareholders' Equity was 15.9% compared to 14.7% in Q4 2018.

Reported Diluted earnings per share ("EPS") were $3.21 and reported Return on Shareholders' Equity ("ROE") was 15.9% in Q4 2019 and $2.33 and 12.9% in Q4 2018. The Company's reported results for Q4 2019 include $0.3 million (Q4 2018 – $7.4 million) of pre-tax mark-to-market losses on certain security investments and derivative financial instruments.

2019 ANNUAL HIGHLIGHTS

• Adjusted Diluted EPS was an annual record $12.29, up 22% from $10.10 in 2018.
• Adjusted ROE was 15.9% compared to 14.7% in 2018.
• Retail loan principal outstanding at December 31, 2019 was $18.3 billion, up 13% from $16.1 billion a year ago on growth in all retail asset categories.
• Commercial loan principaloutstanding at December 31, 2019 was $8.3 billion, up 13% from $7.3 billion a year ago as a result of organic growth and the acquisition of Bennington.
• The Provision for Credit Losses ("PCL") was $18.4 million or 0.07% of average loan principal outstanding.
• Deposits at December 31, 2019 were $15.2 billion, up 13% from $13.5 billion a year ago and included 22% or $478 million year-over-year growth in EQ Bank deposits.
• The Bank's Common Equity Tier 1 Capital Ratio at December 31, 2019 was 13.6% compared to 13.5% at December 31, 2018 as the Bank rebuilt capital to above the middle of its target range after the Bennington acquisition in January 2019.

2019 reported Diluted EPS and ROE were $11.97 and 15.5% respectively, compared to $9.67 and 14.1% in 2018. Reported results include $1.6 million of pre-tax mark-to-market losses on certain security investments and derivative financial instruments (2018 – $3.9 million), as well as a one-time, $5.7 million IFRS 9-related provision for credit losses on performing equipment leases recorded immediately after the Bennington acquisition. 2018 reported results included a $5.9 million pre-tax write-down of unamortized up-front costs associated with the reduction in the size of the Bank's secured backstop facility.

DIVIDEND DECLARATIONS

The Board of Directors ("Board") today declared a dividend of $0.37 per common share, payable on March 27, 2020 to common shareholders of record at the close of business March 13, 2020. This 23% increase over the dividend declared in February 2019 reflects the Board's commitment to growing Equitable's dividend at a rate of between 20% and 25% over the next five years. Even with this faster pace of dividend growth, the Bank is expected to retain sufficient capital to support strong business growth. The Board also suspended the common share DRIP due to the strength of the Bank's capital position and its confidence in building sufficient capital organically to support Equitable's growth.

The Board declared a quarterly dividend in the amount of $0.373063 per preferred share, payable on March 27, 2020, to preferred shareholders of record at the close of business on March 13, 2020. 

COMMENTARY ON PERFORMANCE AND OUTLOOK

"2019 capped a decade of superior value creation as Equitable delivered a total shareholder return of 500%, the highest of any Bank in the TSX Composite," said Andrew Moor, President and Chief Executive Officer. "I am incredibly proud of our team for their efforts and the collaboration required to make these results a reality. We continue to cement our position as Canada's Challenger Bank™ by introducing new services that are consistently improving the everyday banking experience of Canadians. The number of green shoots now in place across the Bank, particularly at EQ Bank, has enhanced and diversified our growth opportunities. The focus is always on finding more ways to bring greater value to our customers and I'm particularly excited by the progress made with our innovative EQ Bank platform in 2019. This includes the recent launch of transformative international money transfers, the migration of our core banking infrastructure to the cloud, and the 35% growth in the EQBank customer base. Further, the traction we achieved with our insurance-based line of credit, reverse mortgage and equipment leasing businesses has me believing in their long-term potential more than ever. To continue building both our new and established businesses and to position Equitable for the open banking era, we plan to significantly increase our investment spending in 2020. This is a decision we are taking with great confidence knowing that we can continue to deliver more and more value for Canadians as the banking landscape shifts in the favour of the consumer."

EQ Bank also recently crossed the 100,000 customer mark, providing further evidence that a growing number of Canadians want more from their bank: better savings; simpler transactions; fewer headaches. "Our vision from the very beginning has been to provide a better banking experience that gives Canadians far more value by challenging the status quo and bringing a no-nonsense approach to the way people do their everyday banking." said Moor. "We're excited to see more people choosing to bank differently."

In 2020, Equitable's 50^th year of serving Canadians, management anticipates that earnings growth will outpace that of the broader Canadian banking industry, based on consensus forecasts for other banks.   Management expects earnings to increase in the range of 4% to 8% in 2020 as a result of loan growth, stable margins and low provisions for credit losses.  The expected earnings growth rate will be below Equitable's longer-term average due to significant planned investments in the Bank's digital platform, emerging lending businesses and IT capabilities.  Adjusted ROE should be between 14% and 16%, slightly lower than 2019 due to higher levels of capital and slightly lower earnings growth expectations.

Management's complete business outlook can be found in Management's Discussion and Analysis ("MD&A") for the three and twelve months ended December 31, 2019 which is available on SEDAR and on Equitable's website.

CONFERENCE CALL AND WEBCAST

Equitable will hold its fourth quarter conference call and webcast at 8:30 a.m. ET Tuesday, February 25, 2020. To access the call live, please dial (647) 427-7450 five minutes prior to the start time. The listen-only webcast with accompanying slides will be available at www.equitablebank.ca under Investor Relations. The call will be hosted by Andrew Moor, President and Chief Executive Officer.

A replay of the call will be available until March 3, 2020 at midnight and it can be accessed by dialing (416) 849-0833 and entering passcode 1180468 followed by the number sign. Alternatively, the call will be archived on the Company's website for three months.

ABOUT EQUITABLE GROUP INC.

Equitable Group Inc. is a growing Canadian financial services business that operates through its wholly-owned subsidiary, Equitable Bank. Equitable Bank, Canada's Challenger Bank™, has grown to become one of the nine Schedule I banks included in the TSX Composite Index through its proven branchless approach and customer service focus in providing residential lending, commercial lending and savings solutions to Canadians. EQ Bank, the digital banking platform offered by Equitable Bank, provides state-of-the-art digital banking services. The EQ Bank Savings Plus Account reimagines banking for Canadians by offering the functionality of a chequing account to perform daily banking with ease, as well as a great everyday interest rate to help transactional balances grow into bigger savings. From unlimited Interac® e-Transfers and bill payments to payroll deposits and no monthly fees, everyday banking is now a richer prospect for Canadians. Equitable Bank employs over 900 dedicated professionals across the country. For more information about Equitable Bank and its products, please visit equitablebank.ca.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made by the Company in the sections of this news release, in other filings with Canadian securities regulators and in other communications include forward-looking statements within the meaning of applicable securities laws ("forward-looking statements"). These statements include, but are not limited to, statements about the Company's objectives, strategies and initiatives, financial performance expectations and other statements made herein, whether with respect to the Company's businesses or the Canadian economy. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "planned", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases which state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved", or other similar expressions of future or conditional verbs. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, closing of transactions, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to capital markets and additional funding requirements, fluctuating interest rates and general economic conditions, legislative and regulatory developments, changes in accounting standards, the nature of our customers and rates of default, and competition as well as those factors discussed under the heading "Risk Management" in the MD&A and in the Company's documents filed on SEDAR at www.sedar.com. All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends, including their knowledge of the current credit, interest rate and liquidity conditions affecting the Company and the Canadian economy. Although the Company believes the assumptions used to make such statements are reasonable at this time and has attempted to identify in its continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Certain material assumptions are applied by the Company in making forward-looking statements, including without limitation, assumptions regarding its continued ability to fund its mortgage business, a continuation of the current level of economic uncertainty that affects real estate market conditions, continued acceptance of its products in the marketplace, as well as no material changes in its operating cost structure and the current tax regime. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.  Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws.

NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") FINANCIAL MEASURES

This news release references certain non-GAAP measures such as Adjusted Diluted earnings per share, Adjusted Return on Shareholders' Equity, Reported Return on Shareholders' Equity, Provision for credit losses – rate, and Common Equity Tier 1 Capital Ratio that management believes provide useful information to investors regarding the Company's financial condition and results of operations. The "NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") FINANCIAL MEASURES" section of the Company's fourth quarter 2019 MD&A provides a detailed description of each non-GAAP measure and should be read in conjunction with this release. The MD&A also provides a reconciliation between all non-GAAP measures and the most directly comparable GAAP measure, where applicable. Readers are cautioned that non-GAAP measures often do not have any standardized meaning, and therefore, may not be comparable to similar measures presented by other companies.

SOURCE Equitable Group Inc.