The actual dividend increase on Wednesday was 3.8%. The 17% refers to the year over year increase in the dividend. EPS of $2.07 missed estimates of $2.48; revenue of $306.1M missed estimates of $318.6M. Certainly things were not good. Loan growth was OK but credit losses (largely in real estate) and weaker economic conditions impacted provisions and resulted in a reduced outlook for the balance of the year. Revenue fell 5% and 2% consecutively. AUM did grow 9%, as did book value. There has of course been some management changes with the death of the former CEO. This adds uncertainty. On the positive side, customer growth was good as was personal lending growth. But provisions for losses and impaired loans were the main concerns. The conference call has not yet occurred at the time of this answer, but for the moment it appears the weakness is skewed a bit towards the sector rather than company issues. As a smaller bank it likely takes an earlier 'hit' versus larger peers who can be more selective with their loans and credit. But, as noted, EQB has seen recent misses as well, and prior promises are not yet being delivered. The stock will take a hit today. The valuation (likely 8X earnings with a decline expected) does reflect some of this risk. We would like to see where the stock settles, and wouldn't 'react' and sell this right away, especially into a decline. But with some overall economic concerns continuing it is also hard to foresee a big recovery in the next several quarters as well.
5i Research Answer: