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Managed multi-unit loans increase 11 percent
Published on December 9, 2023 • Last updated 1 day ago • 2 minutes reading time
“We are definitely seeing strong demand from our customers to build purpose-built rental housing to address this housing shortage,” said Andrew Moor, chief executive of Equitable Bank. Photo by Tyler Anderson / National Post
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Alternative mortgage lender Equitable Bank’s parent company reported record annual results for fiscal 2023, with its fast-growing multi-unit lending business among the bright spots.
EQB Inc. has changed its reporting period to align with the rest of the Canadian banking sector, making comparisons with other periods difficult. But in its fiscal fourth quarter, which consisted of the four months ended Oct. 31, the company reported adjusted net income of $147 million and adjusted diluted earnings of $3.80 per share.
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For the 10 months ended October 31, net income was $371.59 million, an increase from $270.18 million for the full year ended December 31, 2022.
Equitable Bank said its commercial lending business primarily finances the development and renovation of rental housing and the construction of condominiums in Canada’s major cities.
The bank manages $20 billion in multi-unit loans, up 11 percent quarterly quarter over quarter and up 27 percent year over year, EQB CEO Andrew Moor said during the conference call.
Of that amount, $15 billion is through Canada Mortgage and Housing Corp.’s mortgage bond and NHA Mortgage Backed Securities programs. insured against payment defaults. The assets are recorded when they are securitized and sold, resulting in upfront returns without interest. In the fourth quarter, these revenues were $25.9 million and for fiscal 2023 they were $56 million, doubling year-over-year.
In August, CMHC announced that it was temporarily reducing dividend payments to the federal government and redirecting funds to support rental housing construction
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“We are definitely seeing a lot of demand from our customers to build specialty rental housing to address this housing shortage,” Moor said. “CMHC must retain capital on its balance sheet to support its housing support activities. It makes perfect sense to withhold the dividend in order to build up capital to better absorb any losses.”
During the bank’s fourth-quarter earnings call, Moor said the outlook for the division remains optimistic.
“(We expect) to continue to generate strong returns from related securitization activities, with actions by the federal government to support this guidance, including increasing the Canada Mortgage program to finance CMHC-insured multifamily projects, which the government believes that they will provide impetus.” “Up to 30,000 more rental apartments will be created every year,” he said.
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EQ Bank said its customer base grew nine percent since last quarter and 30 percent year-on-year. The report attributes the increase to the increasing popularity of the Savings Plus account, which functions like a high-interest checking account.
In addition, the launch of new digital offerings such as the EQ Bank First Home Savings Account (FHSA), EQ Bank Card and expanded services in Quebec contributed to this accelerated growth in daily account openings in 2023.
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