The Canadian Investor - 3 Signs a Dividend Cut Is Coming and Canadian Bank Earnings Kick Off

Episode Date: December 4, 2025

On this episode of The Canadian Investor Podcast, Simon and Dan cover a packed slate of major Canadian market moves — from dividend shocks to CEO shakeups and a long-awaited bank sale. We break down Telus’ dividend growth pause and DRIP phase-out, why the company says the payout is safe, and what 2026 free cash flow could mean for investors. Then we look at Goeasy, where CEO Dan Rees is stepping down amid rising provisions, a short report, and widespread management turnover. Simon also explains Allied Properties’ 60% distribution cut, highlighting the three warning signs that dividend investors should always watch for. Then we dive into Laurentian Bank’s split sale to Fairstone and National, and what this means for Quebec’s banking landscape. Finally, we review Scotiabank’s strong quarter and whether the bank is starting to pull off a real turnaround. Tickers Discussed: T, BCE, GSY, AP.UN, NA, LB, BNS Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

Do you keep hearing about these all-in-one ETFs lately? Well, I have some exciting news. BMO ETFs just cut the fees on their flagship all-in-one ETFs to 0.15%, making them one of the lowest cost options in Canada. That's right, more value, same smart diversification, all in a single ETF. Whether you're just starting out or simplifying your portfolio, BMO all-in-one ETFs make it easy to invest with confidence. Just ZED it and forget it.

Considering ETFs like ZEQT, BMO's All Equity ETF, or ZGRO, BMO's growth ETF. Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business. Just my reminder to people who own sicklyly. Don't be surprised when there's a cycle. If there's uncertainty in the markets, there's going to be some great opportunities for investors.

This has to be one of the biggest quarters I've seen from this company in quite some time. Welcome back to the Canadian investor podcast. My name is Simone Bilange. I'm back with Dan Kent. We have a fun episode, a little bit of everything, quite a bit of news on the Canadian front. We'll go over. We'll go over some earnings. as well bank earnings are starting earlier today royal bank reported i think yesterday was scotia bank

which we'll talk a little bit about there was also some news with lorencian bank and then of course it'll continue this week so next week we'll be wrapping up the banking earnings so stay tuned especially if you like those banks so dan how you doing are you ready to get started oh yeah it's gonna be a good episode a lot of news i guess in the financial space that's what the majority of the episode will be because we got some stuff on go easy as well yeah exactly so i guess companies are getting all out before the holidays start happening and make sure you stay tuned we will be doing our bold prediction and reviews from this year we'll have to go through the episode i don't even remember i always forget what our bold predictions are but that'll be fun but enough uh housekeeping

let's get started here do you want to go over then use that uh i guess another telco tellis saying that they're suspending dividend growth? Yeah, so I think it was last week there was an article that came out on the Globe and Mail that kind of criticized TELUS for growing the dividend and actually like not cutting the dividend and the stock price ended up taking quite a big hit. I think it was near 23, 24 bucks a share and that that kind of drove it all the way down to nearly 18, I think. They came out, oh, what would this be now, a week later and said they're going to pause dividend

growth. So they had slowed down dividend growth. I think TELUS usually made like 3% increases semi-annually. Like they've done this for a very long time. And I think they scaled that back to like two and a half percent. And now they're just going to cut it out, period. The quarterly dividend will stay at its current level, but they're going to pause the dividend growth.

And they had also mentioned they want to gradually reduce the drip, the dividend reinvestment plan. They want to phase it out over the next few years. Drip plans, I mean, they're really not. all that good for the company. I mean, they kind of save them a bit of money because they're effectively just issuing shares, kind of dividend reinvestment plans, but they are dilutive and I believe BCE got rid of this and TELUS is looking to kind of get rid of it as well. The company expects to generate $2.4 billion in free cash flow next year compared to $2.1 billion this year. So this is still

around $100 million less than the dividend. I think common share dividends were around $2.5 billion or will come in at $2.5 billion this year. But I do believe they plan to sell off quite a few non-core assets, which should shore up the dividend, sorry, in 26. And then from there, they kind of expect 10% annual increases to free cash flow. So, I mean, really what they're saying or what they're trying to say is that the dividend will be covered without selling assets by 2027, judging by what I read in the article. And I kind of spoke about how the dividend will continue to be paid and not be cut. This is kind of, you know, stark contrast to BCE. They didn't really say anything about the dividend ever.

They kind of just kept it under wraps and then eventually cut it. But I don't think, like, TELUS is in nowhere near the situation that BCE was. I believe, like, when B.C. was at its worst, I think it was short, like, $800 million or something like that in regards to the dividend. Tellus is, it's short. There's no question. I mean, they're not going to grow the dividend, but they're not, they don't have as big of a shortfall. So I could actually see them, you know, coming out of this without cutting the dividend. And I think the market like this, I think it's up four or five percent this morning.

Yeah, and I was showing to join TCI subscribers. I think it was down 18 percent from the peak in the last six months. So I'm not quite sure when it peaked, but it was in a drawdown of 18 percent, even with the four and a half percent increase. It definitely got hit, especially recently. And then I was just pulling up here because it's always interesting mobile phone paid subscribers. So the growth has been pretty stagnant, a little bit of growth.

Obviously, we saw a whole lot of growth, especially with immigration, of course. It's going to have a big impact on that over the last four or five years being in around 9.1.18 million. And then now it's around 10 million, a bit above 10 million. But it's not moving all that much. Tell us, I think, is doing better than some of the other providers. But I just wanted to mention that I think it shows some of the growth issues that I think the telecos will probably be facing over the next couple years because the federal government announced that there'd be a big pullback in immigration. I think temporary residents too, they're going to be scaling that back. And just overall population growth will be pretty low, if not stagnant for the foreseeable future.

So you don't have the same kind of potential of new customers. It's definitely going to have an impact on profits when a lot of people see having a phone and a subscription as an essential. yeah i mean i own i own tell us i mean i'm not bullish on the telecoms like long term whatsoever i actually bought this one just kind of as a short term play on a on a like evaluation rebound and it looked pretty good leading up to that article i think tellus was up like 23% on the year i was i was very close to actually selling it and then it bombs like this but it's kind of hard to be bullish on these companies long term like where is the growth coming from i mean a lot of these telecoms are guiding to, you know, one to two percent revenue growth. And there's only so much they can trim

back expenses until, you know, they just can't trim it back anymore. I really don't know where the growth comes from. They're, they're pretty much just, I mean, bond proxies at this point, I would say. Yeah. Yeah. Well, the biggest issue on top of not being able to get a whole lot of new subscribers is they're actually almost cannibalizing each other, right? I'm showing here the average revenue per user for mobile phone subscribers. So it peaked in September 2020, around $61. And now it's backed down to 56, 57, actually, the latest quarter. So you're seeing a decline, and I did an episode on that on how to save money,

and you can definitely leverage the big telecoms against one another. If your phone bill, you're finding it's too expensive. You can just go online, and oftentimes you'll see just current. deals that are better or if not you go and talk to their chat and say you're thinking about switching especially if you own your phone you can put really bring down your bill and i think i mean these numbers i i would pull bell and rogers and i'm pretty sure it would show the exact same thing where they're seeing some pricing pressure so slower subscriber growth or even decline in some cases and then the average revenue per user is also declining is typically not the best recipe for

a business. Yeah, I mean, I didn't even need to do anything in regards to my phone. Like, I swapped to Rogers and they like cut my bill in half pretty much. And I didn't even need to really press it all that much. They just kind of did it. Yeah, it's, it's a tough pricing environment. Yeah, because they have fixed costs, right? So for them, it's not much additional cost to get a new customer or even keep you as a customer, even like say you're paying $80 and they offer you a plan at $55. it's better for them to keep you at 55, then you lose you altogether because their fixed costs are the same. So that's why I agree with you. It's definitely more of a bond proxy, but I just

wanted to mention this because especially when you remove the population growth factor, at least in the short term to medium term, it's definitely going to put some pressure on these businesses. But let's shift over here. So Go Easy, a company, we've talked quite a bit. Kind of surprising. So Go Easy. CO announced that he was stepping down, I think, at the end, of the year. So you want to go over that? Yeah. So Dan Reese, which would be the CEO of Go Easy is going to step down at the end of 2025 due to a medical issue. I think he has some sort of blood disorder or something like that. So what's going to happen is he'll go into a special advisor role from January of next year until June of next year to kind of support the handoff. And the new CEO will

be Patrick Enz, who is currently the president of Easy Financial, which would be kind of the lending arm like they have easy financial and easy home easy home would be the the segment of the business that like loans out furniture and appliances for ridiculous APRs but easy financial is definitely the better performing segment of the business so if you're going to see somebody step up this is probably the guy you want to see step up but i mean obviously you wish him the best in regards to health but i mean there's been a ton of management overhaul from go easy over the last while the company's cFO i believe this was a few months ago said that he's going to take another opportunity. Last year, Dan Reese, who the person who just resigned, replaced Jason Mullins as a CEO and is now, you know, stepping down himself at the end of the year. And there's also been quite a few internal shufflings. I mean, obviously, you can't really predict the timing of these types of things, but it is kind of awful timing to have all these sort of management overhauls and management changes when, you know, that short report came out, you know, not necessarily saying fraud. There was no fraud at all. But they're kind of like questioning the practices of these alternative.

lenders and how the regulations aren't kind of, you know, as transparent and what they can get away with payment relief wise. You have the price down from like $205 a share to what. I think it's even sub $130.30. Yeah. Yeah. It's like probably the worst timing to get rid of your or your CFO and your CEO over the last couple of months here. Obviously, you can't really do anything because it's health related issues, but still it's, they've kind of been in the news the last while all for kind of the bad, the wrong reasons. Yeah, exactly. And I do hope. obviously it's nothing I wish Dan Rees the best but it is kind of odd the timing and of course a medical issue is a medical issue but especially if he's going to stay as a special advisor

you think if it was super serious it'd be stepping down at the end of December and I'm not trying to make light of this situation is just one thing after the next for this company especially since he's been there for six months but it's not serious enough that he can still be a special advisor. I understand wanting to support the transition, but at the same time, he's only been there for six months. So how hard will the transition be when he hasn't? I don't know. There's just a whole lot of thing that just don't really add up for this company. I know we've been like pretty critical and we're not saying that there's fraud, nothing like that from what we've seen. It's just they're playing within the rules. It's just the rules do allow a lot of flexibility in terms of

reporting delinquencies, for example, but there's just a whole lot of stuff happening, and it makes me wonder even more if we're not going to see some pretty tough quarters coming up next year for Go Easy, especially as we talked before, some of those loans where people are actually not paying the loans, but they're counting those as revenues nonetheless and just accruing them on their balance sheet. At some point, if people are not paying you, you're going to have to ride off a significant portion of those and we're not seeing that quite yet in their delinquency rate. So there is a lot of questions and that's kind of the big reason why we're definitely a bit skeptical on the results. I mean, at least me, I think you agree with me on that part.

Yeah, I mean, I think it's already started to show in their results. Earnings are declining. Like, I think they've had probably the worst three quarters, I guess you could say here. I think they had one good quarter in between, but they had a couple of rough quarters over the last while here and obviously we're down, you know, 30, 40% in terms of share price. I think that's that's pretty obvious. But yeah, the management shuffles, I mean, obviously there's nothing you can do about it, but it's just, it's terrible timing. No, exactly. Yeah, I was when I saw, like, I was just checking the stock yesterday. I'm like, oh, like, I wonder what happened. It's down 5% had been rebounding a whole, a little bit, not a lot from its recent lows.

And then I saw that yesterday. So we obviously had to talk about it. Having cash on hand is essential for any business. Traditional business accounts hit you with high fees while paying little to no interest on the cash you need for day-to-day operations. That was our experience too, until we switched to the new EQ Bank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFTs, bill payments,

mobile check deposits, and 50 outgoing and 100 incoming free interackey transfers. And to sign up, quick and fully online, no branch visits because, let's be honest, no business owner has time for that. We use it for our own business, and it's the first account that actually helps our money work harder while keeping operations simple. Check it out today at EQBank.ca slash business. Want to buy a stock, but don't want to shell. out hundreds or even thousands for a single share? With QuestTrade's new fractional shares, you can

invest any dollar amount and build a diversified portfolio instantly. No delays, no trade fees, no excuses. Want to put $10 into a stock trading at $100? No problem. Quest Trade has you covered. They're the first broker in Canada to offer real-time commission-free trading for U.S. fractional shares and ETFs. It's simple, powerful, and finally available in Canada. Head to questrade.com to open and fund an account. Use code TCI and you get $50 to get you started. Calling all DIY, do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus. and growing who are using the app.

Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account,

you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning duolingo style education lessons that are completely free. You can search up Blossom Social in the App Store and join the community today. I'm on there. I encourage you go on there and follow me, search me up, some of the YouTubers and influencers

and podcasters that you might know. I bet you they're already on there. People are just on there talking, sharing their investment ideas, and using the analytics tools. So go ahead, Blossom Social in the App Store, and I'll see you there. Now, we'll go on some more news. This one will be a slightly longer segment, but Allied Property. Reed announced that it was cutting its distribution, kind of odd timing, too, in between quarters, but not overly surprising.

They said that they would cut the distribution. When I say distribution for Reed, just think of it of the dividend. Same thing is just they call it a distribution by 60 percent affected the December distribution, so it would be the one that will be paid in January, but is the December declaration. That means the monthly distribution went from 15 cents to $0.15. six cents per unit. And honestly, it is not surprising all that law because if you like to invest in dividend companies, you really need to listen carefully to this because there were signs

actually for quite some time. We've been talking about this for probably the better part of a year that a distribution cut at the high chance of happening for Allied. And obviously if you own the stock and you're looking at dividend cut, especially if you own it for the income, it's not great. But I think as long as you learn from it, that's what really counts. I've made mistakes. You've made mistakes. We made an episode on that. You know, I'm sure I'll make mistakes time and time again.

The one thing I do like to pride myself is not repeating the same mistakes. So I think that's really important here. I even, I was invested in Nile. I'd actually back in late 2020, bought it as a turnaround play, kept it for 2023 and then early 2024. I started seeing some signs that I'll actually show here that actually got worse since then that probably led to the dividend cut or the distribution cut. Now, the first obvious sign here was that if you listen to the call and especially a company that's having a high yield like this or you're looking as a turnaround play, which I'm assuming anyone who have been invested in Allied was

looking at it that way or a value play, you should really listening, be listening to every conference call. I wouldn't say that for like every single company you own, but for the ones that are more value plays that you're kind of banking on a turnaround, you definitely want to keep a closer eye on it. And it's something that they were actually saying they were considering last earnings call. So they were saying that the board was reviewing all their options, including a dividend cut when they got the question from an analyst. And there's other signs that were pretty easy to spot if you just know what to look at. And this actually applies well to all dividend stocks.

So if you see, I think, these three signs, I would say there is a very, very high likelihood of a dividend cut that could be coming. It's just obviously going to be the timing, but there's going to be a high likelihood. And we saw this for bail all these signs as well. So the first one is the payout ratio. Now, the payout ratio that you would look at for REIT, like Allied, is the funds from operation or adjusted from operation without going into the definition. Essentially, it just tells you the cash coming in, excluding things like depreciation, amortization, and proceeds from the sell of the certain buildings if they sell some. Now, AFFO, which is the more stringent of the two, because it includes things like maintenance, capital expect, nature, AFFO had actually gone over 100%. And before, it had been historically more in the high 70s to low 80s, so joint TCI subscribers, they'll see I have the chart over here.

And you see that that AFFO payout ratio is actually jumping, started jumping, I would say, late 2023. And then I kept climbing and hitting over 100% in the most recent quarter. And even the funds from operation payout ratio, which is a bit less stringent. But still, that one was in the typically in the last few years, it had been more in the low 70s range. And now it had reached 96% in terms of payout ratio. So that's just a sign there that they're paying more and more of that dividend with a larger portion of the cash actually. coming in and at some point this is just not sustainable yeah and i think it's kind of a important

sign that you know if you're investing in these turnaround plays i guess to actually like look at the numbers and not necessarily what management is saying because i mean they they're kind of obviously they're going to have a bullish tone for a lot of it what what were they reporting again like visitations or viewings like that was kind of their main thing they were pumping that was their main selling point yeah like how many people were good yeah and i mean They were strong. Yeah, the viewings were strong, but like, I mean, if you look at it, like the debt to EBTA, the, like every single metric for this company was declining.

It was deteriorating for the better part of like a year or so. And this was also a company that we covered as like kind of a turnaround play. And as soon as it started to deteriorate, we kind of like removed it. But the one thing that amazes me is like, yeah, they came out on the quarterly conference call and said we might cut the dividend. And then like this, the unit value went from like $21 down to 13. I mean, if you're going to say you might cut the dividend, you may as well just cut it because the market is going to.

Yeah, exactly. The market's going to price it in as if you're going to cut it anyway. Like it was kind of strange to me. Obviously, the cut came very shortly after, likely because the price bombed to the point where they probably thought it was kind of absorbed already. But, yeah, I mean, if you ever tell the market, yeah. Yeah. And it's, I think it's important for people, especially New Year investors, because they'll get a

attracted to that higher yield, right? So especially if you look, I wasn't looking at the yield. I'm assuming it was probably like 13, 40% range after they said they might cut the dividend. And sometimes you have newer investors that are looking at it and they don't really do the research. They just see the yield, especially when you have a team that's saying like, oh, no, we're probably going to cut it. But like I said, the signs I'm talking about here were visible like at least a year out.

Like you didn't need to hear it from management to know there was. a realistic and highly probable scenario where they would cut the dividend. And the second one, so the first one is the payout ratio. And again, we looked at the metrics here that apply more for REITs, but you can look at a payout ratio compared to free cash or earnings when you look at regular companies or companies that are not REITs. The second one would be debt levels. We're becoming unsustainable. And that will be a trend as well. So their interest covers ratio, and you alluded to that a bit quickly here, add worsened significantly. So it went from 2.5 times to 2.1 times in the span of two years. So this is just the amount of times that your profit cover your interest cost. They use,

I believe, adjusted EBITA, but there's different ways to calculate it depending on the type of companies. But regardless, if it's better, higher is better here. So if you see that ratio consistently trending down, that should be some alarm bells. That's something that we saw with BCE. before they cut their dividend is they were like a larger portion of their profits were actually going to pay those interest payments. Their net debt compared to their profits had gotten much worse as well. So going from 7.9 times to 12.3 times. And that was in the span of a couple years too.

So that's the opposite here. So you want this lower or better. So this just means that, you know, how many years essentially, profits would it take you to pay down the debt? And for a company that's higher debt level where cash flow are more sustainable, like a telco or even a reed, sometimes you have these higher numbers, but you don't want them to be too high as well. So debt levels were definitely becoming unsustainable. And that's another trend that you'll see for businesses that will have a higher likelihood of cutting the dividend. And the last one here, you alluded to it for TELIS. We talked about it

for BCE before they cut their dividend for probably a year and a half before they did. But is the business is showing signs of weakness. And there's a couple of things. So you said those tours. So I think are, yeah, those, yeah, like, what was it called again? Like the kind of showings, I guess. Oh, the showings. Showings.

Yeah, in real estate talk. The showing. So there's a couple of things here. So the first one that you could see that wasn't trending in the right direction. So it was the least area and the occupations. area. So essentially the occupancy rate and the lease rate. So you have here for Joint TCI in blue. So you see the lease area. The lease area has been trending down. So just means that companies are leasing the space. So it was at a high, I would say, in 2022 around 91%. Keep in mind

they were coming out of the pandemic. But these are longer term leases. So yes, you had some pre-pandemic leases. You had actually the occupied area that was below that, but that was kind of normal, right? During the pandemic, a lot of companies switch to a war-form home or a hybrid process. But then you saw the leased area as probably as those leases were coming due, trending down from 90, let's say 91%. And most probably the last couple of years had been trending around 87%. And then the occupied area actually from, let's say, 90% trending down. down to 84% the most recent quarter. And that one is even more worrying because if you're leasing an area

and you're seeing the cap between the leased area of 87% and 84% of occupied area, it implies that there might be some more companies that will not renew down the line because why would you renew a space that you're not going to use, right? It's not a great use of capital. So they were seeing pressure and they had been guiding this year, if I remember correctly,

to that, for that to hit 90% by the end of the year. In the last quarter, they basically said it's not happening. They were guiding for both of them to hit 90%. So that's the first example, D here. Another example of why it wasn't going well. So if you look at average in-rent, average in-place net rent per occupied square foot. So basically it just averages out the square foot that's being occupied, the average rent they're getting. So it was actually around $25 in towards the end of the pandemic in 2022,

dropped sharply to $23 after that, which again, kind of normal. It's a new world. You're not quite sure what your business is going to do. Are you working from home? Are you doing hybrid? Are you coming back in full force? Went back up to $25, but now has been stagnant for the last five, six quarters at $25, just showing that they're not able to.

really to get that average rent up, which creates some issues, especially as your overall costs are probably going up with inflation. And then you look at the last thing here, rent increase on renewal. So the kind of increase they're able to do for companies that are renewing their rent, which was typically over about three and a half, four percent, and you could see quarters that was eight, even 11 percent. And now you look at the last five quarters, there's a negative quarter at minus 6%, and then it's been, aside from that, around like two, three, one percent flat. So you can see that even the renewals, they're losing some pricing power there because the renewing companies are probably telling them, like, look, there's tons of space available.

Keep us at the same price or a small increase. If not, we'll go somewhere else. Yeah, or, yeah, even if they don't need the space anymore, period. Exactly. Yeah, I mean, it's, it was kind of a, well, I guess you could say yield trap to a certain extent. I had, uh, I had somebody on our, our Discord mentioned, this was like probably three weeks ago. They, they sent me a Reddit post of a guy who went kind of all in on Allied a month ago. Like, I think it was, it was over a quarter million dollars. So I, as you were talking,

I looked up the Reddit post and yeah, it's called Allied Properties 250K Yolo. So a month ago, he put a quarter million dollars in, based on the yield. And, uh, I mean, he does updates. That's probably a prime example of someone not. not doing the homework or just not understanding how to to look at real estate or read metrics. I mean, the metrics I am showing here, like, literally, like, you could have seen this trend for over a year. There's a reason why I sold my position. I bought it as a turnaround play coming back outside the pandemic, and I thought companies

eventually would get back to leasing space, and they'd won nice space because they'd want to bring their employees, encourage them to come to work. An ally typically has some of the nicest buildings and amenities, but at some point it was just not happening. And yeah, people get lured by the yield. And again, these three rules, if you see that, the payout ratio is getting a sustainable debt levels are rising and being unsustainable as well. And the business is showing signs of weakness that is consistent. It's not just a few quarters. This had been the better part of two years now, there is probably going to be a dividend cut or distribution cut. And we saw it and we'll see it time and time again. Yeah. Yeah, if you, I mean, if you want a pretty good read, you can,

you can look this up and read it. It's funny, he kind of talks about how like short sellers are pushing down the price and stuff like that. But I mean, Allied has like three percent short interest. I mean, it's just all the, the, the funny thing is, is the first comment on here when he did it a month ago was the one of them said, like, read the last 10 quarterly reports. All they keep talking about is having people view their properties and their vacancy rates continue to not rise. He's like, he's like management is not being being honest. But yeah, this like if you want to look, you know, why you shouldn't depend on yield alone, like have a look at this post because this guy, I mean, he spent 250K when it was almost $20 a unit.

So he's down $75,000 in a month. Yeah. The income is irrelevant. Yeah, even if management is not like, I don't think they were being dishonest per se, but I think they were being overly optimistic and when things were staring them in the face where it was clear that a cut was coming, they delayed it as long as they could,

which tends to be the norm here. And of course, when you see a management team that keeps saying that viewing are up and it's going to pick back up and they've been saying that for what 10 quarters the person mentioned and I vouched and one of the reasons I sold

is they kept saying that and it wasn't showing the numbers. Well, at some point, even if they're not necessarily lying, clearly the viewings are not translating into actual leases. It's that simple. Having cash on hand is essential for any business. Traditional business accounts hit you with high fees

while paying little to no interest on the cash you need for day-to-day operations. That was our experience too until we switched to the new EQ Bank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFTs, bill payments, mobile check deposits, and 50 outgoing and 100 incoming free interacee transfers.

And to sign up quick and fully online, no branch visits because, let's be honest, no business owner has time for that. We use it for our own business and it's the first account that actually helps our money work harder while keeping operations simple. Check it out today at EQBank.ca slash business. Want to buy a stock but don't want to shell out hundreds or even thousands for a single share? With Questrade's new fractional shares, you can invest any dollar amount and build a diversified portfolio instantly.

No delays, no trade fees, no excuses. Want to put $10 into a stock trading at $100? No problem. Questrade has you covered. They're the first broker in Canada to offer real-time commission-free trading for U.S. fractional shares in ETFs. It's simple, powerful, and finally available in Canada. Head to quest trade.com to open and fund an account. Use code TCI and you get $50 to get you started.

Calling all DIY, do-it-yourself investors. Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked.

And then once you link your brokerage account, you can get in-depth portfolio. Insights, track your dividends, and there's other stuff like learning duolingo style education lessons that are completely free. You can search up Blossom Social in the app store and join the community today. I'm on there. I encourage you go on there and follow me, search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas, and using the analytics tools. So go ahead. Blossom social in the app store. And I'll see you there. But anyways, I think enough with Allied. Let's move over here with some

some more banking news. So Laurentian split sale. Do you want to go over that? Yeah. So this happened Monday, I think. Incheon Bank finally found a suitor. It's kind of, in this case, multiple. So over the last few years, I would imagine everybody would know, like Laurentian was trying to find somebody to buy the bank, but there was not a lot of suitors. I think for one, like the bank isn't exactly the highest quality. I think especially like the retail operations are kind of low quality. You know, not to say that it was poor. I don't think it was like a poorly ran financial institution at all.

It's just like when you compare it to the big six, it just really wasn't all that good. It kind of start like in 2018 or something where they had like some underwriting issues for mortgages, remember. And then they never really recovered from that. And then I think like they've been trying to sell it for a while. but I think there was an issue that they were unionized up until like 2022. So I think a lot of a lot of banks maybe didn't want to deal with the unionized situation of it all. Like I don't think they are anymore.

I think they abolished that in 2020. But I know that was an issue back in the day as well. The deal now involves Fairstone Bank and National Bank. And national, I guess, is notable because they just made that move to acquire Canadian Western. So, I mean, they acquire Canadian Western, which is Western Canadian exposure. and they acquire Laurentian here. They're retail assets, whereas Fairstone kind of acquired, they acquired Laurentian. I believe it's kind of confusing as to how it works.

I think Fairstone acquired Laurentian and then National is going to take like the retail side of the business and Fairstone is kind of going to take the commercial side. But they will pay $40.50 per share in cash. So I think it was like a 20% premium. And yeah, it's kind of a move that strengthens National in Quebec even more. You know, you kind of have a bank that is fumbled, the retail side of things in Quebec and Laurentian and a bank like National, which is very, very good on that side of things. So you're kind of hoping they can kind of take these assets and, you know, increase the quality, kind of increase the profits. The interesting thing here is no, apparently no job is safe.

So while the deal goes on, all the branches in Quebec will be closed. But when they reopen, employees who worked at Laurentian will not be transferred to national. So they all have to reapply. So no jobs will be held for any of them, which is, which is kind of interesting. And I mean, yeah, the big six just kind of continue to gobble up the, the tiniier players, obviously with Canadian Western now with Laurentian partially. We had RBC with HSBC. There's really not too many more players here in Canada outside of, I mean, smaller credit unions. Six now.

Yeah, like equitable, I think is the seventh largest. Like, yeah, yeah, yeah. It's, uh, there's not much left here besides like, you know, credit unions and. And like regional banks, like here in Alberta, I can think of like ATB, which is like a government bank. But outside of that, it's like big six and really tiny credit unions here. Yeah. No, I think that that's true. And it's not surprising for the jobs.

And I do feel if there are some people that work for Laurentian Bank, it always sucks to have to go through that. But at the end of the day, from a business perspective, probably makes sense because, again, I've been lived in Quebec for a big portion of my life. And in Ottawa, I go on the Quebec side regularly. Lerencian is very present on the Quebec side, so his national bank, so clearly there's going to be some overlapping here between the two. So they're probably going to be looking at closing some branches because it's kind of what I thought. Yeah, exactly. It just wouldn't make sense to have, you know, maybe in a market where they have like, say a larger market, they have like five national banks and three

Laurentians. Well, do they really need eight? Maybe. they just need six or seven so maybe they'll close a couple of them i'm not saying it's obviously it's it sucks if your job is affected by the end of the day it's the kind of thing you would expect because it's not like it's a company that has a little to no presence in quebec like national bank arguably is the most present bank in quebec of all the big banks they they all are don't get me wrong but it i think it just came out of quebec right national banks yeah i mean they're very efficient and very good at what they do in Quebec, whereas Laurentian Bank has not been at all. So I imagine you're going to see a lot of overhaul and change when they, uh, if, I mean,

if it goes through, I guess it's, you know, subject to approval, I guess. No, exactly. No, I think that's, uh, really interesting. It's, we're seeing more and more consolidation in the banking space, huh? Yeah. I'm not sure it's, uh, it's best for competition. No, but, you know, hopefully there's banks like EQBang that are pushing the envelope and making things more competitive there. I think we have enough time to go over

Scotia Bank's earnings and we'll call it an episode. I also had done the earnings for firm holdings because I always have to like to look what the buy now pay later. The unregulated space of BNPL is looking light. But they reported a month ago. So even if we do them in a week or two, just a big takeaways. I think that's fine. So Scotia Bank, how does it look? Yeah, the one thing I'll say is I was going to ask you before we started recording to open up the 90-day delinquency on their slide deck if you can and we can show yeah i have it i have it okay cool you did it you did it all right we're ready so yeah it was a pretty good quarter from scotia like actually they've they've strung together like quite a few results like

quite a few good quarters they've kind of been on a tear since the middle of the year i think they're up like 35% on the year it's been one of the better banks i believe td is the best performing. Revenue increase 13%. Earnings grew 23%. Return on equity still lags a lot of the major banks, but it did increase 190 basis points to 12.5% just to give you an idea of how much this lags, like Royal reported this morning, I think they were 17.2%. So they're still, you know, not as high quality as something like Royal Bank, and you'll kind of see that in the valuations. But I mean, they are kind of turning things around. The company's GBM segment, which would be global banking and markets, which kind of serves more of the larger clients,

like corporations, governments, institutions. I was one of the main drivers of results. So earnings increased 50% revenue 24%. And they collected record advisory and underwriting fees. Canadian banking was steady, but not as solid as it has been for the last while. Like a lot of these banks, the Canadian side of the business is what has really been driving results. But they kind of noticed, you know, a slowdown here, it increased by only 1%. earnings in the Canadian segment. And they had mentioned the primary reason for this was an increase in provisions due to mortgage stress in the in the GTA. They specifically mentioned mortgage stress, which is why I wanted to show that 90 day delinquency eventually. It's, it's,

there's a bit of pressure here in regards to mortgages. And we've kind of seen this from all the banks. They're kind of mentioned that, mentioning that. But provisions overall remain relatively stable. So they're up 10% year over year and around 8% quarter over quarter. So it's nothing overly concerning, kind of the same in line with every other. No, but, yeah, but when you start licking in them, that's the data I did for on Fiscal.A.I, I still say finchat.com. I. Fiscal.a. So I did a custom metric here, which looks at the allowance for credit losses compared to the gross loans. So the total amount of loans they have and the money they have on the balance sheet because we've mentioned it before, but if there's

some new listeners, so they don't have banks that put money aside. every quarter and then that kind of goes into a pot if you'd like on their balance sheet and then every quarter they'll probably write some off and then they'll kind of adjust that part on the balance sheet but they might also recoup a bit more than they thought and so on but looking at it as a total of their gross loans give you a nice gives you a really good picture as to how that's growing and oftentimes you know yes it hasn't necessarily grown all that much the additional money they've added to it on a quarter over quarter basis. But what this tells me is it has been growing as a percentage of their gross loans. So it's possible that the gross loans

are actually slowing down in terms of origination because it's been growing. It's almost hitting 1% now. So if you're looking back at January of 2023, it was 0.72%. And now it's all the way up to 0.96% despite not adding much more. Obviously, they still added quite a bit, but I think it was around the same amount as about a year ago. Yeah, almost exactly. I think it was just over a billion or something like that. I mean. Yeah, so it probably tells me that, yeah, the loans are not growing as quickly then.

No, and I think that's intentional. Like, I think a lot of them are tightening up. Like, obviously when you have provisions going up 10% year over year, I don't think they're growing loans by that much. I actually think... They are seeing something, it's pretty clear, though. You wouldn't be seeing that straight line up in the better part of two years. It's not exactly reassuring.

I mean, it's not crazy high, but you can definitely tell that the banks are seeing stress and the credit markets they're lending. Yeah, and I think they're, like, I think the reason why they're doing so well over the last couple of years that I think people thought it would be a lot worse. And yeah, I mean, they're tightening up. I mean, you're seeing it if you look to a company like Go Easy, their originations. are still through the roof high, whereas these banks are, yeah, these banks are tightening up credit a lot.

I mean, it's, it's very difficult to get a loan through, you know, a high grade lender like this if you're not in a very good situation, which is why a lot of people are, are heading to a company like, like go easy. But yeah, the provisions are going up, but I also think that's an element of the banks purposely scaling down and being a lot more tight credit wise. So on the international side of things, so they grew earnings by 3%. provisions continue to accelerate. So they sit at a PCL ratio, or sorry, an ACL ratio of 1.44%.

So, sorry, that would be a provision ratio on the quarter. So 1.44% is quite high. I mean, just to give you perspective on this, the Canadian banking sits around 0.44%. So the international side of things, a lot more provisions. That side, like, still continues to struggle, but they've kind of pivoted and have started to kind of try to expand in the U.S. I wouldn't say they've given up internationally, but I mean, the Scotia Bank going international, while banks like BMO and all of them kind of went heavy in the United States, like kind of cost them quite a bit.

Like they lagged for a very long time. Yeah. And international predominantly Latin America. Yeah, Latin America. Yeah. So the bank, so they issued guidance in regards to provisions. So they expect the PCL ratio to be in the high 40s to mid 50 range for 2026, right? now it's around 54 basis points. So they're effectively saying worst case, things stay the

same provision wise. Best case, they see a big improvement in regards to provisions for next year. I guess we'll talk about Royal next week. But again, in regards to Royal, they kind of said it's going to stay the same in 2026 and then it's going to decrease in 2027. So you're kind of seeing like different outlook and different guidance from a lot of these banks. Scotia is targeting double digit earnings growth in 2026 and return on equities north of 14 percent. So big improvement on both sides of those. Again, it would be a drastic improvement. And just this slide deck of 90 day delinquencies, I guess we can talk about the mortgages. So the mortgages ticked up quite a bit. And I mean, it looks really small overall. But I mean,

it's still like a notable bump. So you're looking at a four basis point increase in a single quarter. Whereas, I mean, the last time we've seen that would have been Q3, 2024 when it jumped three basis points. But I mean, you're looking at a nearly, so what do we have? Q1 20, 24 was was 20 basis points and you're looking at 28 basis. So you're looking at almost a 50% bump in retail 90 day delinquent mortgages. So we're not seeing kind of that, you know, that increase in anything else really besides maybe credit cards. So I mean, the company did mention that the GTA mortgages are kind of an issue and that's why provisions were a bit higher. But you can kind of see it in these numbers and and like people may think these numbers are tiny but i mean it's more of the trend rather

than the you know the actual numbers standpoint yeah and i mean i'm not an expert neither are you just like uh dan and nick from the real estate podcast especially dan does a whole lot of dan foch of research on this and yeah gta real estate has been under a whole lot of stress for quite some time and now i think they're even seeing it in the single family homes and semi-detach where prices are actually declining for those as well. It just creates an issue, right? Because if you have a big, a high ratio mortgage, even if you put 20% down, if you're starting to see the value of your home drop significantly,

it just limits your option. When you're starting to renew, the cost may be quite high, especially for those who had a mortgage, those low pandemic mortgages who likely bought at the, well, pretty much bought at the peak at that point, And if they bought in 21, 2022, now they're looking at lower prices, lower value of the homes, and then they're also renewing at much higher prices. So if they didn't have much these homeowners of a buffer, it's quite a bit of a payment shock.

And especially if you add in all the other things that have been increasing in costs over the last few years because of inflation, I can understand why you're seeing these delinquencies rise, especially in the GTA area, because people are just under stress and you're going to say I think 2026 is going to be the biggest year in terms of that renewal wall so those pandemic mortgages and then clearly seeing a much higher interest rate

and we've talked about it time and time again the Bank of Canada can lower rates to zero at the end of the day it really doesn't impact fixed rates mortgages that's the five year Canada bond which in big part is impacted by the US 10 year and what's happening in the US. So it's very possible that that doesn't budge even if they lower rates to zero. Of course, people can still renew when a variable, but a lot of people

have been burnt on that and may be scared to go with the variable even if it offers better rates than the fixed option. Yeah, I would imagine if you were a variable rate holder in like 2021, you might never go variable again. Because yeah, that was terrifying for a lot of people. people. I guess the one thing, like, yeah, one thing that the banks will probably benefit from. And I mean, it's, it is what it is. It's a business. People may say it's a bit predatory, but when they have clients that renew, people have the tendency to stay with the bank, especially if they're tied financially and the bank they're with will, they're the only ones that will be able to renew them because there's less stringent requirements while they can get a higher rate for that

you renewal and I remember Dan shared with me some data with what you're seeing is more and more people actually extending the amortization because that's the only way they can make the payment more, which it gives you a lower payment but means you end up paying way more interest over the life of the mortgage, which ends up benefiting the bank. Yeah. Oh yeah. I think it's, I don't know if they've changed the regulations on this, but when you came up for renewal, like if you went somewhere else, he had to go through the stress test. So if you couldn't pass the stress test,

you were effectively. I believe they did. Yeah. I think they got rid of that because you were effectively stuck with the lender you had and they could just hose you on a rate. But yeah, I mean, in terms of this like past due loans, I mean, a lot of people will look at this and see credit cards at like 1.16% and be like, okay, mortgages aren't that bad at 28 basis points.

But like mortgages are way, way more of the loan book than credit cards. It's not comparable. A 28 basis point impact on mortgages, it has much bigger impact than, you know, 1.16 on credit cards. It's not close. That's what I mean. It's more of the trend. Yeah, the credit card, 1.16 is pretty good for credit cards. Like that's, well, what is Canadian tire?

They were like. I think it was in the 6% range, if I remember correctly. Yeah, just to give people an idea. So that's, even if it increases, it's not bad at all. Yeah. But yeah, that's it for Scotia. Okay. No, I think we'll wrap it up here.

I think it was a fun episode. Lots of news, some earnings. We'll be back on Monday. We'll have kind of a hybrid episode. We'll have some stocks on our radar. That'll think it'll be fun for people. I know everyone likes when we have those. A couple, at least a new name for me that's on my radar.

I would qualify a pretty small cap around one point something billion for a Canadian company. So not a company I've been following for a long time just recently. So it'll be fun to talk about that. We'll also do a little bit of primer, still in the spirit of financial literacy month, even though that was November, for newer people that are starting to invest. So we'll do a two-parter, so the first part on that, but then stocks on a radar. So I think it'll be fun. We were due for a stock on radar, so definitely happy to do that.

So we'll wrap it up here. Thank you for listening for those who are not subscribing to our Patreon page. If you're interested in, you can go to join tCI.com. It's $15 a month. you get our full videos, you get also our monthly updates for our portfolio, my parents' monthly retirement portfolio update, also post some additional content every so and again. But if you just want to listen to the podcast, that's totally fine.

We definitely appreciate the support, whichever way we do have some videos on YouTube, some short clips of the podcast that we clean up for those that want to see our beautiful faces. And I guess the last thing for joint TCI, you do get the podcast feed ad-free. so that's the extra perk that you get there. Anyways, we appreciate all the support. Hopefully, we're pretty high on your Spotify list in terms of listenership, which podcast you listen to most

for those using Spotify because it is the end of the year. So looking forward to wrapping up the year here. But thanks again for listening and we will be back on Monday. The Canadian Investor Podcast should not be construed as investment or financial advice.

The host and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.