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: Nikolaus Priebe - BMO Capital Markets Equity Research - Analyst
: Okay. I just want to start with a pair of questions on just some of the guidance that you've established for the year ahead. It sounds like some of
the investments you've planned will cause noninterest expense growth to run ahead of revenue growth, at least in the short term. Just wondering
if you could provide a little context around whether you consider 2020 to be a bit of a peak spending year in that regard? And maybe just what
you would consider to be a good, I suppose, long-term goal in terms of efficiency ratio for the bank?
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.
FEBRUARY 25, 2020 / 1:30PM, EQB.TO - Q4 2019 Equitable Group Inc Earnings Call
Question: Nikolaus Priebe - BMO Capital Markets Equity Research - Analyst
: Got it. Okay. No, that's very helpful. And then just one other for me. There was a comment, I think, Tim, in your prepared remarks just about how
some of the larger banks have been renewing alternative boards and prime products and I guess, that's caused a bit of an uptick in the attrition
rate for the alternative single-family portfolio. I've always thought what kept the larger banks away from the Alt space was, I guess, in part, challenges
with the income verification for self-employed as well as some other factors. So do you get the sense that the larger banks are maybe willing to
accept lower, weakened business? Or I guess, I'm just looking for your read there, a little more insight on some of the competitive dynamics in that
space.
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Yes. First question is on the specialized financing, looks like $240 million now at the end of 2019. I think that's almost doubled. I could be wrong,
but correct me on how much growth there's been in specialized financing? And then if you could detail some of the underlying assets? I believe
this is a strategy that is lend to lenders. So maybe you could talk a little bit about what's going on in specialized financing?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Okay. Next question is just around the Bennington PCL ratio this quarter, above the 1.5% to 2% guidance. I mean, there could be some fluctuations
there, but maybe you can provide more color as to what drove that higher rate of provisioning this quarter? And why we should expect to see it
come back down?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Was that increase in impaired loans specific to any one industry?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Okay. Next question around the -- there was a comment in the MD&A that strategic deposits are a lot more stable than your other source of deposits.
Can you just refresh me on the rationale behind that or the explanation?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Okay. And can you just remind me, is this -- is there a handful of strategic deposit relationships or partnerships? Or are we talking like several dozen?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Very small number. Okay. And last one for me, and this kind of goes to the medium-term objectives and I think you started to allude to it a little
bit. But if I look out 3, 4 years from now in trying to achieve the CET1 ratio target of 13% to 14%, given the amount of internal capital generation
that's coming off these businesses based on the guidance, I mean, there has to be some form of share buyback built into those forecasts. So is that
a key component of driving EPS growth in the, let's say, 3, 4, 5 years as we get out that far? Or is share buyback something that could be coming,
I mean, as early as 2020 to help drive that EPS growth?
Question: Jaeme Gloyn - National Bank Financial, Inc., Research Division - Analyst
: Okay. So I guess the takeaway here would be that 2020 is probably a little bit early to be having these conversations?
|
