The head of an Ontario-based lender that experienced a sharp drop in its share price last month after disclosing unexpected loan losses says recent events will serve as an “excellent learning opportunity” and that it expects the number of bad loans to drop.

Mississauga, Ont.-based Goeasy Ltd., which relies on providing

loans

to Canadians with low

credit scores

, on March 10 said it expected to incur an “incremental charge-off” — a declaration that a debt is unlikely to be collected — of about $178 million due to certain loans given by the company’s LendCare business segment. Its share price fell by more than 50 per cent that day.

“The leadership team here is certainly spending some time reflecting on how we got to this point,” chief executive Patrick Ens said on a call with analysts on Wednesday. “These aren’t results that we want to attain.”

He said there was a strong belief that being a part of the “merchant-originated secure business,” which allows customers to

buy first and pay later

, would help the company grow.

“We are now learning those expectations aren’t being met based on the most recent data that we have,” he said. “It’s an excellent learning opportunity for the organization. It also just provides us an opportunity to recalibrate our strategy.”

Ens said the company will pull back from its weakest-performing business segments and focus on where it has the “greatest confidence,” including home loans and loans directly given to Canadians.

Canada’s

biggest banks

have been performing well despite the Canadian economy struggling due to the uncertainty in trade relations with the United States and, more recently, the war on Iran.

But executives such as Royal Bank of Canada chief executive

Dave McKay

have said the economy is getting polarized, with more affluent consumers benefiting from their ability to invest in growing markets, while less affluent ones struggle with affordability.

Goeasy’s challenges with its LendCare business segment hurt its fourth-quarter earnings, which it released on Wednesday, reporting a net loss of $336.9 million, down from a profit of $54.2 million in the same period in 2024.

Adjusted for certain conditions, its net loss was $146.9 million for the quarter, down from $57.7 million in 2024. The adjusted diluted loss per share was $8.93, down from $3.32 in the same timeframe.

Aside from the $178-million charge-off, the company also reported a $160-million goodwill impairment charge.

But Goeasy issued more loans during the fourth quarter, generating $951.5 million in loan originations, up 17 per cent a year earlier.

“The origination levels in the quarter are a reminder of the opportunity we have to provide a valued service to an underserved customer base,” Ens said.

The company also reduced its workforce by about nine per cent in March and now employs 2,600 people, according to a company filing on Wednesday.

Goeasy said it expects the percentage of charge-offs to improve into the mid-teens for fiscal 2026 from 23.8 per cent in the fourth quarter of 2025.

Jaeme Gloyn, an analyst at National Bank of Canada, said the “new information gained” from Goeasy’s release still tilted negatively.

“What was new? We learned: i) delinquency rates are running significantly higher than previously thought (e.g., more than double in Q3-25); ii) charge-offs will be higher in Q1-26 than our baseline “mid-teens” expectations,” he said in a note on Wednesday.

Gloyn also said “we are concerned by elevated macro risk (higher inflation) and execution risk,” even though management maintained its full-year guidance for charge-offs.

Bart Dziarski, an analyst at RBC Capital Markets, also said the sentiment was negative and that the litigation risk appeared to be increasing.

Goeasy’s “subsequent event disclosure indicates the company has knowledge of proposed class action lawsuits alleging, amongst other things, misrepresentation of public disclosures for certain periods,” he said in a note on Wednesday.

Dziarski said Goeasy is currently not able to estimate the potential impact of these lawsuits and it expects more lawsuits to be filed.

• Email: nkarim@postmedia.com

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