EQB (TSE:EQB) Chief Executive Officer Chadwick Westlake outlined the bank’s near-term financial priorities and longer-term strategic direction during a conference session, emphasizing a renewed focus on operating leverage, efficiency, and a return to a 15%+ return on equity (ROE) “North Star.” Westlake, about four months into the role, described 2025 as a “difficult year” marked by significant change and said the company is entering what he called “a new era for Canada’s challenger bank.”
2026 outlook: operating leverage and ROE remain central
In discussing expectations for 2026, Westlake said EQB is applying stronger discipline to expenses after what he characterized as an unacceptable dynamic last year, when expenses increased 12% while revenue declined by 10%. He said EQB has “rectified that” and expects investors to begin seeing the impact in the first quarter.
He also referenced the company’s outlook for 12% to 15% EPS growth and said EQB is targeting ROE of around 12%+ in 2026, growing from there as the bank works back toward 15%+.
Loan growth mix and margin expectations
Westlake said the bank continues to expect high single-digit to low double-digit growth in loans under management. He highlighted several areas shaping that growth profile:
- Continued growth in CMHC-insured multi-family lending, which he noted is a major component of the commercial business.
- Ongoing growth in reverse mortgages, which he described as a strong-yielding business.
- A more cautious posture in single-family insured lending, while expecting single-family uninsured to gain momentum, particularly in the second half of the year.
On net interest margin, Westlake said the bank expects consistency in 2026, citing a margin of around 2.01% in Q4 and noting the bank stabilized volatility experienced last year. He added that growth in certain categories, including insured multi-family, can have a larger impact on non-interest revenue.
Credit: reserves posture and expectation for improving PCL ratio
Westlake said credit performance and provisioning remain key focus areas for management. He described a “loan by loan” review conducted by the new leadership team to build conviction in the bank’s credit posture and reserves, within the constraints of IFRS 9 accounting.
While he said EQB is not expecting credit conditions to improve “dramatically,” he added the bank believes it exited 2025 “from a position of strength” and is reserved for the possibility of a more recessionary environment. He said he expects EQB’s provisions for credit losses (PCL) ratio to improve in 2026 versus 2025, with sequential improvement through the year, including in both single-family and commercial portfolios.
Addressing single-family mortgage performance, Westlake said the bank has not identified anything systemic in the portfolio. He noted the losses that emerged last year were more unusual for EQB and were concentrated in a limited number of loans, pointing to approximately “50–60 loans” out of about “63,000” in that portfolio. He said those cases involved larger property price declines, citing “30%–35%” declines in certain instances, coupled with borrower stress. He added that EQB expanded its coverage ratio by roughly 10–15 basis points during Q4 and said his expectation would be improvement in Q1 over Q4.
Equipment finance: improved mix, but volatility remains a concern
Westlake said EQB has adjusted the risk posture of its equipment financing business, noting a shift away from long-haul trucking exposure. He said the long-haul portion of the book has moved from closer to 60% previously to “maybe 25% or so” today, with a more significant portion now characterized as prime.
He also cited the segment’s contribution to provisioning trends, saying equipment financing represented about 80% of EQB’s PCL in 2024 and around a third last year. Westlake said he expects continued improvement, while acknowledging that equipment finance still carries higher credit losses than other books and can be more cyclical than the bank might prefer.
PC Financial acquisition: scale, omnichannel presence, and product expansion
Westlake emphasized the strategic importance of EQB’s recently announced acquisition of PC Financial, calling it a transformational transaction that will make EQB “one of the most unique challenger banks in the world” and “omnichannel for the first time.” He framed the deal around three themes: scale, capability, and value.
On scale, he said EQB expects to increase from nearly 800,000 customers to about 3.5 million, while also linking EQB to the PC Optimum loyalty ecosystem with 17.5 million members. He highlighted planned in-store presence across 2,500 stores and operation of 180 device pavilions, noting that “seven to eight million people visit per week.”
On capabilities, he said the acquisition adds payments and credit capabilities EQB has discussed for years, including a major credit card portfolio he described as “one of the biggest” in Canada and “80% prime, super prime.” He also noted alignment between the companies’ technology environments, including that both operate on the same core banking platform and Microsoft Azure.
On financial expectations, Westlake said EQB disclosed “conservative” synergy assumptions of about CAD 30 million in cost savings, or roughly 7%, and said the deal is expected to clear a 15%+ ROE hurdle even under “rudimentary” assumptions. He pointed to potential upside from funding and cross-sell opportunities, citing PC Financial’s day-to-day offering launched in 2024 that he said added CAD 800 million in deposits and “a few hundred thousand” deposit customers in a short period.
Westlake also discussed the deal’s physical presence strategy, saying he does not believe challengers need traditional branches but sees value in “the right amount of physical” presence through economical in-store pavilions and ATMs. He said there were no early plans to expand beyond the footprint being acquired, while noting the potential to build customers through those sites.
Additionally, he highlighted an insurance distribution component tied to the partnership, describing it as referral-based and ROE-accretive without taking property and casualty risk. He said the business has grown to more than 65,000 customers and over 90,000 policies.
Looking ahead, Westlake said wealth remains a strategic gap and suggested EQB is more likely to “buy and partner versus build” to broaden investment offerings, while stressing the first priority is to close and integrate the PC Financial transaction.
On capital deployment, Westlake said EQB is “very well capitalized” and intends to put capital to work through organic growth, dividends, and buybacks. He referenced an enhanced normal course issuer bid and said EQB entered an automatic share purchase program for the first time, allowing repurchases through blackout periods. He said EQB has bought back more shares in recent months than in its combined history, describing the stock as “significantly undervalued.”
In closing remarks, Westlake said EQB is focused on reigniting its core franchise, taking the challenger bank model to its “full potential,” and optimizing capabilities to return efficiency as a competitive advantage, while moving back toward a 15%+ ROE threshold.
About EQB (TSE:EQB)
EQB Inc formerly Equitable Group Inc trades on the Toronto Stock Exchange TSX: EQB and EQB.PR.C and serves over 360000 Canadians through its wholly owned subsidiary Equitable Bank Canadas Challenger Bank. Equitable Bank has grown to become the countrys eighth largest independent Schedule I bank with a clear mandate to drive real change in Canadian banking to enrich peoples lives. At Equitable Bank we are as invested in our employees as we are in our business. Thats why we are consistently recognized as one of Canadas Top Employers a rating that comes from our 1300+ employees.
