Home Capital reports growth of its mortgage business

Things continue to improve at Home Capital with further growth in its mortgage business year-over-year.

The lender has reported Q1 2019 originations of $1.22 billion, down from $1.61 billion in Q4 2018 but up from the $1.16 billion it originated in the first quarter of 2018.

Single-family mortgage originations grew from $869.7 million in Q1 2018 to $933.2 million in Q1 2019. There was a dip from the $1.160 million originated in the final quarter of 2018.

Total loans of $16.68 billion at the end of the first quarter of 2019 was up 1.7% quarter-over-quarter and up 9.7% year-over-year. Loans under administration of $23.11 billion was up 0.8% from Q4 2018 and up 2.5% from Q1 2018.

The firm also announced growth of its Oaken Financial deposits and total adjusted net income of $30.2 million or 49 cents per share, up 14.0% over Q1 2018 after adjustment for incremental amortization of legacy information systems in connection with investment in IT Roadmap.

“The growth in our mortgage portfolio and deposits with Oaken Financial show that more Canadians are trusting us to look after their financial needs,” said Yousry Bissada, President and Chief Executive Officer. “We have begun to upgrade our information technology infrastructure on a multi-year IT Roadmap that will include an upgrade of our core banking system and new initiatives in digital technologies, customer relationship management and mobile banking. These investments will enable us to improve productivity, accelerate new product introductions and improve the customer experience.”

Credit quality
Total provision for credit losses (PCL) of $6.1 million in Q1 2019 compared with $3.9 million in Q4 2018, and $6.0 million in Q1 2018.

Net write-offs as a percentage of gross loans of 0.02% compared with 0.13% in Q4 2018 and 0.03% in Q1 2018.

Net non-performing loans (represented by Stage 3 loans under IFRS 9) as a percentage of gross loans remained low at 0.49% at the end of Q1 2019 compared to 0.47% at the end of Q4 2018 and up from 0.29% at the end of Q1 2018.

“We have the capability and desire to continue returning capital through the normal course issuer bid as we grow our mortgage portfolio and make substantial technology investments to build our business for the future,” added Mr. Bissada.

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