Q u a r t e r 2 0 1 6 May 13, 2016 1 Forward-Looking Statements - - PowerPoint PPT Presentation

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F i r s t Q u a r t e r 2 0 1 6

May 13, 2016

T S X E Q B / E Q B . P R . C

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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

• bjectives. 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.

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A Transformational Quarter

EQ Bank Launch Is a Game Changer for Canadian Savers and Equitable

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Profitable First Quarter Affected by Some Unusual Items

29.5 28.0

Q1 2015 Q1 2016

Net Income

($ millions) EPS 1.71 EPS 1.81

• Bank continued to perform well

across most operating metrics

• EPS performance reflected:
• Strategic investments - including

EQ Bank launch costs – that will benefit future periods

• $1.2M accounting hedge loss (no

economic loss)

• Decision not to sell I/O strips and

to keep assets on balance sheet

EPS $1.89 Adjusted for Hedge Loss and Marketing Spend

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Creating More Value for Our Shareholders

17.9 14.7

Q1 2015 Q1 2016

ROE

(%) 25.18 29.83 35.14 40.90 46.57 47.81 2011 2012 2013 2014 2015 Q1 2016

Book Value

($ Per Share)

16%

Canadian bank average 13.2% in Q11

1 Average of all publicly traded Canadian banks, excluding Equitable

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Serving More Borrowers Than Ever

9.5 10.9 12.1 13.8 16.7 17.7

2011 2012 2013 2014 2015 Q1 2016

16%

Mortgages Under Management

($ billions)

MUM Increased 22% Over Q1 of Last Year

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568 674

Q1 2015 Q1 2016

Alternative Single Family Lending

4.3 4.6 4.9 5.4 5.7 5.9 6.2 6.4 6.8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2014 2015 2016

Mortgage Principal Growing On High Quality Originations

Mortgage Principal

($ billions)

6%

Mortgage Originations

($ millions)

19%

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Commercial Lending

2.4 2.3 2.3 2.3 2.3 2.3 2.2 2.2 2.3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Maintaining ROE and Risk Discipline in a Competitive Market

Mortgage Principal

($ billions)

208 202

Q1 2015 Q1 2016 2014 2015 2016

Mortgage Originations

($ millions)

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Securitization Financing

469 693

Q1 2015 Q1 2016

Originations

($ millions)

Prime MUM Almost Three Times Higher Year Over Year at $2.5B

Mortgages Under Management

($ billions) Prime $444M 5.5 5.5 5.7 6.1 6.4 6.8 7.5 8.0 8.6 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

5%

2014 2015 2016

48%

10 0.0% 0.1% 0.2% 0.3% 0.4% 0.5%

04 05 06 07 08 09 10 11 12 13 14 15 Q1 2016

Best in Class Credit Performance

Net Realized Credit Losses as a % of Total Loans

Strong Relative Performance Highlights Portfolio Quality

• PCL was 1 bp of total

mortgage principal in Q1

• Analysis showed no addition

necessary to collective allowance

• Expect Single Family arrears

rates and losses to remain low in most regions in 2016

• Arrears are trending up in

Alberta but expect any losses to be manageable

EQB Peer Group

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Serving More Savers Than Ever

4.5 5.6 6.4 7.4 8.1 8.7 2011 2012 2013 2014 2015 Q1 2016

17%

Deposit Principal

($ billions)

Successfully Diversifying Our Funding Sources

• Brokered HISA balances have grown to

$1.1B

• EQ Bank Savings Plus account balances

already at $794M at quarter end

• Additional investments brought service

levels up to Equitable’s high standards by end of March

• Managing account growth with waiting

list, reduced ad budget, 2.25% savings rate

EQ Bank

794M

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Margin Trends

Net Interest Margin – TEB

• 13% growth in Q1 net interest

income on higher average asset balances

• Core NIM reflects high levels
• f liquid assets, lower

prepayment income, EQ Bank deposit growth

• Securitization Financing NIM

up on tighter MBS spreads

2.53 2.57 2.66 2.62 2.60 2.65 2.59 2.68 2.55 0.37 0.31 0.27 0.29 0.23 0.28 0.28 0.18 0.25

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Core Lending Securitization Financing Total NIM 1.66 1.70 1.76 1.76 1.73 1.79 1.73 1.70 1.63

2014 2015 2016

Expect Net Interest Income to Grow at Low to Mid Teen Rates in 2016

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Investing For Our Future

32.4 32.8 33.4 35.7 43.2

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016

• Q1 normal course non-interest expenses

up $5.0M (27%) year over year on 25% FTE growth

• Investments in strategic initiatives of

$5.7M, five times higher than last year (almost half of total expense growth)

• Without strategic investments, adjusted

Efficiency Ratio was 35%

• Expect Efficiency Ratio to decline but

stay in mid to high 30% range in 2016 as we continue to invest for future

Remain One of Canada’s Most Efficient Banks

Efficiency Ratio

(%)

14

5.0 13.5 16.7

Solid Capital Ratios

March 31, 2016 (%)

Basel III minimum Total Capital level of 10.5% Basel III minimum CET1 target

• f 7.0%

Full compliance with new standard

Leverage Ratio CET1 Total Capital

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Expect Strong Results From All Initiatives

Strong Consumer Receptivity to New Offerings

High Interest Savings Account Single Family Mortgage Lending Home Equity Line of Credit Digital Banking Services

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Summary

Strong fundamentals, solid asset growth continues EQ Bank platform is a game-changer for savers Investments now will yield great future results

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