Report Highlights
- In 2024, client assets were up 9% to $12.1B, exceeding our forecast by 1%. As a result, revenue rose 3% YoY, beating our forecast by 3%, drive by interest revenue on unallocated client capital.
- In 2024, 53% of revenue came from interest on unallocated client capital held in cash accounts at major Canadian banks/credit unions. Since May 2024, the Bank of Canada has cut rates six times (200 bp), with potential for one or two more cuts due to slowing GDP growth, high unemployment, and cooling inflation. Consequently, we anticipate interest revenue declining in the coming quarters.
- A key highlight of 2024 was a 2% YoY increase in services revenue from core divisions (Investment Account Services and Health Service Plans), driven by higher transaction volumes.
- EPS fell 0.2% YoY due to a 6% rise in G&A expenses, driven by salaries, wages, and bonuses. While the drop was expected, it still beat our estimate by 10% due to higher-than-expected revenue. Management expects only moderate growth in expenses in 2025.
- Dividends increased 24% YoY to $7.20, aligning with our estimate.
- Services revenue will likely continue benefiting from organic demand growth for alternative investments. OLY’s subsidiary, Olympia Trust Company, is currently in the process of registering as a federal trust corporation, which will allow it to actively market its services in ON.
- OLY’s EV/EBITDA is 7.3x vs the sector average of 12.6x, a 41% discount.
*This report and research coverage is paid for and commissioned by Olympia Financial Group Inc. – See the bottom of this report for other important disclosures rating, and risk definitions. All figures in C$ unless otherwise specified.
