Loblaw's near-25% move into EQB signals where grocery giants see banking profits going

EQB shares spiked 9% on Wednesday after the grocery chain filed notice of intent to nearly double its position in Equitable Bank's parent. The filing itself is routine disclosure. What matters is the arithmetic underneath it: Loblaw isn't dabbling anymore.

Equitable Bank is Canada's ninth-largest deposit-taking institution by assets, and it built that position by staying out of the Big Six's way. No branch network. No tellers. Just mortgages and high-interest savings accounts, distributed digitally. Loblaw already owned a meaningful piece of EQB. This move takes it close to the 25% threshold where a stake stops being an investment and starts looking like infrastructure.

The PC Financial template scaled up

Loblaw has run PC Financial since 1998, a white-label bank built on top of CIBC's rails. It's been modestly profitable for years, mostly as a loyalty play. Customers who bank where they shop tend to spend more where they bank. The credit card became the connective tissue. The problem with that model is that Loblaw never owned the actual banking. CIBC did. Loblaw got the branding and the points liability. CIBC got the net interest margin and the regulatory moat.

Equitable is different. It's a Schedule I bank. It holds deposits, issues mortgages, files OSFI reports. If Loblaw treats this like infrastructure rather than a portfolio holding, it gets access to the whole machine: the deposit base, the underwriting desk, the mortgage servicing operation. That's not a fintech partnership. That's vertical integration.

Where the profit actually lives now

The retail banking story of the past decade isn't about branches. It's about deposits. A checking account in 2015 was a loss leader. A high-interest savings account in 2025, held by a customer who already trusts your grocery brand and is earning PC Optimum points on every transaction, is a funding vehicle. The deposit is the raw material. Mortgages and consumer credit are just what you build with it.

Equitable made its name lending to borrowers who didn't fit the Big Six's boxes: self-employed, new to Canada, non-traditional income. It's not subprime. It's non-standard. And it earns a spread. As of Q2 2025, Equitable's net interest margin sat at 2.14%, roughly 40 basis points wider than the chartered bank average.

Loblaw sees that spread and sees the same customer base walking through 2,400 stores every week. That's distribution the banks have to buy through marketing spend and branch leases. Loblaw already has it.

What the Big Six missed

The major banks spent the 2010s buying wealth managers and trying to add "digital-first" features to 40-year-old core banking systems. They mostly ended up with expensive apps stapled to legacy infrastructure. Equitable built the opposite: digital-native mortgage and deposit products with no physical baggage. The Big Six couldn't buy it outright because OSFI tends to frown on concentration. Loblaw faces no such constraint. It's a grocer buying a bank, not a bank buying another bank.

That's the actual story here. Loblaw isn't betting that banking will become more like retail. It's betting that mortgage lending and deposit-taking, stripped of the branch network and the compliance theatre, look a lot like any other vertically integrated supply chain.

EQB's market cap sits around $3.2 billion as of Wednesday's close. Loblaw's stake is now worth something north of $750 million, and climbing. The company hasn't said what the endgame ownership level is. But the direction is clear. This isn't a portfolio allocation. It's an acquisition that's just taking longer than usual.