The challenger bank will gain access to millions of new customers, $5.8 billion in assets as it aims to away from a tough 2025
EQB aims to redefine challenger banking in Canada with the announcement that it has agreed to acquire the financial services division of Loblaw in a deal valued at around $800 million.
The bank will acquire PC Financial and related units including Loblaw’s banking and insurance businesses at 1.15 times book value (adjusted for regulatory capital), with compensation split roughly between cash and 7.2 million new EQB common shares, giving Loblaw about 16% of EQB’s outstanding equity post-closing.
The acquisition brings EQB immediate scale with a combined platform serving nearly 3.5 million banking clients. It will integrate over 2 million active credit card accounts and hold about $5.8 billion in assets, including more than C$800 million in retail deposits.
Recently installed EQB president and CEO Chadwick Westlake described the merger as “creating a better banking ecosystem for all Canadians that prioritizes innovation and value.”
PC Financial customers will gain access to EQB’s broader suite of digital banking tools, savings and registered account products, while EQB clients will be able to tap into PC Financial’s credit card offerings and gain access to Loblaw’s extensive branch, store-pavilion and ATM network.
The combined operation will also become the exclusive financial partner for the popular PC Optimum reward program with 17 million users, offering banking clients a path to earn loyalty points as part of everyday banking.
“This new relationship between EQB and Loblaw will yield significant benefits to our customers, and those of EQ Bank,” says Richard Dufresne, CFO of Loblaw. “PC Financial's products will be better positioned for long-term growth … while maintaining the high level of quality and care our customers expect.”
ECQ results reveal tough 2025
News of the deal came on the same day as EQB released its latest quarterly results.
EQB Inc. reported a tough 2025 but is betting on cost-cuts and its bold acquisition to set up a stronger 2026.
Fiscal 2025 was marked by a one-time restructuring charge of $92 million (pre-tax) that weighed on profitability. On an adjusted basis, Q4 earned diluted EPS of C$1.53, down 39% year-on-year; full-year adjusted EPS was C$8.90, down 19%. Adjusted net income fell to C$63.5 million in Q4 and C$354.2 million for the full year. Pre-provision, pre-tax profit (PPPT) dropped by 17% in Q4 and 11% for the year.
However, book value per share rose 5% to C$81.31. Total assets under management/administration grew to $138 billion, up 9% year-on-year. The digital banking arm, EQ Bank, hit nearly $10 billion in deposits and now serves about 607,000 customers.
On the lending side, commercial loans under management rose about 20% year-on-year driven by insured multi-unit residential mortgages while personal lending remained stable, and decumulation loans (reverse mortgages, etc.) jumped 36%.
Capital-return efforts continue: the firm declared a dividend of $0.57/share, a 16% increase over the prior year and remains well capitalised with a CET1 ratio of 13.3% and total capital ratio of 15.8%.
CFO Anilisa Sainani said the firm has three financial priorities for fiscal 2026: drive growth, thoughtfully manage expenses and maintain strong risk management practices.
"Recent targeted actions to manage expense growth along with prudent credit provisioning create the foundation to deliver on these priorities,” said Sainani. “Core business growth will come from disciplined organic initiatives to expand our lending market share positions and serve our EQB customers, both retail and business, with differentiated digital products. We expect to significantly bolster these organic growth opportunities with the announcement to acquire PC Financial and strategic partnership with Loblaw. In all our actions, we are committed to creating shareholder value."
