TORONTO - Home Capital Group Inc. ('Home Capital' or 'the Company') (TSX: HCG) today reported financial results for the three and nine months ended September 30, 2022.
This press release should be read in conjunction with the Company's 2022 Third Quarter Report including Financial Statements and Management's Discussion and Analysis which are available on Home Capital's website at www.homecapital.com and on SEDAR at www.sedar.com.
'The housing market is currently in a period of transition as buyers and sellers adjust to a higher interest rate environment,' said Yousry Bissada, President and Chief Executive Officer. 'Our emphasis on prudent underwriting has kept the quality of our mortgage loan book consistently high. We have a strong balance sheet and a proven emphasis on risk management that will help us ensure that we remain resilient.'
Net Income: Diluted earnings per share of $0.77 in Q3 2022 compared with $1.08 in Q3 2021
Net income of $31.0 million or $0.77 diluted earnings per share in Q3 2022, a decrease of 20.6% from $0.97 per share in Q2 2022 and a decrease of 28.7% from $1.08 per share in Q3 2021.
Adjusted net income of $38.0 million or $0.95 diluted earnings per share in Q3 2022, a decrease of 3.1% from $0.98 per share in Q2 2022 and a decrease of 13.6% from $1.10 per share in Q3 2021. Results are adjusted for items of note related to implementing our Ignite Program. Adjusted results, measures and ratios are non-GAAP financial measures.
Net interest margin of 1.92% in Q3 2022, compared with 1.97% in Q2 2022 and 2.58% in Q3 2021.
Non-interest expenses of $72.1 million in Q3 2022, compared with $60.9 million in Q2 2022 and $64.6 million in Q3 2021.
Asset Growth: Mortgage originations decreased 23.4% over Q3 2021
Mortgage originations of $1.85 billion in Q3 2022, compared with $3.04 billion in Q2 2022 and $2.41 billion in Q3 2021.
Single-family mortgage originations of $1.44 billion in Q3 2022, compared with $2.27 billion in Q2 2022 and $2.01 billion in Q3 2021.
Total loan portfolio of $20.59 billion at the end of Q3 2022, a decrease of 0.03% from the end of Q2 2022 and an increase of 17.3% from the end of Q3 2021.
Loans under administration of $26.80 billion at the end of Q3 2022, up 0.4% from the end of Q2 2022 and 14.8% from the end of Q3 2021.
Funding: Deposits through our Oaken channel of $4.80 billion make up 30.9% of total deposits
Total deposits of $15.52 billion at the end of Q3 2022, compared with $15.02 billion at the end of Q2 2022 and $13.71 billion at the end of Q3 2021.
Total Oaken deposits of $4.80 billion at the end of Q3 2022, an increase of 3.4% from the end of Q2 2022 and 12.8% from the end of Q3 2021.
Oaken's share of total deposits was 30.9% at the end of Q3 2022, compared with 30.9% at the end of Q2 2022 and 31.0% at the end of Q3 2021.
Credit Quality: Provision for credit losses of $4.4 million compared to a provision reversal of $3.8 million in Q3 2021
Total provision for credit losses ('PCL') of $4.4 million in Q3 2022, compared with $4.7 million in Q2 2022 and a reversal of provision for credit losses of $3.8 million in Q3 2021.
Allowance for credit losses of 0.21% of gross loans at the end of Q3 2022, compared with 0.19% at the end of Q2 2022 and 0.20% at the end of Q3 2021.
Net write-offs as a percentage of gross loans on an annualized basis were 0.01% in Q3 2022, unchanged from Q2 2022 and Q3 2021.
Net non-performing loans (represented by Stage 3 loans under IFRS 9) as a percentage of gross loans at 0.16% at the end of Q3 2022, compared with 0.14% at the end of Q2 2022 and 0.15% at the end of Q3 2021.
Outlook
'We expect softer market conditions to persist in the near term,' said Mr. Bissada. 'We continue to believe we are in a great business and that the demand for home ownership is an enduring driver of the Canadian economy. By maintaining our focus on providing great service to our customers and partners through all market conditions, we will continue to manage our company with the objective of delivering value over the long term.'
Caution Regarding Forward-Looking Statements
From time to time, Home Capital Group Inc. makes written and verbal forward-looking statements. These are included in the Annual Report, periodic reports to shareholders, regulatory filings, press releases, Company presentations and other Company communications. Forward-looking statements are made in connection with business objectives and targets, Company strategies, operations, anticipated financial results and the outlook for the Company, its industry, and the Canadian economy. These statements regarding expected future performance are 'financial outlooks' within the meaning of National Instrument 51-102. These risk factors are material risk factors a reader should consider, and include credit risk, liquidity and funding risk, structural interest rate risk, operational risk, investment risk, strategic risk, reputational risk, compliance risk and capital adequacy risk along with additional risk factors that may affect future results. Forward-looking statements can be found in the Report to the Shareholders and the Outlook section of the 2022 Third Quarter Report. Forward-looking statements are typically identified by words such as 'will,' 'believe,' 'expect,' 'anticipate,' 'intend,' 'should,' 'estimate,' 'plan,' 'forecast,' 'may,' and 'could' or other similar expressions.
By their very nature, these statements require the Company to make assumptions and are subject to inherent risks and uncertainty, general and specific, which may cause actual results to differ materially from the expectations expressed in the forward-looking statements. These risks and uncertainties include, but are not limited to, the impacts of the COVID-19 pandemic and government responses to it, global capital market activity, changes in government monetary and economic policies, changes in interest rates, inflation levels and general economic conditions, legislative and regulatory developments, climate change, competition and technological change. The preceding list is not exhaustive of possible factors.
These and other factors should be considered carefully and readers are cautioned not to place undue reliance on these forward-looking statements. The Company presents forward-looking statements to assist shareholders in understanding the Company's assumptions and expectations about the future that are relevant in management's setting of performance goals, strategic priorities and outlook. The Company presents its outlook to assist shareholders in understanding management's expectations on how the future will impact the financial performance of the Company. These forward-looking statements may not be appropriate for other purposes. The Company does not undertake to update any forward-looking statements, whether written or verbal, that may be made from time to time by it or on its behalf, except as required by securities laws.
Assumptions about the performance of the Canadian economy in 2022 and its effect on Home Capital's business are material factors the Company considers when setting strategic priorities and outlook. In determining expectations for economic growth, both broadly and in the financial services sector, the Company primarily considers historical and forecasted economic data provided by the Canadian government and its agencies and other third-party providers. In setting and reviewing its strategic priorities and outlook for 2022, management makes certain assumptions about the Canadian economy, employment conditions, interest rates, levels of housing activity, household debt service levels and the Company's continued access to broker mortgage and deposit markets. These assumptions are discussed in greater detail in the 2022 Third Quarter Report.
The current economic uncertainties pertaining to rising interest rates, declining house prices, inflationary pressure and continued economic impacts from the COVID-19 pandemic, such as supply chain challenges from China, significantly impact the assumptions made by management in setting and reviewing the Company's strategic priorities and outlook. Updated forward-looking macroeconomic assumptions have been incorporated into the models used in the Company's expected credit loss estimation process. The full extent of the impact that the heightened economic challenges mentioned above will have on the Canadian economy and the Company's business remains uncertain and difficult to predict.
About Home Capital
Home Capital Group Inc. is a public company, traded on the Toronto Stock Exchange (HCG), operating through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering residential and non-residential mortgage lending, securitization of residential mortgage products, consumer lending and credit card services. In addition, Home Trust and its wholly owned subsidiary, Home Bank, offer deposits via brokers and financial planners, and through a direct-to-consumer brand, Oaken Financial. Licensed to conduct business across Canada, we have offices in Ontario, Alberta, British Columbia, Nova Scotia, and Quebec.
Contact:
Jill MacRae
Tel: (416) 933-4991
Email: investor.relations@hometrust.ca
HOME CAPITAL GROUP INC. 