Scotia Capital Financials Summit September 17, 2009

Transcription

1 Scotia Capital Financials Summit 2009 September 17,

2 Gerald M. Soloway CEO 2

3 Disclaimer This presentation provides management with the opportunity to discuss the financial performance and condition of Home Capital Group Inc. and Home Trust Company and, as such, may contain forward-looking information about strategies and expected financial results. Various factors, many difficult to predict and to control, could cause actual results to differ materially from results projected in the forwardlooking statements. Accordingly, the audience is cautioned against undue reliance on these remarks. 3

4 Home Capital Today Trades on the Toronto Stock Exchange (TSX:HCG) Company is a member of the S&P/TSX Composite Index Market cap: $1.34B (Sept 15, 2009) Home Capital Group owns 100% of Home Trust Company Member of Canada Deposit Insurance Corporation Funding is from Retail Deposits Total assets: $6.2B (June 30, 2009), $9.4B incl. MBS 452 full-time employees Company has grown by organic growth (only one minor acquisition) Senior Management: CEO, President, COO with Home Capital for over 20 years 4

5 Home Capital continued in 2008 to deliver exceptional results in an unprecedented market Net income 20.4% $108.7 M $90.2 M EPS 20.2% $3.15 $2.62 ROE consistently high Total assets and mortgage backed securities 30.9% 27.8% $8.42 B 28.9% $6.43 B 5

6 During the first six months of 2009 the strong momentum continued Six Months Ended June 30, 2009 June 30, 2008 Net income 27.2% $65.8 M $51.7 M EPS 27.3% $1.91 $1.50 ROE consistently high Total assets and mortgage backed securities 34.1% 27.7% $9.44 B 27.8% $7.04 B Home Capital has delivered 13 consecutive quarters of net income and EPS growth 6

7 Traditional mortgage lending is supporting a recovery in net interest income $40,000 $39,000 $38,732 $38,000 $37,390 $37,000 Millions $36,000 $35,000 $34,928 $35,237 $34,000 $33,000 $32,949 $32,000 $31,000 $30,000 Q Q Q Q Q

8 Success, today and tomorrow, is built on three fundamentals 1. Attention to detail 2. Financial strength Record of Success 3. Businesses we know and understand 8

9 1 Attention to detail Relentless focus on arrears and collections Exceptional loan management and collections (As at June 30, 2009) 1.3% 0.07% Net Impaired Loans as a Percentage of Gross Loans Gross Write-Offs 9

10 1 - Attention to detail Continued focus on cost management Superior Efficiency Ratio (taxable equivalent basis) (As at June 30, 2009) 60.9% 25.1% Major Banks Home Capital 10

11 2 Financial strength The Company remains strongly-capitalized Tier 1 Ratio Total Capital Ratio 11.1% 12.9% 15.2% 12.5% 14.2% 16.7% Year end Q2 Year end Q2 Home has the highest capital ratios in Canada compared to other publicly reporting deposit taking financial insitutions 11

12 2 Financial Strength Credit ratings confirm Home s financial strength Affirmed rating Only retail Trust Company with investment grade Affirmed rating Upgrade possible Home is the only non-bank owned Trust company in Canada with an investment grade rating 12

13 Increased dividends 14th time in 8 Years Jun- 09 Home is confident in it s financial strength, increasing dividends 14 times in eight years and twice in

14 Housing prices and momentum have strengthened throughout 2009 Low mortgage rates Great time to buy Stabilizing housing market Demand is strengthening 14

15 Home has returned to its traditional lending business in substantially all markets Markets strengthening Stabilized house valuations Conservative approach Cautiously return to traditional lending More buyers 15

16 Nick Kyprianou President 16

17 Home Capital has four core businesses Residential Mortgages CMHC Mortgages Non-residential Mortgages Consumer lending 17

18 Momentum is clearly continuing Strong residential origination growth continues For Six Months Ended June 30, 2009 June 30, 2008 Total Originations 21.6% $2.0 B $1.6B 2009 Priorities Focus on risk and valuations Adjust geographical areas where we lend and expand lending criteria Increase spreads through risk based pricing 18

19 Moved into insured mortgages Insured Mortgage Market Mitigates risk Better yields Separate team 19

20 Large addressable market Total Canadian Mortgage Market ~ $850B 80% Eligible for insurance 20% Growth opportunity 20

21 Results from Accelerator Program Securitization volumes are strong $1,600 $1,499 $1,400 $1,200 $1,116 $1,000 Millions $800 $600 $693 $400 $200 $ YTD 2009 Securitized in Q2,

22 Continued growth in Visa / Retail Credit Return to growth in Equityline Visa Added new team members New initiatives product innovation expansion of broker referral program Expanded Retail Credit Division home improvement products 22

23 Invested to improve operations New information system SAP will transform our processes enhances efficiency will grow with company 23

24 Moving Forward Capitalize on one-stop shop for mortgages Grow on-balance sheet residential portfolios Limit exposure to non-residential lending 24

25 Gerald M. Soloway CEO 25

26 Home has delivered solid results year to date vs. our 2009 objectives Net income 2009 Target 10-15% Six Months Ended June 30, % EPS 10-15% 27.3% ROE Total assets and mortgage backed securities 20% 10-15% 27.8% 34.1% 26

27 Questions? Investor Relations: Home Capital Group Inc. 145 King Street West, Suite 2300 Toronto, Ontario M5X 1J8 Websites:

28 Scotia Capital Financials Summit September 17,