EQ Bank-owner shares rise as it reports earnings rise in Q3 results

TORONTO — An earnings boost from wider margins helped push up shares of EQ Bank owner Equitable Group Inc. by more than 12 per cent Wednesday.

The jump came as the bank reported record third quarter earnings of $77.6 million, up from $72.5 million for the same quarter last year.

Earnings got a boost from a adjusted net interest margin of 1.94 per cent that was higher than any quarter in the bank's history and 0.13 of a percentage point higher than the last quarter.

The jump was also well ahead of the bank's 2022 guidance of flat to moderate growth.

“I think perhaps we were a touch cautious in projecting that to the Street until we actually saw it manifest," said Andrew Moor, chief executive, on an earnings call.

The bank benefited on the margins with a strategy of being more nimble and responsive to rising interest rates, he said.

"It's been a good management approach to take very little interest rate position."

The bank, which last week closed a $495 million takeover of Concentra Bank, saw its share close up $5.55, or 12.24 per cent, to $50.88 on the Toronto Stock Exchange on a day that saw markets generally down.

Earnings for the quarter ending Sept. 30 worked out to $2.22 per diluted share, up from $2.07 per share last year, while adjusted diluted earnings were $2.35 per share.

Analysts had been expecting adjusted earnings of $2.11 per diluted share, according to financial markets data form Refinitiv.

Scotiabank analyst Meny Grauman said in a note that while markdowns on Equitable's fintech investment portfolio did weight, it was more than cancelled out by margin expansion.

"While that charge did indeed come in as we had expected, it was overwhelmed by very significant sequential margin expansion and elevated securitization revenue that completely took us by surprise."

This report by The Canadian Press was first published Nov. 9, 2022.

Companies in this story: (TSX:EQB)

The Canadian Press