Olympia Financial Group Inc.
Services Revenue Boosted by Surge in Client Assets
Published: May 13, 2025
Author: FRC Analysts
View Complete Report*This report and research coverage is paid for and commissioned by Olympia Financial Group Inc. – See the bottom of this report for other important disclosures rating, and risk definitions. All figures in C$ unless otherwise specified.
Sector: Financial Services | Industry: Asset Management
Ticker Symbols: OLY.TO – TSX
Report Highlights
- In Q1-2025, client assets were up 8% YTD to $12.97B, exceeding our forecast by 6%.
- Q1 revenue was down 0.3% YoY amid lower revenue from interest on unallocated client capital, but exceeded our forecast by 1.1%, as we had anticipated a steeper decline in interest revenue. EPS declined 5.9% YoY, but still beat our forecast by 2.4% on stronger-than-expected revenue.
- Over 50% of revenue came from interest on unallocated client capital held in cash accounts at major Canadian banks/credit unions. Since June 2024, the BoC has cut rates seven times (225 bp), with the potential for one or two more cuts this year, due to slowing GDP growth, high unemployment, and cooling inflation. Consequently, we anticipate interest revenue declining in the coming quarters.
- A key highlight of Q1 was a 4% YoY increase in services revenue from core divisions (Investment Account Services and Health Service Plans), driven by higher transaction volumes. Services revenue will likely continue benefiting from organic demand growth for alternative investments.
- Dividends held steady at $1.80/quarter, aligning with our estimate
- While lower rates have historically boosted financial stocks, Trump’s tariff threats have negatively impacted both Canadian and U.S. equities across the board. Although tariffs will not directly affect OLY, we believe they could be impacted by a potential tariff-induced recession.
- Given the uncertainties, we are taking a cautious stance on financial stocks. We expect Trump may reverse or soften his new tariff measures due to their potential negative impact on U.S. consumers and businesses. Should this occur, we would revert to a bullish stance on financials.
- OLY’s EV/EBITDA is 6.7x vs the sector average of 12.4x, a 46% discount.
Fundamental Research Corp. Equity Rating Scale:
- Buy – Annual expected rate of return exceeding 5%; the expected return is commensurate with risk
- Hold – Annual expected rate of return is between 5% and 12%
- Sell – Annual expected rate of return is below 5% or the expected return is not commensurate with risk
- Suspended or Rating N/A – Coverage and ratings suspended until more information can be obtained from the company regarding recent events.
Fundamental Research Corp. – Risk Rating Scale:
- (Low Risk) – The company operates in an industry where it has a strong position (for example a monopoly, high market share etc.) or operates in a regulated industry. The future outlook is stable or positive for the future. The company generates positive free cash flow and has a history of profitability. The capital structure is conservative with little or no debt.
- (Below Average Risk) – The company operates in an industry where the fundamentals and outlook are positive. The industry and company are relatively less sensitive to systemic risk than companies with a Risk Rating of 3. The company has a history of profitability and has demonstrated its ability to generate positive free cash flows (though current free cash flow may be negative due to capital investment). The company’s capital structure is conservative with little to modest use of debt.
- (Average Risk) – The company operates in an industry that has average sensitivity to systematic risk. The industry may be cyclical. Profits and cash flow are sensitive to economic factors although the company has demonstrated its ability to generate positive earnings and cash flow. Debt use is in line with industry averages, and coverage ratios are sufficient.
- (Speculative) – The company has little or no history of generating earnings or cash flow. Debt use is higher. These companies may be in start-up mode or in a turnaround situation. These companies should be considered speculative.
- (Highly Speculative) – The company has no history of generating earnings or cash flow. They may operate in a new industry with new, and unproven products. Products may be at the development stage, testing, or seeking regulatory approval. These companies may run into liquidity issues and may rely on external funding. These stocks are considered highly speculative.
Disclaimers and Disclosure
The opinions expressed in this report are the true opinions of the analyst about this company and industry. Any “forward looking statements” are our best estimates and opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness. There is no guarantee that our forecasts will materialize. Actual results will likely vary.
Fundamental Research Corp. “FRC” owns shares of the subject company: No. The analyst owns shares of the subject company: No , and does not make a market or offer shares for sale of the subject company, and does not have any investment banking business with the subject company.
Fees have been paid to FRC by Olympia Financial Group Inc. to commission this report and research coverage including update reports . This fee creates a potential conflict of interest which readers should consider. The purpose of the fee is to subsidize the high costs of research and monitoring. FRC takes steps to ensure independence including setting fees in advance and utilizing analysts who must abide by CFA Institute Code of Ethics and Standards of Professional Conduct. Additionally, analysts may not trade in any security under coverage. Our full editorial control of all research, timing of release of the reports, and release of liability for negative reports are protected contractually. To further ensure independence, Olympia Financial Group Inc. has agreed to a minimum coverage term including an initial report and three updates. Coverage cannot be unilaterally terminated. Distribution procedure: our reports are distributed first to our web-based subscribers on the date shown on this report then made available to delayed access users through various other channels for a limited time.
The distribution of FRC’s ratings are as follows: BUY (69%), HOLD (3%), SELL / SUSPEND (28%). Olympia Financial Group Inc.
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