goeasy (GSY) Scotiabank’s 27th Annual Financials Summit summary

Recap of recent challenges and strategic response

• Significant underperformance in the LendCare point-of-sale business led to increased credit losses and a portfolio write-down.

• Decisive actions included sharply reducing LendCare originations and shifting capital to the higher-return direct-to-consumer business.

• A six-point action plan was launched, focusing on portfolio mix, balance sheet strength, and executive hires in risk, data, and operations.

• Dividend payments and share buybacks were paused to prioritize deleveraging, with leverage reduced from mid-5x to 4.95x.

Progress and operational priorities

• The loan book mix shifted from 54% to 60% direct-to-consumer loans by Q2, with further increases expected.

• Credit performance improved, with charge-off rates dropping from 17.8% to 16.7%, and guidance set for mid-teens.

• Continued focus on collections, portfolio mix, and operational discipline to drive down credit losses.

• Strengthening the team with key hires, notably a new Chief Credit Risk & Data Officer to enhance underwriting and risk-adjusted margins.

Market conditions and outlook

• Non-prime lending conditions have been volatile, with rising unemployment and inflation impacting consumers.

• Recent data shows a possible improvement in unemployment, but inflation and trade uncertainty persist.

• The company is preparing for multiple economic outcomes, emphasizing resilient underwriting.