EQB Inc.

Welcome to EQB's earnings call for the second quarter of 2025. This call is being recorded on Thursday, May 29, 2025. At this time, you are in a listen-only mode. Later, we will conduct a question-and-answer session for analysts. Instructions will be provided at that time. It is now my pleasure to turn the call over to Maggie Hall, Director of Public Relations and Communications. Please go ahead.

Thank you, Jenny, and good morning, everyone. Your hosts today are Andrew Moore, President and Chief Executive Officer, Marlene Leonard-Ducey, Chief Risk Officer, and David Wilkes, Vice President and Head of Finance. For those on the phone lines only, we encourage you to also log on to our webcast and view our presentation, which may be referenced during the prepared remarks. On slide two of our presentation, you'll find EQB's caution regarding forward-looking statements, as well as the use of non-IFRS measures. All figures referenced today are on an adjusted basis where applicable unless otherwise noted. With that, I will turn it over to Andrew.

Good morning, everyone, and thank you, Maggie. Before diving into quarterly numbers, some initial observations. While the fundamental capacity of our business to grow profitably is unchanged, I would be remiss not to acknowledge that this was a period of unusual volatility. The confidence-altering threat of cross-border tariffs and dominated the narrative and dictated many customer decisions in Q2. The situation will be remedied, but it may take time. We trust that the resolution brings with it some benefits occurring to Canada from more diversified trade and the creation of a very necessary pro-growth economic agenda in Ottawa. In the meantime, while being ever mindful of near-term risks, we remain confident in EQB's prospects and for good reason. We have market-leading franchises in digital banking, single-family residential, and CMHC-insured multi-unit lending, with great businesses in decumulation lending and across our portfolio of commercial businesses, supported by a really strong capital position with excellent liquidity. In a more muted market, these positions will serve us well, and the Q2 helped us deliver one of the stronger periods for loan originations with market share gains. At a high level, our approach and record renewal rates helped our single-family uninsured portfolio grow at 2% quarter-over-quarter, or $379 million. Our longtime leadership in serving Canada's apartment sector was again demonstrated in Q2, with the insured construction portfolio increasing 10% quarter-over-quarter and term loans under management increasing 6% over the same time period, and nearly 29% year-over-year. We did see a decline in gains on securitization from CMHC-insured multifamily, but we expect higher earnings in Q3 and Q4 from this business. More detail on EQ Bank later, but it continued to grow meaningfully, such that over 560,000 customers now enjoy our differentiated Challenger Bank offerings, and deposits grew to 9.4 billions. Objectively, there is much to celebrate. In a business like ours, we do not expect too much quarter-to-quarter volatility in earnings, given predictability in most elements of net interest income and non-interest revenue, which tend to grow at a stable pace. Variances in earnings when they occur tend not to be terribly material when considered individually, but they can add up when they coalesce and point in the same direction in a single quarter. That's what occurred in Q2, as our securitization business produced lower earnings than in Q1. Our common equity was above target, weighing down ROE, and we incurred higher levels of other variable spending, such as marketing and other expenditures, to drive EQ bank account acquisition. When combined with elevated credit losses, we are the first to acknowledge our financial results were out of character. We certainly expect Q3 and beyond to show better performance even as economic uncertainty may continue to drive credit provisions. The bottom line is that we are well positioned for the future and expect over the medium term we will generate over 15% ROEs consistent with our historical record. Now to the numbers. Against our financial priority of generating over 15% ROE, We fell short at 11.9% for the quarter and 13.6% for the first half of the fiscal year, with EPS of 231 and 529, respectively. During the last part, to anomalous demands our sector and the broader economy face and the naturally variable factors I mentioned. No conversation about the banking sector through this demanding period of uncertainty can be made without acknowledging the credit environment, which Marlene will walk us through in a moment. PCLs for our lending businesses in the quarter were up at $29 million. This figure is split nearly evenly across each of our business lines and broadly reflect the demands of Q2's unique macroeconomic landscape. Stress on the vintage of SFR borrowers and pressure in the commercial portfolio, all collectively shadowing otherwise strong core performance. Consistent with our expectations, our single-family residential originations increased 28% compared to last year. We won market share and picked up business in line with our risk appetite. This was achieved even as we dialed in our credit policies to manage risk in a less certain economic environment. We did not stretch our standards to achieve growth because we never do. By maintaining a broad presence across Canada, while prudently managing risks associated with house prices, we continue to build a strong portfolio. with good risk-managed earnings potential. SFR portfolio growth was also supported by one of the stronger periods for low retention for the bank, a function of good customer service as well as economic factors. We naturally observe the housing market very closely. In line with market forecasts many of you will be familiar with, our outlook now reflects lower housing sales than when we last reported. While the future still holds some degree of uncertainty and we have adjusted our tone to be slightly more cautious of the result, let me be clear that we remain confident that the demand for housing is there and that we will continue to gain share in the markets that are important to us. As an encouraging point of example, uninsured single-family loan application volumes in the first few weeks of May were up 17% from last year at the same time. Deaccumulation lending continue to enjoy strength in demand as we advance our presence in a market that's serving the growing population of Canada's retirees. Growth in CMHC insured multi-unit residential was a highlight for our commercial banking business. Cash flow in multi-unit apartments are attractive to own, and we're pleased to support this asset class that has yielded strong returns through many economic cycles. I'll have more to say about our outlook and innovation agenda, including for EQGAP Bank. But first, I'd like Marlene to review credit performance and David to provide a quarterly summary.