Second Quarter 2017 August 2017 1 Forward-Looking Statements - PowerPoint PPT Presentation

Second Quarter 2017 August 2017 1

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 2

Company Overview 3

Investment Thesis 1 Positioned as a challenger bank 2 Structural business model advantages 3 Disciplined and proven value creation processes 4 Track record of consistent performance 4

Company Overview Who We Are Our Vision • Become Canada’s leading challenger bank … • 9 th largest independent Schedule I bank in Canada by assets • …by delivering the best customer service experience of any • Proven lending and deposit-taking capabilities bank in Canada • 45+ year track record • Nurture a distinctive culture that engages our employees • 120 th most profitable company in Canada • Consistently deliver a Return on Equity above 15% and (Globe & Mail, 2016) maintain strong capital ratios Diversified Business Earnings Momentum Mortgages Under Management ($Bn) Earnings Per Share ($) Single Family Commercial 17% CAGR Securitization Financing 10.7 10.3 8.0 8.49 6.1 7.73 2.8 5.6 2.8 6.53 5.82 2.2 5.11 2.3 2.4 8.5 7.9 6.4 5.4 4.1 2013 2014 2015 2016 2017 Q2 2012 2013 2014 2015 2016 5

A Well Positioned Challenger Bank 6

Have been successfully evolving the business INCREASING GEOGRAPHIC COVERAGE AND PRODUCT BREADTH Implemented new large bank Became a truly sponsored national funding facility Increased focus Converted alternative SFR on Alternative Equitable Trust lender, with IPO of Single Family Opened to Equitable Issued first entry into business Bank Deposit Note Quebec market Equitable Group Montreal Office 2013 2014 2016 1970 2004 2006 2010 2015 2008 Equitable Trust Opened Began to Issue Launched Implemented Launched EQ Launched Alternative two new funding Bank, our first Incorporated Calgary Office MBS and brokered HISA Single Family facilities direct-to- Participate in account consumer CMB business in Quebec Opened business Introduced a Vancouver HELOC Office Entered Prime Single Family business Long History as a Regulated Canadian Financial Institution 7

Equitable’s Long-Term Value Creation Equation Book Value Per Share ($) Generate an ROE in the Mid to High Teens 17% CAGR Grow Assets at Rates Grow Capital by In-Line With Capital Retaining the Growth, if Majority of Earnings Opportunities and Reinvesting it Meet or Exceed Our in the Business 59.98 ROE Targets 54.96 46.57 40.90 35.14 29.83 Pay Out a Consistently Growing 2012 2013 2014 2015 2016 2017 Q2 Dividend to Our Shareholders Note: % figures above represent most recent 5-year average actual results 8

Disciplined capital management • History of Consistent Dividend Growth • Capital Management Framework Strong capital base has allowed us to pursue our 13% CAGR growth objectives while returning capital to shareholders Maintain target CET1 and leverage ratios Capital Deployment Find attractive assets within existing markets; deploy to highest ROE opportunities first 0.84 0.76 0.68 0.60 Consistently grow dividends 0.52 Invest in growth and diversification initiatives that meet return thresholds 2012 2013 2014 2015 2016 9

Balance sheet strength • Increasingly Diversified Funding • Strong Regulatory Capital Position Sources • Higher CET1 and Total Capital ratios than any of the eight largest Deposit Notes 1% publicly traded Canadian Banks… MBS $21.8 Bn total 17% – …even though we use the standardized approach to risk weight our assets • 85% of regulatory capital in high-quality common equity Brokered Term GICs 36% Resilient Liquidity Position • $2.0 Bn backstop funding facility from big-6 Canadian Banks • $1.6 Bn or 7.9% of total assets at June 2017 – 94% is cash held at big-6 Canadian banks or in government CMB guaranteed accounts/instruments Program EQ Bank 33% Savings • LCR well in excess of regulatory minimum Account • 99% of securities investments are preferred shares rated P-3(mid) or 6% Brokered Bank higher, with 43% rated P2(low) or higher Facilities HISAs 4% 3% 10

Our Digital Strategy 11

Equitable is embracing FinTech Be Invested Be Open Be Collaborative 12

Digital simplicity, absent of legacy infrastructure, enables innovation State-of-the-Art Banking Systems and Central Data Depository 13

Continued EQ Bank Advancements Account Opening Now More Automated For Quick Approval With Full FINTRAC Compliance 14

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.” 15

Canadians have responded well to our innovative digital banking platform EQ Bank Deposit Principal Balances ($Bn) First Marketing campaign (January 2016) 1.3 1.2 1.1 1.0 1.0 0.8 0.1 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 16

Our Performance 17

Q2 2017 Performance Highlights Objectives Results  Consistently create Delivered a quarterly EPS of $2.28, 11% higher than last year  shareholder value Declared a common share dividend of $0.24 per share in August, 14% higher than last year Grow by providing effective  Grew Alternative Single Family assets by 19% service, competitive products  Increased our Prime Single Family Mortgages Under Management by 35% and cost-efficient operations  Continued adding value to our customers through constant enhancements to our EQ Bank Build our capabilities and digital platform brand  Furthered our AIRB initiative and risk modelling capabilities  Obtained a two-year $2 billion secured backstop funding facility from a syndicate of Canadian banks  Maintain a low risk profile Recorded a provision for credit losses of $0.4 million or 1 bp of average loan balances  Reported a CET1 Ratio of 14.8%, well ahead of regulatory minimums and most competitive benchmarks 18

Continued industry outperformance 18.7 17.9 18.1 17.9 17.4 17.0 17.0 16.9 16.6 16.5 16.5 16.1 15.5 14.5 13.8 12.1 12.1 10.7 2008 2009 2010 2011 2012 2013 2014 2015 2016 (1) Canadian Banks EQB Includes all publically traded Canadian banks Source: company filings, Bloomberg, Equitable analysis 19

A strong risk management framework and low loss levels Actual Credit Loss Rates, Selected Canadian Banks and Trust Companies 0.6% 0.5% 0.4% 0.3% Big Six 0.2% Peer Grp. 1 0.1% EQB 0.0% 04 05 06 07 08 09 10 11 12 13 14 15 16 Minimal Credit Losses and Strong Relative Performance Highlight Portfolio Quality Notes: 1 Peer group includes Canadian Western Bank, Laurentian Bank, and Home Capital Group Source: company filings, Bloomberg, Equitable analysis 20

Branchless operating model yields higher productivity and efficiency 2017 Q2 Revenue per Employee ($000s/Employee) 2017 Q2 Efficiency Ratios (%) 322 70.7 61.5 57.1 56.5 56.6 54.7 50.7 47.5 192 39.2 137 101 87 85 78 74 65 LB BNS NB CIBC CWB TD RBC BMO EQB EQB CWB RBC BNS TD NB BMO CIBC LB Source: company filings, Equitable analysis 21

Valuation Metrics vs. Other Canadian FIs Price to Forward Earnings 2017E Return on Equity 20% 14 12 15% 10 8 10% 6 4 5% 2 - 0% RY TD BNS BMO CWB NA HCG CM LB EQB NA RY CM BNS TD EQB BMO LB CWB HCG Price to Q2 2017 Book Price to Book vs. Forward ROE 2.5 2 2.2 1.5 1.8 1.4 1 1.0 0.5 0.6 0 10% 12% 14% 16% 18% RY NA BNS TD CM BMO CWB LB EQB HCG Source: Bloomberg, Equitable analysis 22

Looking Forward 23

Our 2017 objectives build on our capabilities and our market opportunities 1 Grow our Single Family Business 2 Optimize Returns in Commercial 3 Advance our Mortgage Servicing Capabilities 4 Enhance Digital Banking Platform 5 Pursue AIRB initiative 24

Market Developments Regulatory Changes Fintech Consumer Disruption Banking Market Preferences Dynamics and Opportunities Housing Market Competitive Conditions Developments 25

Successfully responded to recent market developments Equitable’s Response Funding Markets Disrupted Insured and securitized $892MM of Invested in an EQ Bank mortgages marketing campaign Increased deposit rates Sold $23M of preferred shares 26