EQB Inc.

Good morning ladies and gentlemen welcome to EQB's earnings call for the first quarter of 2023 being held on Wednesday May the 3rd 2023 at this time all your lines are in listen-only mode later we will conduct a question-and-answer session for analysts and instructions will be provided at that time on how to queue up It is now my pleasure to turn the call over to Richard Gill, Vice President of Corporate Development and Investor Relations at EQB. Please go ahead, sir.

Thanks, Michelle. Good morning, everyone. Your hosts today are Andrew Moore, President and Chief Executive Officer, Chadwick Westlake, Chief Financial Officer, and Ron Trach, Chief Risk Officer. For those on the phone lines only, we encourage you to log on to our webcast as well to review our accompanying quarterly investor presentation. The presentation includes on slide two, EQB's caution regarding forward-looking statements, as well as the use of non-IFRS measures on this call. All figures referenced today are adjusted, were applicable or otherwise noted. It's now my pleasure to turn the call over to Andrew.

Thanks, Richard, and good morning, everyone. This was a milestone quarter for EQB. Our direct customer relationships surpassed half a million. We achieved more than $100 million in quarterly earnings for the first time. Performance allows us to see how strong we've become as a bank. We marked our first quarter of results with Concentra, which is already proving to make Equitable an even better bank. We are particularly enthused by our engagements with credit union partners with whom we share a core customer service and challenger philosophy. And EQ Bank was named best bank in Canada by Forbes on their annual ranking of world's best banks for the third straight year. You would expect me to attribute performance, including ROE of 16.9%, to our differentiated value creation approach, long-term strategies, and award-winning digital capabilities, and I will. But these accomplishments are rooted in the hard work of our team across Canada in keeping customer service at the very forefront, while very effectively managing risks and opportunities. Thank you all. Understandably, our business outlook remains positive, and I will speak to it shortly. But before that, I want to acknowledge the continued strain on some banks outside Canada over the past couple of months. We manage our risks well and have made additional disclosures in this quarter's MD&A to help investors understand why that statement is true. On credit, I want to offer additional context on our commercial real estate lending. With approximately $26 billion in loans under management, I am proud of our commercial loan portfolio and the team driving its diversified business. Here we prioritize lending against multifamily rental properties, including affordable housing, where demand is strong and resilient. We're the largest securitizer of CMHC multi-unit mortgages in Canada, and over two-thirds of our commercial loans under management are insured by CMHC. On uninsured commercial loans, we require strong personal and corporate guarantees and restrict LTVs. With heightened focus on the risks in the office property market, you should also take comfort that less than 1% of total bank assets are loans to office properties. Of that small portfolio, the average LTV is 59%, and even more protection comes from our focus on vocational offices occupied by dentists, doctors, and other service providers. These offices are vital to the delivery of patient care and the generation of income for their tenants who cannot displace physical space by working from home. Our exposure to hotel, shopping malls, and big box retail is negligible, not a lending priority, and far less than 1% of assets. Commercial banking represents about half our earnings and is a proven business worthy of shareholder confidence. When it comes to liquidity management, we always operate prudently and well above regulatory guidelines, and even higher than bank peers from our review of their disclosures. Great execution of our multi-year strategy to diversify our sources of funding has added further strength and stability. If you're aware of the growth of EQ bank deposits, What you might not know is that we generally limit EQ bank deposits to $200,000 per account. Our approach effectively reduces concentration exposure and runoff risks, while giving our customers confidence a large part of their money is protected by CDIC. We believe strongly the importance of CDIC-insured deposits, and we've taken a public stand advocating for higher coverage limits. I'm pleased to see others take up this cause in the past few weeks, 95% of our deposits are term or insured. I can assure you the positive trends in deposit growth and stability continue today, recognizing our quarter ended March 31st, and April continued to reflect strain on some banks locally. What I'm saying is, bring you out to date, you would see no deterioration on liquidity. Chadwick will add more context on liquidity and funding in his remarks. The last point I want to touch on is interest rate risk. This has been a deep well of troubles at some U.S. regional banks. Our advantage is derived from how our Treasury team manages interest rate risk in the banking book, in alignment with our low appetite for market risk. We operate with a target duration of equity of approximately one year as a means of tightly controlling exposure to interest rate interest movements. Another way to look at it, we don't take a view on rates. We consider the sensitivity of changes in economic value equity to be the most important measure. Table 19 of Q1 MD&A shows our sensitivity modeling to immediate and sustained interest rate increases and decreases. Here you will see that 100 basis point increase in interest rates, the EV impact of the percentage of common shareholders' equity would only be 1%. This demonstrates very well-managed interest rate exposure. Turning now to our perspective on the Canadian housing market. With the Bank of Canada holding its policy rate steady, we're already seeing signs of price stabilization and increased activity in the housing market. We expect this to continue. In fact, it was very encouraging data from the Toronto Real Estate Board just yesterday confirming this view. In Q1, uninsured single-family origination volumes were $1.1 billion, and the portfolio grew 1% over Q4, or 33% year-over-year, to $19.2 billion, assisted by lower attrition, aligned with our expectations for the first half of 2023. Certainly, Alberta and British Columbia have been brighter spots in the national picture. We had an excellent quarter in multi-unit and continue to see stable growth within the conventional commercial. In short, multi-unit mortgages under management increased by $992 million this to $17 billion, although the on-balance sheet amount was lower due to higher securitization under CMHC's programs and derecognition in the quarter. All in, we are holding to our overall commercial portfolio growth guidance. For EQ Bank, it's particularly exciting to see breakthrough progress unfold in customer engagement with our EQ Bank payment card, now in the hands of more than 40,000 It's already been used in over 115 countries. Our successful Quebec launch and the continued success of our MakeBank campaign. Hopefully you've had the chance to see our marketing investments at work. Our MakeBank campaign brings to life just how fed up Canadians are with all the takes and happens in the world, from surge prices to bank fees, and shows how eQBank is here to help them. MakeBank. with no fees and high interest on everyday banking. It's really working. Millions of Canadians have seen it at key moments from the NHL playoffs to riding the streetcar to work. We are building franchise value and phenomenal brand recognition, creating demand with great early payback. Forbes once again named EQ Bank Best Bank in Canada on its curated list of the world's best banks for the third year running, with customers ratings especially highly for digital service. driving home the point that we have something very special going on. We're consistently adding hundreds of new accounts every day, such that EQ Bank's customer count is now reaching 350,000. This growth in customer reach and public profile has been coupled with customer engagement at a record high of 51%, and transactions increasing 54% year over year. Giving customers a physical EQ Bank to hold in their hands and wallets is reassuring and provides tactile proof that we are real and substantial. This is helping us drive the effectiveness of rabitizing. We're also seeing more Canadians doing direct payroll deposits, another tangible sign of growing confidence and awareness that this is the very best digital bank in Canada. Next up is the launch of Reiki Bank mobile wallet for the card, which we plan to have in customers' hands this summer. I'll profile the value of that development on our next call. I can assure you that when it comes to credit, liquidity, and interest rate management, we are as prudent as they come, and we have been for years. Exceeding $100 million in quarterly earnings is a special milestone to me, as I remember reporting earnings of $8 million in Q1 of 2007, and as the newly appointed CEO, thinking that was pretty damn good. But what's even better is that the more we've grown, the more evident it is that the bank's approach to both managing risk and bringing new forms of value to our customers works. We plan to keep following this philosophy. And now Chadwick.