Challenger bank boosts single-family and insured lending while navigating revenue dip
Alternative mortgage lender EQB Inc. posted a strong quarter for loan originations despite reporting a dip in revenue and weaker net income for the second quarter of 2025.
For the quarter ended April 30, 2025, EQB recorded adjusted net income of $94.2 million, down 15% year over year, and reported net income of $90.3 million. Revenue slightly declined to $316 million, down 0.2% compared with the same time last year.
However, net interest income rose to $271.1 million, a 1% increase y/y, supported by a 13-basis-point quarterly increase in net interest margin (2.20%).
Adjusted diluted earnings per share stood at $2.31, down 18% year over year, while the bank’s book value per share rose to $80.99, up 10% over the past 12 months.
“Amid economic uncertainty globally and in Canada, EQB experienced one of our strongest quarters for uninsured single family loan originations,” said Andrew Moor, president and CEO of EQB. “Our fundamentals remain resilient despite credit provisions made necessary by tariff-driven changes in the economy and the residual impact of higher interest rates on certain borrowers.”
The company declared a $0.53 dividend per share, an 18% increase compared with 2024’s second quarter, and completed a $200 million subordinated debt issuance. EQB’s total capital ratio stands at 15.6% with a CET1 ratio of 13.2%.
Loan origination
Uninsured single-family originations surged 28%, contributing to total residential lending balances of $20.6 billion, up 4%. EQB emphasized high-quality asset growth with average loan-to-value ratios at 63% and consistent borrower credit scores of 711.
Decumulation lending, including reverse mortgages and insurance loans, hit $2.5 billion, rising 45% on an annual basis.
On the commercial side, CMHC-insured multi-unit residential lending rose 29% to $29.1 billion, while insured construction lending grew 31% to $3.3 billion. Over 80% of EQB’s commercial lending portfolio is now insured through federal programs.
Provisions for credit losses (PCL) totaled $30.2 million, split evenly across business lines. Stage 3 provisions rose 77% quarter over quarter. The impaired loan ratio increased to 156 basis points, up from 92 bps a year earlier, largely due to two new commercial impairments.
Net allowances for credit losses rose to 29 bps of total loan assets, up from 23 bps in Q2 2024. The rise was driven by downgraded GDP and employment forecasts linked to global tariffs.
Long-haul transportation exposure within the equipment financing portfolio was de-risked, now representing 33% of the portfolio, while prime leases grew to 51%.
Q3 outlook
Executives remain optimistic about performance in the second half of 2025, citing strong loan pipelines and insured securitizations. The newly unveiled EQ Bank Tower in Toronto underscores the company’s long-term investment in operational infrastructure.
Rad next: EQ Bank moves into new Toronto headquarters as lending grows
“In the second quarter, we responded to an increasingly volatile environment by focusing on unique, high-quality market opportunities,” EQB head of finance David Wilkes said in a media release. “By focusing on our fundamentals... we are well-positioned to navigate uncertain economic conditions, target growth opportunities and sustain EQB’s long track record as an industry performance leader.”
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