Bank shares jump 11% as market backs shift toward fee income and credit cards
EQB Inc. is paying $800m to bolt supermarket banking and one of Canada’s biggest loyalty programs onto its digital franchise.
EQB, parent of EQ Bank, agreed to buy President’s Choice Bank and other PC Financial entities from Loblaw Cos. Ltd. for about $800m in cash and shares, a deal that will add about 3.5 million customers and $5.8bn in assets to EQB’s existing $138bn balance sheet, according to The Canadian Press.
Loblaw will receive a minority equity stake in EQB that will be at least 16–17 percent and could rise to as much as 25 percent.
For a mid-tier lender, the deal is a scale play in a consolidating market.
The Canadian Press reported that EQ Bank is now the last of the smaller publicly traded banks left in Canada after Laurentian Bank said it would be split up and sold to Fairstone Bank and National Bank, while Canadian Western Bank and HSBC Canada were bought by National Bank and RBC, respectively.
Markets initially backed the move.
Bloomberg reported that EQB shares jumped as much as 11 percent in Toronto, the biggest intraday gain since May 2024, reversing several months of losses and lifting the stock back to around $96.33.
That rally came even though EQB missed earnings expectations, with Bloomberg reporting that the bank posted adjusted earnings of $1.53 per share in its fiscal fourth quarter—about 23 percent below the $1.99 consensus—and took $137m in credit-loss provisions for the year to brace for a weaker housing market and slower economic growth.
Analyst reaction focused on diversification versus timing.
According to Bloomberg, Bank of Nova Scotia analyst Mike Rizvanovic called the transaction “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.”
BMO Capital Markets analyst Etienne Ricard, meanwhile, highlighted the “key upside” of a bigger client base.
TD Cowen analyst Graham Ryding, however, warned that EQB is issuing shares at a “relatively depressed level” after the stock fell 12 percent year-to-date before the rally.
He also noted that PC Financial’s credit-card portfolio has grown only about 2 percent annually over the past three years.
The credit card expansion lands in a softer consumer phase.
Bloomberg pointed to Canadian Tire Corp. as a bellwether, noting a 7.2 percent net credit-card write-off rate in the third quarter, up from 6.9 percent a year earlier, and a slowdown in credit-card sales growth to 2.3 percent from 3.8 percent.
On the customer side, the messaging is continuity now, change later.
BNN Bloomberg reported that Loblaw spokeswoman Catherine Thomas said PC Optimum members will continue to earn, hold and redeem points as usual, their points will not be affected, and the PC Optimum app will not change, while Loblaw will keep owning and operating the loyalty program, which has more than 17 million members.
BNN Bloomberg also said EQB chief executive Chadwick Westlake told PC Financial customers they will not see immediate changes while the deal awaits regulatory approvals, and that the bank will later outline how it will integrate the two brands and everyday banking products.
Natasha Macmillan of Ratehub.ca expects a “phased rebrand and platform migration over time,” with existing PC Financial accounts and cards likely transitioning, and advised customers to watch for potential changes to fees, interest rates and features.
The Canadian Press noted that EQ Bank customers will gain access to PC Financial credit cards, more than 180 in-store banking pavilions and over 600 ATMs, and that the EQ Bank name will eventually replace the PC Financial brand while Loblaw keeps PC Optimum.
The Canadian Press said the deal, which EQB announced alongside its fourth-quarter and 2025 fiscal-year results, is expected to close in 2026, subject to closing conditions and regulatory approvals.
