TORONTO--(BUSINESS WIRE)--Home Capital Group (“Home Capital” or “the Company”) (TSX: HCG) today reported financial results for the three months ended March 31, 2018. This press release should be read in conjunction with the Company’s 2018 First Quarter Report including Financial Statements and Management’s Discussion and Analysis (MD&A), which are available on Home Capital’s website at www.homecapital.com and on SEDAR at www.sedar.com.
First Quarter 2018, compared with the Fourth Quarter 2017:
- Net income of $34.6 million, an increase of 13.0% or $4.0 million from $30.6 million.
- Diluted earnings per share of $0.43, an increase of 13.2% from $0.38.
- Non-interest expense of $51.4 million, a decrease of $14.1 million and a 21.5% improvement from $65.5 million.
- Non-securitized single-family residential mortgages of $10.26 billion, an increase of 2.3% or $227.3 million from $10.04 billion.
- Total mortgage originations of $1.16 billion, an increase of 32.9% or $287.2 million from $872.1 million.
- Provision for credit losses as a percentage of gross uninsured loans of 0.20%, compared to 0.12%.
First Quarter 2018, compared with the First Quarter 2017:
- Net income of $34.6 million, a decrease of 40.4% or $23.5 million from $58.0 million.
- Net income in Q1 2018 includes the impact of reduced loan balances and lower securitization income, partially offset by lower non-interest expenses.
- Diluted earnings per share of $0.43, a decrease of 52.2% from $0.90.
- Non-interest expenses were $51.4 million, a $13.1 million decline and a 20.3% improvement from $64.5 million.
- Total mortgage originations of $1.16 billion, a decrease of 50.6% or $1.19 billion from $2.35 billion.
- Provision for credit losses as a percentage of gross uninsured loans was 0.20% compared to 0.16%.
“We have taken another step forward on our journey to renewed growth. We had a good start to the year building on the momentum in our business from the past two quarters and our first quarter results demonstrate that Home is back," said Yousry Bissada, President and CEO, Home Capital Group. “We delivered growth in our residential and commercial lending business as result of our constant focus on improving our service to brokers and customers while building a sustainable risk culture.”
"Looking forward, we are ready to grow. Our capital and liquidity position provides flexibility to be competitive in our markets. As we work towards building shareholder value, we are following a responsible growth strategy to be the leading Canadian Alt-A lender, leading in service, technology and market share.”
First Quarter 2018 Financial Position
- Total loans under administration of $22.54 billion, which includes securitized mortgages that qualify for off-balance sheet accounting, increased $22.4 million from $22.52 billion at the end of Q4 2017, and decreased $4.63 billion from $27.17 billion at the end of Q1 2017.
Total loans of $15.22 billion increased 1.0% from $15.07
billion at the end of Q4 2017, and decreased 18.1% from $18.58 billion
at the end of Q1 2017.
- Single-family residential mortgage originations of $869.7 million compared with $566.0 million in Q4 2017, and $1.71 billion in Q1 2017.
- Multi-unit residential mortgage originations of $104.9 million compared to $194.8 million in Q4 2017, and $294.8 million in Q1 2017. Most multi-unit residential mortgage originations are insured and subsequently securitized through programs that qualify for off-balance sheet accounting.
- Non-residential commercial mortgage originations, which include store and apartment mortgages, of $184.7 million compared to $111.2 million in Q4 2017, and $338.4 million in Q1 2017.
- Liquid assets were $1.45 billion, compared to $1.65 billion at the end of Q4 2017 and $2.10 billion at the end of Q1 2017. The Company maintains a prudent level of liquidity, given the current level of operations, loan balances and the Company’s obligations.
- Total deposits were $12.08 billion compared to $12.17 billion at the end of Q4 2017 and $16.25 billion at the end of Q1 2017.
Effective January 1, 2018, the Company adopted IFRS 9 Financial Instruments (IFRS 9), which replaced IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). Please see Note 2 of the unaudited interim consolidated financial statements included in the 2018 First Quarter Report for more information on the implementation of IFRS 9.
Credit losses and delinquencies are expected to remain low in 2018; however, the Company is prepared for volatility in this performance that may result from uncertainty in the macroeconomic environment.
Implementing the changes to OSFI Guideline B-20 could have a negative impact on the housing market and economic growth in the Company’s largest market of Ontario. This in turn could contribute to deterioration in credit performance in future quarters, if the extent of the impact is more severe than widely expected. The implementation of IFRS 9 requires consideration of forward-looking information, and may also add higher volatility to reported credit losses going forward.
The Company continues to have strong credit performance with total provision for credit losses of $6.0 million in Q1 2018. Provision as a percentage of gross uninsured loans remained low at 0.20% compared to 0.12% in Q4 2017 and 0.16% in Q1 2017. Provisions for credit losses were calculated under IFRS 9 for Q1 2018 and under IAS 39 for 2017. As provisions for credit losses for 2017 were not restated, comparability is reduced to some extent. Provision for credit losses for the quarter primarily related to the single-family residential mortgage portfolio, reflecting portfolio growth including volume of renewals and the impact of forward-looking macroeconomic information.
The provision on the commercial mortgage portfolio was a decrease of $0.3 million, comprising a reduction of the provision on performing loans of $3.4 million, offset by an increase of $3.0 million for a specific commercial loan. This increase was included in Stage 3 under IFRS 9.
The Company continues to observe strong credit profiles and stable loan-to-value ratios across its portfolio, which continues to support low delinquency and non-performing rates and ultimately low net write-offs. Net write-offs were $1.1 million and represented 0.03% of gross loans compared to 0.11% in Q4 2017 and unchanged from Q1 2017.
Net non-performing loans (represented by Stage 3 loans under IFRS 9) as a percentage of gross loans remained low at 0.29% at the end of Q1 2018 compared to 0.30% at the end of Q4 2017 and 0.24% at the end of Q1 2017.
Non-interest expenses decreased by $14.1 million or 21.5% from Q4 2017, resulting primarily from a decrease in other operating expenses. Other operating expenses last quarter included $11.4 million of expenses comprising $6.3 million of impairment losses on intangible assets along with costs related to the exit of the PSiGate and prepaid card business and litigation-related costs.
The decrease in non-interest expenses over Q1 2017 represents a decrease in salaries and benefits expense mainly as a result of reduced staff levels. In addition, salaries and benefits expense in Q1 2017 included $7.4 million of Project EXPO restructuring provision.
Non-Interest Expenses Outlook
Overall non-interest expenses for 2018 are expected to decline from the elevated levels of 2017 as there were a number of significant expenses related to the liquidity event in last year’s results.
However, non-interest expenses are expected to increase for the remainder of 2018 principally due to salaries and benefits expense. It is expected to increase from the amount recorded in Q1 2018 as staffing levels have subsequently increased. It is expected that quarterly salaries and benefits expense will increase between $5 million to $6 million over Q1 2018 levels in subsequent quarters. Due to the lingering impact of certain costs stemming from the liquidity event other operating costs will remain at the current level and increase modestly in connection with new initiatives.
The Company maintained strong capital ratios well above Company targets and regulatory minimums at the end of Q1 2018. Management continues to review opportunities to deploy capital in the most efficient manner to maximize long-term shareholder value.
- Home Trust’s Common Equity Tier 1 and Total capital ratios remained very strong at 23.64% and 24.12%, respectively, at March 31, 2018. The comparative balances were 23.17% and 23.68%, respectively, at December 31, 2017 and 16.34% and 16.77%, respectively, at March 31, 2017.
- Home Trust’s Leverage ratio was 9.02% at March 31, 2018, 8.70% at December 31, 2017 and 7.29% at March 31, 2017.
Home Capital is ready to grow with a robust capital, liquidity and leverage position. The Company’s primary strategic objective is to grow sustainably and regain its leading market share position in Canada’s Alt-A mortgage market.
In the near term, management’s key areas of focus are:
1. Building a sustainable risk culture.
2. Being the leader in the Alt-A marketplace, in service, technology and solutions.
3. Developing robust and diverse liquidity sources and maintaining a strong balance sheet.
4. Profitably growing residential and commercial business lines and increasing market share, relative to market conditions.
5. Increasing renewal and retention rates.
6. Deepening broker relationships and increasing outreach to advance higher-quality applications.
7. Assessing opportunities for the business as it relates to operating in the context of an evolving regulatory environment.
In 2018, the Company is ready to grow under the direction of a revitalized management team and Board of Directors. Management and the Board are aligned and focused on ensuring that Home Capital regains its position as the leading Canadian Alt-A lender, with leading service, innovative solutions, strong financial performance, the highest ethical standards and the most rigorous risk management. The Board is also focused on leading in governance. Last year’s Board renewal began that process, which is being continued through the slate proposed at the Company’s upcoming annual shareholders’ meeting. The Board is committed to ongoing board renewal to add skills and expertise that will strengthen the Board’s important oversight capabilities.
Moving forward, management and the Board are following a strategy that will take advantage of the Company’s capital position and balance sheet to invest in sustainable and responsible growth. Investments in talent, training and technology will be key to driving profitable growth and creating long-term shareholder value.
President & Chief Executive Officer
Chair of the Board
May 8, 2018
The Company’s 2018 First Quarter Financial Report, including Management’s Discussion and Analysis, for the three months ended March 31, 2018 is available at www.homecapital.com and on the Canadian Securities Administrators’ website at www.sedar.com.
First Quarter 2018 Results Conference Call and Webcast
The conference call will take place on Wednesday, May 9, 2018, at 8:00 a.m. ET. Participants are asked to call approximately 10 minutes in advance at 647-427-7450 in Toronto or toll-free 1-888-231-8191 throughout North America. The call will also be accessible in listen-only mode on Home Capital’s website at www.homecapital.com in the Investor Relations section of the website.
Conference Call Archive
A telephone replay of the call will be available between 11:00 a.m. ET Wednesday, May 9, 2018 and 12:00 a.m. ET Wednesday, May 16, 2018 by calling 416-849-0833 or 1-855-859-2056 (enter passcode 5991866). The archived audio webcast will be available for 90 days on Home Capital’s website at www.homecapital.com.
|(Unaudited)||For the three months ended|
|(000s, except Percentage and Per Share Amounts)||March 31||December 31||March 31|
|Net Interest Income||88,100||91,718||125,857|
|Diluted Earnings per Share||$||0.43||$||0.38||$||0.90|
Return on Shareholders’ Equity (annualized)
|Return on Average Assets (annualized)||0.8%||0.7%||1.1%|
|Net Interest Margin (TEB)2||2.02%||2.02%||2.44%|
|Provision as a Percentage of Gross Uninsured Loans (annualized)||0.20%||0.12%||0.16%|
|Provision as a Percentage of Gross Loans (annualized)||0.16%||0.09%||0.13%|
|Efficiency Ratio (TEB)2||49.5%||59.8%||43.4%|
|March 31||December 31||March 31|
|BALANCE SHEET HIGHLIGHTS1|
|Total Assets Under Administration3||24,776,803||25,040,182||29,583,545|
|Total Loans Under Administration3,4||22,541,079||22,518,675||27,169,129|
|Common Equity Tier 1 Capital Ratio||23.64%||23.17%||16.34%|
|Tier 1 Capital Ratio||23.64%||23.17%||16.34%|
|Total Capital Ratio||24.12%||23.68%||16.77%|
|Net Non-Performing Loans as a Percentage of Gross Loans||0.29%||0.30%||0.24%|
|Allowance as a Percentage of Gross Non-Performing Loans||78.1%||79.5%||91.8%|
|Book Value per Common Share||$||23.04||$||22.60||$||26.18|
|Common Share Price – Close||$||13.56||$||17.31||$||26.03|
|Dividend paid during the period ended||$||-||$||-||$||0.26|
|Dividend Payout Ratio||-||-||28.9%|
|Number of Common Shares Outstanding||80,246||80,246||64,204|
|1 The amounts as at and for the period ended March 31, 2018 have been prepared in accordance with IFRS 9 Financial Instruments (IFRS 9); prior period amounts have not been restated and have been prepared in accordance with IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). Please see Note 2 in the unaudited interim consolidated financial statements included in the 2018 First Quarter Report for further information.|
|2 See definition of Taxable Equivalent Basis (TEB) under Non-GAAP Measures in the 2018 First Quarter Report.|
|3 Total assets and loans under administration include both on- and off-balance sheet amounts.|
|4 Total loans include loans held for sale and are presented gross of allowance for credit losses, for all periods presented.|
|5 These figures relate to the Company’s operating subsidiary, Home Trust Company.|
|Consolidated Statements of Income|
|For the three months ended|
|thousands of Canadian dollars, except per share amounts||March 31||December 31||March 31|
|Net Interest Income Non-Securitized Assets|
|Interest from loans¹||$||154,934||$||158,938||$||192,435|
|Dividends from securities||286||278||2,286|
|Interest on deposits and other||68,367||70,330||77,252|
|Interest and fees on line of credit facility||6,007||6,215||-|
|Net interest income non-securitized assets||85,326||89,088||120,389|
|Net Interest Income Securitized Loans and Assets|
|Interest income from securitized loans and assets¹||22,059||22,563||21,558|
|Interest expense on securitization liabilities||19,285||19,933||16,090|
|Net interest income securitized loans and assets||2,774||2,630||5,468|
|Total Net Interest Income||88,100||91,718||125,857|
|Provision for credit losses¹||5,968||3,434||5,919|
|Fees and other income||12,041||16,346||16,331|
|Gain on sale of PSiGate||950||-||-|
|Net realized and unrealized gains (losses) on securities and loans||1,000||-||(3)|
|Net realized and unrealized losses on derivatives||(1,017)||(304)||(875)|
|Salaries and benefits||16,229||17,063||29,619|
|Other operating expenses||32,756||44,949||31,094|
|Income Before Income Taxes||46,410||40,531||77,358|
|NET INCOME PER COMMON SHARE|
|AVERAGE NUMBER OF COMMON SHARES OUTSTANDING|
|Total number of outstanding common shares||80,246||80,246||64,204|
|Book value per common share||$||23.04||$||22.60||$||26.18|
1 The amounts for the period ended March 31, 2018 have been prepared in accordance with IFRS 9 Financial Instruments (IFRS 9); prior period amounts have not been restated
and have been prepared in accordance with IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). Please see Note 2 in the unaudited interim
consolidated financial statements included in the 2018 First Quarter Report for further information.
|Consolidated Statements of Comprehensive Income|
|For the three months ended|
|March 31||December 31||March 31|
|thousands of Canadian dollars (Unaudited)||2018||2017||2017|
|OTHER COMPREHENSIVE INCOME|
|ITEMS THAT WILL NOT BE SUBSEQUENTLY RECLASSIFIED TO NET INCOME|
|Equity Securities Designated at FVOCI1|
|Change in net unrealized gains or losses||931||N/A||N/A|
|Income tax expense||248||N/A||N/A|
|ITEMS THAT WILL BE SUBSEQUENTLY RECLASSIFIED TO NET INCOME|
|Available for Sale Securities and Retained Interests1|
|Net change in unrealized gains or losses||N/A||1,431||16,414|
|Net losses reclassified to net income||N/A||-||3|
|Income tax expense||N/A||378||4,358|
|Debt Instruments at FVOCI1|
|Net change in unrealized gains or losses||1,018||N/A||N/A|
|Net gains or losses reclassified to net income||-||N/A||N/A|
|Income tax expense||280||N/A||N/A|
|Cash Flow Hedges|
|Net change in net unrealized gains or losses||(348)||356||(85)|
|Net losses (gains) reclassified to net income||287||(68)||329|
|Income tax (recovery) expense||(26)||78||72|
|Total other comprehensive income||1,386||1,263||12,231|
1 The amounts for the period ended March 31, 2018 have been prepared in accordance with IFRS 9; prior period amounts have not been restated and have been
prepared in accordance with IAS 39. N/A indicates not applicable under the accounting policy for the respective period. FVOCI indicates fair value through other comprehensive income.
Please see Note 2 in the unaudited interim consolidated financial statements included in the 2018 First Quarter Report for further information.
|Consolidated Balance Sheets|
|March 31||December 31|
|thousands of Canadian dollars (Unaudited)||2018||2017|
|Cash and Cash Equivalents||$||1,013,945||$||1,336,138|
|Loans Held for Sale||75,748||165,947|
|Non-securitized mortgages and loans||12,273,219||11,910,439|
|Allowance for credit losses¹||(45,140)||(38,775)|
|Deferred tax assets||3,107||9,577|
|Goodwill and intangible assets||97,691||100,993|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Deposits payable on demand||$||476,038||$||539,364|
|Deposits payable on a fixed date||11,608,370||11,631,090|
|CMHC-sponsored mortgage-backed security liabilities||1,550,183||1,562,152|
|CMHC-sponsored Canada Mortgage Bond liabilities||1,473,472||1,473,318|
|Bank-sponsored securitization conduit liabilities||106,192||142,279|
|Deferred tax liabilities||28,161||30,230|
|Accumulated other comprehensive loss||(4,508)||(5,894)|
1 The allowance for credit losses as at March 31, 2018 represents expected credit losses and have been prepared in accordance with IFRS 9. The allowance for credit losses as at
December 31, 2017 represents the total of individual and collective allowances on loan principal as prepared in accordance with the incurred loss model under IAS 39.
Please see Note 2 in the unaudited interim consolidated financial statements included in 2018 First Quarter Report for further information including information on reclassification of comparative balances.
|Consolidated Statements of Changes in Shareholders' Equity¹|
|Net Unrealized Gains (Losses), After Tax, on:||Total||Total|
|thousands of Canadian dollars||Capital||Contributed||Retained||Equity Securities||Debt Instruments||Cash Flow||Accumulated Other||Shareholders'|
|(Unaudited)||Stock||Surplus||Earnings||Designated at FVOCI||at FVOCI||Hedges||Comprehensive Loss||Equity|
|Balance at January 1, 2018 2||$||231,156||$||4,978||$||1,583,265||$||(6,902)||$||2,197||$||(1,189)||$||(5,894)||$||1,813,505|
|Amortization of fair value of|
|employee stock options||-||(410)||-||-||-||-||-||(410)|
|Balance at March 31, 2018||$||231,156||$||4,568||$||1,617,851||$||(6,219)||$||2,935||$||(1,224)||$||(4,508)||$||1,849,067|
|on Securities and||Losses on||Accumulated|
|Retained Interests||Cash Flow||Other||Total|
|thousands of Canadian dollars,||Capital||Contributed||Retained||Available for Sale,||Hedges,||Comprehensive||Shareholders'|
|except per share amounts (Unaudited)||Stock||Surplus||Earnings||After Tax||after Tax||Loss||Equity|
|Balance at December 31, 2016||$||84,910||$||4,562||$||1,598,180||$||(53,589)||$||(1,476)||$||(55,065)||$||1,632,587|
|Stock options settled||548||(141)||-||-||-||-||407|
|Amortization of fair value of|
|employee stock options||-||304||-||-||-||-||304|
|Repurchase of shares||(264)||-||(5,698)||-||-||-||(5,962)|
|Dividends ($0.26 per share)||-||-||(16,710)||-||-||-||(16,710)|
|Balance at March 31, 2017||$||85,194||$||4,725||$||1,633,813||$||(41,530)||$||(1,304)||$||(42,834)||$||1,680,898|
1 The amounts for the period ended March 31, 2018 have been prepared in accordance with IFRS 9; prior period amounts have not been restated and have been prepared in
accordance with IAS 39.
2 Please see Note 2 in the unaudited interim consolidated financial statements included in the 2018 First Quarter Report for further information on transition of balances as at
December 31, 2017 to balances as at January 1, 2018 upon adoption of IFRS 9.
|Consolidated Statements of Cash Flows|
|For the three months ended|
|March 31||March 31|
|thousands of Canadian dollars (Unaudited)||2018||2017|
|CASH FLOWS FROM OPERATING ACTIVITIES|
|Net income for the period||$||34,586||$||58,041|
|Adjustments to determine cash flows relating to operating activities:|
|Amortization of net premium (discount) on securities||111||(86)|
|Provision for credit losses||5,968||5,919|
|Recovery on sale of loan portfolios||(1,000)||-|
|Gain on sale of PSiGate||(950)||-|
|Gain on sale of mortgages or residual interest||(1,322)||(4,738)|
|Net realized and unrealized losses on securities||-||3|
|Amortization and impairment losses¹||5,333||6,219|
|Amortization of fair value of employee stock options||(410)||304|
|Deferred income taxes||4,401||(3,825)|
|Changes in operating assets and liabilities|
|Loans, net of gains or losses on securitization and sales||(150,955)||(537,269)|
|Derivative assets and liabilities||8,226||3,669|
|Accrued interest receivable||(1,910)||(512)|
|Accrued interest payable||11,235||19,648|
|Taxes receivable or payable and other||(33,872)||33,807|
|Cash flows (used in) provided by operating activities||(321,609)||67,206|
|CASH FLOWS FROM FINANCING ACTIVITIES|
|Repurchase of shares||-||(5,962)|
|Exercise of employee stock options||-||407|
|Dividends paid to shareholders||-||(16,710)|
|Cash flows used in financing activities||-||(22,265)|
|CASH FLOWS FROM INVESTING ACTIVITIES|
|Activity in securities|
|Proceeds from sales||-||-|
|Proceeds from maturities||299||9,051|
|Net proceeds from sale of PSiGate||310||-|
|Purchases of capital assets||(22)||(56)|
|Capitalized intangible development costs||(1,171)||(2,337)|
|Cash flows (used in) provided by investing activities||(584)||855|
|Net (decrease) increase in cash and cash equivalents during the period||(322,193)||45,796|
|Cash and cash equivalents at beginning of the period||1,336,138||1,205,394|
|Cash and Cash Equivalents at End of the Period||$||1,013,945||$||1,251,190|
|Supplementary Disclosure of Cash Flow Information|
|Dividends received on investments||$||273||$||3,028|
|Income taxes paid||13,081||20,222|
1 Amortization and impairment losses include amortization on capital and intangible assets and impairment losses on intangible assets.
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. Please see the risk factors, which are set forth in detail in the Risk Management section of the 2018 First Quarter Report, as well as the Company’s other publicly filed information, which is available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com, for the material factors that could cause the Company’s actual results to differ materially from these statements. 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 2018 Outlook section in the 2018 First 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, 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, 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 2018 and its effect on Home Capital’s business are material factors the Company considers when setting its performance goals, 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. In setting and reviewing its strategic priorities and outlook for the remainder of 2018, management’s expectations continue to assume:
- The Canadian economy is expected to be relatively stable in 2018.
- Generally the Company expects stable employment conditions in its established regions. Also, the Company expects inflation will generally be within the Bank of Canada’s target of 1% to 3%, leading to stable credit losses and demand for the Company’s lending products in its established regions.
- The Canadian economy will continue to be influenced by the economic conditions in the United States and global markets and further adjustments in commodity prices; as such, the Company is prepared for the variability that may result.
- While the Company is assuming that interest rates will experience increases in 2018, the impact of such increases is not expected to be material. The level of interest rates is expected to continue to support relatively low mortgage interest rates for the remainder of 2018.
- The Company believes that the current and expected levels of housing activity indicate a relatively stable real estate market overall. Please see Market Conditions under the 2018 Outlook in the Company’s 2018 First Quarter Report for more discussion on the Company’s expectations for the housing market.
- The Company expects that debt service levels will remain manageable by Canadian households in 2018, however high levels of consumer debt make the economy more vulnerable to rising interest rates.
- The Company will have access to the mortgage and deposit markets through broker networks.
The Company has adopted IFRS as its accounting framework. IFRS are the generally accepted accounting principles (GAAP) for Canadian publicly accountable enterprises for years beginning on or after January 1, 2011. The Company uses a number of financial measures to assess its performance. Some of these measures are not calculated in accordance with GAAP, are not defined by GAAP, and do not have standardized meanings that would ensure consistency and comparability between companies using these measures. Definitions of non-GAAP measures can be found under Non-GAAP Measures in the Management’s Discussion and Analysis included in the Company’s 2018 First Quarter Report.
The Company’s continuous disclosure materials, including interim filings, annual Management’s Discussion and Analysis and audited consolidated financial statements, Annual Information Form, Notice of Annual Meeting of Shareholders, and Proxy Circular are available on the Company’s website at www.homecapital.com and on the Canadian Securities Administrators’ website at www.sedar.com.
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 deposits, residential and non-residential mortgage lending, securitization of insured residential first mortgage products, consumer lending and credit card services. In addition, Home Trust offers deposits via brokers and financial planners, and through its direct to consumer brand, Oaken Financial. Home Trust also conducts business through its wholly owned subsidiary, Home Bank. Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba.