EQ Bank reported 8% earnings growth in Q1 2025

EQB’s growth is slowing down, with EPS growing 8% YoY, compared to 12.6% in the past 5 years. This is not surprising given the sluggish Canadian economy and housing market. I believe the growth will recover as the economy gets better under a lower interest rate environment in the next few years.

Here are some highlights in this report:

EPS of $2.98 per share, up 8% YoY
Revenue of $323 million, up 8% YoY
Book value per share $79.71, up 12% YoY
EQ Bank customers grew 26% YoY to 536k
Total loan under management grew 8% YoY to $69.3 billion -ROE of 15.2%, better than most of the big 5 Canadian banks
Dividends increased 21% YoY, to $0.51 per share
EQB repurchased shares for the first time in Q1, bought back 275k shares, or 0.7% of shares outstanding
Revert mortgage portfolio continues to grow fast at 47% YoY to $2.3 billion
Total impaired loans grew another 10 bps compared to last quarter and now stand at 154 bps, which is not good to see. That said the impaired loan growth rate has been slowing down, and the management is confident about resolving the impaired loans with collections and reserves already set aside.

The estimated fair value of EQB is $99.56 using the DCF model, indicating a 9.43% CAGR. Here are the assumptions:

Latest TTM Net income CA$395.67 million
Net income growth rate of 10% (5YR avg of 14%)
2% Share dilution (5YR AVG 2.94%)
Future PE of 10 (5YR avg 7.9)
Discount rate of 10%

EQB shares look expensive compared to historical valuation, but still cheaper than other big banks. I will continue to hold all of my shares.

You can also see all my past EQB stock analysis using this link.

Holdings Disclosure

SoloFIRE EQB ownership: 7% of portfolio
SoloFIRE EQB Average Cost Paid: CA$61.91
Holding time: 4 years

For on-going changes of my holdings with in-depth analysis, make sure to check out my porfolio updates.

To keep track of my full stock portfolio and get live trade updates, please follow me on Blossom Social

Comments and Questions

Make sure to leave your comments and questions on my original Blossom post

DISCLAIMER: Solofire is not a registered financial advisor. This post contains author's personal opinion only and it should NOT be considered financial advice.