The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Geoffrey Kwan - RBC Capital Markets, Research Division - Analyst
: I had a question on the Alta part of your business. It just -- it appears that despite having the higher mortgage rates that we've seen and also relative
to prime borrowers and also perceived higher credit risk profile. How would you explain why your Alta borrowers so far haven't seemed to have
issues renewing the mortgages at these significantly higher mortgage rates?
Question: Geoffrey Kwan - RBC Capital Markets, Research Division - Analyst
: Okay. And just my second question was the adjusted efficiency ratio was just under 43% in Q2. Just wondering, bigger picture, as you pursue your
growth as we get through the Concentra integration, where do you see that adjusted efficiency ratio going over the medium term?
Question: Etienne Ricard - BMO Capital Markets Equity Research - Analyst
: On EQ Bank, you're expecting deposit growth to be in the high single digits this year, which essentially implies that EQ Bank as a percentage of
your mix should stay relatively flat. Now I understand it's a balancing act -- on one hand, you're offering -- offering the attractive rates and growing
deposits. But on the other hand, also leveraging that platform for NIM expansion. Looking part, how do you think about balancing those 2 given
we're in a higher and arguably more competitive deposit market today relative to a year or maybe 2 years ago?
REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us
consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.
AUGUST 02, 2023 / 12:30PM, EQB.TO - Q2 2023 EQB Inc Earnings Call
Question: Etienne Ricard - BMO Capital Markets Equity Research - Analyst
: Andrew, that was my next question. Actually, what do you see as the optimal balance between turn and demand deposits at EQ Bank? And how
should investors think about the resulting economics?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Sticking with the NIM theme. I just wanted to get a bit of an update, I guess, on the covered bond programs and success this quarter. What type
of cadence would you be expecting in size? Like I assume that demand remains strong from investors on that front. So I just wanted to get a sense
as to how you see that funding structure building over the next several quarters?
REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us
consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.
AUGUST 02, 2023 / 12:30PM, EQB.TO - Q2 2023 EQB Inc Earnings Call
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: I guess, why not more than once a year?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Okay. And as I think about the NIM going forward, I hear the guidance is consistent or I guess, flat for the rest of this year into next year. I'm wondering
why there wouldn't be more NIM upside to be expected in the upcoming quarters, at least this expanded Q4 quarter as mortgage prices or mortgage
yields that are rolling off or repricing now still at significantly higher rates, I would assume. So my view is that there would still be some NIM upside
here in the next couple of quarters as that mortgage yield repricing is higher and faster than deposit costs or overall funding costs are. So I'm just
want to get a little bit more color from you guys as to why you wouldn't expect more NIM upside here near term?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Yes. And I mean, conventional loans growing faster than residential loans or personal loans should support that NIM upside as well, at least that's
-- the guidance for the rest of this year looks...
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Okay. Good. Shifting to the credit side of the story. Someone touched on the commercial side, but I wanted to focus more on the personal loan
side and delinquency rates jumping up, still low levels, obviously, when we're talking about these delinquency rates, but the direction is obviously
unfavorable. So -- and we're kind of at a level now on personal loan delinquency rates that are higher than 2019. So I just wanted to get a little bit
more color from you guys on what you're seeing with those delinquency rates. Is there any characteristics or themes in those personal loans that
you're seeing that is driving higher delinquencies?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Okay. And just sort of following on that interest rate shock, I guess, if I look at the remeasurement of allowance for credit losses, a pretty big driver
of, say, Stage 1 and Stage 2 increases. Normally, I would attribute that to deteriorating macro assumptions, but it seems your macro assumptions
are actually improving. And so that would indicate that this is being driven by changes in credit risk. And so is it that interest rate shock that you're
baking in and overlaying some more risk attached to that? Or are there some other factors here that are playing into that increase in remeasurement
in stage 1 and stage 2 allowances?
REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us
consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.
AUGUST 02, 2023 / 12:30PM, EQB.TO - Q2 2023 EQB Inc Earnings Call
|
