Canadian non-prime lender goeasy extends slide after major charge-off, forecast withdrawal (updated)

goeasy

11/03/2026 15:16

Company expects C$331 million total net charge-offs

CFO says further pressure on net charge-offs expected

Shares down 16%; tanked 57% on Tuesday

Adds analyst comment in paragraph 8

By Pritam Biswas

March 11 (Reuters) - Canadian non-prime consumer lender goeasy's GSY.TO shares slumped 16% on Wednesday after more than halving in value in the previous session, as the company flagged a charge-off of about C$178 million and write-downs tied to its LendCare unit.

The division mainly lends to customers with weaker financial profiles and focuses on financing in the auto and powersports businesses. LendCare, which was acquired in 2021, had expanded its loan book through third-party merchants.

Goeasy on Tuesday also pulled its forecast for the quarter and the next three years. The company also plans to address a recently identified error in LendCare's historical reporting practices when it reports after markets close on March 25.

"We view the development as unambiguously negative for the near-term financial outlook and a major blow to management credibility and investor sentiment," analysts at Scotiabank said in a note.

Total net charge-offs across its units are expected to be about C$331 million ($243.74 million), the company said. It also expects its allowance for credit losses on gross consumer loans receivable to rise by about C$86  million in the fourth quarter, from the level reported on September 30.

"We expect pressure on net charge-offs and higher delinquency reporting for the coming quarters, before an anticipated improvement in 2027," said Felix Wu, who was named permanent Chief Financial Officer on Tuesday.

The anticipated rise in net charge-offs and loan-loss provisions is expected to breach several financial covenants, but goeasy has secured a deal with its syndicate lenders and is in talks with other counterparties, the company said.

"While obtaining covenant relief from lenders gives short-term reprieve, the path forward is challenged given ratings agencies are likely to downgrade the company's debt rating," said analysts at RBC Capital Markets.

     An equity raise was difficult at current trading levels, they added.

Shares of the lender, which had a market capitalization of about C$1.85 billion as of Monday, fell 57% on Tuesday.

($1 = 1.3580 Canadian dollars)

 (Reporting by Pritam Biswas in Bengaluru; Editing by Sriraj Kalluvila)

 ((Pritam.Biswas@thomsonreuters.com;))