Equitable Group Reports Strong Second Quarter 2016 Results

TORONTO, Aug. 11, 2016 /CNW/ - Equitable Group Inc. (TSX: EQB and EQB.PR.C) ("Equitable" or the "Company") today reported financial results for the three and six months ended June 30, 2016 that reflected substantial growth in assets and deposits for its wholly owned subsidiary, Equitable Bank (the "Bank") and ongoing investments in support of business expansion.

SECOND QUARTER HIGHLIGHTS

  • Net income was $33.4 million and diluted earnings per share were $2.05, up 19% and 20% respectively from Q1 2016 and consistent with Q2 2015 which benefitted from an unusual investment gain that lifted net income by $1.5 million and diluted EPS by $0.10.
  • Return on Equity ("ROE") was 17.1% compared to 14.7% in Q1 2016, 19.8% in Q2 2015 and the Bank's five year average of 17.7%.

FIRST SIX MONTHS HIGHLIGHTS

  • Net income was $61.4 million and diluted earnings per share were $3.76, 2% and 3% lower than in the first half of 2015 as a result of strategic investments this year and the investment gain a year ago.
  • ROE was 15.9% compared to 18.4% in the first half of 2015.
  • Book value per common share was $49.55 at June 30, 2016, up 13% from $43.80 at June 30, 2015.

DIVIDEND DECLARATIONS

The Board of Directors declared a quarterly dividend of $0.21 per common share, payable on October 3, 2016, to common shareholders of record at the close of business on September 15, 2016.  This represents an 11% increase over dividends declared in August 2015.  In addition, the Board declared a quarterly dividend of $0.396875 per preferred share, payable on September 30, 2016, to preferred shareholders of record at the close of business on September 15, 2016.

CEO's COMMENTARY          

"In the second quarter, Equitable extended its track record as a performance leader among Canada's banks by delivering a high ROE even as we continued to invest in the expansion and diversification of our service offerings," said Andrew Moor, President and Chief Executive Officer. "Driven by growth in market share, Assets under Management increased 22% from last year to $19.7 billion – the 8th consecutive quarter of asset expansion – supported by record quarterly originations of $2 billion. We also maintained best-in-class credit metrics that reflect our disciplined approach to risk management. And we grew EQ Bank deposit balances 25% to just shy of $1 billion as more new customers experienced the advantage of digital banking. Based on our progress to date and positive outlook, Equitable is on track for another year of significant value creation."

OPERATING HIGHLIGHTS

  • Single Family Lending mortgage principal at June 30, 2016 was a record $7.2 billion, up 20% from $6.0 billion a year ago on record second quarter originations of $953 million as the Bank continued to gain market share in the mortgage broker channel nationally through its focus on service quality.
  • Commercial Lending mortgage principal at June 30, 2016 was $2.4 billion, up 6% from $2.3 billion a year ago while originations were $323 million – its most productive period in 17 quarters. 
  • Securitization Financing Mortgages under Management increased 34% to $9.1 billion at June 30, 2016 from $6.8 billion a year ago largely as a result of the Bank's growth in Prime Single Family lending.
  • Deposit principal outstanding amounted to $9.0 billion at June 30, 2016, up 11% from $8.1 billion a year ago reflecting the success of our EQ Bank platform and strong consumer demand for Equitable Bank's brokered savings products.

Equitable's credit metrics continue to reflect the high quality of the mortgage portfolio and remain well in line with the Bank's long-term levels.  Provision for credit losses was less than one basis point of the mortgage portfolio in the second quarter, three basis points lower than the provision in the second quarter a year ago, and net impaired mortgage assets were just 0.20% of total mortgage assets compared to 0.18% a year ago.

CAPITAL

Equitable Bank's capital ratios continue to exceed minimum regulatory standards and were above the levels of all of the other eight publicly-listed Schedule I Canadian banks.  At June 30, 2016:

  • Common Equity Tier 1 capital ratio was 13.5%, surpassing the Basel III minimum of 7.0%, and unchanged from last year's level
  • Total capital ratio was 16.5%, well above the regulatory requirement of 10.5% on an all-in basis
  • Leverage Ratio was 5.0% and as such the Bank was fully compliant with the limit that OSFI sets on a confidential, institution-by-institution basis.

Management executed several transactions this quarter that transferred the risks and rewards of securitized prepayable mortgages to third parties and resulted in the derecognition of $253 million of mortgages from the balance sheet. These transactions helped the Company to maintain its leverage ratio above its target levels and also resulted in gain on sale income of $0.5 million. In the second half of 2016, management expects to continue executing such transactions to the extent warranted by its asset growth and leverage ratio position.

STRATEGIC UPDATE

Equitable's strategic initiatives are designed to enhance the long-term value of its franchise and include: further diversifying its sources of funding in part through its digital banking platform; building its presence in the Prime Single Family market as a complement to its strong position in Alternative single family lending; and growing its Commercial mortgage business while maintaining pricing and risk discipline. Progress was made in all areas in the second quarter as Equitable:

  • Grew EQ Bank Savings Plus Account balances by 25% or $202 million in the second quarter to $996 million as consumer demand for this digital banking product launched in January 2016 continued to exceed expectations.
  • Funded $500 million of Prime single family mortgages in the second quarter, 32% more than in the second quarter of 2015, bringing total Prime mortgage assets under management to $2.9 billion, more than double last year's levels.
  • Increased Commercial mortgage originations by 62% year over year to $323 million as the Company realized benefits from the more focused approach taken to the lending market by its recently rebranded Business Enterprise Solutions team and Commercial Finance Group.

"Momentum continued to build for our newest platforms in the second quarter, while at the same time Equitable added assets in our traditional core lending operations at a record-setting pace," said Mr. Moor. "Of note, our Commercial Lending business benefitted from recent operating refinements as balances increased on origination growth and lower attrition rates. Our Commercial Lending team continued to strengthen our distribution partnerships nationally and we are now more optimistic about our growth prospects than we have been in recent quarters."

The second quarter was also notable as EQ Bank added many more new customers, "even though we took steps to slow the pace of growth including suspending our advertising program and reducing the high introductory interest rate we employed at launch," said Mr. Moor. "The fact that balances continued to grow shows that there is more to EQ Bank than eye-catching ads. Canadians are responding well to our innovative digital offerings and discovering the industry-leading value of banking with us."

As expected, the Bank's Efficiency Ratio of 38.2% for the second quarter was an improvement over the first quarter's rate of 43.2%, as spending in support of EQ Bank's launch was reduced. However, Equitable's Efficiency Ratio was higher than last year's 32.8% as the Company continued to invest in support of growth and its digital capabilities.  Even with this higher level of spending, Equitable remained far more efficient than Canada's other eight publicly traded banks as a result of its branchless business model.

BUSINESS OUTLOOK

Equitable expects that its capital allocation strategies, non-branch business model advantage, risk management approach and commitment to superior levels of customer service will lead to EPS growth and high returns on shareholders' equity throughout the last half of 2016. The assumptions used in formulating these expectations can be found in Management's Discussion and Analysis available on the Company's website and on SEDAR.

"Now that we have established new foundations to drive additional growth in the Bank's assets and diversify its funding sources, our task is to execute flawlessly for our customers and shareholders," said Mr. Moor. "To do that, we will continue to invest to sustain the high levels of service that have led to the meaningful market share gains Equitable has captured over the past few years. And, we will enhance our digital capabilities to ensure EQ Bank retains its edge in digital banking. At the same time, we will leverage our branchless business model to ensure that we remain highly cost-effective.  By being both service and value oriented, we expect to remain a performance leader among Canada's banks."

Management expects that current market conditions and the Bank's strong positioning in the mortgage broker channel should support mid to high teen year-over-year growth rates in Mortgages under Management in the second half of 2016.

This growth will not come at the expense of credit quality. Equitable employs highly disciplined lending practices that have long been embedded in the Bank's overall risk management approach. Taking into account current economic forecasts, management expects arrears rates and credit loss provisions to be low for the rest of 2016 at a national level. In Alberta and Saskatchewan, the Bank expects arrears rates may rise in the latter half of the year as a result of the ongoing challenges in the oil industry, but that losses, if any, will be manageable.

"Compared to last year, we anticipate low to mid teen growth rates for Net Interest Income in the last half of 2016, driven by continued growth in assets," said Tim Wilson, Vice President and Chief Financial Officer. "We also expect our Efficiency Ratio to improve again in Q3 from Q2 and Q1 although it will likely remain in the high 30 percent range for the last half of 2016 as a result of ongoing investments in our strategic initiatives."

CONFERENCE CALL AND WEBCAST

The Company will hold its second quarter conference call and webcast with accompanying slides at 10:00 a.m. ET August 12, 2016.  To access the call live, please dial 416-260-0113 five minutes prior.  The listen-only webcast with accompanying slides is available at www.equitablebank.ca under Investor Relations.

A replay of the call will be available until August 19, 2016 and it can be accessed by dialing 647-436-0148 and entering passcode 5739471 followed by the number sign. Alternatively, the call will be archived on the Company's website for three months.


INTERIM CONSOLIDATED FINANCIAL STATEMENTS


CONSOLIDATED BALANCE SHEETS (unaudited)











AS AT JUNE 30, 2016











With comparative figures as at December 31, 2015 and June 30, 2015

($ THOUSANDS)


























June 30, 2016



December 31, 2015



June 30, 2015












Assets:











Cash and cash equivalents



$

336,237


$

423,366


$

631,917

Restricted cash




150,691



107,988



107,338

Securities purchased under reverse repurchase agreements




150,906



19,918



102,025

Investments




130,770



153,714



163,390

Mortgages receivable – Core Lending




9,591,449



8,674,599



8,229,510

Mortgages receivable – Securitization Financing




6,652,657



6,026,207



4,986,757

Securitization retained interests




74,563



61,650



56,982

Other assets




60,581



60,142



51,905




$

17,147,854


$

15,527,584


$

14,329,824












Liabilities and Shareholders' Equity











Liabilities:












Deposits



$

9,148,025


$

8,211,265


$

8,236,361


Securitization liabilities




6,807,964



6,109,436



4,870,987


Obligations under repurchase agreements




-



-



167,767


Deferred tax liabilities




33,663



28,698



20,747


Other liabilities




79,278



81,290



57,011


Bank facilities




170,000



235,779



141,802


Debentures




65,000



65,000



85,000





16,303,930



14,731,468



13,579,675












Shareholders' equity:












Preferred shares




72,557



72,557



72,557


Common shares




144,615



143,690



141,794


Contributed surplus




5,099



4,706



4,640


Retained earnings




658,098



605,436



550,979


Accumulated other comprehensive loss




(36,445)



(30,273)



(19,821)





843,924



796,116



750,149















$

17,147,854


$

15,527,584


$

14,329,824























 

CONSOLIDATED STATEMENTS OF INCOME (unaudited)





FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2016





With comparative figures for the three and six month periods ended June 30, 2015





($THOUSANDS, EXCEPT PER SHARE AMOUNTS)

























Three months ended

Six months ended




June 30, 2016

June 30, 2015

June 30, 2016

June 30, 2015












Interest income:












Mortgages – Core Lending



$

107,544

$

98,146

$

208,963

$

191,479


Mortgages – Securitization Financing




45,296


39,066


88,903


76,362


Investments




2,372


2,102


4,248


3,680


Other




1,227


1,726


2,279


2,991





156,439


141,040


304,393


274,512

Interest expense:












Deposits




46,084


43,226


89,743


85,054


Securitization liabilities




41,354


34,120


80,539


67,122


Bank facilities




1,040


885


1,606


1,499


Debentures




950


1,269


1,900


2,546


Other




1


545


1


959





89,429


80,045


173,789


157,180

Net interest income




67,010


60,995


130,604


117,332

Provision for credit losses




105


830


332


1,644

Net interest income after provision for credit losses




66,905


60,165


130,272


115,688

Other income:












Fees and other income




3,781


2,534


6,958


4,842


Net gain (loss) on investments




747


(247)


747


(450)


Gains on securitization activities and income from securitization retained interests




1,894


2,268


2,454


3,970





6,422


4,555


10,159


8,362

Net interest and other income




73,327


64,720


140,431


124,050

Non-interest expenses:












Compensation and benefits




15,882


12,804


30,860


24,190


Other




12,490


8,906


26,890


17,220





28,372


21,710


57,750


41,410

Income before income taxes




44,955


43,010


82,681


82,640

Income taxes:












Current




7,875


7,250


16,294


13,859


Deferred




3,670


2,240


4,965


5,800





11,545


9,490


21,259


19,659

Net income



$

33,410

$

33,520

$

61,422

$

62,981












Earnings per share:












Basic



$

2.07

$

2.09

$

3.80

$

3.92


Diluted



$

2.05

$

2.06

$

3.76

$

3.87













 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)





FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2016

With comparative figures for the three and six month periods ended June 30, 2015





($ THOUSANDS)

























Three months ended

Six months ended



June 30, 2016

June 30, 2015

June 30, 2016

June 30, 2015












Net income



$

33,410

$

33,520

$

61,422

$

62,981












Other comprehensive income – items that may be reclassified subsequently to income:






















Available for sale investments:











Net unrealized gains (losses) from change in fair value




1,086


(6,451)


(4,455)


(12,753)

Reclassification of net (gains) losses to income




(795)


(16)


(901)


359





291


(6,467)


(5,356)


(12,394)

Income tax (expense) recovery




(77)


1,707


1,422


3,272





214


(4,760)


(3,934)


(9,122)












Cash flow hedges:











Net unrealized (losses) gains from change in fair value




(3,404)


842


(4,828)


(2,674)

Reclassification of net losses to income




802


825


1,780


1,457





(2,602)


1,667


(3,048)


(1,217)

Income tax recovery (expense)




692


(440)


810


321





(1,910)


1,227


(2,238)


(896)

Total other comprehensive loss




(1,696)


(3,533)


(6,172)


(10,018)

Total comprehensive income



$

31,714

$

29,987

$

55,250

$

52,963













 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2016











With comparative figures for the three month period ended June 30, 2015











($ THOUSANDS)














































Accumulated other

comprehensive

income (loss)



June 30, 2016


Preferred
shares

Common
shares

Contributed
surplus

Retained
earnings

Cash flow
hedges

Available

for sale
investments


Total


Total



















Balance, beginning of period


$

72,557

$

144,159

$

4,935

$

629,147

$

(8,143)

$

(26,606)

$

(34,749)

$

816,049

Net income



-


-


-


33,410


-


-


-


33,410

Other comprehensive income (loss), net of tax



-


-


-


-


(1,910)


214


(1,696)


(1,696)

Exercise of stock options



-


364


-


-


-


-


-


364

Dividends:



















Preferred shares



-


-


-


(1,191)


-


-


-


(1,191)


Common shares



-


-


-


(3,268)


-


-


-


(3,268)

Stock-based compensation



-


-


256


-


-


-


-


256

Transfer relating to the exercise of stock options



-


92


(92)


-


-


-


-


-

Balance, end of period


$

72,557

$

144,615

$

5,099

$

658,098

$

(10,053)

$

(26,392)

$

(36,445)

$

843,924















































Accumulated other

comprehensive

income (loss)



June 30, 2015


Preferred
shares

Common
shares

Contributed
surplus

Retained
earnings

Cash flow

hedges

Available

for sale
investments


Total


Total



















Balance, beginning of period


$

72,557

$

141,245

$

4,505

$

521,587

$

(8,025)

$

(8,263)

$

(16,288)

$

723,606

Net income



-


-


-


33,520


-


-


-


33,520

Other comprehensive income (loss), net of tax



-


-


-


-


1,227


(4,760)


(3,533)


(3,533)

Exercise of stock options



-


445


-


-


-


-


-


445

Dividends:



















Preferred shares



-


-


-


(1,190)


-


-


-


(1,190)


Common shares



-


-


-


(2,938)


-


-


-


(2,938)

Stock-based compensation



-


-


239


-


-


-


-


239

Transfer relating to the exercise of stock options



-


104


(104)


-


-


-


-


-

Balance, end of period


$

72,557

$

141,794

$

4,640

$

550,979

$

(6,798)

$

(13,023)

$

(19,821)

$

750,149

                                                                             

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited)

FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2016











With comparative figures for the six month period ended June 30, 2015











($ THOUSANDS)














































Accumulated other

comprehensive

income (loss)



June 30, 2016


Preferred shares

Common shares

Contributed surplus

Retained earnings

Cash flow hedges

Available

for sale investments


Total


Total



















Balance, beginning of period


$

72,557

$

143,690

$

4,706

$

605,436

$

(7,815)

$

(22,458)

$

(30,273)

$

796,116

Net income



-


-


-


61,422


-


-


-


61,422

Other comprehensive loss, net of tax



-


-


-


-


(2,238)


(3,934)


(6,172)


(6,172)

Exercise of stock options



-


743


-


-


-


-


-


743

Dividends:



















Preferred shares



-


-


-


(2,382)


-


-


-


(2,382)


Common shares



-


-




(6,378)


-


-


-


(6,378)

Stock-based compensation



-


-


575


-


-


-


-


575

Transfer relating to the exercise of stock options



-


182


(182)


-


-


-


-


-

Balance, end of period


$

72,557

$

144,615

$

5,099

$

658,098

$

(10,053)

$

(26,392)

$

(36,445)

$

843,924















































Accumulated other

comprehensive

income (loss)



June 30, 2015


Preferred
shares

Common
shares

Contributed
surplus

Retained
earnings

Cash flow

hedges

Available

for sale
investments


Total


Total



















Balance, beginning of period


$

72,412

$

140,657

$

4,331

$

496,097

$

(5,902)

$

(3,901)

$

(9,803)

$

703,694

Net income



-


-


-


62,981


-


-


-


62,981

Other comprehensive income (loss), net of tax



-


-


-


-


(896)


(9,122)


(10,018)


(10,018)

Issuance cost



145


-


-


-


-


-


-


145

Exercise of stock options



-


939


-


-


-


-


-


939

Dividends:



















Preferred shares



-


-


-


(2,381)


-


-


-


(2,381)


Common shares



-


-


-


(5,718)


-


-


-


(5,718)

Stock-based compensation



-


-


507


-


-


-


-


507

Transfer relating to the exercise of stock options



-


198


(198)


-


-


-


-


-

Balance, end of period


$

72,557

$

141,794

$

4,640

$

550,979

$

(6,798)

$

(13,023)

$

(19,821)

$

750,149

 


CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2016

With comparative figures for the three and six month periods ended June 30, 2015

($ THOUSANDS)






















Three months ended

Six months ended



June 30, 2016

June 30, 2015

June 30, 2016

June 30, 2015

CASH FLOWS FROM OPERATING ACTIVITIES










Net income for the period


$

33,410

$

33,520

$

61,422

$

62,981

Adjustments for non-cash items in net income:











Financial instruments at fair value through income



(91)


7,880


(1,009)


4,642


Amortization of premiums/discount on investments



137


203


279


399


Amortization of capital assets and intangible costs



1,918


911


3,795


1,657


Provision for credit losses



105


830


332


1,644


Securitization gains



(1,894)


(1,703)


(3,513)


(3,233)


Net (gain) loss on sale or redemption of investments



(747)


247


(747)


450


Stock-based compensation



256


239


575


507


Income taxes



11,545


9,490


21,259


19,659

Changes in operating assets and liabilities:











Restricted cash



(21,238)


(43,221)


(42,703)


(39,648)


Securities purchased under reverse repurchase agreements



(120,561)


(91,490)


(130,989)


(83,908)


Mortgages receivable, net of securitizations



(713,509)


(437,111)


(1,559,754)


(961,664)


Other assets



51


2,606


367


1,948


Deposits



303,535


487,317


938,037


744,018


Securitization liabilities



231,787


413,227


698,528


515,659


Obligations under repurchase agreements



-


(57,930)


-


115,354


Bank facilities



170,000


74,716


(65,779)


49,566


Other liabilities



(1,947)


(3,410)


(4,211)


(5,335)

Income taxes paid



(4,634)


(8,089)


(11,454)


(18,941)

Securitization retained interests



3,689


2,594


7,003


4,867

Cash flows (used in) from operating activities



(108,188)


390,826


(88,562)


410,622

CASH FLOWS FROM FINANCING ACTIVITIES










Dividends paid on preferred shares



(1,191)


(1,190)


(2,382)


(2,381)

Dividends paid on common shares



(3,109)


(2,780)


(6,215)


(2,780)

Issue of preferred shares, net of issuance cost



-


-


-


145

Proceeds from issuance of common shares



364


445


743


939

Cash flows used in financing activities



(3,936)


(3,525)


(7,854)


(4,077)

CASH FLOWS FROM INVESTING ACTIVITIES










Purchase of investments



-


(2,592)


(6,783)


(15,436)

Proceeds on sale or redemption of investments



23,538


5,307


23,608


8,805

Net change in Canada Housing Trust re-investment accounts



29


3,954


49


11,795

Purchase of capital assets and system development costs



(3,006)


(5,687)


(7,587)


(9,855)

Cash flows from (used in) investing activities



20,561


982


9,287


(4,691)

Net (decrease) increase in cash and cash equivalents



(91,563)


388,283


(87,129)


401,854

Cash and cash equivalents, beginning of period



427,800


243,634


423,366


230,063

Cash and cash equivalents, end of period


$

336,237

$

631,917

$

336,237

$

631,917











Cash flows from operating activities include:










Interest received


$

154,482

$

141,973

$

300,447

$

273,511

Interest paid



(98,723)


(88,838)


(156,744)


(147,968)

Dividends received



2,347


7,600


4,101


9,365

 

ABOUT EQUITABLE GROUP INC.

Equitable Bank is Canada's ninth largest independent Schedule I bank, serving Canadians coast to coast. It offers a diverse suite of residential lending, commercial lending and savings solutions, including high-interest savings products and GICs. Through its proven branchless approach and customer service focus, Equitable Bank has grown to approximately $20 billion in assets under management.  Most recently, Equitable Bank launched a digital banking operation, EQ Bank, and introduced the EQ Bank Savings Plus Account.  Equitable Bank currently employs over 500 employees across the country, and was named one of Canada's best employers for 2016 by Aon.  For more information about Equitable Bank and its products, please visit equitablebank.ca.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made by the Company in the sections of this news release including those entitled "CEO's Commentary", "Operating Highlights", "Capital", "Strategic Update", "Business Outlook", in other filings with Canadian securities regulators and in other communications include forward-looking statements within the meaning of applicable securities laws ("forward-looking statements"). These statements include, but are not limited to, statements about the Company's objectives, strategies and initiatives, financial result expectations and other statements made herein, whether with respect to the Company's businesses or the Canadian economy. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "planned", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases which state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved." Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, closing of transactions, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to capital markets and additional funding requirements, fluctuating interest rates and general economic conditions, legislative and regulatory developments, the nature of our customers and rates of default, and competition as well as those factors discussed under the heading "Risk Management" in the Management's Discussion and Analysis and in the Company's documents filed on SEDAR at www.sedar.com. All material assumptions used in making forward-looking statements are based on management's knowledge of current business conditions and expectations of future business conditions and trends, including their knowledge of the current credit, interest rate and liquidity conditions affecting the Company and the Canadian economy. Although the Company believes the assumptions used to make such statements are reasonable at this time and has attempted to identify in its continuous disclosure documents important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Certain material assumptions are applied by the Company in making forward-looking statements, including without limitation, assumptions regarding its continued ability to fund its mortgage business at current levels, a continuation of the current level of economic uncertainty that affects real estate market conditions, continued acceptance of its products in the marketplace, as well as no material changes in its operating cost structure and the current tax regime. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws.

NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") FINANCIAL MEASURES

This news release references certain non-GAAP measures such as Return on Shareholders' Equity ("ROE"), capital ratios, book value per share, Efficiency Ratio, Assets under Management, and Mortgages Under Management that management believes provide useful information to investors regarding the Company's financial condition and results of operations. The "NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP") FINANCIAL MEASURES" section of the Company's second quarter 2016 Management's Discussion and Analysis provides a detailed description of each non-GAAP measure and should be read in conjunction with this report. The Management's Discussion and Analysis also provides a reconciliation between all non-GAAP measures and the most directly comparable GAAP measure, where applicable. Readers are cautioned that non-GAAP measures do not have any standardized meaning, and therefore, may not be comparable to similar measures presented by other companies.

SOURCE Equitable Group Inc.

For further information: Andrew Moor, President and Chief Executive Officer, 416-515-7000; Tim Wilson, Vice President and Chief Financial Officer, 416-515-7000

RELATED LINKS
www.equitablebank.ca

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