EQB Bank recorded significant growth in its uninsured mortgage and CMHC-backed multi-unit loan businesses during the second quarter of 2025, despite a challenging economic environment and an increase in loan loss provisions.

According to the bank's earnings report, the uninsured residential mortgage portfolio grew by 2% compared to the previous quarter, supported by a 28% increase in annual issuances in one of the strongest quarters in terms of customer loan retention. The volume of applications submitted in May also increased by 17% compared to last year.

CEO Andrew Moore stated that the bank is gaining market share at the expense of a major competitor, emphasizing that this growth has come without compromising credit standards, with an average loan-to-value ratio of 70% for uninsured residential mortgages.

Increase in Provisions for Impaired Loans

Despite the growth, impaired loans rose by 8% to reach $775 million, with stage three provisions recorded at $23.2 million, most of which is related to loans originated in 2022. Management noted that these loans were affected by sharp declines in property values compared to the broader market, with delays in file resolution due to slow legal proceedings.

Chief Risk Officer Marlene Leonarduzzi projected that provisions would remain elevated in the third quarter, but she and Moore confirmed that the second quarter may represent the peak.

Growth in Reverse Mortgages and Multi-Unit Housing

The reverse mortgage portfolio registered growth of 8% quarter-over-quarter and 45% year-over-year to reach $2.5 billion, while CMHC-backed multi-unit residential loans increased by 6% and 29%, respectively.

Challenges Affecting Returns

The return on equity declined to 11.9% compared to 15.9% a year ago, due to higher provisions and weak securitization earnings. However, the bank affirmed that it is still on track to achieve a targeted return of between 15% and 17% in the medium term.

Benefiting from Interest Rate Cuts

Vice President of Finance David Wilks stated that the bank will benefit from additional interest rate cuts from the Bank of Canada, as many of its variable rate loans have already reached the contractual minimum, meaning that lower funding costs will enhance the net interest margin.