Q4 2025 EQB Inc Earnings Call

December 4, 2025

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 the more precise vice president and head of investor relations. Please go ahead.

Thank you Ludy and good morning everyone.

Your host for today's Q4 results, call our Chadwick Westlake president and CEO, Annalisa sinani, CFO and Marlene Leonardi cro. Also present for the Q&A session is Darren lurmer group head of Commercial Banking. After prepared remarks, we will open the lines for questions from our pre-qualified analysts. Please note that while we are excited about the acquisition of PC Financial today's call, including Q&A session, is intended to be focused on the Q4. And full year eqb results for those on the phone lines. Only, we encourage you to also log into our webcast and view. Our quarterly results presentation, which will be referenced during our prepared remarks.

On slide 2 of our presentation. You will find eqb caution, regarding forward-looking statements, which involves assumptions that have inherent risks and uncertainties, actual results May differ materially, I would remind listeners that all figures reference today are in an adjusted basis where applicable unless otherwise noted with that I will now turn the call over to Chadwick.

Thanks Lamar and good morning.

I appreciate everyone joining us during a busy earnings day and so soon after yesterday's call,

To stay on point for this call. I'm pleased to have fiscal 2025 behind us. It was a difficult year in 1 of the significant change for eqb.

That chapter is now closed.

And our incredible leadership team is energized and focused on tomorrow.

There were however, several notable accomplishments.

first while deemphasized, certain areas due to less attractive economics, we still achieved 10% year-over-year growth in total loans under management on the back of very strong, 36% year-over-year growth in our off-balance sheet cmhc, insured multi-unit, Residential Mortgage business,

Second, EQ Bank are Crown Jewel, continued to shine bright, achieving 18%, year-over-year growth in customers and 10% growth in deposits. With the Positive balances, ending the year at nearly 10 billion.

Third, we launched our small business banking offering in October bringing real competition, and positive change to an underserved Market that deserves better options.

This offering has all the Challenger features you would expect including full fully digital account opening, a competitive interest rate business gic's and no monthly fees.

I'm pleased to report that at the end of October, we were already at 140 million in business deposits. That's before dialing up marketing efforts.

Finally, we were named the top Bank brand in Canada by the financial times. The banker magazine, citing our status as best positioned to grow market. Share.

We have had plenty of moments of change in our history.

And each time we emerge even stronger.

I believe that is precisely how eqb is positioned now ready for our next and most significant chapter of growth.

I want to thank our deeply dedicated Challenger employees for their tireless work over the past year.

everyone is part of this team because they believe in our purpose and our ability to execute

I believe that applies to our long-standing and prospective shareholders as well.

This morning, I have a few key observations on my first 100 days as CEO.

When I rejoined, ekb in late August, I set out with a clear mandate from our board to develop a future focused plan that concentrates capital and talent at the point of highest return with a goal of achieving, our long-term potential.

With my leadership team, we've made a clear eyed assessment of our competitive strengths and growth opportunities strategies and supporting cost structure.

There were no preconceived notions, no sacred cows, only a pledge to make the tough decisions and execute with philosophy.

This resulted in a few early actions. First, I spent a lot of time traveling across Canada to meet hundreds of employees, Partners, Brokers and shareholders.

It is important to understand what people love about our company and where we can do better.

What I found was a Workforce that is energized as ever to win.

Plan that concentrates capital and talent at the point of highest return with a goal of achieving our long-term potential.

Full potential while returning it to our traditional Roe profile of 15 to 17% which is important to our shareholders.

With my leadership team, we have made a clear eyed assessment of our competitive strengths and growth opportunities strategies and supporting cost structure.

There were no preconceived notions, no sacred cows, only a pledge to make the tough decisions and execute with philosophy.

This resulted in a few early actions.

I also said coming into this job, we would return to efficiency as a competitive Advantage. We would complete our product shelf and move back to our industry-leading Roi profile, even with the competitive disadvantage of standardized Capital treatment.

I've also learned more about important areas for growth, that matter for Canadians.

First, I spent a lot of time traveling across Canada to meet hundreds of employees, Partners, Brokers and shareholders. It is important to understand what people love about our company and where we can do better.

What I found was a Workforce that is energized as ever to win.

importantly for example, are decumulation business, this portfolio increased 36% last year and remains poised to continue, delivering double digit growth supported by market, share gains and demographic Trends, including the movement to age in place

Second, my team dug deep into the fundamentals of our bank to reduce pressure points, specifically focused on margin.

Efficiency and credit.

Customers that love our products and services and conviction. And our ability to take our Challenger to its full potential. While returning to our traditional Roe profile of 15 to 17% which is important to our shareholders.

For margin. We took a closer look at our funding costs.

I also said coming into this job, we would return to efficiency as a competitive Advantage. We would complete our product shelf and move back to our industry-leading, or we profile even with the competitive disadvantage of standardized Capital treatment.

The intention of our bank is still to provide Canadians with a highly attractive everyday interest rate. However, we recognize that with the Bank of Canada moving interest rates down another 50 basis points in the quarter, we have to more dynamically adjust to our interest rate offering

I've also learned more about important areas for growth, that matter for Canadians.

It's all about striking. The right balance to ensure We are continuing to grow profitably. We'll expanding EQ Bank, deposits to become the largest part of our funding stack.

Importantly for example are decumulation business, this portfolio increased 36% of last year and remains poised to continue delivering double-digit growth supported by market share gains in demographic Trends, including the movement to age in place.

With the buildout of our EQ Bank product shelf, we will attract more Canadians to our bank and grow share of wallet. A proven strategy to capture more value, from our customer relationships, and deliver greater value to our customers a win-win situation.

Second, my team dug deep into the fundamentals of our bank to reduce pressure points, specifically focused on margin efficiency and credit.

For margin, we took a closer look at our funding costs.

The outcome for Q4 was progress with them. Expanding 4 basis points sequentially to 2.01%.

on efficiency, we took decisive action and what we cannot control the macroeconomic environment, we can control our costs,

this resulted in the first ever restructuring charge for eqb.

The intention of our bank is still to provide Canadians with a highly attractive everyday interest rate. However, we recognize that with the Bank of Canada moving interest rates down another 50 basis points. In the quarter, we have to do more dynamically, adjust our interest rate offering

Annalisa will speak to more details shortly.

It's all about striking. The right balance to ensure We are continuing to grow profitably will expanding EQ Bank, deposits to become the largest part of our funding stack.

The benefit is not in our Q4 results, as it was executed, at the end of October, but it will become evident in q1 results.

we needed to focus our efforts on the highest return, initiatives with clear benefits to earnings to drive improvements in efficiency, and positive operating Leverage

With the buildout of our EQ Bank product shelf, we will attract more Canadians to our bank and grow share of wallet. A proven strategy to capture more value from our customer relationships and deliver greater value to our customers—a win-win situation.

With respect to Credit pcl's in Q4 might be higher than some expected. But our intent as a refresh team was to dig deep into our lending book.

The outcome for Q4 was progress with them. Expanding 4 basis points sequentially to 2.01%.

We carefully considered macroeconomic variables for Moody's to inform our 4 looking indicators and we ensured, we are appropriately provisioned for all current risks.

on efficiency, we took decisive action and what we cannot control the macroeconomic environment, we can control our costs,

this resulted in the first ever restructuring charge for eqb.

Annalisa will speak to more details shortly.

The good news is assuming no significant changes or deterioration from our 4 looking indicator. Macro drivers, we enter fiscal 2026 from a position of strength.

Merlin will comment on credit further in her remarks.

The benefit is not in our Q4 results, as it was executed, at the end of October, but it will become evident in q1 results.

Our businesses are well positioned to deliver growth in resiliency credit despite the challenging macroeconomic backdrop.

And third, we spent time thinking through our strategic focus on the market.

we needed to focus our efforts on the highest return, initiatives with clear benefit to earnings to drive improvements in efficiency, and positive operating Leverage

Contextually. We can all agree that Canada is 1 of the most profitable banking markets in the world.

With respect to credit PCLs in Q4, they might be higher than some expected. However, our intent as a refresh team was to dig deep into our lending book.

But there are millions of underserved Canadians in a real need for greater Innovation and stronger competition to the incumbent, biggest banks.

We carefully considered macroeconomic variables for Moody's to inform or forward-looking indicators. And we ensured, we are appropriately provisioned for all current risks.

We are here to bring that change competition, and Innovation. We are here to disrupt and become a better everyday option focused on Canadians.

The good news is, assuming no significant changes or deterioration from our four-looking indicator macro drivers, we enter fiscal 2026 from a position of strength.

Berlin will comment on credit further in her remarks.

Our interest is in building a better banking system, offering Unique Products, including how many low and no fee options with EQ bank. And we championed the concept of Challenger with our trademark brand literally being Canada's Challenger Bank.

Our businesses are well positioned to deliver growth in resiliency and credit, despite the challenging macroeconomic backdrop.

Our addressable Market is significant, and our growth opportunities are tremendous, all at the same time. We remain significantly undervalued

And third, we spend time thinking through our strategic focus in the market contextually. We can all agree that Canada is one of the most profitable banking markets in the world.

I've always believed our goal should be to focus on doing a few big things. Well rather than be everything to everyone.

That is what it means to be a challenger bank at its core.

But there are millions of underserved Canadians in real need of greater innovation and stronger competition to the incumbent biggest banks.

Our PC Financial acquisition and Loblaw partnership are going to be game changers.

We are here to bring that change competition, and Innovation. We are here to disrupt and become a better everyday option focused on Canadians.

This Is Anchored In purpose and a leap towards our full potential as the largest Challenger in Canada. That should be clear from last night's call.

2025 was a challenging year for housing.

Our interest is in building a better banking system, offering unique products, including how many low and no-fee options with EQ Bank. We championed the concept of Challenger, with our trademark brand literally being Canada's Challenger Bank.

At the market was characterized by elevated levels of economic uncertainty, following the trade dispute with the US tariffs, Rising unemployment and lower consumer confidence levels, even as the Bank of Canada cut interest rates there is strong structural demand in Canada for home ownership and supply issues. Remain.

Our addressable Market is significant, and our growth opportunities are tremendous. All of the same time we remain significantly undervalued.

Looking into 2026. We are a cautiously optimistic. We will see a rebound in housing, we think it's less of a question of if more. So, when will the market recover?

What it means to be a challenger bank at its core.

Our PC Financial acquisition and Loblaw partnership are going to be game changers.

Single family residential and with a 13.3% set 1 ratio, we have the capital to fund this growth.

This Is Anchored In purpose and a leap towards our full potential as the largest Challenger in Canada. That should be clear from last night's call.

2025 was a challenging year for housing.

To get the market really going, we would need to see the combination of lower rates, lower unemployment, which we saw recently and better GDP growth.

We have already seen the Bank of Canada respond by aggressively lowering interest rates.

And finally, with the FED 2025 federal budget focusing in on infrastructure investment, we are hopeful. We can see positive impacts on GDP growth.

But the market was characterized by elevated levels of economic uncertainty following the trade dispute with the US tariffs, Rising unemployment and lower consumer confidence levels, even as the Bank of Canada cut interest rates there is strong structural demand in Canada for home ownership and supply issues. Remain.

Looking into 2026, we are cautiously optimistic. We will see a rebound in housing; we think it's less of a question of if, more of when. When will the market recover?

We think commercial loan growth will follow confidence in the broader economy and our pipeline. Now is twice what it was this time last year with a very busy. Start already to fiscal 2026 across all segments. This includes our multi-unit residential portfolio.

Support the supply of affordable housing to Canadians. The government announced an increase in the CMB issuance limits.

From 60 billion.

When it happens, you can expect it to result in revenue growth, given that over 60% of our on-balance sheet loans are single-family residential. With a 13.3% set 1 ratio, we have the capital to fund this growth.

budget this increase, which is tied exclusively to multi-unit, housing across Canada, will benefit eqb

To get the market really going, we would need to see the combination of lower rates, lower unemployment, which we saw recently and better GDP growth.

We have already seen the Bank of Canada respond by aggressively lowering interest rates.

Combining all this with osp's engagement on reducing restrictions on Capital to support business investment. I've moved which should directly impact your bank. I remain excited for the future of eqb.

As part of that future our offer, a few strategic comments.

And finally, with the Fed, the 2025 federal budget focusing in on infrastructure investment, we're hopeful we can see positive impacts on GDP growth.

1, we're focused on winning in our core franchise. We are reviewing and driving more changes to ensure. We hold the number 1 position in single family Lending.

We think commercial loan growth will follow confidence in the broader economy and our pipeline. Now, it is twice what it was this time last year, with a very busy start already to fiscal 2026 across all segments.

This includes our multi-unit residential portfolio.

In 2025, we achieved record broker satisfaction scores and are uninsured business partly driven by recent technological investments, in approved, customer retention.

We also focused on expanding origination Partnerships.

To support the supply of affordable housing to Canadians, the government announced an increase in the CNB issuance limits to 80 billion up from 60 billion in the latest federal budget.

Being the leader in. Reverse Mortgages is a priority and we are not standing still. This past Monday, we launched even more enhancements to increase. Our competitiveness while maintaining strong risk management.

This increase, which is tied exclusively to multi-unit housing across Canada, will benefit EQB, combining all of this with OSP's engagement on reducing restrictions on capital support for business investment. I've moved, which should directly impact your bank. I remain excited for the future of EQB.

As part of that future our offer, a few strategic comments.

We Remain the market leader in cmhc, insured multi-unit, residential, and operate attractive, and well-run, Commercial businesses, as a choice lender to other lenders, a commercial real estate alternative lender and top provider of services to credit unions.

1, we're focused on winning in our core franchise.

Finally the growth in sustainability of our Diversified funding stack. Anchored in EQ bank will be a critically important as we intend to get the full attention, it deserves. As we bring Focus to our priority lending areas.

2. We're completing our product shelf and taking EQ Bank to its full potential.

We are reviewing and driving more changes to ensure. We hold the number 1 position in single family. Lending in 2025, we achieved record broker satisfaction scores and are uninsured business partly driven by recent technological Investments and approved customer retention. We also focused on expanding origination Partnerships.

I've said before the gaps here are payments and wealth. We are addressing payments with PC Financial.

All of this will be plugged into our world-class EQ Bank platform.

I want to be clear, we're focused on delivering a successful integration, which will allow us to achieve our full value from this historic transaction, but the remaining ingredient of wealth will remain a priority.

Finally the growth in sustainability of our Diversified funding stack, an EQ bank will be a critically important as we intend to get the full attention, it deserves. As we bring Focus to our priority lending areas.

3. We're expanding our capabilities in challenging. The market, we will continue to leverage our digitally native platform to drive best-in-class efficiency. This will be achieved through the rigorous expense discipline. We introduced in Q4 to invest in a few big areas and ensure that as the bank grows, we invest significantly but also at PACE with Revenue growth.

2. We're completing our product shelf and taking EQ Bank to its full potential.

I've said before the gaps here are payments and wealth.

We are addressing payments with PC Financial.

We'll grow our capabilities to reshape the market by investing in AI enablement, championing, our technology and working with Partners government and Regulators to enhance competition.

All this will be plugged into our worldclass EQ Bank platform.

Our acquisition of PC Financial advances our strategy here as well as they are bringing best-in-class, personalization capabilities and tools in a 300 plus employee Workforce with complimentary skills to drive product innovation.

With the addition of their Pavilions. It offers offers us a Unique Edge to serve millions of Canadians and meet them where. And when it's most convenient for them,

We’re expanding our capabilities in the market. We will continue to leverage our digitally native platform to drive best-in-class efficiency. This will be achieved through the rigorous expense discipline we introduced in Q4 to invest in a few big areas and ensure that as the bank grows, we invest significantly but also at pace with revenue growth.

Finally given the passing of the federal budget. We are 1 Step Closer to the creation of a maiden Canada consumer-driven banking system eqb is uniquely positioned for this new era of the longtime support of open banking. We look forward to sharing more of our strategy at our 2026 investor day.

We'll grow our capabilities to reshape the market by investing in AI enablement, championing our technology, and working with partners, government, and regulators to enhance competition.

Our medium-term financial objectives.

You will see that we are we are reaffirming our objectives so this should be familiar to everyone.

We have better aligned our categories to be more comparable to peers.

Our acquisition of PC Financial advances our strategy here, as they are bringing best-in-class personalization capabilities and tools, along with a workforce of over 300 employees with complementary skills to drive product innovation.

For 2026, our Outlook excludes the impact of PC Financial.

And I would expect, are we to improve materially from the 7.5% we reported for Q4?

With the addition of their Pavilions. It offers offers us a Unique Edge to serve millions of Canadians and meet them where. And when it's most convenient for them,

What that looks like. It's highly dependent on the macroeconomic backdrop. But we feel based on our estimate today that could look something like approaching 12%, increasing even higher later in fiscal 2026.

Finally given the passing of the federal budget, we are 1 Step Closer to the creation of a made in Canada. Consumer-driven banking system eqb is uniquely positioned for this new era as a longtime supporter of open banking.

Dilated EPS growth could land within our medium-term range of 12 to 15% growth.

We look forward to sharing more of our strategy at our 2026 investor day.

We expect to see improvements in our efficiency ratio and be within our medium-term range of flat to slightly positive, operating leverage and exit. Next year, with strong capital

You will see that we are we are reaffirming our objectives so this should be familiar to everyone.

We have better aligned our categories to be more comparable to peers.

Annalisa and Marlene will provide, a more specific outlook on key income statement, line, items intersections.

For 2026, our Outlook excludes the impact of PC Financial.

And I would expect, are we to improve materially?

From the 7.5%, we reported for Q4.

Now, over to Annalisa to go through the 2025 full year in Q4 results. Her first quarterly call as the CFO of Canada's Challenger bank and I could not be more thrilled and excited to have Annalisa in this chair.

What that looks like is highly dependent on the macroeconomic backdrop, but we feel, based on our estimate today, that could look something like approaching 12%.

Increasing even higher later in fiscal 2026.

That our later DPS growth could land within our medium-term range of 12% to 15% growth.

Thanks Chadwick and good morning everyone. As a reminder, my comments will be on an adjusted basis and you can find a summary of these addresses on slide. 27 of today's presentation.

Starting on slide 9 for a review of the fiscal 2025 results.

We expect to see improvements in our efficiency ratio and be within our medium-term range of flat to slightly positive, operating leverage and exit. Next year, with strong capital

We expect to continue delivering on our very strong dividend growth projections.

Operating environment, headwinds including a soft housing market and Rising unemployment weighed on our results.

Annalisa and Marlene will provide, a more specific outlook. On key income statement, line items in their sections

Diluted EPS for the year was 8.90 and return on Equity was 11.3% both reflecting higher Provisions for credit losses.

In addition, higher expenses and Investments also impacted full year results. Against a backdrop of more modest Revenue growth. Operating leverage was -2.5 and the efficiency ratio increased by 570 basis points.

Thanks, Chadwick, and good morning, everyone. As a reminder, my comments will be on an adjusted basis, and you can find a summary of these adjustments on slide 27 of today's presentation.

Moving to slide, 10, diluted EPS for the fourth quarter was 1, 153 and Roe was 7.5%.

Starting on slide 9 for a review of the fiscal 2025 results.

Operating environment, headwinds including a soft housing market and Rising unemployment weighed on our results.

The decline in fourth quarter results as compared to last year, reflected lower revenues expense growth and higher Provisions for credit losses.

Compared to last quarter.

Diluted EPS for the year was $8.90, and return on equity was 11.3%, both reflecting higher provisions for credit losses.

Pre-provision pre-tax earnings were down a modest 1% with higher Provisions for credit losses. Partially offset by Nim expansion and contained expenses.

In addition, higher expenses and investments also impacted full-year results against a backdrop of more modest revenue growth. Operating leverage was -2.5, and the efficiency ratio increased by 570 basis points.

We announced an increase in the quarterly dividend to 57 cents per share up from 55 cents last quarter and 49 cents. Last year, as we continue our strong track record of dividend increases.

Moving to slide, 10, diluted EPS for the fourth quarter was 1, 153 and Roe was 7.5%.

we also repurchased a record, 731,000 shares in the quarter as part of our strategy to return Capital to shareholders,

And we and we expect to continue BuyBacks next year.

The decline in fourth quarter results as compared to last year reflected lower revenues, expense growth, and higher provisions for credit losses.

Before we get into key drivers, a note on the restructuring program on slide 11, for which we recognize a final pre-tax charge of 92 million.

Compared to last quarter pre-provision pre-tax. Earnings were down a modest 1% with higher Provisions for credit losses. Partially offset by Nim expansion and contained expenses.

The program, sharpens our focus on top growth priorities, ensures efficient Capital, allocation and manages third-party spend and other costs with discipline.

We announced an increase in the quarterly dividend to 57 cents per share up from 55 cents last quarter and 49 cents. Last year, as we continue our strong track record of dividend increases.

Going forward. We expect approximately 45 million in annual expense Savings in fiscal 2026.

We also repurchased a record 731,000 shares in the quarter as part of our strategy to return capital to shareholders.

These savings will be reinvested in continued. Strategic growth initiatives as we remain committed to investing in our future and maintaining our robust risk management framework.

And we and we expect to continue BuyBacks next year.

As a result, we expect total expense growth to be in the low single digits next year.

Inclusive of the restructuring program savings.

Before we get into key drivers, a note on the restructuring program on slide 11, for which we recognize a final pre-tax charge of 92 million.

We also expect to deliver positive operating leverage with a low 50s, efficiency ratio with additional upside as the revenue environment. Picks up.

The program sharpens. Our focus on top growth priorities ensures efficient capital allocation and manages third-party spend and other costs with discipline.

Now I'll break down the results of the quarter starting with the balance sheet on slide 12.

Going forward, we expect approximately $45 million in annual expense savings in fiscal 2026.

As a reminder, we look to loans under management, or Lums as a key performance metric. As we as we are, the market leader in, ensuring multi-unit, Residential Mortgages

These savings will be reinvested in continued strategic growth initiatives as we remain committed to investing in our future and maintaining our robust risk management framework.

Our Lum increased 10% year-over-year and 1% sequentially to 784. 74.5 billion with continued strength and our multi-unit residential portfolio.

As a result, we expect total expense growth to be in the low single digits next year.

Inclusive of the restructuring program savings.

Solid growth in the context of a difficult economic environment.

We also expect to deliver positive operating leverage with a low 50s efficiency ratio, with additional upside as the revenue environment picks up.

And as a reminder we intentionally pulled back from certain portfolios for example insured single family residential and some equipment financing portfolios as we manage overall risk adjusted returns.

Now I'll break down the results of the quarter, starting with the balance sheet on slide 12.

As a reminder, we look to loans under management, or Lum, as a key performance metric. As we as we are, the market leader in, ensuring multi-unit, Residential Mortgages,

Conventional loans which are Lum excluding off, balance sheet loans and insured, single family, residential portfolios. And are the primary contributor of net interest income grew 7% year-over-year and 1% sequentially reflecting continued growth in our de, accumulation, business and uninsured mortgages.

Our LUM increased 10% year-over-year and 1% sequentially to $78.74 billion, with continued strength in our multi-unit residential portfolio.

Looking forward to 2026. We expect growth in Lum in the high single digits to low double digits,

Reflecting strong growth in EQ Bank.

And as a reminder, we intentionally pulled back from certain portfolios, for example, insured single-family residential and some equipment financing portfolios, as we manage overall risk-adjusted returns.

Growth in EQ Banks, demand deposits was strong, increasing 38% year-over-year and 3% sequentially.

Within that portfolio growth in the notice savings product was strong while growth in payroll deposits moderated in the quarter as we adjusted interest rates in response to Bank of Canada cuts.

Conventional loans which are Lum, excluding off-balance sheet, loans, and insured, single family, residential portfolios, and are the primary contributor of net interest income grew 7% year-over-year and 1% sequentially reflecting continued growth in our decumulation business and uninsured mortgages.

Wholesale funding was relatively flat in Q4 as repayments of covered Bonds were offset by increases in our deposit, note program.

Looking forward to 2026. We expect growth in Lum in the high single digits to low double digits,

Wholesale funding remains an important source of our Diversified funding stack, and it expands our investor base.

Turning to deposits balances increased, 9% year-over-year and 1% sequentially to 36.1 billion reflecting strong growth in EQ Bank.

At the same time, we are focused on our funding mix sourcing a higher percentage from lower cost sources including deposits, which are sensitive to management actions and can be used to manage margins more actively.

Growth in EQ Banks, demand deposits was strong, increasing 38% year-over-year and 3% sequentially.

Overall, we are pleased with our mix progression.

Turning to knee on slide 13.

Within that portfolio, growth in the notice savings product was strong, while growth in payroll deposits moderated in the quarter as we adjusted interest rates in response to Bank of Canada cuts.

Net interest income was 265. Million down 2%, year-over-year and up 1% versus last quarter.

Wholesale funding was relatively flat in Q4 as repayments of covered Bonds were offset by increases in our deposit, note program.

Net, interest margins were down, 8 basis, points versus last year. But expanded 4 basis points sequentially.

Wholesale funding remains an important source of our Diversified funding stack, and it expands our investor base.

The sequential margin expansion primarily reflects lower funding costs and a shift towards higher yielding. Uninsured mortgages partly offset by higher liquid assets and lower prepayment income.

Looking forward to 2026, we expect margins to remain around the 2% plus level.

Overall, we are pleased with our mix progression.

Turning to knee on slide 13.

Net interest income was $265 million, down 2% year-over-year and up 1% versus last quarter.

Turning to slide 14, non-interest revenue of 43.5. Million was down 15% from last year and 9% from last quarter largely due to hedging activities and also lower gains on sale from securitization activities as volumes normalized.

Net interest margins were down 8 basis points versus last year, but expanded 4 basis points sequentially.

turning to slide 15 non-emergency were concentrated in our Challenger staff in growth related Investments,

The sequential margin expansion primarily reflects lower funding costs and a shift towards higher yielding. Uninsured mortgages partly offset by higher liquid assets and lower prepayment income.

In addition, higher premises costs played through the second half of this year. As we moved into our new Toronto headquarters this past spring.

Looking forward to 2026, we expect margins to remain around the 2% plus level.

As a reminder, these occupancy costs will have a full year impact in 2026.

Compared to last quarter, both non-interest expenses, and the efficiency ratio were largely flat as we thoughtfully managed controllable costs.

We are pleased with this result considering the timing of the restructuring activities being late in the quarter and especially in the context of what is normally a seasonally higher expense quarter.

Turning to slide 15, non-interest expenses increased by 11% compared to last year.

areas of increase were concentrated in our Challenger staff, in growth related Investments,

as mentioned overall, we expect low single-digit expense growth into 2026

Finally turning to Capital on slide 16.

In addition, higher premises costs played through the second half of this year. As we moved into our new Toronto headquarters this past spring.

As a reminder, these occupancy costs will have a full-year impact in 2026.

Internal Capital generation was offset by the impact of the restructuring program. And the banks set 1 ratio was flat at 13.3%, well above Target and Regulatory minimums.

Our Capital allocation approach continues to prioritize reinvestment in organic growth.

Compared to last quarter, both non-interest expenses and the efficiency ratio were largely flat as we thoughtfully managed controllable costs.

Steadily increasing dividends and the maintenance of capital flexibility to pursue strategic and organic growth.

I will now turn the call over to Marlene to take us through risk.

We are pleased with this result, considering the timing of the restructuring activities being late in the quarter and especially in the context of what is normally a seasonally higher expense quarter.

Thank you, Anna. Lisa and good morning everyone. I'll start on Friday 18 with an overview of allowances for credit losses.

as mentioned overall, we expect low single-digit expense growth into 2026

Against the continued uncertain, economic backdrop. Credit losses were elevated in Q4 2025.

Higher performing pcls and personal. And commercial lending were primarily driven by deterioration in the forward-looking indicators.

Capital generation was offset by the impact of the restructuring program. And the bank's set 1 ratio was flat at 13.3%, well, above Target and Regulatory minimums.

Our capital allocation approach continues to prioritize reinvestment in organic growth.

This was partially offset by a release in equipment financing due to improved credit quality on the remaining tine portfolio.

Steadily increasing dividends and the maintenance of capital flexibility to pursue strategic and organic growth.

by business, tcl's were 7.8 million in personal 11.8 million, in commercial, and 0.2 million in equipment financing,

I will now turn the call over to Marlene to take us through this.

Thank you, Anna. Lisa, and good morning, everyone. I'll start on Friday, the 18th, with an overview of allowances for credit losses.

along with pcl's on impaired loans, realized losses and write-offs are ACL rate increased to 41 basis points up a basis, point sequentially and 9 basis points year-over-year

Against the continued uncertain macroeconomic backdrop, credit losses were elevated in Q4 2025.

Higher performing pcl's, and personal and commercial lending were primarily driven by deterioration in the forward-looking indicators.

Turning to slide 19.

This was partially offset by a release and equipment financing due to improved credit quality on the remaining line portfolio.

Impaired, pcl's were 30 basis points up 11 basis, points sequentially and driven by increases across all businesses.

By business, pcl's were 7.8 million in personal 11.8 million, in commercial, and 0.2 million in equipment financing.

On single family residential. We continue to experience. Weakness stemming from larger loans, in areas of Toronto and surrounding suburbs, where residential real estate prices have declined significantly from their peaks.

This does not appear to be a systemic issue across the portfolio.

In commercial Provisions were primarily driven by existing longer-standing impaired loans.

Along with pcl's on impaired loans, realized losses and write-offs are ACL rate increased to 41 basis points. Up 8 basis, point sequentially and 9 basis points year-over-year. This was primarily driven by an increase in performing allowance, leaving the portfolio, appropriately, provisioned.

The increase reflects deterioration and values and elongated resolution times.

We will continue to manage our allowances as the macroeconomic conditions evolve.

Turning to slide 19.

And finally, increase provisions and Equipment. Financing are driven by continued downward pressure on asset values.

Impaired, pcl's were 30 basis points up 11 basis, points sequentially and driven by increases across all businesses.

Turning to slide 20 and the discussion of gross impaired. Loans, macroeconomic conditions have contributed to an increase in Gross impaired, loans of 7% quarter-over-quarter to 871 million.

Gross impaired loans and personal lending, increased to 368 million in this quarter of 4%, increase from Q3.

This does not appear to be a systemic issue across the portfolio.

This was largely driven by continued credit migration.

In commercial provisions primarily driven by existing longer-standing impaired loans.

On the positive side. However, early stage delinquencies are trending positively over the year.

The increase reflects deterioration and values and elongated resolution times.

Gross impaired loans and commercial lending, were up quarter over quarter, primarily driven by 1. Commercial loan. Where a provision is not currently required.

And finally, increase provisions and Equipment. Financing are driven by continued downward pressure on asset values.

We are seeing stability and Equipment. Financing as impaired loans increase only 3% or 1.4 million relative to last quarter.

Turning to slide 20 and a discussion of gross impaired loans, macroeconomic conditions have contributed to an increase in gross impaired loans of 7%, quarter over quarter, to $871 million.

Now I'll provide some thoughts on how I see credit evolving in 2026.

Gross impaired loans and personal lending, increased to 368 million in this quarter, a 4% increase from Q3.

This was largely driven by continued credit migration.

The impacts of the 275 basis, point reduction in the Bank of Canada's overnight rate. Since recent, Peaks are starting to work their way through the economy and we see signs of credit Improvement in the portfolios.

On the positive side, however, early facial in our trending positively over the years.

We are also encouraged by the recent federal budget announcements, which we expect will contribute to Greater economic growth and improved Market sentiment that will benefit performance in the latter half of 2026.

Growth impaired loans and commercial lending were up quarter-over-quarter, primarily driven by commercial loans, where a provision is not currently required.

On single family residential, we are seeing some improvements with early, with lower early, stage of delinquencies. However, we expect that we'll continue to operate in an environment of elevated. Global macroeconomic uncertainty in fiscal 2026.

On the commercial Side, Resolution timelines continue to be long.

These loans tend to be larger in size and there could be Noise Within any given quarter.

In our equipment financing business, we are seeing the credit benefits of repositioning towards Prime and the de-emphasis on Long Haul. Trucking, originations resulting in improved credit performance.

Having said this, we should be cautious that this Outlook is highly dependent on macroeconomic conditions, and based on the expectations, that we will avoid a deep recessionary scenario.

in terms of PCL expectations,

I would expect more relief in the second half of the year.

Despite the headwinds of this past year, we remain confident in the credit quality of our lending portfolios and our prudent approach towards managing risk through the cycle.

And with that, I'll turn it back to Lamar for the QA portion of the call.

Thanks Marlene I would ask that you limit yourself to 1 or 2 questions and then please req, so that we can get through everyone with that. Operator, can we have the first question from the line?

Your first question comes from John. Akin with Jeffrey. Please go ahead.

Good morning, Marlene. Thanks for the, the color on the, uh, the commercial, uh, portfolio X equipment. Financing is what I'd like to to focus in on though. You had mentioned that the incremental Provisions in the quarter related to uh loans that were previously classified as impaired. Do you have any uh sense in terms of how long the process will be for resolution until you can actually get the uh get these files off your desk?

Yeah, it's it's, um, it has been longer as we we've said in the past and it's approximately taking, um, anywhere between 12 to 18 months, it can take a while to resolve.

And then, just as a follow on Chadwick, in terms of, you know, the stew strategic review that you've done. Uh, since you came back on board, can we expect to see any changes in terms of the composition of the commercial portfolios?

Think of the Commercial Bank over 80% is insured and our priority has been the cmhc insured multi-unit uh as our as our top focus. And and being a number 1 uh alternative C lender. All those principles will stay the same, uh, and Darren lurmer our group had a Commercial Banking. Uh, it's just exceptional, and he's here. And I don't know if Darren, if you want to add any other additional comments. Yeah, we continue to have a, a high level of conviction that we're going to see strong, uh, CMA C and shirt lending growth, uh, into next year, both on the term and the construction side. Um, we have great capabilities there when you look ahead in our CMA construction, uh, most of that we we is, is is based on commitments that we already have in place. So we have good visibility into that. Uh, and we're we expect also to see an improvement in the um, uninsured, uh, commercial real estate lending as well. We're starting to see some early stages of, uh, of growth there. First the last 2 or 3 months our pipeline has started to grow. I wouldn't want to extrapolate that over all of next year, but I think it's

It's a good sign, nonetheless.

Great. Thanks for the color. I'll reach you.

Thank you. The next question comes from. Gabriel Deen with National Bank financial piece. Go ahead. Uh, good morning. Uh, we're still morning. Yeah. Um I would like to ask about the uh, the credit stuff of course, um, and and, you know, get a maybe a bit more specific on your outlook and I get generally, you expect the, um, the phase of or the the pace of PCL to

Moderate over the course of the year. That's pretty consistent with what I'm hearing from other Banks. But like, where, like if we we look at the impaired, uh, is this a high water mark, and a grades down? Or are we going to be stuck at this level? Uh, in the Residential Mortgage portfolio? Specifically

So I would say, you know, we are continuing to see elongated resolution times even in the Residential Mortgage portfolio where it can be, you know, 6 to 12 months, to resolve, um, our what we are encouraged by and we show that in, uh, in the graph in the appendix is that the early stage delinquency in, uh, in, in in that portfolio has been moderating. And you can see that decline over the year. Um, maybe a little bit of fluctuation quarter quarter, but it's on a general downward Trend that will eventually result in in, uh, lower gross impaired loans, and we even see the growth in growth impaired. Loans, slowing quarter over quarter, if you look over the last, you know, uh, 6 to 8 quarters. So, um,

You know, I I don't have a crystal ball of course, but I would say that it all of those factors lead us to believe that.

Towards the end of the second half. We'll see, we'll see those grow. Some parents. Come down.

Okay. And, and, and the, I think it was 12 million of impaired pcl's, uh, in that, uh, resi mortgage, uh, um, portfolio.

how much of that was, uh,

You know, on new impairments. And I don't know if that there's actually still the case, how much of it was on previously, impaired loans, where you're finding yourself, you know, with the longer resolution, you got to you know, pay someone to mow the lawn, pay the property taxes, whatever.

Well, maybe not mow the lawn this time of year, but you know what I mean? I would say when I look at that, when I look at that portfolio, um, the impaired portfolio in in sfr, a lot of it is still stemming from the segments that I've been talking about for several quarters, it's the GTA suburbs. It's in that 2022 vintage and um, and those are and if you look at our our formations in that portfolio, like which we also provide to you, um, the formations are also coming down as well. So the formations represent the new that's coming in and um,

Yeah. So but but if largely out of that 12 million, a large chunk of that more than half is related to that segment that we continue to uh to Monitor and uh and provide against and we feel that we're appropriately provisioned.

So so new formations from the same area codes and vintage not, not Top-Up Provisions, that's my terminology but it's not part part of it is tapa. Yeah there is a it's a mix of top off and new formations

Okay. Um,

Now, as far as the cost savings go, and thank you for the clarity on the, uh, you know, the, the, the expense Target growth Target and all that. And I, I, I guess,

From the segments, I've been talking about for several quarters, it's the GTA suburbs. It's in that 2022 vintage and um, and those are and if you look at our, our formations in that portfolio, like which we also provide to you, um, formations are also coming down as well. So the formations represent the new that's coming in and um,

Particular number. That's a pure cost savings to the shareholder. Yeah.

Yeah, thanks for the question, Gabe. Um,

You would have already.

My terminology, but it's not part, part of it is tapas. Yeah, there is a mix of top-off and new formations.

Okay. Um,

To come through this quarter but you're quite right that the bottom line, that 45 million. I was talking about in the subsequent reinvestment that will play through 2026. You can expect to see the reversal and the expense growth trending right from the get-go, you're seeing it now and you'll continue to see that into q1.

Now, as far as the cost savings go, and thank you for the clarity on the, uh, you know, the, the expense Target growth Target and all that. And I, I, I guess,

Is, is it should I interpret that the cost savings emanating from that? Restructuring? That's all benefiting the. The bottom line is no reinvestment stuff. I know you got to reinvest in your business, but just from a, you know, if we, uh, ring fence, this particular number, that's a pure cost savings to the shareholder. Yeah.

Okay, great. And then the last 1, I've got here, the PC Financial just to follow up that. I didn't get that yesterday or think of asking uh do we have a uh you know, if you have to Ballpark it I'd really appreciate that. When you close, um, what your, you know, Target Court, Tier 1 Position will be?

Uh, well, I'd say just plan for a strong consistency right now. Uh, Gabriel, it'll be, you know, we expect second half of next year but we we have strong Capital ratios and that will continue, especially the, the focus on 15% plus uh total capital and strong set 1.

All right. Uh, enjoy the rest of the the day.

Yeah, I think for the question Gabe, um you would have already seen the discipline comes through this quarter but you're quite right that the bottom line, that 45 million. I was talking about in the subsequent reinvestment that will play through 2026. You can expect to see the reversal in the expense growth trending right from the get-go, you're seeing it now and you'll continue to see that into q1.

Thank you very much. Yeah.

And the next question comes from Mike risen with Scotia Bank, please go ahead.

start with Marlene just

Okay, great. And then the last 1 I've got here, the PC Financial just a follow-up though. I didn't get that yesterday or think of asking uh do we have a uh you know if you have to Ballpark it I'd really appreciate that.

When you close, um, what you're, you know, Target Court, your 1 position will be.

When I say just plan for strong consistency. Right now. Okay, bro, it'll be, you know, we expect second half of next year but we we have strong Capital ratios, and that will continue, especially over the focus on 15% plus that total capital and strongest that 1. Okay.

All right. Uh, enjoy the rest of the the day.

So, the 41 basis points, how should we look at the 41, like, it's been built up pretty substantially here? The last couple quarters and we tend to hear a similar narrative on, um, your confidence in being well reserved. So is the 41 a new normal. It seems like there might have been a bit of a step change here in terms of where you want to sit, or is it just a function of Gil's being elevated for now and as they come down? Uh, what I'm trying to get at ultimately is as pcl's come in on the impaired side. Do you offset that with some Reserve releases and get that coverage ratio back down over time or? Or is it a new level? I'm just trying to decipher if that's the case.

Yeah, thank you. Uh, thanks Mike. I would say that when we look at this quarter you saw that we have um, the forward in based on our forward-looking indicators, we have an increase in our performing provision

and we ex and that was driven because of the outlook on the macroeconomic factors which show unemployment Rising the 7.3 shows a GDP um Contracting even to a to a small degree and and staying relatively um

Low and close to zero for the rest of the year. And so with that in mind, um, and not expecting the Outlook in q1 and those 4 little looking indicators to deteriorate. Materially more than that. We shouldn't expect another large growth in that or a large performing provision in q1.

That helped answer your question. Yeah, and it just as far as the actual coverage ratio so that 41 basis points is, is that somewhere where you you're comfortable sitting at, or can you see that coming back down in a more positive? Um, credit environment, like this is what I'm getting at.

yeah, if the credit environment improves for sure, we would see that coverage, you know that 41 basis points come down

Okay, okay, that's helpful. And then chat with just just a quick 1 on the PC Financial, um, just just curious on, um, and thanks for the the p&l that was provided. The the high level p&l on that business is being acquired. Um, in terms of it looks like a about a 4% loss ratio on that portfolio and that's trailing 12 months. And I'm wondering if you have any anything you can offer,

For, in terms of like what's what's the parameter there? Like like is that 4% um, current in terms of the macro Outlook being a little bit uncertain, is it a little bit elevated? Uh, like what is it normally at I I don't have color on if that 4% is a bit higher right now or if it's right where it should be, as a run rate and then like like where does that tend to go when when things get, you know, really uh concerning on the on the consumer side in terms of risk.

Able man, attractive customer base and um, and over well over 80% are are Prime and super Prime. Um, so it is a different quality, uh, and well below their loss rate, uh, thresholds. Uh, so does it, you know, does it reflect in our models? Uh, the current credit environment? Yes. Um and I think you could see this continued Trend level. But in our models do we do. We model for a different scenarios. Absolutely. And it still makes a lot, a lot of a creative sense. Either way.

And then just just, just out of curiosity, are you able to give us a sense of the capital that, that backs that business?

Just in terms of dollar terms, I'm just trying to get a sense of the Roe of that acquired business. I'm not sure if you're able to provide that right now, but thought I'd ask. Yeah, well, I follow up on my, I'd say it's a different way, uh, that that that, you know, there is there's a high set 1 Capital position in that, but that's not really the way to think about the business. The way to think about the business is how we're going to close it. And that's where we had pegged it at 13% at closing. Uh and that's why you're going to see this hurdle really well. Um uh from a base case and then with the even the modest synergies, let alone all the upside from there

So fair to say that, it's a very, very good Roi business in relation to the lending business.

Yes, sir, it is. Okay, okay, thanks for the caller. Appreciate it.

Thanks, Mike. Have a good day.

And the next question comes from Darko me with RBC Capital markets, please go ahead.

Hi. Thank you. Uh, my questions are for Marlene, um, the first 1 is with respect to the

Residential Mortgage, uh, impairments.

I was just curious if um you can talk a little bit about the nature of these formations. In other words I'm trying to better understand is

Is the primary reason for the formation?

Um, job loss.

Or is it simply the weight of the mortgage payment and the over indebtedness of the consumer?

That eventually has them.

Fall behind.

And go impaired.

and as a follow on onto that,

um, as we look forward into 2026,

Uh is the vast majority of the renewals that occurring, will they be at a higher payment or a lower payment in 2026?

Okay, those are great questions. Darko thank you, I would say a couple things 1 when we look at the formations and the um

You know, the the reason codes if you will for for customers who are going into default, it's a bit of a mixed bag. Some of it is related to job loss, some of it is just customers were holding on for a long time and having a harder time as the macroeconomic environment shifts as as you probably are aware about 66% of our customers are self-employed. So, as there's uh, you know, less activity in the, um, the macroeconomic environment, GDP slows, their businesses are impacting, and our impacted rather. And, and we see that happening in terms of like industry segments. These are industry segments that we see, um, across the portfolios construction is, uh, impacted those working in transportation or other or other areas that are impacted. Um,

And then in terms of other segments, we talked about the the what was the second part of your question? Can you repeat that Darko

The.

Potential payment shock on renewals in 26 or relief? I don't know.

Yeah, yeah, I've got that. So in terms of renewals

Um, this the segment that this more vulnerable segments that we've been talking about, the sort of GTA suburb, as you can. Imagine the renewal rates have been higher, but that portfolio is actually come down about 26% year-over-year. And in terms of renewal rates, they are renewing into lower rates for the most part, because you recall, our duration is quite short. And so, um, our customers who were originated in 2022 at those very low rates did have already renewed into higher rates and actually have started to renew, they've renewed into the lower rate and some of them have renewed again into lower rates, their durations like 1 to 2 years. Generally,

And it sorry, is it meaningfully lower or just modestly lower in terms of?

In terms of, in terms of the meaningfully won't let her. Yeah. Okay. Yeah. The the the payments would be meaningfully lower.

Okay.

and then,

A follow-on question.

Just want to make sure that I'm interpreting your remarks with respect to the forward Outlook I recall last year.

Thinking about a range of 12 basis points or so. For losses. Overall, are you willing to talk about? So what the, the range for 26?

Not at this time, Darko.

Okay.

and then my last question is in relation to, uh,

The the the the transaction um and again it's aimed at you Marlene does this in any way.

assuming the transaction closes uh, as per plan, is this in any way, slowed down your aarb approval work, or would that just continue on and you would separately, uh, look to eventually get

Um the PNC uh uh uh moved over to ARB more futuristically. I just just curious if there's any impact at all on your work there.

Um, no it hasn't. We actually are fully committed to our ARB strategy. And we're, we're moving ahead with our, uh, our plans on the existing portfolio. And then we will assess the, um, the PC Financial portfolio and likely, you know, make plans for for that moving into AI, orb remaining standardized that I would expect it would uh, you know, based on the outcome of that analysis and we'll decide hey Dara, I'd say as well.

On the questions. The so our our Capital allocation and our development plans are continue, we've been working on that for a long period of time. It is important, but also look at the regulatory environment. Um, in our our regulars, been very open about, you know, aab support or there could also still end up being an Arab late or further changes in Risk, floors. We don't know yet. But I think we, we certainly got this sentiment that they'll be progress progress here. Uh that will be supportive to, to Greater competition and ensuring, uh, we can get investment back into businesses, uh, into consumers.

Okay, great. Uh thank you very much for the insights.

Thanks dco.

And the next question comes from Eden record with BMO Capital markets, please go ahead.

Thank you and uh, good morning. So um, credit cards will become a new product at eqb.

Um,

How would you contrast the long-term growth potential of the card portfolio relative to mortgages. The reason I'm asking is

I tend to think of eqb long-term loan, growth track records to be in the low double digits, uh, for mortgages. And I think we're all aware of the industry Tailwinds.

In that space with the shift to mortgage brokers and the growing size of the Alternative Market. Now, credit cards appears more, uh, GDP driven, would you agree with this statement?

Thanks. I think a couple things the thing about, so we'll after we close, we'll, we'll share more about our outlook for the business. But what I would say is don't just think about this as a credit card. I think about this very much as payment solutions for Canadians, and a truly valuable in many cases, low fee, no fee. Um, current and payment solution for Canadians and importantly, backed by the power of the PC, Optimum program with those 7 million members that is the best in this country, um, and it brings so many options for Canadians. So they are going to want to grow. We are going to grow cards and customers because of the payments with the Lo with the Loyalty, uh, because it adds more value for, uh, people in this country. So it there's a huge upside potential there for us. Uh, and that includes with existing EQ customers where there's going to be a benefit here.

Plus we can do more, um, for PCF, uh, customers as well as they come into our ecosystem. It's it's a win-win on both sides but I see payments as growing as a fundamental need for Canadians and these are going to this is going to give us the tools to grow that other way and that will then drive revenue of course too. Right, when you think of the non-interest revenue, this is not just about knee or cards. This gives it all backed by PC Optimum and we have the exclusive

Position with that PC Optimum. So it's really important. I think to, to keep that as front of mind.

And does the transaction impact your Capital allocation policies? Whether that's

Share BuyBacks heading into closing or maybe the dividend payout uh looking longer term.

No.

No. And as you heard Annalisa say we we have a buyback plan and intent for a 2026, uh and we have, we have a great strong Capital position and that will all continue.

Thank you very much.

Thanks.

And the next question comes from Graham writing with TD Securities, please go ahead.

Hi good morning um maybe I could just follow up on that. That theme Chadwick can you just um explain you know if you're offering as an exclusive Financial partner here with PC Optimum? You're going to be offering loyalty points to your eqb customers. I assume outside of just the credit card.

How should we think about the economics? There will this be a cost to you that you offset with greater deposit growth and ultimately lower name? But is there also a benefit here from higher interchange, payment fees, that that ultimately helped pay for these loyalty costs.

Yeah, I think it's a combination of the factors. So, you know, they'll be higher cash rewards. They'll definitely be a higher uh, growth in our in our funding capabilities. Um, obviously, um, you will have higher interchange over time, but this will become part of the the value proposition overall. Where if we have PC Optimum in our existing, customers can use it that will, um, encourage them, uh, to want to deepen their relationships and do more business with us. That's really the underlying Factor. Um, you know, we think we, if you think of the full shelf, we have the notice of savings accounts. Excellent. FX transfer. Our US dollar accounts registered accounts uh uh excellent, payroll accounts. Everything will come into that platform and then we can cross sell more from there that will drive positive economics.

Market closed and ultimately lowered them. But these are also a benefit here from higher interchange payment fees that ultimately helped pay for these loyalty costs.

okay, so, ultimately, uh, greater penetration on the deposit side which, which helps your nib

But also yeah, on the revenue side Around The Interchange fees, that's correct, that's how you offset the uh the Loyalty cost, okay?

um, and then my second question is just when you think about

the sort of cross sell opportunities here.

Um, selling that PC, MasterCard into your existing

Uh, 600,000 EQ Bank customers is that potentially an easier.

Synergy to execute on versus increasing that EQ Bank customer base through. Either leveraging PC

Yeah, I think it's a combination of the factors. So, you know, they'll be higher cash rewards. They'll definitely be higher uh, growth in our in our funding capabilities, um, obviously, um, you will have higher interchange over time, but this will become part of the the value proposition overall. Where if we have PC Optimum in our existing, customers can use it that will, um, encourage them, uh, to want to deepen their relationships and do more business with us. That's really the underlying Factor. Um, you know, we think we, if you think of the full shelf, we have the notice of savings accounts. Excellent. FX transfer. Our US dollar accounts registered accounts uh uh excellent, payroll accounts. Everything will come into that platform and then we can cross sell more from there that will drive positive economics.

Loyalty program or just the the distribution infrastructure. That PC Financial has, how do you think about those?

Okay, so ultimately, greater penetration on the deposit side, which helps your NIB.

Uh, those sort of different um uh Synergy opportunities.

But also yeah, on the revenue side Around The Interchange fees, that's correct. That's how you want to offset the uh the Loyalty costs. Okay?

um, and then my second question is just when you think about

the sort of cross-sell opportunities here.

Um,

selling that PC MasterCard into your existing

uh 600,000 EQ Bank customers.

Is that potentially an easier?

Well, well, both I think as a customer, you're going to love it when you have the PC Optimum loaded into the EQ, uh, account. Uh, you're going to see the integration that you're going to have, you're going to have all that and, and the platform that to to to, to drive uh, the growth. So it is, it is both of what you said and what I want to say again it's when you it's a little early for us to give all the details, there's going to be more to come as we get closer to close. This is a, this is

Synergy to execute on versus increasing that EQ Bank customer base through. Either leveraging DC

Oily program, or just the distribution infrastructure. Financial has, how do you think about those?

Uh, those sort of different, um, uh, synergy opportunities.

Very modest savings, all of what you're talking about there is the full potential upside still, for us, uh, and our franchise. And really, it's this is about Canadians first and the product shelf and the value that every day Canadians have. And this is going to complete that in a very significant way. So, it's Canadians first, and by doing that, we're going to do really well for a shareholders here and a lot more upside to come as we get closer to close on this.

Okay, last question. Um, you gave us some guidance on uh loan loan under management. Uh, I think uh, mid to high single digits growth.

Um, sorry. Hi, single the low double digit. What is your growth expectation for on balance sheet loan growth for next year?

Yeah, happy to take that 1. Um,

2026. We see the green sheets for economic recovery and growth.

From a lum perspective. As we said, High single digit to low double digits range for 2026. So very consistent with what, we've delivered this year, though, skew to the latter half of the year.

Well, well, both I think as a customer you're going to love it when you have the PC Optimum loaded into the EQ account, uh, you're going to see the integration that you're going to have, you're going to have all that and and the platform to to to to drive the growth. So it is, it is both of what you said and what I want to say again, it's when it's a little early for us to give all the details. There's going to be more to come, as we get closer to quotes. This is a high. This is an excellent deal for shareholders, for customers for employees this hurdles at the 15% plus are we with very, very modest savings. All of what you're talking about there is the full potential upside still for us uh, and and our franchise. And really, this is about Canadians for and the product shelf and the value that every day Canadians have. And this is going to complete that in a very significant way. So, it's Canadians first, and by doing that, we're going to do really well for a shareholders here, and a lot.

More upside down as we get closer to close on this.

Okay, and my last question. Um,

You gave us some guidance on loan under management. Um, I think mid to high single digits growth.

Um, sorry. Hi, single the low double digit. What is your growth expectation for on balance sheet loan growth for next year?

On the personal sfr side. So, that's all on balance sheet, we see an improved rate environment, um, not relying on future Cuts, but the cuts that came through, uh, certainly in the last. The last quarter combined, with pent up housing demand, uh, to be quite strong accumulation, we see to be strong momentum as we see Canadians wanting to age in place and executing their Estate Planning. And so overall, um,

Yeah, happy to take that. Um, I do see as we look ahead to 2026, we see the green shoots for economic recovery and growth.

From Alum perspective, as we said, High single digits to low double digits range for 2026. So very consistent with what we've delivered this year. So skew to the latter half of the year.

We expect kind of medium single digit growth in that portfolio as a reminder, I would just call out. We are continuing to intentionally and strategically pull back from the insured, single family residential. So there is declined in that portfolio that offset some of the growth that we're seeing in the uninsured. Uninsured piece. And that's again, as we balance total risk adjusted returns,

To grow there, continues to be a need for affordable housing, uh, and the rate rate environment placed through there as well. Um, and, and I know you're focused on the on balance sheet but just 1 final 1 final point on the off-balance sheet, we have the, um, in the federal budget. We were really pleased to see the expansion of the CMD pool limits. And we stand to benefit from that as we do have a market leading securitization provision and so um, that allows us to kind of lean in into even more capacity on that side. We expect roughly speaking mid single digit million growth there.

Great. That's it for me. Thank you.

Thanks Ron.

And the next question comes from dog, gang with teacher that please go ahead.

Hi, uh, good morning, uh, Chadwick, I guess.

Both of these are probably for you, but on the wealth priority side, you talked about it and you're prepared remarks and that's not new and you talked about it before wanting to build up some form of of wealth platform. I assume this is not organic um, that you would do this in an inorganic manner you know, can you do something else before you close PC and before you integrate PC and and can you maybe just remind us what it is that you're interested in as you talked about as well?

Thanks Dad.

First, I'm gonna repeat again, though. That, you know, obviously we for sure we've highlighted that wealth represents, an important strategic Gap. We're looking to close over time. I, I don't think it's appropriate for me to speculate on m&a. But I, you know, I, I would say, um, you know, it's there's different pros and cons to building versus buying in, um, in the well space and our current Focus though, will will remain on the successful integration of PCF first and then it's the remaining ingredient. Uh, is is well, uh, the the simplest way? I I, I could say is um, you know, for for a, a complete successful Challenger, you know, you need the, the best day-to-day offering the best payments offering and now I can a loyalty we have that we'll have a direct reach to millions of customers. Uh and then what could be most constructive within the EU bank offering is a higher yielding offering offering integrated in to the digital lineup that really gives Canadians uh more choice for to put their money outside of uh say interest savings accounts and gic's and more so a real uh uh

Long-term perspective on how to generate more yield integrated into the lineup is 1 of the ways to think about it. And then outside of that when you step back and think of eqb,

Remember we have a we have a excellent alternative asset management company uh called ACM. Advisors we have 1 of the top, trust companies in Canada, that's performing really well. So we have we have various ingredients but we'll bring that. Um, concerted Focus back to EQ bank and that integrated wealth offering to give more choice to customers all within the platform.

I assume this is more distribution and Manufacturing.

Yeah, distribution. So it's it is distribution. We represent distribution as well. Now. So there there is, you know, we we um, we need the product and the solution on on our distribution shelf is is 1 way to think about it as well. Um but it is more anchored in our in our in our expertise and distribution and but bringing the product into the Shelf is really important.

Okay. And then you can correct me if I'm wrong. Second question here. I think you talked Chad with the you know potential. Are we approaching 12% by the end of fiscal 26? And

You know, when I kind of look at the math, you know, like it's hard to get there unless you have a material Improvement in the PCL versus what we saw and I'm talking like that PCL half of what we saw in Q4. And so I'm just trying to get a sense. Is that, am I reading that, right? Did you, did you talk about 12% by the end of the year? Like, what would be some of the drivers to get there? Um, and is it mostly pcl's? Obviously expense growth. Kind of and positive operating leverage would be key. Just trying to kind of understand a little bit more about that.

Then you think about your denominator, right? And what we're doing with capital, in our intent, to continue with BuyBacks, to further accrete, Roe, and really put the capital to work all those ingredients combined. Um, I think you see we would expect in our base case, you see that higher uh by later next year. And then moving towards our our medium-term objectives into the following year, uh, at PACE

Appreciate the color. Thank you.

Thank you Doug. Uh,

And the last question comes from, Stephen Boland with women James, please go ahead.

Thanks just uh, 1 question. Um, what when you talk about pulling back on the insured single family, I always thought that was a tool. Um, you use to basically retain the customer and and maintain, you know, broker relationships as well. Like you go into a broker and they have Prime and you can ensure it. But they also have alternate, you know, traditional um, single family and you underwrite all of them. So is, is that changed? Is it, is it consumer Behavior changed or a change in in thought? I'm just curious about that.

Yeah. Thanks you and so pull back shortly. But we're we're we're our focus is growing. The uninsured. Our Focus.

Is supporting the mortgage brokers. The mortgage brokers. We always still say, are the, the best ways to get a, a mortgage in Canada, there are vital partners and we're going to support them and serve them really well. Uh, and, uh, first priority is the, the uninsured and then in some cases. Yeah, you have some insured, but ensured is, is, uh, is is a, a thinner margin? It's very competitive. And we want to focus our Capital as well where where we can win while doing really well uh, for Canadians. So it's it's a bit of a combination. We we pull back more, um, it's not a new thing. I was actually goes back, probably a year or 2. Um so you'll still see some but it hasn't been a priority and I think that's also often why our our asset growth is misperceived. You know if people just look at OSI data and say assets are down, well it's because we deprioritized lower profitability. We're not chasing volume, we're we're putting on thoughtful profitable growth underpinned by by Canadians needs first. So that's what we're doing here. Um, as we go forward.

And how's the broker? You know, reaction been to that you know like you would do that those types of loans and then you're kind of saying no we don't really want to do it anymore.

It's not, it's not new news. We we this this is a long-standing. I think you're just seeing some of that play out. The this was, we'll call it over over a year ago. I'd say our Partnerships with Brokers are strength. The strength of our relationship with Brokers has never been stronger. Uh, they, they fully understand our model and, and at where we can best serve them. Um, so I'd say it's, it's, it's very, uh, positive, Stephen

Okay, thanks very much.

Have a great day.

Thank you and that confuses your question and answer session, I would like to turn it back to Chad request Lake for closing remarks.

Thank you everyone for joining us today. We like to thank everyone for their continued support and wish everyone a safe and joyous holiday season.

Annalisa Lamar and I look forward to seeing some of you early in the new year at the RBC Capital markets Bank CEO conference on January 6th. Thanks very much have a great day

and this is,

now, disconnect

Operator: 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 Lamar Persaud, Vice President and Head of Investor Relations. Please go ahead.

Thank you. And that concludes our question-and-answer session. I would like to turn it back to Chad for closing remarks.

Thank you, everyone, for joining us today. We'd like to thank everyone for their continued support and wish everyone a safe and joyous holiday season.

Lamar Persaud: Thank you, Rudy, and good morning, everyone. Your hosts for today's Q4 results call are Chadwick Westlake, President and CEO; Annalisa Sinani, CFO; and Marlene Lenarduzzi, CRO. Also present for the Q&A session is Darren Lorimer, Group Head of Commercial Banking. After prepared remarks, we will open the lines for questions from our pre-qualified analysts. Please note that while we are excited about the acquisition of PC Financial, today's call, including Q&A session, is intended to be focused on the Q4 and full-year EQB results. For those on the phone lines only, we encourage you to also log into our webcast and view our quarterly results presentation, which we'll reference during our prepared remarks. On slide two of our presentation, you will find EQB's caution regarding forward-looking statements, which involves assumptions that have inherent risks and uncertainties. Actual results may differ materially.

Annalisa Lamar and I look forward to seeing some of you early in the new year at the RBC Capital Markets Bank CEO Conference on January 6th. Thank you very much, and have a great day.

And this can good cities conference call. Thank you all for joining me now. This is

Please note that while we are excited about the acquisition of PC Financial, today's call, including Q&A session, is intended to be focused on the Q4 and full-year EQB results. For those on the phone lines only, we encourage you to also log into our webcast and view our quarterly results presentation, which we'll reference during our prepared remarks. On slide two of our presentation, you will find EQB's caution regarding forward-looking statements, which involves assumptions that have inherent risks and uncertainties. Actual results may differ materially.

Lamar Persaud: I would remind listeners that all figures referenced today are on an adjusted basis where applicable, unless otherwise noted. With that, I will now turn the call over to Chadwick.

I would remind listeners that all figures referenced today are on an adjusted basis where applicable, unless otherwise noted. With that, I will now turn the call over to Chadwick.

Chadwick Westlake: Thanks, Lamar, and good morning. I appreciate everyone joining us during a busy earnings day and so soon after yesterday's call. To stay on point for this call, I'm pleased to have fiscal 2025 behind us. It was a difficult year and one of significant change for EQB. That chapter is now closed, and our incredible leadership team is energized and focused on tomorrow. There were, however, several notable accomplishments. First, while de-emphasizing certain areas due to less attractive economics, we still achieved 10% year-over-year growth in total loans under management on the back of very strong 36% year-over-year growth in our off-balance sheet CMHC-insured multi-unit residential mortgage business. Second, EQ Bank, our crown jewel, continued to shine bright, achieving 18% year-over-year growth in customers and 10% growth in deposits, with deposit balances ending the year at nearly CAD 10 billion.

There were, however, several notable accomplishments. First, while de-emphasizing certain areas due to less attractive economics, we still achieved 10% year-over-year growth in total loans under management on the back of very strong 36% year-over-year growth in our off-balance sheet CMHC-insured multi-unit residential mortgage business. Second, EQ Bank, our crown jewel, continued to shine bright, achieving 18% year-over-year growth in customers and 10% growth in deposits, with deposit balances ending the year at nearly CAD 10 billion.

Chadwick Westlake: Third, we launched our small business banking offering in October, bringing real competition and positive change to an underserved market that deserves better options. This offering has all the challenger features you would expect, including fully digital account opening, a competitive interest rate, business GICs, and no monthly fees. I'm pleased to report that at the end of October, we were already at CAD 140 million in business deposits. That's before dialing up marketing efforts. Finally, we were named the top bank brand in Canada by the Financial Times, The Banker magazine, citing our status as best positioned to grow market share. We have had plenty of moments of change in our history, and each time, we emerged even stronger. I believe that is precisely how EQB is positioned now, ready for our next and most significant chapter of growth.

Third, we launched our small business banking offering in October, bringing real competition and positive change to an underserved market that deserves better options. This offering has all the challenger features you would expect, including fully digital account opening, a competitive interest rate, business GICs, and no monthly fees. I'm pleased to report that at the end of October, we were already at CAD 140 million in business deposits. That's before dialing up marketing efforts.

Finally, we were named the top bank brand in Canada by the Financial Times, The Banker magazine, citing our status as best positioned to grow market share. We have had plenty of moments of change in our history, and each time, we emerged even stronger. I believe that is precisely how EQB is positioned now, ready for our next and most significant chapter of growth.

Chadwick Westlake: I want to thank our deeply dedicated challenger employees for their tireless work over the past year. Everyone is part of this team because they believe in our purpose and our ability to execute. I believe that applies to our longstanding and prospective shareholders as well. This morning, I have a few key observations on my first 100 days as CEO. When I rejoined EQB in late August, I set out with a clear mandate from our board to develop a future-focused plan that concentrates capital and talent at the point of highest return, with the goal of achieving our long-term potential. With my leadership team, we've made a clear-eyed assessment of our competitive strengths and growth opportunities, strategies, and supporting cost structure. There were no preconceived notions, no sacred cows, only a pledge to make the tough decisions and execute with velocity. This resulted in a few early actions.

I want to thank our deeply dedicated challenger employees for their tireless work over the past year. Everyone is part of this team because they believe in our purpose and our ability to execute. I believe that applies to our longstanding and prospective shareholders as well. This morning, I have a few key observations on my first 100 days as CEO. When I rejoined EQB in late August, I set out with a clear mandate from our board to develop a future-focused plan that concentrates capital and talent at the point of highest return, with the goal of achieving our long-term potential.

With my leadership team, we've made a clear-eyed assessment of our competitive strengths and growth opportunities, strategies, and supporting cost structure. There were no preconceived notions, no sacred cows, only a pledge to make the tough decisions and execute with velocity. This resulted in a few early actions.

Chadwick Westlake: First, I spent a lot of time traveling across Canada to meet hundreds of employees, partners, brokers, and shareholders. It is important to understand what people love about our company and where we can do better. What I found was a workforce that is energized as ever to win, customers that love our products and services, and conviction in our ability to take our challenger to its full potential while returning to our traditional ROE profile of 15% to 17%, which is important to our shareholders. I also said coming into this job, we would return to efficiency as a competitive advantage. We would complete our product shelf and move back to our industry-leading ROE profile, even with the competitive disadvantage of standardized capital treatment. I've also learned more about important areas for growth that matter for Canadians. Importantly, for example, our de-accumulation business.

First, I spent a lot of time traveling across Canada to meet hundreds of employees, partners, brokers, and shareholders. It is important to understand what people love about our company and where we can do better. What I found was a workforce that is energized as ever to win, customers that love our products and services, and conviction in our ability to take our challenger to its full potential while returning to our traditional ROE profile of 15% to 17%, which is important to our shareholders.

I also said coming into this job, we would return to efficiency as a competitive advantage. We would complete our product shelf and move back to our industry-leading ROE profile, even with the competitive disadvantage of standardized capital treatment. I've also learned more about important areas for growth that matter for Canadians. Importantly, for example, our de-accumulation business.

Chadwick Westlake: This portfolio increased 36% last year and remains poised to continue delivering double-digit growth, supported by market share gains and demographic trends, including the movement to age in place. Second, my team dug deep into the fundamentals of our bank to reduce pressure points, specifically focused on margin, efficiency, and credit. For margin, we took a closer look at our funding costs. The intention of our bank is still to provide Canadians with a highly attractive everyday interest rate. However, we recognize that with the Bank of Canada moving interest rates down another 50 basis points in the quarter, we have to more dynamically adjust our interest rate offering. It's all about striking the right balance to ensure we are continuing to grow profitably while expanding EQ Bank deposits to become the largest part of our funding stack.

This portfolio increased 36% last year and remains poised to continue delivering double-digit growth, supported by market share gains and demographic trends, including the movement to age in place. Second, my team dug deep into the fundamentals of our bank to reduce pressure points, specifically focused on margin, efficiency, and credit.

For margin, we took a closer look at our funding costs. The intention of our bank is still to provide Canadians with a highly attractive everyday interest rate. However, we recognize that with the Bank of Canada moving interest rates down another 50 basis points in the quarter, we have to more dynamically adjust our interest rate offering. It's all about striking the right balance to ensure we are continuing to grow profitably while expanding EQ Bank deposits to become the largest part of our funding stack.

Chadwick Westlake: With the build-out of our EQ Bank product shelf, we will attract more Canadians to our bank and grow share of wallet, a proven strategy to capture more value from our customer relationships and deliver greater value to our customers, a win-win situation. The outcome for Q4 was progress, with NIM expanding four basis points sequentially to 2.01%. On efficiency, we took decisive action. While we cannot control the macroeconomic environment, we can control our costs. This resulted in the first-ever restructuring charge for EQB. Annalisa will speak to more details shortly. The benefit is not in our Q4 results, as it was executed at the end of October, but it will become evident in Q1 results. We needed to focus our efforts on the highest return initiatives with clear benefit to earnings to drive improvements in efficiency and positive operating leverage.

With the build-out of our EQ Bank product shelf, we will attract more Canadians to our bank and grow share of wallet, a proven strategy to capture more value from our customer relationships and deliver greater value to our customers, a win-win situation. The outcome for Q4 was progress, with NIM expanding four basis points sequentially to 2.01%. On efficiency, we took decisive action. While we cannot control the macroeconomic environment, we can control our costs.

This resulted in the first-ever restructuring charge for EQB. Annalisa will speak to more details shortly. The benefit is not in our Q4 results, as it was executed at the end of October, but it will become evident in Q1 results. We needed to focus our efforts on the highest return initiatives with clear benefit to earnings to drive improvements in efficiency and positive operating leverage.

Chadwick Westlake: With respect to credit, PCLs in Q4 might be higher than some expected, but our intent as a refreshed team was to dig deep into our lending book. We carefully considered macroeconomic variables for Moody's to inform our forward-looking indicators, and we ensured we are appropriately provisioned for all current risks. The good news is, assuming no significant changes or deterioration from our forward-looking indicator macro drivers, we enter fiscal 2026 from a position of strength. Marlene will comment on credit further in her remarks. Our businesses are well-positioned to deliver growth and resiliency in credit despite the challenging macroeconomic backdrop. Third, we spent time thinking through our strategic focus in the market.

With respect to credit, PCLs in Q4 might be higher than some expected, but our intent as a refreshed team was to dig deep into our lending book. We carefully considered macroeconomic variables for Moody's to inform our forward-looking indicators, and we ensured we are appropriately provisioned for all current risks. The good news is, assuming no significant changes or deterioration from our forward-looking indicator macro drivers, we enter fiscal 2026 from a position of strength.

Marlene will comment on credit further in her remarks. Our businesses are well-positioned to deliver growth and resiliency in credit despite the challenging macroeconomic backdrop. Third, we spent time thinking through our strategic focus in the market.

Chadwick Westlake: Contextually, we can all agree that Canada is one of the most profitable banking markets in the world, but there are millions of underserved Canadians and a real need for greater innovation and stronger competition to the incumbent biggest banks. We are here to bring that change: competition and innovation. We are here to disrupt and become a better everyday option focused on Canadians. Our interest is in building a better banking system, offering unique products, including many low and no-fee options with EQ Bank, and we championed the concept of Challenger, with our trademark brand literally being Canada's Challenger Bank. Our addressable market is significant, and our growth opportunities are tremendous. All at the same time, we remain significantly undervalued. I've always believed our goal should be to focus on doing a few big things well rather than be everything to everyone.

Contextually, we can all agree that Canada is one of the most profitable banking markets in the world, but there are millions of underserved Canadians and a real need for greater innovation and stronger competition to the incumbent biggest banks. We are here to bring that change: competition and innovation. We are here to disrupt and become a better everyday option focused on Canadians.

Our interest is in building a better banking system, offering unique products, including many low and no-fee options with EQ Bank, and we championed the concept of Challenger, with our trademark brand literally being Canada's Challenger Bank. Our addressable market is significant, and our growth opportunities are tremendous. All at the same time, we remain significantly undervalued. I've always believed our goal should be to focus on doing a few big things well rather than be everything to everyone.

Chadwick Westlake: That is what it means to be a Challenger Bank at its core. Our PC Financial acquisition and Loblaw partnership are going to be game changers. This is anchored in purpose and a leap towards our full potential as the largest Challenger in Canada. That should be clear from last night's call. 2025 was a challenging year for housing, but the market was characterized by elevated levels of economic uncertainty following the trade dispute with the US, tariffs, rising unemployment, and lower consumer confidence levels. Even as the Bank of Canada cut interest rates, there was strong structural demand in Canada for homeownership, and supply issues remain. Looking into 2026, we are cautiously optimistic we will see a rebound in housing. We think it's less of a question of if, more so when, will the market recover.

That is what it means to be a Challenger Bank at its core. Our PC Financial acquisition and Loblaw partnership are going to be game changers. This is anchored in purpose and a leap towards our full potential as the largest Challenger in Canada.

That should be clear from last night's call. 2025 was a challenging year for housing, but the market was characterized by elevated levels of economic uncertainty following the trade dispute with the US, tariffs, rising unemployment, and lower consumer confidence levels. Even as the Bank of Canada cut interest rates, there was strong structural demand in Canada for homeownership, and supply issues remain. Looking into 2026, we are cautiously optimistic we will see a rebound in housing. We think it's less of a question of if, more so when, will the market recover.

Chadwick Westlake: When it happens, you can expect it to result in revenue growth, given that over 60% of our on-balance sheet loans are single-family residential. With a 13.3% CET1 ratio, we have the capital to fund this growth. To get the market really going, we would need to see the combination of lower rates, lower unemployment, which we saw recently, and better GDP growth. We have already seen the Bank of Canada respond by aggressively lowering interest rates. And finally, with the 2025 federal budget focusing in on infrastructure investment, we are hopeful we can see positive impacts on GDP growth. We think commercial loan growth will follow confidence in the broader economy, and our pipeline now is twice what it was this time last year, with a very busy start already to fiscal 2026 across all segments. This includes our multi-unit residential portfolio.

When it happens, you can expect it to result in revenue growth, given that over 60% of our on-balance sheet loans are single-family residential. With a 13.3% CET1 ratio, we have the capital to fund this growth. To get the market really going, we would need to see the combination of lower rates, lower unemployment, which we saw recently, and better GDP growth.

We have already seen the Bank of Canada respond by aggressively lowering interest rates. And finally, with the 2025 federal budget focusing in on infrastructure investment, we are hopeful we can see positive impacts on GDP growth. We think commercial loan growth will follow confidence in the broader economy, and our pipeline now is twice what it was this time last year, with a very busy start already to fiscal 2026 across all segments. This includes our multi-unit residential portfolio.

Chadwick Westlake: To support the supply of affordable housing to Canadians, the government announced an increase in the CMB issuance limit to CAD 80 billion, up from CAD 60 billion in the latest federal budget. This increase, which is tied exclusively to multi-unit housing across Canada, will benefit EQB. Combining all of this with OSFI's engagement on reducing restrictions on capital to support business investment, a move which should directly impact our bank, I remain excited for the future of EQB. As part of that future, I'll offer a few strategic comments. One, we're focused on winning in our core franchise. We are reviewing and driving more changes to ensure we hold a number one position in single-family lending. In 2025, we achieved record broker satisfaction scores in our uninsured business, partly driven by recent technological investments and improved customer retention. We are also focused on expanding origination partnerships.

To support the supply of affordable housing to Canadians, the government announced an increase in the CMB issuance limit to CAD 80 billion, up from CAD 60 billion in the latest federal budget. This increase, which is tied exclusively to multi-unit housing across Canada, will benefit EQB. Combining all of this with OSFI's engagement on reducing restrictions on capital to support business investment, a move which should directly impact our bank, I remain excited for the future of EQB. As part of that future, I'll offer a few strategic comments.

One, we're focused on winning in our core franchise. We are reviewing and driving more changes to ensure we hold a number one position in single-family lending. In 2025, we achieved record broker satisfaction scores in our uninsured business, partly driven by recent technological investments and improved customer retention. We are also focused on expanding origination partnerships.

Chadwick Westlake: Being the leader in reverse mortgages is a priority, and we are not standing still. This past Monday, we launched even more enhancements to increase our competitiveness while maintaining strong risk management. We remain the market leader in CMHC-insured multi-unit residential and operate attractive and well-run commercial businesses as a choice lender to other lenders, a commercial real estate alternative lender, and top provider of services to credit unions. Finally, the growth and sustainability of our diversified funding stack anchored in EQ Bank will be critically important as we intend to get the full attention it deserves as we bring focus to our priority lending areas. Two, we're completing our product shelf and taking EQ Bank to its full potential. I've said before, the gaps here are payments and wealth. We are addressing payments with PC Financial. All of this will be plugged into our world-class EQ Bank platform.

Being the leader in reverse mortgages is a priority, and we are not standing still. This past Monday, we launched even more enhancements to increase our competitiveness while maintaining strong risk management. We remain the market leader in CMHC-insured multi-unit residential and operate attractive and well-run commercial businesses as a choice lender to other lenders, a commercial real estate alternative lender, and top provider of services to credit unions.

Finally, the growth and sustainability of our diversified funding stack anchored in EQ Bank will be critically important as we intend to get the full attention it deserves as we bring focus to our priority lending areas. Two, we're completing our product shelf and taking EQ Bank to its full potential. I've said before, the gaps here are payments and wealth. We are addressing payments with PC Financial. All of this will be plugged into our world-class EQ Bank platform.

Chadwick Westlake: I want to be clear. We're focused on delivering a successful integration, which will allow us to achieve our full value from this historic transaction, but the remaining ingredient of wealth will remain a priority. Three, we're expanding our capabilities and challenging the market. We will continue to leverage our digitally native platform to drive best-in-class efficiency. This will be achieved through the rigorous expense discipline we introduced in Q4 to invest in a few big areas and ensure that as the bank grows, we invest significantly, but also at pace with revenue growth. We will grow our capabilities to reshape the market by investing in AI enablement, championing our technology, and working with partners, government, and regulators to enhance competition.

I want to be clear. We're focused on delivering a successful integration, which will allow us to achieve our full value from this historic transaction, but the remaining ingredient of wealth will remain a priority. Three, we're expanding our capabilities and challenging the market. We will continue to leverage our digitally native platform to drive best-in-class efficiency.

This will be achieved through the rigorous expense discipline we introduced in Q4 to invest in a few big areas and ensure that as the bank grows, we invest significantly, but also at pace with revenue growth. We will grow our capabilities to reshape the market by investing in AI enablement, championing our technology, and working with partners, government, and regulators to enhance competition.

Chadwick Westlake: Our acquisition of PC Financial advances our strategy here, as well as they are bringing best-in-class personalization capabilities and tools in a 300-plus employee workforce with complementary skills to drive product innovation. With the addition of their pavilions, it offers us a unique edge to serve millions of Canadians and meet them where and when it's most convenient for them. Finally, given the passing of the federal budget, we are one step closer to the creation of a made-in-Canada consumer-driven banking system. EQB is uniquely positioned for this new era as a longtime supporter of open banking. We look forward to sharing more of our strategy at our 2026 Investor Day. Moving to the next slide where we present our medium-term financial objectives. You will see that we are reaffirming our objectives, so this should be familiar to everyone.

Our acquisition of PC Financial advances our strategy here, as well as they are bringing best-in-class personalization capabilities and tools in a 300-plus employee workforce with complementary skills to drive product innovation. With the addition of their pavilions, it offers us a unique edge to serve millions of Canadians and meet them where and when it's most convenient for them.

Finally, given the passing of the federal budget, we are one step closer to the creation of a made-in-Canada consumer-driven banking system. EQB is uniquely positioned for this new era as a longtime supporter of open banking. We look forward to sharing more of our strategy at our 2026 Investor Day. Moving to the next slide where we present our medium-term financial objectives. You will see that we are reaffirming our objectives, so this should be familiar to everyone.

Chadwick Westlake: We have better aligned our categories to be more comparable to peers. For 2026, our outlook excludes the impact of PC Financial, and I would expect ROE to improve materially from the 7.5% we reported for Q4. What that looks like is highly dependent on the macroeconomic backdrop, but we feel, based on our estimates today, that could look something like approaching 12%, increasing even higher later in fiscal 2026. Diluted EPS growth could land within our medium-term range of 12% to 15% growth. We expect to see improvements in our efficiency ratio, and be within our medium-term range of flat to slightly positive operating leverage, and exit next year with strong capital. We expect to continue delivering on our very strong dividend growth projection. Annalisa and Marlene will provide a more specific outlook on key income statement line items in their sections.

We have better aligned our categories to be more comparable to peers. For 2026, our outlook excludes the impact of PC Financial, and I would expect ROE to improve materially from the 7.5% we reported for Q4. What that looks like is highly dependent on the macroeconomic backdrop, but we feel, based on our estimates today, that could look something like approaching 12%, increasing even higher later in fiscal 2026. Diluted EPS growth could land within our medium-term range of 12% to 15% growth.

We expect to see improvements in our efficiency ratio, and be within our medium-term range of flat to slightly positive operating leverage, and exit next year with strong capital. We expect to continue delivering on our very strong dividend growth projection. Annalisa and Marlene will provide a more specific outlook on key income statement line items in their sections.

Chadwick Westlake: Now, over to Annalisa to go through the 2025 full year and Q4 results. Her first quarterly call as the CFO of Canada's Challenger Bank, and I could not be more thrilled and excited to have Annalisa in this chair. Thanks, Chadwick, and good morning, everyone. As a reminder, my comments will be on an adjusted basis, and you can find a summary of these adjustments on slide 27 of today's presentation. Starting on slide 9 for a review of the fiscal 2025 results. Operating environment headwinds, including a soft housing market and rising unemployment, weighed on our results. Diluted EPS for the year was CAD 8.90, and return on equity was 11.3%, both reflecting higher provisions for credit losses. In addition, higher expenses and investments also impacted full year results.

Now, over to Annalisa to go through the 2025 full year and Q4 results. Her first quarterly call as the CFO of Canada's Challenger Bank, and I could not be more thrilled and excited to have Annalisa in this chair.

Anilisa Sainani: Thanks, Chadwick, and good morning, everyone. As a reminder, my comments will be on an adjusted basis, and you can find a summary of these adjustments on slide 27 of today's presentation. Starting on slide 9 for a review of the fiscal 2025 results.

Operating environment headwinds, including a soft housing market and rising unemployment, weighed on our results. Diluted EPS for the year was CAD 8.90, and return on equity was 11.3%, both reflecting higher provisions for credit losses. In addition, higher expenses and investments also impacted full year results.

Chadwick Westlake: Against a backdrop of more modest revenue growth, operating leverage was negative 12.5%, and the efficiency ratio increased by 570 basis points. Moving to slide 10, diluted EPS for the fourth quarter was CAD 1.53, and ROE was 7.5%. The decline in fourth quarter results as compared to last year reflected lower revenues, expense growth, and higher provisions for credit losses. Compared to last quarter, pre-provision pretax earnings were down a modest 1%, with higher provisions for credit losses partially offset by NIM expansion and contained expenses. We announced an increase in the quarterly dividend to CAD 0.57 per share, up from CAD 0.55 last quarter and CAD 0.49 last year, as we continue our strong track record of dividend increases. We also repurchased a record 731,000 shares in the quarter as part of our strategy to return capital to shareholders, and we expect to continue buybacks next year.

Against a backdrop of more modest revenue growth, operating leverage was negative 12.5%, and the efficiency ratio increased by 570 basis points. Moving to slide 10, diluted EPS for the fourth quarter was CAD 1.53, and ROE was 7.5%. The decline in fourth quarter results as compared to last year reflected lower revenues, expense growth, and higher provisions for credit losses.

Compared to last quarter, pre-provision pretax earnings were down a modest 1%, with higher provisions for credit losses partially offset by NIM expansion and contained expenses. We announced an increase in the quarterly dividend to CAD 0.57 per share, up from CAD 0.55 last quarter and CAD 0.49 last year, as we continue our strong track record of dividend increases. We also repurchased a record 731,000 shares in the quarter as part of our strategy to return capital to shareholders, and we expect to continue buybacks next year.

Chadwick Westlake: Before we get into key drivers, a note on the restructuring program on slide 11, for which we recognized a final pretax charge of CAD 92 million. The program sharpens our focus on top growth priorities, ensures efficient capital allocation, and manages third-party spend and other costs with discipline. Going forward, we expect approximately CAD 45 million in annual expense savings in fiscal 2026. These savings will be reinvested in continued strategic growth initiatives as we remain committed to investing in our future and maintaining our robust risk management framework. As a result, we expect total expense growth to be in the low single digits next year, inclusive of the restructuring program savings. We also expect to deliver positive operating leverage with a low 50s efficiency ratio, with additional upside as the revenue environment picks up.

Before we get into key drivers, a note on the restructuring program on slide 11, for which we recognized a final pretax charge of CAD 92 million. The program sharpens our focus on top growth priorities, ensures efficient capital allocation, and manages third-party spend and other costs with discipline. Going forward, we expect approximately CAD 45 million in annual expense savings in fiscal 2026. These savings will be reinvested in continued strategic growth initiatives as we remain committed to investing in our future and maintaining our robust risk management framework.

As a result, we expect total expense growth to be in the low single digits next year, inclusive of the restructuring program savings. We also expect to deliver positive operating leverage with a low 50s efficiency ratio, with additional upside as the revenue environment picks up.

Chadwick Westlake: Now, I'll break down the results of the quarter, starting with the balance sheet on slide 12. As a reminder, we look to loans under management, or LUM, as a key performance metric as we are the market leader in issuing multi-unit residential mortgages. Our LUM increased 10% year over year and 1% sequentially to CAD 74.5 billion, with continued strength in our multi-unit residential portfolio. Solid growth in the context of a difficult economic environment. As a reminder, we intentionally pulled back from certain portfolios, for example, insured single-family residential, and some equipment financing portfolios, as we manage overall risk-adjusted returns. Conventional loans, which are LUM excluding off-balance sheet loans and insured single-family residential portfolios, and are the primary contributor of net interest income, grew 7% year over year and 1% sequentially, reflecting continued growth in our decumulation business and uninsured mortgages.

Now, I'll break down the results of the quarter, starting with the balance sheet on slide 12. As a reminder, we look to loans under management, or LUM, as a key performance metric as we are the market leader in issuing multi-unit residential mortgages. Our LUM increased 10% year over year and 1% sequentially to CAD 74.5 billion, with continued strength in our multi-unit residential portfolio.

Solid growth in the context of a difficult economic environment. As a reminder, we intentionally pulled back from certain portfolios, for example, insured single-family residential, and some equipment financing portfolios, as we manage overall risk-adjusted returns. Conventional loans, which are LUM excluding off-balance sheet loans and insured single-family residential portfolios, and are the primary contributor of net interest income, grew 7% year over year and 1% sequentially, reflecting continued growth in our decumulation business and uninsured mortgages.

Chadwick Westlake: Looking forward to 2026, we expect growth in LUM in the high single digits to low double digits. Turning to deposits, balances increased 9% year over year and 1% sequentially to CAD 36.1 billion, reflecting strong growth in EQ Bank. Growth in EQ Bank's demand deposits was strong, increasing 38% year over year and 3% sequentially. Within that portfolio, growth in the notice savings product was strong, while growth in payroll deposits moderated in the quarter as we adjusted interest rates in response to Bank of Canada cuts. Wholesale funding was relatively flat in Q4, as repayments of covered bonds were offset by increases in our deposit note program. Wholesale funding remains an important source of our diversified funding stack, and it expands our investor base.

Looking forward to 2026, we expect growth in LUM in the high single digits to low double digits. Turning to deposits, balances increased 9% year over year and 1% sequentially to CAD 36.1 billion, reflecting strong growth in EQ Bank. Growth in EQ Bank's demand deposits was strong, increasing 38% year over year and 3% sequentially.

Within that portfolio, growth in the notice savings product was strong, while growth in payroll deposits moderated in the quarter as we adjusted interest rates in response to Bank of Canada cuts. Wholesale funding was relatively flat in Q4, as repayments of covered bonds were offset by increases in our deposit note program. Wholesale funding remains an important source of our diversified funding stack, and it expands our investor base.

Chadwick Westlake: At the same time, we are focused on our funding mix, sourcing a higher percentage from lower-cost sources, including deposits, which are sensitive to management actions and can be used to manage margins more actively. Overall, we are pleased with our mixed progression. Turning to NII on slide 13, net interest income was CAD 265 million, down 2% year over year and up 1% versus last quarter. Net interest margins were down 8 basis points versus last year, but expanded 4 basis points sequentially. The sequential margin expansion primarily reflects lower funding costs and a shift towards higher-yielding uninsured mortgages, partly offset by higher liquid assets and lower prepayment income. Looking forward to 2026, we expect margins to remain around the 2% plus level.

At the same time, we are focused on our funding mix, sourcing a higher percentage from lower-cost sources, including deposits, which are sensitive to management actions and can be used to manage margins more actively. Overall, we are pleased with our mixed progression.

Turning to NII on slide 13, net interest income was CAD 265 million, down 2% year over year and up 1% versus last quarter. Net interest margins were down 8 basis points versus last year, but expanded 4 basis points sequentially. The sequential margin expansion primarily reflects lower funding costs and a shift towards higher-yielding uninsured mortgages, partly offset by higher liquid assets and lower prepayment income. Looking forward to 2026, we expect margins to remain around the 2% plus level.

Chadwick Westlake: Turning to slide 14, non-interest revenue of CAD 43.5 million was down 15% from last year and 9% from last quarter, largely due to hedging activities and also lower gains on sale from securitization activities as volumes normalized. Turning to slide 15, non-interest expenses increased by 11% compared to last year. Areas of increase were concentrated in our Challenger staff and growth-related investments. In addition, higher premises costs played through the second half of this year as we moved into our new Toronto headquarters this past spring. As a reminder, these occupancy costs will have a full year impact in 2026. Compared to last quarter, both non-interest expenses and the efficiency ratio were largely flat as we thoughtfully managed controllable costs.

Turning to slide 14, non-interest revenue of CAD 43.5 million was down 15% from last year and 9% from last quarter, largely due to hedging activities and also lower gains on sale from securitization activities as volumes normalized. Turning to slide 15, non-interest expenses increased by 11% compared to last year. Areas of increase were concentrated in our Challenger staff and growth-related investments. In addition, higher premises costs played through the second half of this year as we moved into our new Toronto headquarters this past spring.

As a reminder, these occupancy costs will have a full year impact in 2026. Compared to last quarter, both non-interest expenses and the efficiency ratio were largely flat as we thoughtfully managed controllable costs.

Chadwick Westlake: We are pleased with this result, considering the timing of the restructuring activities being late in the quarter, and especially in the context of what is normally a seasonally higher expense quarter. As mentioned, overall, we expect low single-digit expense growth into 2026. Finally, turning to capital on slide 16, internal capital generation was offset by the impact of the restructuring program, and the bank's CET1 ratio was flat at 13.3%, well above target and regulatory minimums. Our capital allocation approach continues to prioritize reinvestment in organic growth, steadily increasing dividends, and the maintenance of capital flexibility to pursue strategic and organic growth. I will now turn the call over to Marlene to take us through risk. Thank you, Annalisa, and good morning, everyone. I'll start on slide 18 with an overview of allowances for credit losses. Against a continued uncertain economic backdrop, credit losses were elevated in Q4 2025.

We are pleased with this result, considering the timing of the restructuring activities being late in the quarter, and especially in the context of what is normally a seasonally higher expense quarter. As mentioned, overall, we expect low single-digit expense growth into 2026. Finally, turning to capital on slide 16, internal capital generation was offset by the impact of the restructuring program, and the bank's CET1 ratio was flat at 13.3%, well above target and regulatory minimums.

Our capital allocation approach continues to prioritize reinvestment in organic growth, steadily increasing dividends, and the maintenance of capital flexibility to pursue strategic and organic growth. I will now turn the call over to Marlene to take us through risk.

Marlene Lenurdazzi: Thank you, Annalisa, and good morning, everyone. I'll start on slide 18 with an overview of allowances for credit losses. Against a continued uncertain economic backdrop, credit losses were elevated in Q4 2025.

Chadwick Westlake: Higher-performing PCLs in personal and commercial lending were primarily driven by deterioration in the forward-looking indicators. This was partially offset by a release in equipment financing due to improved credit quality on the remaining TPIME portfolio. By business, PCLs were CAD 7.8 million in personal, CAD 11.8 million in commercial, and CAD 0.2 million in equipment financing. Along with PCLs on impaired loans, realized losses, and write-offs, our ACL rate increased to 41 basis points, up 8 basis points sequentially and 9 basis points year over year. This was primarily driven by an increase in performing allowance, leaving the portfolio appropriately provisioned. We will continue to manage our allowances as the macroeconomic conditions evolve. Turning to slide 19, impaired PCLs were 30 basis points, up 11 basis points sequentially, and driven by increases across all businesses.

Higher-performing PCLs in personal and commercial lending were primarily driven by deterioration in the forward-looking indicators. This was partially offset by a release in equipment financing due to improved credit quality on the remaining TPIME portfolio. By business, PCLs were CAD 7.8 million in personal, CAD 11.8 million in commercial, and CAD 0.2 million in equipment financing. Along with PCLs on impaired loans, realized losses, and write-offs, our ACL rate increased to 41 basis points, up 8 basis points sequentially and 9 basis points year over year.

This was primarily driven by an increase in performing allowance, leaving the portfolio appropriately provisioned. We will continue to manage our allowances as the macroeconomic conditions evolve. Turning to slide 19, impaired PCLs were 30 basis points, up 11 basis points sequentially, and driven by increases across all businesses.

Chadwick Westlake: On single-family residential, we continue to experience weakness stemming from larger loans in areas of Toronto and surrounding suburbs where residential real estate prices have declined significantly from their peaks. This does not appear to be a systemic issue across the portfolio. In commercial, provisions were primarily driven by existing longer-standing impaired loans. The increase reflects deterioration in values and elongated resolution times. And finally, increased provisions in equipment financing are driven by continued downward pressure on asset values. Turning to slide 20 and the discussion of gross impaired loans, macroeconomic conditions have contributed to an increase in gross impaired loans of 7% quarter over quarter to CAD 871 million. Gross impaired loans and personal lending increased to CAD 368 million this quarter, a 4% increase from Q3. This was largely driven by continued credit migration. On the positive side, however, early-stage delinquencies are trending positively over the year.

On single-family residential, we continue to experience weakness stemming from larger loans in areas of Toronto and surrounding suburbs where residential real estate prices have declined significantly from their peaks. This does not appear to be a systemic issue across the portfolio. In commercial, provisions were primarily driven by existing longer-standing impaired loans. The increase reflects deterioration in values and elongated resolution times.

And finally, increased provisions in equipment financing are driven by continued downward pressure on asset values. Turning to slide 20 and the discussion of gross impaired loans, macroeconomic conditions have contributed to an increase in gross impaired loans of 7% quarter over quarter to CAD 871 million. Gross impaired loans and personal lending increased to CAD 368 million this quarter, a 4% increase from Q3. This was largely driven by continued credit migration. On the positive side, however, early-stage delinquencies are trending positively over the year.

Chadwick Westlake: Gross impaired loans and commercial lending were up quarter over quarter, primarily driven by one commercial loan where a provision is not currently required. We are seeing stability in equipment financing as impaired loans increased only 3%, or CAD 1.4 million, relative to last quarter. Now I'll provide some thoughts on how I see credit evolving in 2026. The impacts of the 275 basis points reduction in the Bank of Canada's overnight rate since recent peaks are starting to work their way through the economy, and we see signs of credit improvement in the portfolios. We are also encouraged by the recent federal budget announcements, which we expect will contribute to greater economic growth and improved market sentiment that will benefit performance in the latter half of 2026. On single-family residential, we are seeing some improvements with lower early-stage delinquencies.

Gross impaired loans and commercial lending were up quarter over quarter, primarily driven by one commercial loan where a provision is not currently required. We are seeing stability in equipment financing as impaired loans increased only 3%, or CAD 1.4 million, relative to last quarter. Now I'll provide some thoughts on how I see credit evolving in 2026.

The impacts of the 275 basis points reduction in the Bank of Canada's overnight rate since recent peaks are starting to work their way through the economy, and we see signs of credit improvement in the portfolios. We are also encouraged by the recent federal budget announcements, which we expect will contribute to greater economic growth and improved market sentiment that will benefit performance in the latter half of 2026. On single-family residential, we are seeing some improvements with lower early-stage delinquencies.

Chadwick Westlake: However, we expect that we'll continue to operate in an environment of elevated global macroeconomic uncertainty in fiscal 2026. On the commercial side, resolution timelines continue to be long. These loans tend to be larger in size, and there could be noise within any given quarter. In our equipment financing business, we are seeing the credit benefits of repositioning towards prime and the de-emphasis on long-haul trucking originations, resulting in improved credit performance. Having said this, we should be cautious that this outlook is highly dependent on macroeconomic conditions and based on the expectations that we will avoid a deep recessionary scenario. In terms of PCL expectations, I would expect more relief in the second half of the year. Despite the headwinds of this past year, we remain confident in the credit quality of our lending portfolios and our prudent approach towards managing risk through the cycle.

However, we expect that we'll continue to operate in an environment of elevated global macroeconomic uncertainty in fiscal 2026. On the commercial side, resolution timelines continue to be long. These loans tend to be larger in size, and there could be noise within any given quarter. In our equipment financing business, we are seeing the credit benefits of repositioning towards prime and the de-emphasis on long-haul trucking originations, resulting in improved credit performance.

Having said this, we should be cautious that this outlook is highly dependent on macroeconomic conditions and based on the expectations that we will avoid a deep recessionary scenario. In terms of PCL expectations, I would expect more relief in the second half of the year. Despite the headwinds of this past year, we remain confident in the credit quality of our lending portfolios and our prudent approach towards managing risk through the cycle.

Chadwick Westlake: And with that, I'll turn it back to Lamar for the QA portion of the call. Thanks, Marlene. I would ask that you limit yourself to one or two questions, and then please re-queue so that we can get through everyone. With that, operator, can we have the first question from the line? Your first question comes from John Aiken with Jefferies. Please go ahead. Good morning, Marlene. Thanks for the color on the commercial portfolio. EQ Equipment Financing is what I'd like to focus in on, though. You had mentioned that the incremental provisions in the quarter related to loans that were previously classified as impaired. Do you have any sense in terms of how long the process will be for resolution until you can actually get these files off your desk?

And with that, I'll turn it back to Lamar for the QA portion of the call.

Lamar Persaud: Thanks, Marlene. I would ask that you limit yourself to one or two questions, and then please re-queue so that we can get through everyone. With that, operator, can we have the first question from the line?

Operator: Your first question comes from John Aiken with Jefferies. Please go ahead.

John Aiken: Good morning, Marlene. Thanks for the color on the commercial portfolio. EQ Equipment Financing is what I'd like to focus in on, though. You had mentioned that the incremental provisions in the quarter related to loans that were previously classified as impaired. Do you have any sense in terms of how long the process will be for resolution until you can actually get these files off your desk?

Chadwick Westlake: Yeah, it has been longer, as we've said in the past, and it's approximately taking anywhere between 12 to 18 months. It can take a while to resolve. And then just as a follow-on, Chadwick, in terms of the strategic review that you've done since you came back on board, can we expect to see any changes in terms of the composition of the commercial portfolios? Well, we have an excellent commercial business. You think of the commercial bank, over 80% is insured, and our priority has been the CMHC insured multi-unit as our top focus and being a number one alternative CRE lender. All those principles will stay the same. And Darren Lorimer, our group head of commercial banking, is just exceptional. And he's here, and I don't know, Darren, if you want to add any other additional comments.

Marlene Lenurdazzi: Yeah, it has been longer, as we've said in the past, and it's approximately taking anywhere between 12 to 18 months. It can take a while to resolve.

John Aiken: And then just as a follow-on, Chadwick, in terms of the strategic review that you've done since you came back on board, can we expect to see any changes in terms of the composition of the commercial portfolios?

Chadwick Westlake: Well, we have an excellent commercial business. You think of the commercial bank, over 80% is insured, and our priority has been the CMHC insured multi-unit as our top focus and being a number one alternative CRE lender. All those principles will stay the same. And Darren Lorimer, our group head of commercial banking, is just exceptional. And he's here, and I don't know, Darren, if you want to add any other additional comments.

Chadwick Westlake: Yeah, we continue to have a high level of conviction that we're going to see strong CMHC insured lending growth into next year, both on the term and the construction side. We have great capabilities there. When you look ahead in our CMHC construction, most of that is based on commitments that we already have in place, so we have good visibility into that. We expect also to see an improvement in the uninsured commercial real estate lending as well. We're starting to see some early stages of growth there. For the last two or three months, our pipeline has started to grow. I wouldn't want to extrapolate that over all of next year, but I think it's a good sign nonetheless. Great. Thanks for the color. I'll re-queue. Thank you. The next question comes from Gabriel Dechaine with National Bank Financial. Please go ahead. Good morning.

Darren Lorimer: Yeah, we continue to have a high level of conviction that we're going to see strong CMHC insured lending growth into next year, both on the term and the construction side. We have great capabilities there. When you look ahead in our CMHC construction, most of that is based on commitments that we already have in place, so we have good visibility into that.

We expect also to see an improvement in the uninsured commercial real estate lending as well. We're starting to see some early stages of growth there. For the last two or three months, our pipeline has started to grow. I wouldn't want to extrapolate that over all of next year, but I think it's a good sign nonetheless.

John Aiken: Great. Thanks for the color. I'll re-queue.

Operator: Thank you. The next question comes from Gabriel Dechaine with National Bank Financial. Please go ahead.

Gabriel Dechaine: Good morning.

Chadwick Westlake: I would like to ask about the credit stuff, of course, and get maybe a bit more specific on your outlook. I guess generally, you expect the pace of PCLs to moderate over the course of the year. That's pretty consistent with what I'm hearing from other banks. If we look at the impaireds, is this a high watermark and it grades down, or are we going to be stuck at this level in the residential mortgage portfolio specifically? I would say we are continuing to see elongated resolution times, even in the residential mortgage portfolio, where it can be six to 12 months to resolve. What we are encouraged by, and we show that in the graph in the appendix, is that the early-stage delinquency in that portfolio has been moderating, and you can see that decline over the year.

I would like to ask about the credit stuff, of course, and get maybe a bit more specific on your outlook. I guess generally, you expect the pace of PCLs to moderate over the course of the year. That's pretty consistent with what I'm hearing from other banks. If we look at the impaireds, is this a high watermark and it grades down, or are we going to be stuck at this level in the residential mortgage portfolio specifically?

Anilisa Sainani: I would say we are continuing to see elongated resolution times, even in the residential mortgage portfolio, where it can be six to 12 months to resolve. What we are encouraged by, and we show that in the graph in the appendix, is that the early-stage delinquency in that portfolio has been moderating, and you can see that decline over the year.

Chadwick Westlake: Maybe a little bit of fluctuation quarter to quarter, but it's on a general downward trend. That will eventually result in lower gross impaired loans. We even see the growth in gross impaired loans slowing quarter over quarter if you look over the last six to eight quarters. So I don't have a crystal ball, of course, but I would say that all of those factors lead us to believe that towards the end of the second half, we'll see those gross impaireds come down. Okay. I think it was CAD 12 million of impaired PCLs in that Resi mortgage portfolio. How much of that was on new impairments? I don't know if that is actually still the case. How much of it was on previously impaired loans where you're finding yourself with a longer resolution?

Maybe a little bit of fluctuation quarter to quarter, but it's on a general downward trend. That will eventually result in lower gross impaired loans. We even see the growth in gross impaired loans slowing quarter over quarter if you look over the last six to eight quarters. So I don't have a crystal ball, of course, but I would say that all of those factors lead us to believe that towards the end of the second half, we'll see those gross impaireds come down.

Gabriel Dechaine: Okay. I think it was CAD 12 million of impaired PCLs in that Resi mortgage portfolio. How much of that was on new impairments? I don't know if that is actually still the case. How much of it was on previously impaired loans where you're finding yourself with a longer resolution?

Chadwick Westlake: You're going to pay someone to mow the lawn, pay the property taxes, whatever? Or maybe not mow the lawn this time of year, but you know what I mean? I would say, when I look at that, when I look at that portfolio, the impaired portfolio in SFR, a lot of it is still stemming from the segments I've been talking about for several quarters. It's the GTA suburbs. It's in that 2022 vintage. And if you look at our formations in that portfolio, which we also provide to you, the formations are also coming down as well. So the formations represent the new that's coming in. And yeah, but largely out of that CAD 12 million, a large chunk of that, more than half, is related to that segment that we continue to monitor and provide against, and we feel that we're appropriately provisioned.

You're going to pay someone to mow the lawn, pay the property taxes, whatever? Or maybe not mow the lawn this time of year, but you know what I mean?

Anilisa Sainani: I would say, when I look at that, when I look at that portfolio, the impaired portfolio in SFR, a lot of it is still stemming from the segments I've been talking about for several quarters. It's the GTA suburbs. It's in that 2022 vintage. And if you look at our formations in that portfolio, which we also provide to you, the formations are also coming down as well. So the formations represent the new that's coming in. And yeah, but largely out of that CAD 12 million, a large chunk of that, more than half, is related to that segment that we continue to monitor and provide against, and we feel that we're appropriately provisioned.

Chadwick Westlake: So new formations from the same area codes and vintage, not top-up provisions. That's my terminology, but it's not. And part of it is top-up. Yeah, it's a mix of top-up and new formations. Okay. Now, as far as the cost savings go, and thank you for the clarity on the expense target, gross target, and all that. And I guess, should I interpret that the cost savings emanating from that restructuring, that's all benefiting the bottom line? There's no reinvestment stuff. I know you got to reinvest in your business, but just from a, if we ring-fence this particular number, that's pure cost savings to the shareholder, yeah? Yeah, thanks for the question, Gabe. You would have already seen the discipline come through this quarter, but you're quite right that the bottom line, that $45 million I was talking about in the subsequent reinvestment, that will play through 2026.

Gabriel Dechaine: So new formations from the same area codes and vintage, not top-up provisions. That's my terminology, but it's not.

Anilisa Sainani: And part of it is top-up. Yeah, it's a mix of top-up and new formations.

Gabriel Dechaine: Okay. Now, as far as the cost savings go, and thank you for the clarity on the expense target, gross target, and all that. And I guess, should I interpret that the cost savings emanating from that restructuring, that's all benefiting the bottom line? There's no reinvestment stuff. I know you got to reinvest in your business, but just from a, if we ring-fence this particular number, that's pure cost savings to the shareholder, yeah?

Anilisa Sainani: Yeah, thanks for the question, Gabe. You would have already seen the discipline come through this quarter, but you're quite right that the bottom line, that $45 million I was talking about in the subsequent reinvestment, that will play through 2026.

Chadwick Westlake: You can expect to see the reversal in the expense growth trending right from the get-go. You're seeing it now, and you'll continue to see that into Q1. Okay, great. And then the last one I've got here, the PC Financial, just a follow-up that I didn't get to ask yesterday or think of asking. Do we have a, if you have to ballpark, I'd really appreciate that, when you close, what your target quarter one position will be? Well, I'd say just plan for a strong consistency right now, Gabriel. It'll be, we expect second half of next year, but we have strong capital ratios, and that will continue, especially the focus on 15% plus total capital and strong CET1. Okay. All right. Enjoy the rest of the day. Thank you very much, Gabe. And the next question comes from Mike Rizvanovic with Scotiabank. Please go ahead.

You can expect to see the reversal in the expense growth trending right from the get-go. You're seeing it now, and you'll continue to see that into Q1.

Gabriel Dechaine: Okay, great. And then the last one I've got here, the PC Financial, just a follow-up that I didn't get to ask yesterday or think of asking. Do we have a, if you have to ballpark, I'd really appreciate that, when you close, what your target quarter one position will be?

Chadwick Westlake: Well, I'd say just plan for a strong consistency right now, Gabriel. It'll be, we expect second half of next year, but we have strong capital ratios, and that will continue, especially the focus on 15% plus total capital and strong CET1.

Gabriel Dechaine: Okay. All right. Enjoy the rest of the day.

Chadwick Westlake: Thank you very much, Gabe.

Operator: And the next question comes from Mike Rizvanovic with Scotiabank. Please go ahead.

Chadwick Westlake: Hey, good morning. I wanted to start with Marlene, just on your reserves. So the 41 basis points, how should we look at the 41? It's been built up pretty substantially here the last couple of quarters, and we tend to hear a similar narrative on your confidence in being well-reserved. So is the 41 a new normal? It seems like there might have been a bit of a step change here in terms of where you want to sit, or is it just a function of GILs being elevated for now? And as they come down, what I'm trying to get at ultimately is, as PCLs come in on the impaired side, do you offset that with some reserve releases and get that coverage ratio back down over time, or is it a new level? I'm just trying to decipher if that's the case. Yeah, thank you. Thanks, Mike.

Mike Rizvanovic: Hey, good morning. I wanted to start with Marlene, just on your reserves. So the 41 basis points, how should we look at the 41? It's been built up pretty substantially here the last couple of quarters, and we tend to hear a similar narrative on your confidence in being well-reserved. So is the 41 a new normal? It seems like there might have been a bit of a step change here in terms of where you want to sit, or is it just a function of GILs being elevated for now?

And as they come down, what I'm trying to get at ultimately is, as PCLs come in on the impaired side, do you offset that with some reserve releases and get that coverage ratio back down over time, or is it a new level? I'm just trying to decipher if that's the case.

Marlene Lenurdazzi: Yeah, thank you. Thanks, Mike.

Chadwick Westlake: I would say that when we look at this quarter, you saw that we have, based on our forward-looking indicators, we have an increase in our performing provision. And that was driven because of the outlook on the macroeconomic factors, which show unemployment rising to 7.3, shows GDP contracting even to a small degree, and staying relatively low and close to zero for the rest of the year. And so with that in mind, and not expecting the outlook in Q1 and those forward-looking indicators to deteriorate materially more than that, we shouldn't expect another large growth in that or a large performing provision in Q1. Does that help answer your question? Yeah. And just as far as the actual coverage ratio, so that 41 basis points, is that somewhere where you're comfortable sitting at, or can you see that coming back down in a more positive credit environment?

I would say that when we look at this quarter, you saw that we have, based on our forward-looking indicators, we have an increase in our performing provision. And that was driven because of the outlook on the macroeconomic factors, which show unemployment rising to 7.3, shows GDP contracting even to a small degree, and staying relatively low and close to zero for the rest of the year.

And so with that in mind, and not expecting the outlook in Q1 and those forward-looking indicators to deteriorate materially more than that, we shouldn't expect another large growth in that or a large performing provision in Q1. Does that help answer your question?

Mike Rizvanovic: Yeah. And just as far as the actual coverage ratio, so that 41 basis points, is that somewhere where you're comfortable sitting at, or can you see that coming back down in a more positive credit environment?

Chadwick Westlake: I guess is what I'm getting at. Yeah. If the credit environment improves, for sure, we would see that coverage, that 41 basis points come down. Okay. Okay. That's helpful. And then, Chadwick, just a quick one on the PC Financial. Just curious on, and thanks for the P&L that was provided, the high-level P&L on that business that's being acquired. In terms of, it looks like about a 4% loss ratio on that portfolio, and that's trailing 12 months. And I'm wondering if you have anything you can offer in terms of what's the parameter there? Is that 4% current in terms of the macro outlook being a little bit uncertain? Is it a little bit elevated? What is it normally at? I don't have color on if that 4% is a bit high right now or if it's right where it should be as a run rate.

I guess is what I'm getting at.

Marlene Lenurdazzi: Yeah. If the credit environment improves, for sure, we would see that coverage, that 41 basis points come down.

Mike Rizvanovic: Okay. Okay. That's helpful. And then, Chadwick, just a quick one on the PC Financial. Just curious on, and thanks for the P&L that was provided, the high-level P&L on that business that's being acquired. In terms of, it looks like about a 4% loss ratio on that portfolio, and that's trailing 12 months. And I'm wondering if you have anything you can offer in terms of what's the parameter there? Is that 4% current in terms of the macro outlook being a little bit uncertain? Is it a little bit elevated? What is it normally at? I don't have color on if that 4% is a bit high right now or if it's right where it should be as a run rate.

Chadwick Westlake: And then where does that tend to go when things get really concerning on the consumer side in terms of risk? Yeah. Thanks, Mike. So I would say it does reflect the current environment. The normal level would be more in the, even last year, more in that 4.6% range. Trailing 12 months was about 4.2%. I would say you asked me this question last night. I'll say again, these are a different type of borrower, right? This is a higher FICO Score, credit score than the Canadian average, high household income, high digital enablement, attractive customer base, and well over 80% are prime and super prime. So it is a different quality and well below their loss rate thresholds. So does it reflect in our models, the current credit environment? Yes. And I think you could see this continued trend level.

And then where does that tend to go when things get really concerning on the consumer side in terms of risk?

Chadwick Westlake: Yeah. Thanks, Mike. So I would say it does reflect the current environment. The normal level would be more in the, even last year, more in that 4.6% range. Trailing 12 months was about 4.2%. I would say you asked me this question last night. I'll say again, these are a different type of borrower, right? This is a higher FICO Score, credit score than the Canadian average, high household income, high digital enablement, attractive customer base, and well over 80% are prime and super prime. So it is a different quality and well below their loss rate thresholds.

So does it reflect in our models, the current credit environment? Yes. And I think you could see this continued trend level.

Chadwick Westlake: But in our models, do we model it for different scenarios? Absolutely. And it still makes a lot of accretive sense either way. And then just out of curiosity, are you able to give us a sense of the capital that backs that business, just in terms of dollar terms? I'm just trying to get a sense of the ROE of that acquired business. I'm not sure if you're able to provide that right now, but thought I'd ask. Yeah. Well, I follow up on it. I'd say it's a different way. There's a high CET1 capital position in that, but that's not really the way to think about the business. The way to think about the business is how we're going to close it. And that's where we pegged it at 13% at closing.

But in our models, do we model it for different scenarios? Absolutely. And it still makes a lot of accretive sense either way.

Mike Rizvanovic: And then just out of curiosity, are you able to give us a sense of the capital that backs that business, just in terms of dollar terms? I'm just trying to get a sense of the ROE of that acquired business. I'm not sure if you're able to provide that right now, but thought I'd ask.

Chadwick Westlake: Yeah. Well, I follow up on it. I'd say it's a different way. There's a high CET1 capital position in that, but that's not really the way to think about the business. The way to think about the business is how we're going to close it. And that's where we pegged it at 13% at closing.

Chadwick Westlake: And that's why you're going to see this hurdle really well from a base case, and then with even the modest synergies, let alone all the upside from there. So fair to say that it's a very, very good ROE business in relation to the lending business? Yes, sir. It is. Okay. Okay. Thanks for the color. Appreciate it. Thanks, Mike. Have a good one. And the next question comes from Darko Mihelic with RBC Capital Markets. Please go ahead. Hi. Thank you. My questions are for Marlene. The first one is with respect to the residential mortgage impairments. I was just curious if you can talk a little bit about the nature of these formations.

And that's why you're going to see this hurdle really well from a base case, and then with even the modest synergies, let alone all the upside from there.

Mike Rizvanovic: So fair to say that it's a very, very good ROE business in relation to the lending business?

Chadwick Westlake: Yes, sir. It is.

Mike Rizvanovic: Okay. Okay. Thanks for the color. Appreciate it.

Chadwick Westlake: Thanks, Mike.Have a good one.

Operator: And the next question comes from Darko Mihelic with RBC Capital Markets. Please go ahead.

Darko Mihelic: Hi. Thank you. My questions are for Marlene. The first one is with respect to the residential mortgage impairments. I was just curious if you can talk a little bit about the nature of these formations.

Chadwick Westlake: In other words, what I'm trying to better understand is, is the primary reason for the formation job loss, or is it simply the weight of the mortgage payment and the over-indebtedness of the consumer that eventually has them fall behind and go impaired? And as a follow-on onto that, as we look forward into 2026, is the vast majority of the renewals that are occurring, will they be at a higher payment or a lower payment in 2026? Okay. Those are great questions, Darko. Thank you. I would say a couple of things. One, when we look at the formations and the reason codes, if you will, for customers who go into default, it's a bit of a mixed bag. Some of it is related to job loss.

In other words, what I'm trying to better understand is, is the primary reason for the formation job loss, or is it simply the weight of the mortgage payment and the over-indebtedness of the consumer that eventually has them fall behind and go impaired? And as a follow-on onto that, as we look forward into 2026, is the vast majority of the renewals that are occurring, will they be at a higher payment or a lower payment in 2026?

Marlene Lenurdazzi: Okay. Those are great questions, Darko. Thank you. I would say a couple of things. One, when we look at the formations and the reason codes, if you will, for customers who go into default, it's a bit of a mixed bag. Some of it is related to job loss.

Chadwick Westlake: Some of it is just customers who are holding on for a long time and having a harder time as the macroeconomic environment shifts. As you probably are aware, about 66% of our customers are self-employed. So as there's less activity in the macroeconomic environment, GDP slows, their businesses are impacted rather, and we see that happening. In terms of industry segments, these are industry segments that we see across the portfolios. Construction is impacted. Those working in transportation are other areas that are impacted. And then in terms of other segments, we talked about the, what was the second part of your question? Can you repeat that, Darko? The potential payment shock on renewals in 2026. Or relief. I don't know if it's. Yeah, yeah. I've got that.

Some of it is just customers who are holding on for a long time and having a harder time as the macroeconomic environment shifts. As you probably are aware, about 66% of our customers are self-employed. So as there's less activity in the macroeconomic environment, GDP slows, their businesses are impacted rather, and we see that happening. In terms of industry segments, these are industry segments that we see across the portfolios. Construction is impacted.

Those working in transportation are other areas that are impacted. And then in terms of other segments, we talked about the, what was the second part of your question? Can you repeat that, Darko?

Darko Mihelic: The potential payment shock on renewals in 2026. Or relief. I don't know if it's.

Marlene Lenurdazzi: Yeah, yeah. I've got that.

Chadwick Westlake: So, in terms of renewals, the segment that this more vulnerable segment that we've been talking about, the sort of GTA suburb, as you can imagine, their renewal rates have been higher, but that portfolio has actually come down about 26% year over year. In terms of renewal rates, they are renewing into lower rates for the most part because you recall our duration is quite short. So our customers who were originated in 2022 at those very low rates have already renewed into higher rates and actually have started to renew. They've renewed into the lower rate, and some of them have renewed again into lower rates. Their duration is like one to two years, generally. And sorry, is it meaningfully lower or just modestly lower in terms of the payments? In terms of the payments, meaningfully lower. Yeah. The payments would be meaningfully lower. Okay.

So, in terms of renewals, the segment that this more vulnerable segment that we've been talking about, the sort of GTA suburb, as you can imagine, their renewal rates have been higher, but that portfolio has actually come down about 26% year over year. In terms of renewal rates, they are renewing into lower rates for the most part because you recall our duration is quite short. So our customers who were originated in 2022 at those very low rates have already renewed into higher rates and actually have started to renew. They've renewed into the lower rate, and some of them have renewed again into lower rates. Their duration is like one to two years, generally.

Darko Mihelic: And sorry, is it meaningfully lower or just modestly lower in terms of the payments? In terms of the payments, meaningfully lower.

Marlene Lenurdazzi: Yeah. The payments would be meaningfully lower.

Darko Mihelic: Okay.

Chadwick Westlake: And then a follow-on question, and maybe I'm sort of, I just want to make sure that I'm interpreting your remarks. With respect to the forward outlook, I recall last year thinking about a range of 12 basis points or so for losses overall. Are you willing to talk about the range for 2026? Not at this time, Darko. Okay. And then my last question is in relation to the transaction. And again, it's aimed at you, Marlene. Does this in any way, assuming the transaction closes as per plan, does this in any way slow down your AIRB approval work, or would that just continue on and you would separately look to eventually get the P&C moved over to AIRB more futuristically? I'm just curious if there's any impact at all on your work there. No, it hasn't.

And then a follow-on question, and maybe I'm sort of, I just want to make sure that I'm interpreting your remarks. With respect to the forward outlook, I recall last year thinking about a range of 12 basis points or so for losses overall. Are you willing to talk about the range for 2026?

Marlene Lenurdazzi: Not at this time, Darko.

Darko Mihelic: Okay. And then my last question is in relation to the transaction. And again, it's aimed at you, Marlene. Does this in any way, assuming the transaction closes as per plan, does this in any way slow down your AIRB approval work, or would that just continue on and you would separately look to eventually get the P&C moved over to AIRB more futuristically? I'm just curious if there's any impact at all on your work there.

Marlene Lenurdazzi: No, it hasn't.

Chadwick Westlake: We actually are fully committed to our AIRB strategy, and we're moving ahead with our plans on the existing portfolio. Then we will assess the PC Financial portfolio and likely make plans for that moving into AIRB or remaining standardized. But I would expect it would, based on the outcome of that analysis, then we'll decide. Darko, I'd say as well on the questions, so our capital allocation and our development plans here continue. We've been working on that for a long period of time. It is important. But also look at the regulatory environment, and our regulators have been very open about AIRB support, or there could also still end up being an AIRB light or further changes in risk floors. We don't know yet, but I think we've certainly got the sentiment that there'll be progress here.

We actually are fully committed to our AIRB strategy, and we're moving ahead with our plans on the existing portfolio. Then we will assess the PC Financial portfolio and likely make plans for that moving into AIRB or remaining standardized. But I would expect it would, based on the outcome of that analysis, then we'll decide.

Chadwick Westlake: Darko, I'd say as well on the questions, so our capital allocation and our development plans here continue. We've been working on that for a long period of time. It is important. But also look at the regulatory environment, and our regulators have been very open about AIRB support, or there could also still end up being an AIRB light or further changes in risk floors. We don't know yet, but I think we've certainly got the sentiment that there'll be progress here.

Chadwick Westlake: There'll be supportive to greater competition and ensuring we can get investment back into businesses, into consumers. Okay. Great. Thank you very much for the insights. Thanks, Darko. And the next question comes from Etienne Ricard with BMO Capital Markets. Please go ahead. Thank you. And good morning. So credit cards will become a new product at EQB. How would you contrast the long-term growth potential of the card portfolio relative to mortgages? The reason I'm asking is I tend to think of EQB's long-term loan growth track record to be in the low double digits for mortgages. And I think we're all aware of the industry tailwinds in that space with the shift to mortgage brokers and the growing size of the alternative market. Now, credit card appears more GDP-driven. Would you agree with this statement? Thanks, Etienne. I think a couple of things to think about.

There'll be supportive to greater competition and ensuring we can get investment back into businesses, into consumers.

Darko Mihelic: Okay. Great. Thank you very much for the insights.

Chadwick Westlake: Thanks, Darko.

Operator: And the next question comes from Etienne Ricard with BMO Capital Markets. Please go ahead.

Étienne Ricard: Thank you. And good morning. So credit cards will become a new product at EQB. How would you contrast the long-term growth potential of the card portfolio relative to mortgages? The reason I'm asking is I tend to think of EQB's long-term loan growth track record to be in the low double digits for mortgages. And I think we're all aware of the industry tailwinds in that space with the shift to mortgage brokers and the growing size of the alternative market.

Now, credit card appears more GDP-driven. Would you agree with this statement?

Chadwick Westlake: Thanks, Etienne. I think a couple of things to think about.

Chadwick Westlake: So after we close, we'll share more about our outlook for the business. But what I would say is don't just think about this as a credit card. I think about this very much as payment solutions for Canadians and a truly valuable, in many cases, low-fee, no-fee card and payment solution for Canadians. And importantly, backed by the power of the PC Optimum program with those 17 million members, that is the best in this country. And it brings so many options for Canadians. So they are going to want to grow. We are going to grow cards and customers because of the payments with the loyalty, because it adds more value for people in this country. So there's a huge upside potential there for us. And that includes with existing EQ customers, where there's going to be a benefit here.

So after we close, we'll share more about our outlook for the business. But what I would say is don't just think about this as a credit card. I think about this very much as payment solutions for Canadians and a truly valuable, in many cases, low-fee, no-fee card and payment solution for Canadians. And importantly, backed by the power of the PC Optimum program with those 17 million members, that is the best in this country. And it brings so many options for Canadians.

So they are going to want to grow. We are going to grow cards and customers because of the payments with the loyalty, because it adds more value for people in this country. So there's a huge upside potential there for us. And that includes with existing EQ customers, where there's going to be a benefit here.

Chadwick Westlake: Plus, we can do more for PCF customers as well as they come into our ecosystem. It's a win-win on both sides. But I see payments as growing as a fundamental need for Canadians. This is going to give us the tools to grow that other way. That will then drive revenue, of course, too, right? When you think of the non-interest revenue, this is not just about NIR or cards. This gives it all backed by PC Optimum. We have the exclusive position with that PC Optimum. So it's really important, I think, to keep that as front of mind. Does the transaction impact your capital allocation policies, whether that's share buybacks heading into closing or maybe the dividend payout looking longer term? No. No. As you heard Annalisa say, we have a buyback plan and intent for 2026.

Plus, we can do more for PCF customers as well as they come into our ecosystem. It's a win-win on both sides. But I see payments as growing as a fundamental need for Canadians. This is going to give us the tools to grow that other way. That will then drive revenue, of course, too, right? When you think of the non-interest revenue, this is not just about NIR or cards. This gives it all backed by PC Optimum. We have the exclusive position with that PC Optimum. So it's really important, I think, to keep that as front of mind.

Étienne Ricard: Does the transaction impact your capital allocation policies, whether that's share buybacks heading into closing or maybe the dividend payout looking longer term?

Chadwick Westlake: No. No. As you heard Annalisa say, we have a buyback plan and intent for 2026.

Chadwick Westlake: We have a great, strong capital position, and that will all continue. Thank you very much. Thanks, Annalisa. The next question comes from Graham Ryding with TD Securities. Please go ahead. Hi. Good morning. Maybe I could just follow up on that theme, Chadwick. Can you just explain if you're offering as an exclusive financial partner here with PC Optimum, you're going to be offering loyalty points to your EQB customers, I assume, outside of just the credit card? How should we think about the economics there? Will this be a cost to you that you offset with greater deposit growth and ultimately lower NIM? But is there also a benefit here from higher interchange payment fees that ultimately help pay for these loyalty costs? Yeah. I think it's a combination of the factors. So there'll be higher cash rewards.

We have a great, strong capital position, and that will all continue.

Étienne Ricard: Thank you very much.

Chadwick Westlake: Thanks, Etienne.

Operator: The next question comes from Graham Ryding with TD Securities. Please go ahead.

Graham Ryding: Hi. Good morning. Maybe I could just follow up on that theme, Chadwick. Can you just explain if you're offering as an exclusive financial partner here with PC Optimum, you're going to be offering loyalty points to your EQB customers, I assume, outside of just the credit card? How should we think about the economics there? Will this be a cost to you that you offset with greater deposit growth and ultimately lower NIM? But is there also a benefit here from higher interchange payment fees that ultimately help pay for these loyalty costs?

Chadwick Westlake: Yeah. I think it's a combination of the factors. So there'll be higher cash rewards.

Chadwick Westlake: There'll definitely be higher growth in our funding capabilities. Obviously, we'll have higher interchange over time. But this will become part of the value proposition overall where if we have PC Optimum and our existing customers can use it, that will encourage them to want to deepen their relationships and do more business with us. That's really the underlying factor. I think if you think of the full shelf, we have the notice savings accounts, excellent FX transfer, US dollar accounts, registered accounts, and excellent payroll accounts. Everything will come into that platform, and then we can cross-sell more from there that will drive positive economics. Okay. So ultimately, greater penetration on the deposit side, which helps your NIM, but also on the revenue side around the interchange fees. That's how you offset the loyalty costs. Okay.

There'll definitely be higher growth in our funding capabilities. Obviously, we'll have higher interchange over time. But this will become part of the value proposition overall where if we have PC Optimum and our existing customers can use it, that will encourage them to want to deepen their relationships and do more business with us. That's really the underlying factor. I think if you think of the full shelf, we have the notice savings accounts, excellent FX transfer, US dollar accounts, registered accounts, and excellent payroll accounts. Everything will come into that platform, and then we can cross-sell more from there that will drive positive economics.

Graham Ryding: Okay. So ultimately, greater penetration on the deposit side, which helps your NIM, but also on the revenue side around the interchange fees. That's how you offset the loyalty costs. Okay.

Chadwick Westlake: And then my second question is just when you think about the sort of cross-sell opportunities here, selling that PC Mastercard into your existing 600,000 EQ Bank customers, is that potentially an easier synergy to execute on versus increasing that EQ Bank customer base through either leveraging PC loyalty program or just the distribution infrastructure that PC Financial has? How do you think about those sort of different synergy opportunities? Well, both. I think as a customer, you're going to love it when you have the PC Optimum loaded into the EQ account. You're going to see the integration that you're going to have. You're going to have all that and the platform to drive the growth. So it is both of what you said. And what I'd say again, it's a little early for us to give all the details.

And then my second question is just when you think about the sort of cross-sell opportunities here, selling that PC Mastercard into your existing 600,000 EQ Bank customers, is that potentially an easier synergy to execute on versus increasing that EQ Bank customer base through either leveraging PC loyalty program or just the distribution infrastructure that PC Financial has? How do you think about those sort of different synergy opportunities?

Chadwick Westlake: Well, both. I think as a customer, you're going to love it when you have the PC Optimum loaded into the EQ account. You're going to see the integration that you're going to have. You're going to have all that and the platform to drive the growth. So it is both of what you said. And what I'd say again, it's a little early for us to give all the details.

Chadwick Westlake: There's going to be more to come as we get closer to close. This is an excellent deal for shareholders, for customers, for employees. This hurdles at the 15% plus ROE with very, very modest savings. All of what you're talking about there is the full potential upside still for us and our franchise. Really, this is about Canadians first and the product shelf and the value that everyday Canadians have. This is going to complete that in a very significant way. It's Canadians first. By doing that, we're going to do really well for our shareholders here and a lot more upside to come as we get closer to close on this. Okay. Just my last question. You gave us some guidance on loan under management, I think mid to high single digits growth. Sorry, high single to low double digit.

There's going to be more to come as we get closer to close. This is an excellent deal for shareholders, for customers, for employees. This hurdles at the 15% plus ROE with very, very modest savings. All of what you're talking about there is the full potential upside still for us and our franchise. Really, this is about Canadians first and the product shelf and the value that everyday Canadians have. This is going to complete that in a very significant way. It's Canadians first. By doing that, we're going to do really well for our shareholders here and a lot more upside to come as we get closer to close on this.

Graham Ryding: Okay. Just my last question. You gave us some guidance on loan under management, I think mid to high single digits growth. Sorry, high single to low double digit.

Chadwick Westlake: What is your growth expectation for on-balance sheet loan growth for next year? Yeah. Happy to take that one. As you see, as we look ahead to 2026, we see the green shoots for economic recovery and growth. From a LUM perspective, as we said, high single digit to low double digits range for 2026. So very consistent with what we've delivered this year, though skewed to the latter half of the year. On the personal SFR side, so that's all on balance sheet, we see an improved rate environment, not relying on future cuts, but the cuts that came through certainly in the last quarter, combined with pent-up housing demand to be quite strong. Accumulation we see to be strong momentum as we see Canadians wanting to age in place and executing their estate planning. And so overall, we expect kind of medium single digit growth in that portfolio.

What is your growth expectation for on-balance sheet loan growth for next year?

Anilisa Sainani: Yeah. Happy to take that one. As you see, as we look ahead to 2026, we see the green shoots for economic recovery and growth. From a LUM perspective, as we said, high single digit to low double digits range for 2026. So very consistent with what we've delivered this year, though skewed to the latter half of the year. On the personal SFR side, so that's all on balance sheet, we see an improved rate environment, not relying on future cuts, but the cuts that came through certainly in the last quarter, combined with pent-up housing demand to be quite strong.

Anilisa Sainani: Accumulation we see to be strong momentum as we see Canadians wanting to age in place and executing their estate planning. And so overall, we expect kind of medium single digit growth in that portfolio.

Chadwick Westlake: As a reminder, I would just call out we are continuing to intentionally and strategically pull back from the insured single-family residential. So there is declines in that portfolio that offset some of the growth that we're seeing in the uninsured piece. And that's again as we balance total risk-adjusted returns. In commercial, we see market demand for multi-family residential that's expected to continue to grow. There continues to be a need for affordable housing, and the rate environment placed through there as well. And I know you're focused on the on-balance sheet, but just one final point on the off-balance sheet. We have, in the federal budget, we were really pleased to see the expansion of the CMB pool limits. And we stand to benefit from that as we do have a market-leading securitization provision.

As a reminder, I would just call out we are continuing to intentionally and strategically pull back from the insured single-family residential. So there is declines in that portfolio that offset some of the growth that we're seeing in the uninsured piece. And that's again as we balance total risk-adjusted returns. In commercial, we see market demand for multi-family residential that's expected to continue to grow. There continues to be a need for affordable housing, and the rate environment placed through there as well.

And I know you're focused on the on-balance sheet, but just one final point on the off-balance sheet. We have, in the federal budget, we were really pleased to see the expansion of the CMB pool limits. And we stand to benefit from that as we do have a market-leading securitization provision.

Chadwick Westlake: So that allows us to kind of lean into even more capacity on that side. We expect, roughly speaking, mid-single-digit million growth there. Great. That's it for me. Thank you. Thanks, Graham. And the next question comes from Doug Young with Desjardins. Please go ahead. Hi. Good morning. Chadwick, I guess both of these are probably for you. But on the wealth priority side, you talked about it in your prepared remarks. And that's not new. I think you talked about it before, wanting to build some form of wealth platform. I assume this is not organic, that you would do this in an inorganic manner. Can you do something else before you close PC and before you integrate PC? And can you maybe just remind us what it is that you're interested in as you talk about wealth? Thanks, Chadwick.

So that allows us to kind of lean into even more capacity on that side. We expect, roughly speaking, mid-single-digit million growth there.

Graham Ryding: Great. That's it for me. Thank you.

Chadwick Westlake: Thanks, Graham.

Operator: And the next question comes from Doug Young with Desjardins. Please go ahead.

Doug Young: Hi. Good morning. Chadwick, I guess both of these are probably for you. But on the wealth priority side, you talked about it in your prepared remarks. And that's not new. I think you talked about it before, wanting to build some form of wealth platform. I assume this is not organic, that you would do this in an inorganic manner. Can you do something else before you close PC and before you integrate PC? And can you maybe just remind us what it is that you're interested in as you talk about wealth? Thanks, Chadwick.

Chadwick Westlake: First, I'm going to repeat again, though, that obviously, for sure, we've highlighted that wealth represents an important strategic gap we're looking to close over time. I don't think it's appropriate for me to speculate on M&A, but I would say there's different pros and cons to building versus buying in the wealth space. Our current focus, though, will remain on the successful integration of PCF first. Then the remaining ingredient is wealth. The simplest way I could say is for a complete successful challenger, you need the best day-to-day offering, the best payments offering, and now we can do loyalty. We have that. We'll have a direct reach to millions of customers.

The simplest way I could say is for a complete successful challenger, you need the best day-to-day offering, the best payments offering, and now we can do loyalty. We have that. We'll have a direct reach to millions of customers.

Chadwick Westlake: And then what could be most constructive within the EQ Bank offering is a higher-yielding offering integrated into the digital lineup that really gives Canadians more choice for to put their money outside of, say, high-interest savings accounts, GICs, and more. So a real long-term perspective on how to generate more yield integrated into the lineup is one of the ways to think about it. And then outside of that, when you step back and think of EQB, remember we have an excellent alternative asset management company called ACM Advisors. We have one of the top trust companies in Canada that's performing really well. So we have various ingredients, but we'll bring that concerted focus back to EQ Bank and that integrated wealth offering to give more choice to customers all within the platform. And I assume this is more distribution than manufacturing. Yeah. Distribution. So it is distribution.

And then what could be most constructive within the EQ Bank offering is a higher-yielding offering integrated into the digital lineup that really gives Canadians more choice for to put their money outside of, say, high-interest savings accounts, GICs, and more. So a real long-term perspective on how to generate more yield integrated into the lineup is one of the ways to think about it.

And then outside of that, when you step back and think of EQB, remember we have an excellent alternative asset management company called ACM Advisors. We have one of the top trust companies in Canada that's performing really well. So we have various ingredients, but we'll bring that concerted focus back to EQ Bank and that integrated wealth offering to give more choice to customers all within the platform.

Doug Young: And I assume this is more distribution than manufacturing.

Chadwick Westlake: Yeah. Distribution. So it is distribution.

Chadwick Westlake: We represent distribution as well now. So, we need the product and the solution on our distribution shelf is one way to think about it as well. But it is more anchored in our expertise in distribution. But bringing the product into the shelf is really important. Okay. Then you can correct me if I'm wrong. Second question here. I think you talked, Chadwick, about the potential ROE approaching 12% by the end of fiscal 2026. And when I kind of look at the math, it's hard to get there unless you have a material improvement in the PCL versus what we saw. And I'm talking PCL half of what we saw in Q4. So I'm just trying to get a sense. Am I reading that right? Did you talk about 12% by the end of the year?

We represent distribution as well now. So, we need the product and the solution on our distribution shelf is one way to think about it as well. But it is more anchored in our expertise in distribution. But bringing the product into the shelf is really important.

Doug Young: Okay. Then you can correct me if I'm wrong. Second question here. I think you talked, Chadwick, about the potential ROE approaching 12% by the end of fiscal 2026. And when I kind of look at the math, it's hard to get there unless you have a material improvement in the PCL versus what we saw. And I'm talking PCL half of what we saw in Q4. So I'm just trying to get a sense. Am I reading that right? Did you talk about 12% by the end of the year?

Chadwick Westlake: What would be some of the drivers to get there? And is it mostly PCLs? Obviously, expense, growth, kind of impossible operating leverage would be key. Just trying to kind of understand a little bit more about that. Yeah. I'd say a couple of things. So what I did say is 12%, but I said higher than that by later next year. And step one is the expense side that Annalisa spoke about that we've delivered on. We can control the cost. You haven't even seen that benefit roll through yet. That will start rolling through in Q1. And that's the most significant component of it. And we're planning and ready if it is a slower market, if it is a lower revenue market, then we get a long way there just with the expense side.

What would be some of the drivers to get there? And is it mostly PCLs? Obviously, expense, growth, kind of impossible operating leverage would be key. Just trying to kind of understand a little bit more about that.

Chadwick Westlake: Yeah. I'd say a couple of things. So what I did say is 12%, but I said higher than that by later next year. And step one is the expense side that Annalisa spoke about that we've delivered on. We can control the cost. You haven't even seen that benefit roll through yet. That will start rolling through in Q1. And that's the most significant component of it. And we're planning and ready if it is a slower market, if it is a lower revenue market, then we get a long way there just with the expense side.

Chadwick Westlake: And then as the revenue environment picks up, that will improve, especially with the net interest margin discipline that we brought in and how we brought more expansion back to that. And then your other ingredient is PCL, as you said. And you heard Marlene's sentiment on that. Again, we do think we're at a position of strength, and there's a lot of factors to consider, but we would expect that improvement later next year. So when you add all those up, plus then you think about your denominator, right, and what we're doing with capital and our intent to continue with buybacks to further accrete ROE and really put the capital to work. All those ingredients combined, I think you see we would expect in our base case, you see that higher by later next year and then moving towards our medium-term objectives into the following year at pace.

And then as the revenue environment picks up, that will improve, especially with the net interest margin discipline that we brought in and how we brought more expansion back to that. And then your other ingredient is PCL, as you said. And you heard Marlene's sentiment on that. Again, we do think we're at a position of strength, and there's a lot of factors to consider, but we would expect that improvement later next year. So when you add all those up, plus then you think about your denominator, right, and what we're doing with capital and our intent to continue with buybacks to further accrete ROE and really put the capital to work.

All those ingredients combined, I think you see we would expect in our base case, you see that higher by later next year and then moving towards our medium-term objectives into the following year at pace.

Chadwick Westlake: Appreciate the color. Thank you. Thank you, Doug. And the last question comes from Stephen Boland with Raymond James. Please go ahead. Thanks. Just one question. When you talk about pulling back on the insured single family, I always thought that was a tool you use to basically retain the customer and maintain broker relationships as well. You go into a broker and they have prime, and you can insure it, but they also have alternate traditional single family, and you underwrite all of them. So has that changed? Is it consumer behavior changed or a change in thought? I'm just curious about that. Yeah. Thanks, David. So pullback sure. Our focus is growing the uninsured. Our focus is supporting the mortgage brokers. The mortgage brokers, we always still say, are the best ways to get a mortgage in Canada.

Doug Young: Appreciate the color. Thank you.

Chadwick Westlake: Thank you, Doug.

Operator: And the last question comes from Stephen Boland with Raymond James. Please go ahead.

Stephen Boland: Thanks. Just one question. When you talk about pulling back on the insured single family, I always thought that was a tool you use to basically retain the customer and maintain broker relationships as well. You go into a broker and they have prime, and you can insure it, but they also have alternate traditional single family, and you underwrite all of them. So has that changed? Is it consumer behavior changed or a change in thought? I'm just curious about that.

Chadwick Westlake: Yeah. Thanks, David. So pullback sure. Our focus is growing the uninsured. Our focus is supporting the mortgage brokers. The mortgage brokers, we always still say, are the best ways to get a mortgage in Canada.

Chadwick Westlake: They're vital partners, and we're going to support them and serve them really well. First priority is the uninsured. Then in some cases, yeah, you have some insured, but insured is a thinner margin. It's very competitive. We want to focus our capital as well where we can when we're doing really well for Canadians. So it's a bit of a combination. We pull back more. It's not a new thing. It actually goes back probably a year or two. You'll still see some, but it hasn't been a priority. I think that's often why our asset growth is misperceived. People just look at OSFI data and say assets are down. Well, it's because we deprioritized lower profitability. We're not chasing volume. We're putting on thoughtful, profitable growth underpinned by Canadians' needs first. That's what we're doing here as we go forward.

They're vital partners, and we're going to support them and serve them really well. First priority is the uninsured. Then in some cases, yeah, you have some insured, but insured is a thinner margin. It's very competitive. We want to focus our capital as well where we can when we're doing really well for Canadians. So it's a bit of a combination.

We pull back more. It's not a new thing. It actually goes back probably a year or two. You'll still see some, but it hasn't been a priority. I think that's often why our asset growth is misperceived. People just look at OSFI data and say assets are down. Well, it's because we deprioritized lower profitability. We're not chasing volume. We're putting on thoughtful, profitable growth underpinned by Canadians' needs first. That's what we're doing here as we go forward.

Chadwick Westlake: How has the broker reaction been to that, that you would do those types of loans and then you're kind of saying, "No, we don't really want to do it anymore"? It's not new news. This is long-standing. I think you're just seeing some of that play out. This was, I'll call it over a year ago. I'd say our partnerships with brokers, the strength of our relationship with brokers has never been stronger. They fully understand our model and where we can best serve them. So I'd say it's very positive, Stephen. Okay. Thanks very much. Have a great day. Thank you. That concludes our question-and-answer session. I would like to turn it back to Chadwick Westlake for closing remarks. Thank you, everyone, for joining us today. We'd like to thank everyone for their continued support and wish everyone a safe and joyous holiday season.

Stephen Boland: How has the broker reaction been to that, that you would do those types of loans and then you're kind of saying, "No, we don't really want to do it anymore"?

Chadwick Westlake: It's not new news. This is long-standing. I think you're just seeing some of that play out. This was, I'll call it over a year ago. I'd say our partnerships with brokers, the strength of our relationship with brokers has never been stronger. They fully understand our model andwhere we can best serve them. So I'd say it's very positive, Stephen.

Stephen Boland: Okay. Thanks very much.

Chadwick Westlake: Have a great day.

Chadwick Westlake: Thank you. That concludes our question-and-answer session. I would like to turn it back to Chadwick Westlake for closing remarks.

Thank you, everyone, for joining us today. We'd like to thank everyone for their continued support and wish everyone a safe and joyous holiday season.

Chadwick Westlake: Annalisa, Lamar, and I look forward to seeing some of you early in the new year at the RBC Capital Markets Bank CEO Conference on 6 January. Thanks very much. Have a great day. This concludes today's conference call. Thank you all for joining. You may now disconnect.

Annalisa, Lamar, and I look forward to seeing some of you early in the new year at the RBC Capital Markets Bank CEO Conference on 6 January. Thanks very much. Have a great day.

Operator: This concludes today's conference call. Thank you all for joining. You may now disconnect.

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