EQB (TSE:EQB) CFO Anilisa Sainani said the company’s acquisition of PC Financial represents a major expansion in scale, customer reach and revenue diversification, while management remains focused on integration execution, credit normalization and operating leverage.
Speaking at a CIBC financials conference hosted by Senior Financials Analyst Paul Holden, Sainani said EQB welcomed PC Financial’s team and customer base on July 1. The transaction added approximately 4 million customers, which she described as a fivefold increase from EQB’s customer base a year earlier.
Integration Begins With Customer Focus
Sainani said EQB began preparing for the transaction when it was announced in December, immediately establishing an integration management office. While the company’s July 1 priority was to avoid disruption, EQB also moved quickly to introduce its brand through pop-up stores and promotional events.
EQB previously had no physical presence, she said, but now has access to 180 stores across the country. The company saw strong credit-card customer acquisition during the first month after closing, along with record-high insurance policy activity. EQB’s insurance operation is commission-based and does not retain underwriting risk, Sainani said.
Management is monitoring measures including deposit stability, customer retention and service levels on a weekly or, in some cases, daily basis. Sainani said EQB does not intend to rush the combination of the two customer groups and will focus on how customers experience the brand and product offerings.
“This is a deal that’s not motivated by cost synergies, although they are there,” Sainani said. “This is all about the customer.”
She added that EQB and PC Financial use the same technology stack, reducing some integration complexity, though she said bringing the operations together still requires careful execution. Daniel Rethazy, EQB’s executive vice president of personal banking, is leading the integration management office.
Deposit Growth and Revenue Diversification
Sainani highlighted the potential to deepen banking relationships with PC Financial credit-card customers. EQB’s lowest-cost retail direct deposits accounted for roughly 27% of its total deposit stack before the acquisition and had risen to 29% by the end of the third quarter, she said.
The company has also expanded its funding sources, including through Eagle’s Credit Card Securitization Trust. Sainani said EQB completed its first callable deposit note issuance earlier in the week at spreads below a comparable broker GIC for the same term.
The PC Financial transaction is expected to make EQB’s earnings less dependent on housing-related lending and spread income. Sainani said that revenue source accounted for about 85% of the company’s income a year ago. The acquired operations add credit-card fees, interchange revenue and insurance commissions.
PC Financial credit-card spending totals approximately C$32 billion annually, she said, while the insurance business includes commissions from about 90,000 policies.
“When you do have this one-in-25-year event, you have more resiliency, more stability, more opportunity for growth on the other side of your product shelf,” Sainani said.
On cost synergies, Sainani reiterated a target of C$30 million over the first few years after closing. She said EQB had already achieved 50% of that target during the first month following the acquisition, though she noted that some savings are easier to realize than others.
Credit Trends and Provisioning
Sainani also addressed investor concerns around elevated credit losses in EQB’s residential and commercial real-estate portfolios. She said the company’s residential lending book has average loan-to-value ratios of roughly 65% to 70%, meaning property values would need to decline substantially before credit losses occur.
She said early-stage delinquencies have generally been declining, despite some seasonal fluctuations, and losses in the single-family residential commercial portfolio remain concentrated in specific vintages and neighborhoods rather than spreading broadly across the portfolio.
While Sainani said it may be too early to declare an inflection point, she cited greater home sales activity and stabilization in housing prices as signs of improving conditions. She characterized current losses as cyclical rather than systemic and said the outlook for 2027 and 2028 appears more constructive.
In commercial lending, more than 85% of EQB’s portfolio is insured, Sainani said. New uninsured loan formations declined quarter over quarter in the second quarter, while only about two new formations emerged in the third quarter.
EQB has increased provisions on seasoned impaired commercial loans to reflect expected property values and extended workout timelines, she said. Carrying costs on impaired properties will continue until resolutions are completed, but management expects slower new formations than workout activity by 2027, which could lead to a substantial decline in gross impaired loans.
Growth Priorities
Beyond PC Financial, Sainani said EQB remains focused on its core residential and commercial lending businesses. In a slower origination market, the company is emphasizing renewals and market-share gains. She said EQB recorded its largest quarterly market-share gain in Ontario Alt-A mortgages during the most recent quarter.
The company also expects continued growth in reverse mortgages, which Sainani called a large and growing Canadian segment.
Looking ahead, Sainani said EQB aims to demonstrate neutral to positive operating leverage, normalized credit performance and wider brand recognition. She said greater awareness, an expanded product shelf and omnichannel distribution could support EQB’s path toward a mid-teen return on equity.
About EQB (TSE:EQB)
EQB Inc (TSX: EQB) is a leading Canadian financial services company with approximately $151 billion in combined assets under management and administration. It is the parent company of Equitable Bank, the country’s seventh largest Schedule I bank by assets, which operates EQ Bank, Canada’s Challenger Bank. Our purpose is to remake banking so every Canadian gets ahead, every day. Since 1970, we have built thoughtful financial solutions that serve more than 4 million customers, turning everyday moments into meaningful progress.
