EQB Stock Surges After Acquisition of President’s Choice Bank
Summary:
EQB Inc., a Canadian lender, saw its stock rise by 11% following its agreement to acquire President’s Choice Bank from Loblaw Cos. for $800 million. This acquisition diversifies EQB’s loan portfolio and shifts its revenue toward fee-based income. Despite missing earnings expectations, the deal overshadowed concerns, with analysts highlighting its potential to expand EQB’s client base. However, critics question the timing, given the strained consumer environment and slower credit-card portfolio growth.
What This Means for You:
- Diversification: EQB’s acquisition provides a broader loan portfolio, reducing reliance on housing and commercial markets.
- Investment Opportunity: The stock’s recent surge may signal a rebound, but caution is advised due to the mixed analyst outlook.
- Fee-Based Revenue Potential: The shift toward fee-based income could stabilize EQB’s earnings in volatile economic conditions.
- Consumer Market Risks: Be cautious of EQB’s expansion into credit cards amid rising consumer debt and economic uncertainty.
Original Post:
By Stephanie Hughes
(Bloomberg) — EQB Inc.’s stock rose the most in more than a year after the Canadian lender agreed to buy the banking portfolio of the country’s largest supermarket chain.
Shares jumped as much as 11% in Toronto Thursday morning, its biggest intra-day advance since May 2024. The surge was enough to recoup a few months’ worth of losses, bringing the price back to where it was in late August. The stock traded at $96.33 as of 11:07 a.m.
EQB Wednesday said it would purchase President’s Choice Bank from Loblaw Cos. for an implied price of $800 million, mostly in shares. That gives Loblaw a stake of at least 17% in EQB, which could grow to as much as 25%.
The announcement overshadowed the bank’s sizable earnings miss. EQB earned $1.53 on an adjusted basis in its fiscal fourth quarter, falling short of the $1.99 expected in a Bloomberg survey of analysts. The bank set aside $137 million in credit-loss provisions for the fiscal year, above what most analysts expected as the lender took steps to prepare its personal and commercial portfolios for a weaker housing market and slower economic growth.
The PC Financial deal drew mixed reactions from Bay Street analysts, who weighed the revenue potential against the timing of the deal in a strained consumer environment.
The transaction is “a clear positive, as it certainly provides a compelling diversification play for EQB’s loan book and meaningfully shifts the top line toward fee-based revenue,” wrote Bank of Nova Scotia’s Mike Rizvanovic. BMO Capital Markets analyst Etienne Ricard also pointed to the “key upside” for EQB to expand its client base.
But TD Cowen analyst Graham Ryding noted that EQB would be issuing shares at a “relatively depressed level,” adding that the stock has tumbled 12% year-to-date, prior to Thursday’s gains. He added that PC Financial’s credit-card portfolio has grown by only 2% on average over the past three years, compounded annually.
EQB’s plan to expand its credit card business comes in a weaker stage of the consumer cycle. Retailer Canadian Tire Corp. reported a 7.2% net credit-card write-off rate during its third quarter, up from 6.9% a year earlier. The company also saw credit-card sales growth fall to 2.3% from 3.8% over the same period.
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Acquisition bloomberg deal earnings eqb equitable bank Loblaw Cos. mergers and aquisitions Mike Rizvanovic PC Financial
Last modified: December 4, 2025
Extra Information:
Bloomberg Article – A detailed analysis of EQB’s acquisition and its market impact.
BMO Capital Markets – Insights from analysts on Canadian banking trends.
People Also Ask About:
- What is President’s Choice Bank? President’s Choice Bank is a banking subsidiary of Loblaw Cos., primarily offering credit cards and savings accounts.
- Why did EQB acquire PC Financial? EQB aims to diversify its loan portfolio and increase fee-based revenue.
- What are the risks for EQB? Risks include consumer debt trends and slower credit-card portfolio growth.
- How does this impact Loblaw Cos.? Loblaw receives EQB shares, gaining a 17%-25% stake in the lender.
Expert Opinion:
Mike Rizvanovic, Bank of Nova Scotia analyst, highlights that the acquisition “meaningfully shifts the top line toward fee-based revenue,” positioning EQB for long-term growth despite short-term economic challenges.
Key Terms:
- EQB acquisition of President’s Choice Bank
- Canadian banking sector diversification
- Fee-based revenue strategies
- Credit-card portfolio growth trends
- Impact of consumer debt on banking
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