EQB Inc.

Welcome to EQB's earnings call for the fourth quarter of 2023 on Friday, December 8th, 2023. At this time, you are in a listen-only mode. Later, we will conduct a Q&A session for analysts. Instructions will be provided at that time. It's now my pleasure to turn the call over to Sandy Deauville, Vice President of Investor Relations and ESG Strategy for EQB.

Thanks, Lyra. Your hosts today are Andrew Moore, President and Chief Executive Officer, and Chadwick Westlake, Chief Financial Officer. Also with us is Marlene Lenarduzzi, our new Chief Risk Officer. Marlene joined in October with more than 25 years of experience in risk management. Most recently, Marlene was head of Counterparty Credit Risk Management and Market Risk Strategic Initiatives at BMO Financial Group. Expect to hear from her on these calls in future quarters. Welcome, Marlene, to the bank. For those on the phone lines only, we encourage you to also log on to our webcast to view our accompanying quarterly investor presentation. There, on slide two, you'll find 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 where applicable or otherwise noted. It is now my pleasure to turn the call over to Andrew.

Thanks, Sandy, and good morning, everyone. Before jumping into 2023 performance highlights and our 2024 guidance, I want to acknowledge a few important milestones in our long and successful corporate history. Ten years ago, Equinor Trust received its banking license and became Equinor Bank to appeal to a new generation of financial services customers. 2024 will mark our 20th year as a TSX-listed company. And yesterday, EQB began reporting on the same fiscal year basis as the Canadian banking industry. These 10 years included the launch and scaling of EQBank, the best digital platform in Canada, expansion of our leadership positions in single-family and multi-unit residential lending, the launch of decumulation lending, and the accretive acquisitions of Bennington Financial and Concentra Bank. These and many other developments define and reflect the organization we are today, purpose-driven to enrich people's lives, managed with a strong risk culture, technologically advanced, and more capable than ever. A then and now picture of Equitable Bank's assets and deposits demonstrates our transformation in scope and scale, becoming Canada's seventh largest bank. And with that, the shareholder returns at EQB are leading compared to banks on the TSX and S&P 500. Our progress has been accompanied by annual earnings growth, the consistent achievement of ROE above 15%, strong credit performance, and an unwavering focus on doing the right thing with customer service as the beating heart of our approach. These calls are intended primarily to help our investors and analysts sort out the underlying financial performance over recent history. And Chadwick will provide that insight shortly. While the noise that inevitably accompanies a change in year-end makes comparisons more difficult, EQB clearly delivered great financial results in 2023. In fact, our EPS performance over 10 months surpassed what we achieved in 12 months in 2022. What I'm most proud of is that through this 10-year journey, we've kept our clear focus on building a better bank that improves our customers' lives. This is a hard culture and mindset to maintain, and one that is now embedded in our DNA to provide enduring competitive advantage. Equivalent Bank's defining strengths position us as the challenger bank in Canada, a category we established and defined, with customer upside that is different and better than our industry peers. I'd like to thank the entire Equitable team for delivering great results again this year, with a special shout out to those whose efforts were required to transition our reporting year. Candice Banks got together in 1965 and agreed that October would be their common year end, apparently as a favor to overworked accountants to shift year end reporting away from the times that these firms are most busy. This change predated Equitable's founding by five years. Now that we are firmly established as a distinctive player in the banking industry, I think our industry analysts will be pleased with the ability to make side-by-side comparisons that include Canada's challenger bank going forward. Now to performance highlights and our outlook. I speak regularly to our focus on value creation, discipline on capital allocation, and an all-star objective of generating more than 15% return on equity. We achieved our ambition again in fiscal 2023, with 16.5% ROE in the fourth quarter, ending at 17.1% for the 10-month fiscal period. This takes our 10-year ROE average to 16.3%, which we believe is leading amongst Canadian banks. Our priority for 2024 is to again deliver ROE of greater than 15%, which is performance that rewards shareholders for their ownership, while being consistent with investing in the capabilities acquired by the business to flourish in the years to come. We ended the year with a record $111 billion of assets under management and administration, up 8% in just 10 months. This continued growth demonstrates the strength of our brand, the trust customers have in us, and the value of delivering innovation and service excellence in underserved customer segments. On November 1st, we marked one year since our conceptual bank acquisition, which gave us additional scale advantages and made Equitable Bank the seventh largest bank in Canada. I'm pleased to say we outperformed our key business case targets ahead of schedule. We're also continuing to find new ways to serve our credit union partners. Recent expansions of securitization, consulting, foreign exchange, and digital banking services create the means for us to do even more for them and their 6 million members. With the experience gained in working with the people who joined Equitable through the acquisition, we are also confident that Consentra Investment is poised to continue to deliver great results for shareholders in the form of earnings accretion, non-interest revenue growth in 2024. Foundational to the long-term franchise value and growth of Equitable Bank is EQ Bank, our digital bank. Here we had another big year on the back of the highly successful MakeBank brand campaign and new service innovations. The Forbes number one rated bank in Canada for three years running added another 93,000 customers in just 10 months, rose to 30%, taking us past the 400,000 mark with hundreds signing up daily. You may recall that we launched the EQBank payment card at the beginning of 2023. Just a few weeks ago, the card launched in Quebec. This payment solution has been game-changing for our customers and EQ Bank as a purely digital bank. Customer enthusiasm for our first-to-market, all-digital, first-home savings account also surpassed our expectations. We could not be more excited about what lies ahead for EQ Bank in 2024. Early in the new year, you will see us expand our brand voice with a message that builds on our learnings from 2023. In 2024, we'll be the first all-digital business bank for small businesses, giving them a better way to bank. These initiatives will help us achieve our 30% to 40% EQBank customer growth guidance. Another business that is important to us is commercial banking. We operate through seven lines of business, and our on-balance sheet loan portfolio grew to $15 billion in 2023. The vast majority of our commercial lending supports real estate where people live. We are a leader in funding the development and renovation of apartments, construction of condominiums, and other types of multi-unit residential real estate properties. In order to help Canada close a significant housing supply gap, and as a matter of strategy and risk management, we focus on lending in major urban markets. We have been a reliable lender in this space for decades and are a significant player in in the market to securitize insured multi-unit loans through CMHC-sponsored programs. You'll see in our MD&A guidance that our expectations for multi-unit lending continues to reflect a bullish outlook, and with it, an expectation that we will again realize strong earnings from the associated securitization activities. Recent actions by the Canadian federal government support our guidance, including the increase in the Canada Mortgage Bond Program to fund multi-unit projects sponsored, insured by CMHC, which the government believes will stimulate up to 30,000 more rental apartments being built per year. In our MD&A, we described the composition of our commercial portfolio and underscored that office buildings, shopping malls, and hotels represent about 2% of our loan assets. In personal banking, our strategic focus has remained particularly on growing Equinor's de-accumulation lending business, particularly reverse mortgages. Our Talking House TV campaign debuted this fall, and for the first time we established a direct-to-consumer connection. I'm delighted to note that decumulation lending assets now total $1.5 billion, up 43% in just 10 months. We expect this growth trajectory to continue in 2024 as Canadian seniors look to Ecuador Bank to help them tap the wealth that their homes represent. For single-family uninsured lending, We experienced moderate growth aligned to our 2023 guidance, with assets increasing 3% from year-end 2022. You'll recall that in both June and July, the Bank of Canada raised the overnight rate with a discernible market impact. On the flip side, loan retention is much higher, and this is a tailwind that we expect to continue into 2024. For those of you worried about tail risks, I would point out that over... 80% of our uninsured single-family mortgage customers had their mortgage originated or renewed in this higher interest rate environment. As you think about risks, I urge you to review the MD&A, showing how the bank's historical loss rates over the past 10 years, including 2023, have always been far lower as a percentage of total loan assets than Canada's peer banks. I'm also excited about our announced agreement to acquire 75% of ACM advisors. Beyond adding about $5 billion in assets under management to EQB as a new subsidiary, separate and distinct from Equitable Bank, ACM brings us a new opportunity to enrich people's lives and a new source of non-interest revenue for EQB. We look forward to partnering with Chad Mallow, Chad Mercer, and the entire ACM team to build on their 30-year history of delivering value for institutional and accredited retail investors and commercial borrowing customers. Now over to Chadwick.