Home Capital shares up as Q3 earnings rise, mortgage originations up

Home Capital shares up as Q3 earnings rise, mortgage originations up

TORONTO — Home Capital Group Inc. shares surged Wednesday after the company announced better-than-expected earnings and a share buyback program.

The alternative lender’s shares ended up $4.15, or 14.3 per cent at $33.15 on the Toronto Stock Exchange to mark a significant rebound from a share plunge two years ago when the company’s future was in doubt.

In 2017, Home Capital fired its CEO after the Ontario Securities Commission said the company failed to properly disclose fraudulent activity by some associated brokers, which led to a wave of deposit withdrawals and pushed the share price down to a low of $5.85.

The company later reached a settlement with the Ontario Securities Commission, secured a bridge loan from Warren Buffett, and installed Yousry Bissada as CEO as part of a turnaround.

Bissada said Wednesday that the company, whose share price has climbed steadily this year, has benefited from a rebounding mortgage market and a new path forward.

“We had the benefit of a healthy housing market this quarter,” he said on a conference call.

“The pickup in the activity that began in Q2 in our major markets has continued into Q3. Economic conditions, including low interest rates, and strong employment data are supportive of a balanced market. We expect these conditions to remain in place for the rest of the year.”

Total mortgage originations came in at nearly $1.55 billion in the quarter, up 7.6 per cent from last year, while single-family residential mortgage originations were up by 16.8 per cent. The company’s total loan portfolio grew 6.4 per cent year over year to $16.99 billion.

Bissada said the company’s focus on digital investments to help streamline services, along with marketing and customer service are helping Home Capital reap gains in the market.

“While we’re enjoying the benefits of a rebound in our key housing markets, the growth and profitability that we are reporting today is not only the result of helpful tail winds in the industry.”

The company said it earned $39 million or 67 cents per diluted share for the quarter ended Sept. 30, up from a profit of $32.6 million or 41 cents per diluted share in the same quarter last year.

On an adjusted basis, Home Capital says it earned 72 cents per diluted share for its most recent quarter, up from an adjusted profit of 41 cents per diluted share a year ago, and well ahead of the 56 cents per share analysts had expected according to financial markets data firm Refinitiv.

The rise in earnings was largely due to increased net interest income, which came in at $103.1 million, up from $89.9 million for the same quarter last year, while total provisions for credit losses amounted to $3.7 million in the most recent quarter compared with $6.1 million in its second quarter and $4.0 million in the third quarter last year.

Along with earnings, the company announced it planned to launch a $150 million share buyback program, to be completed by the first quarter of 2019.

The positive news pushed the company’s share price to its highest level in almost three years, but Home Capital’s shares are still well off the more than $50 a share it was trading at in 2014 before news of the fraudulent brokers initially broke.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

An Air Canada Boeing 737 MAX 8 jet arrives at Halifax Stanfield International Airport on Friday, April 9, 2021. THE CANADIAN PRESS/Andrew Vaughan
Air Canada agrees to $5.9-billion aid package, giving Ottawa equity stake in airline

$1.4 billion earmarked to help reimburse thousands of customers

Prime Minister Justin Trudeau shakes hands with Yukon Premier Sandy Silver as Liberal on Wednesday February 8, 2017 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Yukon headed for minority government as two main parties in a tie

Liberals came into the election looking to build on their surprise 2016 majority win

Minister of National Defence Harjit Sajjan takes part in a year-end interview with The Canadian Press at National Defence headquarters in Ottawa on Thursday, Dec. 17, 2020. Sajjan took aim at recent Chinese military expansions into the South China Sea this evening even as he faced questions about the Liberal government’s ties to Beijing. THE CANADIAN PRESS/Sean Kilpatrick
Sajjan targets Chinese claims in South China Sea, battles Tories over Beijing ties

HMCS Calgary shadowed for at least part of the voyage as it passed near the disputed Spratly Islands

Transport trucks approach the Canada/USA border crossing in Windsor, Ont. on Saturday, March 21, 2020. North American trade is facing a “critical moment” in the ongoing aftermath of the COVID-19 pandemic, say Canadian business leaders as they embark on a concerted campaign to fortify ties with the United States. THE CANADIAN PRESS/Rob Gurdebeke
Canada-U.S. trade faces ‘critical moment’ that demands urgent action, businesses warn

Will fall to Canada to ensure its best interests are represented

Two RCMP officers observe a moment of silence to honour slain Const. Heidi Stevenson and the other 21 victims of the mass killings at a checkpoint on Portapique Road in Portapique, N.S. on Friday, April 24, 2020. THE CANADIAN PRESS/Andrew Vaughan
RCMP under scrutiny one year after mass killing that left 22 dead in Nova Scotia

Questions raised about why it took police 13 hours to stop mass killing

Canadian actor/producer/director Jay Baruchel is photographed at the 5 Drive-In Theatre in Oakville, Ont., ahead of the premier of Baruchel’s movie Random Acts of Violence, Wednesday, July 29, 2020. THE CANADIAN PRESS/Cole Burston
Jay Baruchel to host Amazon Prime Video’s ‘LOL: Last One Laughing Canada’

Final comedian left standing wins a grand prize for a charity of their choice

Letters
Letter: Leaders like MLA Jason Stephan should work towards greater good

Red Deer South MLA Jason Stephan talks about the devastating social and… Continue reading

Opinion
Opinion: Women, hit hardest by pandemic, key to economic recovery

Events of the past year have laid bare the many disparities and… Continue reading

Children at the Port Angeles Boys & Girls Club practice social distancing throughout the day to minimize the spreading of germs and potentially the coronavirus. Photo courtesy of the Boys & Girls Clubs of the Olympic Peninsula
Opinion: Teach young people these five principles

At all ages, young people may be the subject of mean behaviours… Continue reading

LtE bug
Letter: MLAs need to think about all Albertans

I was surprised to find more than a dozen UCP MLAs were… Continue reading

Sweden skip Niklas Edin makes a shot against Scotland in the Men's World Curling Championship gold medal final in Calgary, Alta., Sunday, April 11, 2021. Curling's Humpty's Champions Cup in Calgary has been pushed back a day due to the delayed finish of the men's world championship. THE CANADIAN PRESS/Jeff McIntosh
Start of Humpty’s Champions Cup pushed back a day in Calgary

Start of Humpty’s Champions Cup pushed back a day in Calgary

Men’s world curling championship in Calgary concludes amid COVID scare

Men’s world curling championship in Calgary concludes amid COVID scare

Most Read