goeasy (TSE:GSY) reported an adjusted loss in the third quarter of 2026 as higher credit loss allowances and a shrinking loan portfolio weighed on results, even as charge-off rates improved and the lender resumed growth in its direct-to-consumer business.
The Canadian non-prime lender posted an adjusted diluted loss of CAD 0.94 per share, compared with adjusted diluted earnings of CAD 1.02 per share in the second quarter. Revenue fell 18.2% from a year earlier to CAD 372 million, reflecting lower consumer loan balances and a reduced yield on the portfolio.
Gross consumer loans receivable ended the quarter at CAD 4.88 billion, down CAD 124 million, or 2.5%, from the prior quarter and approximately 10% from a year earlier. Chief Executive Officer Patrick Ens said increased direct-to-consumer originations did not fully offset principal repayments and net charge-offs.
Loan losses improve, but delinquencies rise
The company’s overall net charge-off rate fell to 15.2% from 16.7% in the second quarter. Charge-offs on merchant-originated loans declined to 19.1% from 20.6%, while the annualized rate on direct-to-consumer unsecured loans fell to 15.7% from 17%.
Chief Financial Officer Felix Wu said better performance in merchant-originated automotive and powersports loans contributed to the improvement. Charge-offs in the direct-to-consumer portfolio also declined.
Delinquent loans nevertheless rose to 12.6% of the portfolio from 11.9% at the end of the second quarter. Loans more than 30 days past due increased to 6.3% from 5.8%.
The allowance for credit losses on gross consumer loans rose CAD 16.7 million to CAD 516.3 million. The allowance rate increased to 10.59% from 9.99%, driven primarily by expected higher losses in merchant-originated automotive and powersports loans, a less favorable economic outlook and slightly higher expected losses in unsecured lending, Wu said.
Direct lending grows as merchant portfolio contracts
goeasy is shifting its portfolio toward loans originated through its easyfinancial direct-to-consumer channels while maintaining tighter credit standards in its merchant-originated business. Direct-to-consumer balances grew CAD 72 million during the quarter and represented 63.3% of the portfolio, up from 53.6% a year earlier. Merchant-originated loans accounted for 36.7%.
Ens told analysts that the company had not returned to all the direct-lending segments it previously served because current market conditions indicated potential strain in some marginal credit segments. It also was not pursuing an earlier anticipated expansion in merchant-originated lending because management did not see sufficient opportunity for profitable growth there.
“The binding constraint is just ensuring that the underwriting we are doing is going to be value additive and accretive to the business long term,” Ens said. He added that the company did not currently face liquidity constraints on growth.
Liquidity and controls
goeasy increased its cash balance by CAD 179.7 million during the quarter and had CAD 1.23 billion in liquidity, measured as cash plus unused contractual borrowing capacity, at September 30. Its CAD 550 million revolving credit facility remained undrawn.
The company renewed its securitization warehouse facility, reducing its size to CAD 910 million from CAD 1.12 billion and lowering its interest rate by 35 basis points. The renewal restored the ability to draw funds subject to conditions. Wu said borrowing beyond the CAD 612 million outstanding at September 29 would require newly originated assets until certain conditions are met.
Management has also begun discussions with lenders about extending the revolving credit facility, which matures in July 2027, and amending covenants and other terms. Wu said the company hopes to provide updates over the next few months. Dividends and share repurchases remain suspended indefinitely.
Wu said a previously identified material weakness related to IFRS 9 at the LendCare business had not been fully remediated. The company has updated policies and controls, but must demonstrate through testing that the controls operate effectively over a sufficient period.
Fourth-quarter outlook
For the fourth quarter, goeasy expects gross consumer loans receivable of CAD 4.6 billion to CAD 4.8 billion, a consumer loan yield of 27% to 28.5%, and a net charge-off rate of 14.5% to 16%.
Ens said the updated year-end loan outlook reflects lower expectations for merchant originations and the anticipated effect of current conditions on direct-to-consumer lending. The company did not provide loan-book guidance for 2027 and expects to share more about its longer-term plan in the new year.
Asked about the path back to profitability, Ens said management’s primary focus was expanding risk-adjusted margin—the difference between revenue yield and credit loss rates—while also improving efficiency and financing costs.
About goeasy (TSE:GSY)
goeasy Ltd. is a leading Canadian provider of non-prime consumer lending solutions, offering a suite of financial products through its easyfinancial, easyhome, and LendCare brands. goeasy offers unsecured and secured instalment loans, point-of-sale financing, and lease-to-own merchandise through its omni-channel model, which spans online, mobile, and hundreds of locations nationwide. Driven by its team members’ dedication to expand access to credit for underserved communities and helping customers strengthen their financial futures, goeasy has proudly served more than 1.6 million customers while building an award-winning culture.
