March 2018 1 Forward-Looking Statements Certain forward-looking - - PowerPoint PPT Presentation

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Forth Quarter 2017 March 2018

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Forward-Looking Statements

Certain forward-looking statements may be made in this presentation, including statements regarding possible future business, financing and growth objectives. Investors are cautioned that such forward- looking statements involve risks and uncertainties detailed from time to time in the Company’s periodic reports filed with Canadian regulatory authorities. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Equitable Group Inc. does not undertake to update any forward-looking statements, oral or written, made by itself or on its behalf except in accordance with applicable securities laws.

www.eqbank.ca

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Company Overview

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Investment Thesis

Structural business model advantages Disciplined and proven value creation processes Track record of consistent performance

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Well positioned as a challenger bank

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Company Overview

• 9th largest investable Schedule I bank in Canada by assets
• Proven lending and deposit-taking capabilities
• 45+ year track record
• 120th most profitable company in Canada

(Globe & Mail, 2016)

Who We Are Our Vision

4.1 5.4 6.4 7.9 9.3 2.4 2.3 2.2 2.8 3.0 5.6 6.1 8.0 10.3 10.9 2013 2014 2015 2016 2017

Single Family Commercial Securitization Financing

Diversified Business Earnings Momentum

• Become Canada’s leading challenger bank…
• …by providing the best customer service experience of any

bank in Canada

• Nurturing a distinctive culture that engages our employees
• Delivering a long-term Return on Equity above 15% and

maintaining strong capital ratios

Mortgages Under Management ($Bn) Earnings Per Share ($) 5.11 5.82 6.53 7.73 8.49 9.39 2012 2013 2014 2015 2016 2017

13% CAGR

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Canada’s Challenger Bank™

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Launched EQ Bank, our first direct-to- consumer business

INCREASING GEOGRAPHIC COVERAGE AND PRODUCT BREADTH

Long History as a Regulated Canadian Financial Institution

Have Been Successfully Evolving the Business

2004 2008 2013 2014 2015 2016

IPO of Equitable Group Increased focus

• n Alternative

Single Family business Opened Montreal Office Launched brokered HISA account Converted Equitable Trust to Equitable Bank Issued first Deposit Note Implemented new large bank sponsored funding facility Entered Prime Single Family business Became a truly national alternative SFR lender, with entry into Quebec market Implemented two new funding facilities Opened Vancouver Office

1970

Equitable Trust Incorporated Introduced a HELOC Began to Issue MBS and Participate in CMB Launched Alternative Single Family business in Quebec

2006

Opened Calgary Office

2010 2017

Launched PATH Home Plan product

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Equitable’s Long-Term Value Creation Equation

29.83 35.14 40.90 46.57 54.96 64.57 2012 2013 2014 2015 2016 2017

17% CAGR Book Value Per Share ($)

Grow Capital by Retaining the Majority of Earnings and Reinvesting in the Business Grow Assets at Rates In-Line With Capital Growth, if Opportunities Meet or Exceed Our ROE Targets Generate an ROE in the Mid to High Teens Pay Out a Consistently Growing Dividend to Our Shareholders

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Disciplined Capital Management

Strong capital base has allowed us to pursue our growth objectives while returning capital to shareholders

• Capital Management Framework

0.52 0.60 0.68 0.76 0.84 0.95

2012 2013 2014 2015 2016 2017

13% CAGR

Maintain target CET1 and leverage ratios Find attractive assets within existing markets; deploy to highest ROE opportunities first Consistently grow dividends Invest in growth and diversification initiatives that meet return thresholds Capital Deployment

• History of Consistent Dividend Growth

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Balance sheet strength

• Higher CET1 and Total Capital ratios than any of the eight largest

publicly traded Canadian Banks… – …even though we use the standardized approach to risk weight

• ur assets
• 91% of regulatory capital in high-quality common equity
• Strong Regulatory Capital Position
• Diversified Funding Sources
• $2.0 Bn backstop funding facility from big-6 Canadian Banks
• Liquidity portfolio of $1.4 Bn or 6.8% of total assets

– 93% is cash held at big-6 Canadian banks or in government guaranteed accounts/instruments

• LCR well in excess of regulatory minimum
• 100% of securities investments are preferred shares rated P-3(mid)
• r higher, with 42% rated P2(low) or higher

Resilient Liquidity Position

Brokered Term GICs, 37% EQ Bank Savings Account, 7% Brokered HISAs, 4% Bank Facilities, 4% CMB Program, 34% MBS, 14% Deposit Notes, 1%

$22.8 Bn total

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Our Digital Strategy

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Equitable is embracing FinTech

Be Open Be Collaborative Be Invested

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Digital simplicity, absent of legacy infrastructure, enables innovation

State-of-the-Art Banking Systems and Central Data Depository Account Opening Now More Automated For Quick Approval With Full FINTRAC Compliance

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What our customers are saying about us

“All things being equal I prefer the EQ experience. Using EQ I’ve grown to hate the ‘Tangerine two-step’ (transfer from savings to chequing and then pay bill) almost as much as I used to hate the 1-day delay transferring from PCF savings to chequing.” “IMO, EQ is better in this respect since they don’t play games with timing of deposits, starting balances, ‘new money’, etc. Every dollar of every customer earns the same 2%. That’s the fairest by far.” “EQ > Tangerine > PCF in my personal experience.”

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Canadians have responded well to our innovative digital banking platform

0.1 0.8 1.0 1.0 1.1 1.2 1.3 1.6 1.6

2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 First Marketing campaign (January 2016)

EQ Bank Deposit Principal Balances ($Bn)

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Our Recent Performance

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2017 Performance Highlights

Objectives Results

Grow by providing superior service, competitive products and cost-efficient operations  Grew assets by 9% to $20.6 billion  Completed development of PATH Home PlanTM, an equity release solution that launched in early 2018 and diversifies our product suite Build our capabilities and brand  Increased our deposit balances by $1.3 billion or 14% to $11 billion from $9.7 billion a year ago  Awarded 6th place in Financial IT’s 2017 ranking of the top digital banks globally  Received Canada’s Best Employer Platinum Award for 2018 by AON for the second consecutive year  Completed our IFRS 9 program and implemented it on January 1, 2018 Consistently create shareholder value  Delivered EPS of $9.39, 11% higher than in the preceding year even with $1.11 of costs related to successfully managing through a liquidity event  Produced an ROE of 15.8%  Declared common share dividends that were 13% higher than in 2016 Maintain a low risk profile  Recorded a provision for credit losses of $1.5 million or 1 bp of average loan balances  Reported a CET1 Ratio of 14.8%, which remained ahead of regulatory minimums, our own internal targets, and most competitive benchmarks

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Continued high returns

10.7 12.1 15.5 16.5 17.9 16.1 14.5 13.8 13.7 14.5 16.6 17.0 17.0 16.5 18.7 18.1 17.4 17.9 16.9 15.8 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Canadian Banks EQB

Includes eight largest publicly traded Canadian Banks Source: company filings, Bloomberg, Equitable analysis

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Liquidity and funding position has been stable

Deposit Principal Balances

($ billion)

Total Liquid Assets

($ billion)

Liquidity Coverage Ratio Well Above 100% Deposits Diversified and Growing

1.0 1.0 1.3 1.2 1.6 1.5 1.5 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 9.0 9.2 9.7 9.9 10.0 10.5 11.0 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017

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A strong risk management framework and low loss levels

Actual Credit Loss Rates, Selected Canadian Banks

EQB Industry Comparators1

Minimal Credit Losses and Strong Relative Performance Highlight Portfolio Quality

Notes: 1Industry Comparator group represents eight largest publicly traded Canadian banks Source: company filings, Bloomberg, Equitable analysis 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 07 08 09 10 11 12 13 14 15 16 17

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Branchless operating model yields higher productivity and efficiency

2017 Efficiency Ratios (%) 2017 Revenue per Employee ($000s/Employee)

Source: company filings, Equitable analysis

267 305 306 354 362 438 492 520 1,282 LB NB BNS CWB CIBC TD BMO RBC EQB 36.8 46.4 53.6 53.6 53.9 55.9 58.8 64.2 69.2 EQB CWB TD RBC BNS NB CIBC BMO LB

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Valuation Metrics vs. Other Canadian FIs

Price to Forward Earnings Price to Q4 2017 Book Price to Book vs. Forward ROE 2017E Return on Equity

Source: Bloomberg, Equitable analysis

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4 6 8 10 12 14 RY CWB TD BMO BNS NA CM HCG LB EQB EQB 0.50 1.00 1.50 2.00 2.50 6% 9% 12% 15% 18% Price / Book Multiple 0% 4% 8% 12% 16% 20% NA RY CM TD BNS EQB BMO CWB LB HCG

0.0 0.5 1.0 1.5 2.0 2.5

RY NA TD CM BNS BMO CWB EQB LB HCG

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Looking Forward

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Our 2018 objectives build on our capabilities and

• ur market opportunities

Grow our core lending businesses Launch an equity release solution Continue building EQ Bank Pursue AIRB initiative

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Diversify into adjacent businesses and win on service

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Equity Release Product Overview

Target Market Distribution Brand Loan Parameters

• Homeowners 55 years and older
• Residents of larger urban centers, such as

Toronto or Calgary

• Through Canada’s vibrant mortgage broker

community

• Maximum LTV at origination of 40%
• Term of up to 5 years
• Floating interest rate (based off prime)
• PATH Home Plan branding
• Delivers message of equity release being a

natural part of an overall financial plan

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Why and Why Now?

Attractive Market Favorable Competitive Landscape Diversification Platform Synergies with Existing Business

• Targets the growing demographic of aging Canadians
• Addresses increasing gap between retirement savings

and needs

• Provides an option for borrowers if recent regulatory

changes reduce availability of traditional mortgage credit

• New asset class but adjacent to existing businesses
• Broader range of products enhances our value

proposition to the broker community

• Leverages existing capabilities and financial strength
• Cash flow from current operations can finance reverse

mortgage investments

• Systems, corporate centre, and funding channels
• Relationships with brokers
• Robust risk management framework
• Only one incumbent regulated player
• Market size will likely make it appealing to only mid-

sized FIs; niche market not addressed by big-6

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Significant Market Opportunity

Source: 1. Statistics Canada – Projections for Canada, Provinces and Territories

• 2. Statistics Canada, 2011 National Household survey. Assumes approximately 5.8 million households with borrowers over 60, and a 69%
• wnership rate among those households. Average mortgage size is assumed to be $150,000 based on $500,000 house price and 30% LTV

Growing Population 60+ in Canada1

In Millions

Illustrative Market Size2

In $Bn

Penetration rates in other established equity release markets such as Australia, the UK and the U.S. range from 1.2% to 3.5%

$2.7 $6.0 $9.0 $11.9 1% 1.50% 2% EQB Market Penetration 7.5 7.7 8.0 8.3 9.7 11.1 12.0 12.8 2013 2014 2015 2016 2021 2026 2031 2036 Current Market Size

As of Dec. 31, 2017

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Market Developments

Market Dynamics and Opportunities Regulatory Changes Competitive Developments Housing Market Conditions Fintech and Consumer Banking Preferences

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Recent regulatory proposals create operating uncertainty

OSFI has changed its Underwriting Guideline B-20

• Interest rate stress test
• Dynamic LTV measurements
• Restrictions on co-lending
• Impact on Equitable currently unclear, though

we expect it to be negative

• Difficult to forecast competitor and consumer

reactions

• Intend to offset some of the effect with higher

commercial asset growth and new products