A Trust Company in a lower-rate world

Olympia Financial Group Inc. (TSX:OLY) is in the spotlight because its latest results show two businesses moving in opposite directions: fee income that keeps growing, and interest-linked income that is shrinking as rates fall. Its common shares trade on the Toronto Stock Exchange under the symbol OLY, and the split between those income streams is the key to understanding the company.

The latest results, for the six months to 30 June 2026, were released on 12 August 2026.

What Olympia does

Olympia operates mainly through Olympia Trust Company, a non-deposit-taking trust company licensed in nine provinces. The trust company administers self-directed registered plan accounts, provides corporate trust services and acts as a transfer agent.

Two other subsidiaries broaden the offering. Olympia Currency and Global Payments Inc. provides currency exchange and global payment services, while Olympia Benefits Inc. offers private health services plans and IT services for exempt market dealers, registrants and issuers.

Interest on funds held in trust is where rate sensitivity enters.

The latest numbers

For the first six months of 2026, total Revenue fell 10 per cent to $43.49 million from $48.07 million a year earlier. Service revenue rose 4 per cent to $23.26 million, helped by higher monthly and transaction fees. Trust, interest and other income dropped 21 per cent to $20.22 million from $25.71 million, mainly because of lower interest rates on trust-held funds.

Total expenses edged up 1 per cent to $33.71 million. With revenue falling and costs broadly flat, Earnings before income tax declined 35 per cent to $9.70 million, and net earnings from continuing operations fell 37 per cent to $7.06 million. Basic and Diluted Earnings per Share were $2.93, compared with $4.67 in the prior-year period. The release summary does not state the currency, so readers should check the filings.

The full-year backdrop

The pattern is not new. For the year ended 31 December 2025, net earnings were $19.86 million, down 17 per cent from $23.92 million, and earnings per share were $8.25 against $9.94. Total revenue slipped 4 per cent to $98.86 million. Service revenue grew 5 per cent to $50.00 million, driven by account growth in the self-directed plan division, while trust, interest and other income declined 11 per cent to $48.87 million.

Expenses rose 1 per cent to $72.51 million in 2025, mainly because of computer system upgrades, including artificial intelligence and process automation, and higher legal fees, partly offset by lower operational wages.

Our analysis

Taken together, the two periods suggest that Olympia's fee Business is steady but not yet large enough to offset the fall in interest earned on client balances. In the first half of 2026 service revenue contributed roughly 53 per cent of total revenue, compared with about 47 per cent a year earlier, which indicates a gradual shift towards more predictable income.

Expenses have stayed broadly flat while revenue declined, compressing margins. Whether the 2025 spending on system upgrades and automation eventually lowers the cost of serving accounts is something the figures cannot yet answer, and it is worth following.

Risks and what to watch

The main risk is the path of interest rates: further cuts would reduce income on trust funds, while a pause or rise would ease the pressure. The releases give no quantified guidance.

Investors following the company will want to see the third-quarter results, the pace of growth in self-directed account fees, and whether expense growth stays near 1 per cent. The releases refer to monthly Dividend payments in their forward-looking statements but give no amounts.