Equitable Group Inc Q4 2018 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Nikolaus Priebe - BMO Capital Markets Equity Research - Analyst : Just a pair of questions then on the outlook that you've established for the year ahead. In the asset growth rate expectations that you have outlined for the alternative single-family portfolio, it looks like there's some embedded assumptions regarding market share. And there's a little comment suggesting that you're expecting market share gains this year relative to last. I'm just wondering if you could help us understand what factors might contribute to that -- it looks like pricing is pretty well aligned with the industry. So what other factors might contribute to the market share gains there? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MARCH 01, 2019 / 3:00PM, EQB.TO - Q4 2018 Equitable Group Inc Earnings Call

Question: Nikolaus Priebe - BMO Capital Markets Equity Research - Analyst : Okay. So that helps clarify. And then just on the -- I just also wanted to touch on the prime single-family segment. Obviously, a really large uptick in volumes in the fourth quarter. I guess, just a 2-part question. A, was that just a function of the more attractive spread environment that we saw for those assets? And then, looking out into 2019, a higher -- or a lower proportion is expected to be sourced through third-party channels. So I'm just wondering, what proportion, in 2018, would have been sourced through those third-party channels?

Question: Geoffrey Kwan - RBC Capital Markets, LLC, Research Division - Analyst : My first question is just the -- on the straight deposit, call it, proposals that came out in the past few weeks. If they do wind up being implemented as proposed, can you can comment on what impact, if any, it might have on EPS?

Question: Geoffrey Kwan - RBC Capital Markets, LLC, Research Division - Analyst : And just my second question is, when I take a look at your business over the past year, year and a bit, you've branched out into reverse mortgages, the CSV line of credit, doing some specialty lender loans and now with the Bennington. Now, granted, almost -- pretty much all of them are very small loans starting from scratch in many cases. But can you talk about how you're managing the risks of expanding into these areas and trying to grow these areas going forward, just given these aren't really areas I would say you necessarily had expertise historically?

Question: Geoffrey Kwan - RBC Capital Markets, LLC, Research Division - Analyst : Got you. And I just want to make sure. So it's essentially kind of grow these slowly, methodically to make sure you get comfortable with the risk. So do you have to hire people externally who may have had some expertise in some of these different product types?

Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst : First question is related to some somewhat high-level commentary in the MD&A regarding AIRB and the significant impact that could have and potential benefits. Can you -- are you able to expand upon that comment and maybe provide some of the other factors that led you to include that statement in the MD&A this time around?

Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst : Okay. And just a quick follow up on that. Is it time and provability of your models that is the biggest constraint from an [honesty] perspective would you say? And where would you think you are in terms of that timeline? It sounded like, from the MD&A, that it was kind of like end of 2020 where you might be able to at least get some visibility on implementation. Is that based around that sort of feeling of timing...

Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst : Okay. Next question is around the leverage ratio dropping to 5% in this quarter. In past years, you had some strategies to sell some securitized -- or not sell them, I guess, but execute some transactions to de-recognize some securitization transactions. Is that something that is on the agenda at this point, given where leverage is sitting? And are there any strategies or factors to consider in looking at that ratio?

Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst : Okay. And then my last question is just around Bennington. I just want to get a sense as to the NIM guidance around 7% for Bennington. When the transaction was first announced I think I kind of got to about a 9% or a little bit higher than that NIM as an estimate based on like a return on without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MARCH 01, 2019 / 3:00PM, EQB.TO - Q4 2018 Equitable Group Inc Earnings Call invested capital metric. So I'm just wondering, what kind of changed or transpired over -- since this acquisition to sort of drive a little bit of a lower NIM?