Equitable Group’s Q4 Results Include 50% Dividend Hike
Equitable Group capped off 2021 with its “best-ever” fourth quarter, which saw earnings up 12%.
The alternative mortgage lender reported a 19% increase in originations in Q4 and a 31% jump in total net income for the year. Single-family loan balances were up 30% year-over-year to $14.4 billion.
“Once again, the talented members of the Equitable team punched above their weight to exceed the ambitious growth targets we set by a wide margin,” Equitable’s President and CEO Andrew Moor said in a release. “We leveraged our differentiated service and products for personal and commercial customers, including our EQ Bank fintech capabilities that now serve more than 250,000 Canadians and are creating real change in digital banking.”
As part of its earnings release, Equitable announced it will raise its quarterly dividend by 51%, effective in Q1. This is the first hike to the bank’s dividend since March 20, when OSFI temporarily restricted all federally regulated institutions from increasing regular dividends, undertaking common share repurchases and raising executive compensation.
Highlights from the Q4 earnings report
Q4 net income: $72.5 million (+2% YoY)
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 mortgage loans: $247 million (+325%)
Notables from its call
Total loan growth in 2021 was 16%, above Equitable’s 8% to 12% guidance, noted Chief Financial Officer Chadwick Westlake.
Westlake said the bank had a “bias to conventional lending,” which rose 31% in 2021 to $21.1 billion.
“A big storyline was the growth in Equitable’s alternative single-family business,” Westlake said. “That loan portfolio balance grew 30% year-over-year to $14.4 billion, surpassing 2021 growth guidance of 12% to 15% by a wide margin.”
Commenting on Equitable’s continued growth in its reverse mortgage portfolio, Westlake said, “We continue to really like our prospects here because of recent gains in share in Canada’s growing population of seniors, many of whom will achieve the age at home with the help of a reverse mortgage. Equitable is quickly taking a larger piece of this segment in Canada, as evidenced by growing originations. Adding 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 was up 17% for the year, driven by a 10% increase in average assets and higher net interest margin. “As expected, the big driver of NIM growth in both Q4 and for all of 2021 was a planned shift in asset mix toward our higher-yielding conventional loans,” Westlake said.
Equitable released $7.7 million from its provisions for credit losses (PCL) in 2021, $1.4 million of which was released in the fourth quarter.
Because of Equitable’s current acquisition of Concentra Bank, executives were unable to field questions from analysts on the call.
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