TORONTO - Home Capital Group Inc. ('Home Capital' or 'the Company') (TSX: HCG) today reported financial results for the three and twelve months ended December 31, 2022.
This press release should be read in conjunction with the Company's 2022 Annual and Fourth Quarter Consolidated Financial 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.
'Home Capital executed well in a volatile year for the mortgage industry,' stated Yousry Bissada, President and Chief Executive Officer. 'In spite of the challenges of rapidly rising interest rates, we delivered 7% growth in originations and 13% growth in total assets. We also substantially completed our Ignite program, issued our first deposit notes since 2015 and returned significant capital to shareholders through share repurchases. I thank the people at Home for their efforts throughout the year and for their dedication to our shared purpose.'
Net Income: Diluted earnings per share of $3.64 in 2022 compared with $4.78 in 2021
Net income of $150.2 million or $3.64 diluted earnings per share in 2022, compared with $244.7 million or $4.78 per share in 2021. Fourth quarter net income of $33.3 million or $0.86 per share compared with $31.0 million or $0.77 per share in Q3 2022 and $52.7 million or $1.04 per share in Q4 2021.
Adjusted net income of $161.5 million or $3.91 diluted earnings per share in 2022, compared with $4.87 per share in 2021. Fourth quarter adjusted net income of $36.6 million or $0.95 per share compared with $0.95 per share in Q3 2022 and $1.06 per share in Q4 2021. Results are adjusted for items of note related to implementing our Ignite Program and the SFC Transaction. Adjusted results, measures and ratios are non-GAAP financial measures.
Net interest margin of 2.01% in 2022, compared with 2.56% in 2021. Net interest margin of 1.99% in Q4 2022 compared with 1.92% in Q3 2022 and 2.46% in Q4 2021.
Non-interest expenses of $265.1 million in 2022, compared with $248.8 million in 2021. Fourth quarter non-interest expenses of $67.0 million, compared with $72.1 million in Q3 2022 and $61.7 million in Q4 2021.
Asset Growth: Mortgage originations increased 6.8% over 2021
Mortgage originations of $9.46 billion in 2022, compared with $8.86 billion in 2021. Mortgage originations of $1.81 billion in Q4 2022, compared with $1.85 billion in Q3 2022 and $2.72 billion in Q4 2021.
Single-family mortgage originations of $7.35 billion in 2022, compared with $7.45 billion in 2021. Single-family mortgage originations of $1.34 billion in Q4 2022, compared with $1.44 billion in Q3 2022 and compared with $2.27 billion in Q4 2021.
Total loan portfolio of $21.02 billion at the end of 2022, an increase of 14.0% from the end of 2021 and 2.1% from the end of Q3 2022.
Loans under administration of $27.25 billion at the end of 2022, up 12.8% from the end of 2021 and up 1.7% from the end of Q3 2022.
Funding: Deposits through our Oaken channel of $4.92 billion make up 30.9% of total deposits
Total deposits of $15.92 billion at the end of 2022, compared with $14.01 billion at the end of 2021 and $15.52 billion at the end of Q3 2022.
Total Oaken deposits of $4.92 billion at the end of 2022, an increase of 12.0% from the end of 2021 and 2.5% from the end of Q3 2022.
Oaken's share of total deposits was 30.9% at the end of 2022, compared with 31.3% at the end of 2021 and 30.9% at the end of Q3 2022.
Credit Quality: Provisions of 0.09% of gross loans in 2022 compared with a reversal of provision of 0.18% in 2021
Total provision for credit losses ('PCL') of $19.4 million in 2022, compared with a reversal of provision of $33.7 million in 2021. Provision expense of $10.4 million in Q4 2022, compared with a provision of $4.4 million in Q3 2022 and a provision of $1.0 million in Q4 2021.
Allowance for credit losses of 0.26% of gross loans at the end of 2022, compared to 0.20% at the end of 2021 and 0.21% at the end of Q3 2022.
Net write-offs as a percentage of gross loans were 0.01% in 2022, compared to less than one basis point in 2021. Net write-offs as a percentage of gross loans were 0.01% in Q4 2022, consistent with Q3 2022 and less than one basis point in Q4 2021.
Net non-performing loans (represented by Stage 3 loans under IFRS 9) as a percentage of gross loans at 0.22% at the end of 2022, compared with 0.13% at the end of 2021 and 0.16% at the end of Q3 2022.
Dividend Declaration
The Board has declared a dividend of $0.15 per common share, payable on March 15, 2023, to shareholders of record at the close of business on February 28, 2023. The dividend is designated as an 'eligible' dividend for the purposes of the Income Tax Act (Canada) and any similar provincial legislation.
Outlook
'Last week shareholders voted overwhelmingly in favour of the proposed plan of arrangement between Home Capital Group and Smith Financial Corporation,' said Mr. Bissada. 'We thank our shareholders for their support for more than 36 years. The team at Home is looking forward, subject to regulatory approval, to closing our plan of arrangement with Smith Financial Corporation and continuing to build our business and serve our customers.'
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 and the SFC Transaction. 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 Annual and Fourth Quarter Consolidated Financial Report and under the heading Arrangement with Smith Financial Corporation in the Business Profile section of the 2022 Annual and Fourth Quarter Consolidated Financial 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, the impacts of the COVID-19 pandemic and government responses to it, 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 2023 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 2023, 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 Annual and Fourth Quarter Consolidated Financial Report.
The current economic uncertainties pertaining to rising interest rates, declining house prices and inflationary pressure 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. 
