Home Capital Reports Solid Performance for the First Quarter

• 10% Increase to Quarterly Dividend to $0.22 per share
• Basic Earnings per Share of $1.52; Return on Equity of 26.2%
• First Quarter Net Income Increases 21.7% over 2011 Net Income

TORONTO, May 2, 2012 /CNW/ - Home Capital today reported another quarter of strong results for the three months ended March 31, 2012. All of Home Capital's business lines produced solid results and the Company is well positioned to continue delivering strong earnings. The Company continues to observe positive real estate and mortgage markets across Canada.

The Company's First Quarter Report, including Management's Discussion and Analysis, is available on www.homecapital.com and on the Canadian Securities Administrators' website at www.sedar.com.

FINANCIAL HIGHLIGHTS

(Unaudited)	For the three months ended
(000s, except Per Share and Percentage Amounts)	March 31		December 31		March 31
		2012		2011		2011
OPERATING RESULTS
Net Income	$	52,534	$	50,280	$	43,178
Adjusted Net Income^1		52,534		50,280		45,603
Total Revenue		214,682		208,400		184,613
Earnings per Share - Basic/Diluted	$	1.52/1.52	$	1.45/1.45	$	1.24/1.24
Adjusted Earnings per Share - Basic/Diluted^1		1.52/1.52		1.45/1.45		1.31/1.31
Return on Shareholders' Equity		26.2%		26.7%		26.7%
Return on Average Assets		1.2%		1.2%		1.1%
Net Interest Margin (TEB)^2		2.02%		2.06%		1.98%
Net Interest Margin Non-Securitized Assets (TEB)^2		3.00%		3.03%		2.99%
Net Interest Margin Securitized Assets		0.97%		1.16%		1.20%
Provision as a Percentage of Gross Loans (annualized)		0.11%		0.07%		0.03%
Efficiency Ratio (TEB)^2		27.7%		27.1%		29.5%
As at	March 31		December 31		March 31
		2012		2011		2011
BALANCE SHEET HIGHLIGHTS
Total Assets	$	17,995,256	$	17,696,471	$	16,010,923
Total Loans		16,403,745		16,089,648		14,956,752
Securitized Loans		7,953,414		8,243,350		8,649,203
Liquid Assets		702,581		837,881		701,372
Deposits		8,297,126		7,922,124		6,475,244
Shareholders' Equity		828,036		774,785		664,462
FINANCIAL STRENGTH
Capital Measures^3
Risk-Weighted Assets	$	4,704,529	$	4,549,696	$	3,720,495
Tier 1 Capital Ratio		17.5%		17.3%		19.0%
Total Capital Ratio		21.6%		20.5%		20.3%
Credit Quality
Non-Performing Loans as a Percentage of Gross Loans		0.28%		0.25%		0.29%
Allowance as a Percentage of Gross Non-Performing Loans		67.6%		74.9%		71.1%
Share Information
Book Value per Common Share	$	23.83	$	22.38	$	19.14
Common Share Price - Close	$	50.34	$	49.10	$	56.91
Market Capitalization	$	1,749,365	$	1,700,088	$	1,975,915
Number of Common Shares Outstanding		34,751		34,625		34,720

^1	See definition of Adjusted Net Income under Non-GAAP Measures of the unaudited interim consolidated financial report and reconciliation to net income in Table 2 of the Management's Discussion and Analysis.
^2	See definition of Taxable Equivalent Basis (TEB) under Non-GAAP Measures in the unaudited interim consolidated financial report.
^3	These figures relate to the Company's operating subsidiary, Home Trust Company.

FIRST QUARTER 2012 HIGHLIGHTS

Key results for the first quarter of 2012 included:

• Net income was $52.5 million in the first quarter, an increase of 21.7% over first quarter 2011 net income and up 15.2% over adjusted net income of $45.6 in the first quarter of 2011.  First quarter earnings represent an increase of 4.5%, or 17.9% annualized, over the $50.3 million recorded in the fourth quarter of 2011. These results put the Company solidly within the 13%-18% net income growth target for 2012.
  
  
• Basic and diluted earnings per share were $1.52 for the quarter representing an increase of 22.6% over first quarter 2011 basic and diluted earnings per share and 16.0% from the $1.31 adjusted basic and diluted earnings per share in the first quarter of 2011. This is an increase of 4.8%, or 19.3% annualized, over the $1.45 basic and diluted earnings per share in the fourth quarter of 2011.
  
  
• Net interest income of $88.2 million in the first quarter increased 15.2% over the $76.6 million recorded in the first quarter of 2011 reflecting strong loan growth year over year. Compared to fourth quarter net interest income of $88.4 million, first quarter net interest income is down marginally due to net interest margin compression in the securitized mortgage book and lower income in the liquidity and investment portfolio.  As the Company continues to shift the balance sheet towards higher yielding traditional mortgages within its risk appetite and continues to grow its assets within its targets, it expects that net interest income will increase throughout the remainder of 2012.
  
  
• Net interest margin was 2.02% in the first quarter up from 1.98% in the first quarter of 2011 and down from 2.06% in the fourth quarter of 2011.  Net interest margin on non-securitized assets was 3.00% compared to 2.99% in the first quarter of 2011 and compressed marginally compared to the 3.03% in the fourth quarter of 2011. Net interest margin on securitized assets of 0.97% has declined from 1.20% one year ago and 1.16% last quarter. The utilization of lower yielding assets as replacement assets in the CMB program is the primary contributor to the margin compression in this portfolio. The Company has initiated new replacement asset programs that are expected to stabilize these margins at approximately the current levels, with this initiative, and the continuing shift to rebalance the portfolio towards the traditional higher yielding portfolio, the Company expects total net interest margin to remain relatively stable throughout 2012.
  
  
• Return on equity at 26.2% remained robust in the quarter and continues well in excess of the Company's minimum performance objective of 20%.
  
  
• The credit performance of the loans portfolio remained strong in the first quarter. Net non-performing loans ended the quarter at 0.28% of the total loans portfolio compared to 0.29% at March 31, 2011 and 0.25% at the end of 2011. The provision for credit losses in the quarter was 0.11% of gross loans on an annualized basis compared to 0.03% in the first quarter of 2011 and 0.07% in the fourth quarter of 2011. While up seasonally and with a continuing shift to uninsured loans, the provision for credit losses ratio is within the Company's objective of 0.05% to 0.15% of gross loans.
  
  
• Home Trust maintained robust Tier 1 and Total capital ratios of 17.5% and 21.6%, respectively, at March 31, 2012 and well above the Company's minimum targets.  Home Trust's asset to capital multiple was 13.6 at March 31, 2012 compared to 14.4 at December 31, 2011, and allows the Company continue growing its assets, revenue and net income as targeted. During the first quarter the Company advanced $50.0 million of subordinated debt to Home Trust. These funds were from the Company's $150.0 million senior debt issue. Early in the second quarter the Company provided Home Trust with an additional $6.0 million through subordinated debt. These amounts are expected to be sufficient for the achievement of the Company's 2012 targets while maintaining prudent levels of capital.
  
  
• Total assets, which include securitized mortgages, were $18.00 billion at the end of the first quarter, an increase of almost $2 billion or 12.4% from the $16.01 billion one year ago and $298.8 million or 1.7% over the $17.70 billion at the end of the fourth quarter of 2011. Total loans grew to $16.40 billion an increase of $1.45 billion or 9.7% from the $14.96 billion one year ago and an increase of $314.1 million or 2.0% or 7.8% annualized over the fourth quarter of 2011. While annualized loan growth in the first quarter lagged the Company's growth target due to net reduction of insured loans, demand is strong and the Company continues to expect year-over-year loan growth to be within the target range of 13%-18% for 2012.
  
  
• The total value of mortgages originated in the first quarter was $1.19 billion compared to $1.37 billion originated in the first quarter of 2011 and $1.25 billion in originations in the fourth quarter of 2011. Origination volumes and weightings continue to reflect the Company's strategy to reduce originations of insured mortgage products, which are generally securitized, and to increase focus on originations of higher yielding traditional mortgages.
  
  
• The Company originated $921.1 million of traditional mortgages in the first quarter, an increase of 22.2% over the $753.7 million in the first quarter of 2011, and down on a seasonal basis from the $948.8 million originated in the fourth quarter of 2011.
  
  
• Accelerator (insured) mortgage originations were $172.7 million in the first quarter compared to $449.2 million in the first quarter of 2011 and $188.5 million in the fourth quarter of 2011.  The Company continued limited lending in this segment in favour of higher margin traditional mortgages products within the Company's risk appetite. The Company continues to explore opportunities that may lead to future growth in this product segment in 2012.
  
  
• Multi-unit residential originations were $27.5 million in the quarter compared to $89.0 million in the first quarter of 2011 and $6.5 million in the fourth quarter of 2011. The Company anticipates additional funding of multi-residential mortgages through the second quarter and plans to securitize these mortgages through programs that are expected to qualify for off-balance sheet accounting.
  
  
• Non-residential mortgage advances were $25.2 million in the quarter compared to $48.7 million in the first quarter of 2011 and $41.5 million in the fourth quarter of 2011. The Company continues to focus on opportunities that present strong margins and risk profiles that are within the Company's risk tolerance.
  
  
• Store and apartment advances were $37.9 million for the quarter compared to $25.1 million in the first quarter of 2011 and $35.5 million last quarter.
  
  
• The Company opened 1,383 new Visa accounts in the first quarter compared to 2,431 accounts opened in the first quarter of 2011 and 2,137 accounts last quarter. This decline reflects the Company's increased conservatism in approvals and advances.

Despite the ongoing general perception of headwinds in the financial services industry and continued fragile global economic conditions, the Company continues to deliver solid performance reflecting the strength, and its successful execution, of the Company's core strategy. Based on the Company's current observations in the real estate market and analysis of its loan portfolio performance, the Company continues to see resilient and relatively stable real estate markets across most of Canada, with a few areas of continuing concern where the Company has already scaled back. The Company expects real estate demand to remain stable in 2012, with relatively balanced conditions that should lead to continued healthy demand for the Company's products. The Company is in a strong position to take of advantage of unique opportunities in the current market environment that are within its risk appetite and growth strategy. While the ongoing stability of Canadian housing markets has allowed for renewed focus on the Company's traditional mortgage portfolio the Company remains proactive and prudent in its lending practices, taking into account local economic and market conditions.  The credit quality of the loan portfolio remains strong, reflecting the Company's expertise in diligent underwriting combined with strong collection standards and loan resolution strategies.

While housing prices have increased at higher than expected rates in certain markets in Canada due, in part, to unbalanced demand versus supply conditions in those markets, the Company has not seen evidence of a "real-estate bubble" in Canada. Low interest rates and stable employment have maintained housing affordability. The Company expects interest rates to remain at current levels or experience very modest increases into 2013 and that Canadian employment levels will remain relatively stable in 2012. In the event of more than modest increases in interest rates, or a more than marginal decrease in employment levels, housing prices and demand may experience more than a modest decline. The Company believes it is well positioned and prepared to deliver reasonable results even in the case of moderate declines in real estate prices and demand. Additionally, the Company maintains a solid capital position and prudent liquidity and is confident that it is well positioned to deal with the impact of uncertainty that may affect the Canadian economy.

Enhancing risk management, governance and compliance processes remains an important focus for the Company.  These enhancements are essential components in supporting the Company's strategic priorities and are key contributors to the Company's continued generation of above average shareholder returns, long-term growth and profitability. Additionally, to accommodate recent and planned growth, the Company expanded into to newly renovated accommodations in its Toronto headquarters, adding 24,500 square feet of office and meeting space.

Subsequent to the end of the quarter, and in light of the Company's solid performance, profitability and strong financial position, the Board of Directors declared an increased quarterly dividend of $0.22 per Common share, payable on June 1, 2012 to shareholders of record at the close of business on May 15, 2012.  This represents an increase of 10% in the quarterly dividend and is the 14th increase in the last 8 years, reflecting Home Capital's ongoing commitment to enhancing long-term shareholder value.

With solid performance in all aspects of Home Capital's business, management is highly confident that the Company will generate above average earnings and shareholder performance for 2012, and will meet all of its stated objectives for 2012.

(signed)								(signed)
GERALD M. SOLOWAY								KEVIN P.D. SMITH
Chief Executive Officer								Chairman of the Board
May 2, 2012

Additional information concerning the Company's targets and related expectations for 2012, including the risks and assumptions underlying these expectations, may be found in Management's Discussion and Analysis (MD&A) included in the Company's First Quarter 2012 Report.

Conference Call and Webcast

First Quarter Results Conference Call

The conference call will take place on Thursday, May 3, 2012, at 10:30 a.m. Participants are asked to call 5 to 15 minutes in advance, 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 via the Internet at www.homecapital.com.

Conference Call Archive

A telephone replay of the call will be available between 1:30 p.m. Thursday, May 3, 2012 and midnight Thursday, May 10, 2012 by calling 416-849-0833 or 1-855-859-2056 (enter passcode 71598264). The archived audio web cast will be available for 90 days on CNW Group's website at www.newswire.ca and Home Capital's website at www.homecapital.com.

Annual and Special Meeting Notice

The Annual and Special Meeting of Shareholders of Home Capital Group Inc. will be held at the Design Exchange, Trading Floor, Second Floor, 234 Bay Street, Toronto, Ontario, on Wednesday, May 16, 2012 at 11:00 a.m. local time. Shareholders and guests are invited to join Directors and Management for lunch and refreshments following the Annual Meeting. All shareholders are encouraged to attend.

2012 OBJECTIVES AND PERFORMANCE

Home Capital published its financial objectives for 2012 on page 15 of the Company's 2011 Annual Report. The following table compares actual performance to date against each of these objectives.

Table 1: 2012 Targets and Performance
For the three months ended March 31, 2012
		2012 Targets^1	Actual Results^1		Amount	Increase over 2011
Growth in net income		13%-18%	21.7%	$	52,534	$	9,356
Growth in diluted earnings per share		13%-18%	22.6%		1.52		0.28
Growth in total loans^2		13%-18%	7.8%		16,403,745		314,097
Return on shareholders' equity		20.0%	26.2%
Efficiency ratio (TEB)^3		28.0% - 34.0%	27.7%
Capital ratios^4
	Tier 1	Minimum of 13%	17.5%
	Total	Minimum of 14%	21.6%
Provision as a percentage of gross loans (annualized)		0.05% - 0.15%	0.11%

^1	Objectives and results for net income and diluted earnings per share are for the current year.
^2	Change represents growth over December 31, 2011 on an annualized basis.
^3	See definition of TEB under Non-GAAP Measures in the unaudited interim consolidated financial report.
^4	Based on the Company's wholly owned 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
(Unaudited)			2012		2011		2011
Net Interest Income Non-Securitized Assets
Interest from loans		$	117,565	$	111,066	$	91,053
Dividends from securities			3,964		4,559		4,258
Other interest			1,047		1,241		1,693
			122,576		116,866		97,004
Interest on deposits			53,128		51,989		44,966
Interest on senior debt			1,653		1,674		-
Net interest income non-securitized assets			67,795		63,203		52,038
Net Interest Income Securitized Loans and Assets
Interest income from securitized loans and assets			76,616		81,876		80,500
Interest expense on securitization liabilities			56,192		56,667		55,932
Net interest income securitized loans and assets			20,424		25,209		24,568
Total Net Interest Income			88,219		88,412		76,606
Provision for credit losses (note 5(E))			4,498		2,979		974
			83,721		85,433		75,632
Non-Interest Income
Fees and other income			10,897		11,294		8,360
Realized net gains and unrealized losses on securities			308		(1,306)		2,029
Net realized and unrealized gain (loss) on derivatives (note 14)			4,285		(330)		(3,280)
			15,490		9,658		7,109
			99,211		95,091		82,741
Non-Interest Expenses
Salaries and benefits			13,999		13,184		12,577
Premises			1,998		2,007		1,872
Other operating expenses			13,171		11,916		10,767
			29,168		27,107		25,216
Income Before Income Taxes			70,043		67,984		57,525
Income taxes (note 12(A))
	Current		19,055		15,909		14,075
	Deferred		(1,546)		1,795		272
			17,509		17,704		14,347
NET INCOME		$	52,534	$	50,280	$	43,178
NET INCOME PER COMMON SHARE
Basic		$	1.52	$	1.45	$	1.24
Diluted		$	1.52	$	1.45	$	1.24
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic			34,550		34,668		34,691
Diluted			34,593		34,782		34,872
Total number of outstanding common shares (note 9(A))			34,751		34,625		34,720
Book value per common share		$	23.83	$	22.38	$	19.14
The notes contained in the Company's First Quarter 2012 Report are an integral part of these unaudited interim consolidated financial statements.

Consolidated Statements of Comprehensive Income
	For the three months ended
	March 31		December 31		March 31
thousands of Canadian dollars (Unaudited)		2012		2011		2011
NET INCOME	$	52,534	$	50,280	$	43,178
OTHER COMPREHENSIVE INCOME (LOSS)
Available for Sale Securities
Net unrealized gains (losses) on securities available for sale		4,393		700		(501)
Net (gains) losses reclassified to net income		(364)		1,174		(1,828)
		4,029		1,874		(2,329)
Income tax expense (recovery)		1,167		505		(249)
		2,862		1,369		(2,080)
Cash Flow Hedges (note 14)
Net unrealized gains (losses) on cash flow hedges		26		(639)		(674)
Net losses reclassified to net income		353		338		-
		379		(301)		(674)
Income tax expense (recovery)		110		(36)		(175)
		269		(265)		(499)
Total other comprehensive income (loss)		3,131		1,104		(2,579)
COMPREHENSIVE INCOME	$	55,665	$	51,384	$	40,599
The notes contained in the Company's First Quarter 2012 Report are an integral part of these unaudited interim consolidated financial statements.

Consolidated Balance Sheets
		March 31		December 31
thousands of Canadian dollars (Unaudited)			2012		2011
ASSETS
Cash Resources (note 4(A))		$	421,397	$	665,806
Securities (note 4(B))
Available for sale			471,951		391,754
Pledged securities (note 6(B))			493,889		341,588
			965,840		733,342
Loans (note 5)
Residential mortgages			6,946,012		6,339,883
Securitized residential mortgages (note 6)			7,953,414		8,243,350
Non-residential mortgages			940,055		946,222
Personal and credit card loans			564,264		560,193
			16,403,745		16,089,648
Collective allowance for credit losses (note 5(E))			(29,500)		(29,440)
			16,374,245		16,060,208
Other
Derivative assets (note 14)			55,611		72,424
Other assets (note 7)			90,899		79,650
Capital assets			6,296		5,372
Intangible assets			65,216		63,917
Goodwill			15,752		15,752
			233,774		237,115
		$	17,995,256	$	17,696,471
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
	Deposits payable on demand	$	36,220	$	62,746
	Deposits payable on a fixed date		8,260,906		7,859,378
			8,297,126		7,922,124
Senior Debt (note 13)			154,129		153,336
Securitization Liabilities (note 6(C))
	Mortgage-backed security liabilities		2,238,138		2,417,801
	Canada Mortgage Bond liabilities		6,210,408		6,231,274
			8,448,546		8,649,075
Other
Obligations related to securities sold under repurchase agreement (note 5(F))			49,720		-
Derivative liabilities (note 14)			2,990		3,458
Income taxes payable			6,672		17,628
Other liabilities (note 8)			169,560		136,025
Deferred tax liabilities (note 12(C))			38,477		40,040
			267,419		197,151
			17,167,220		16,921,686
Shareholders' Equity
Capital stock (note 9)			61,494		55,104
Contributed surplus			5,207		5,873
Retained earnings			767,395		722,999
Accumulated other comprehensive loss (note 11)			(6,060)		(9,191)
			828,036		774,785
		$	17,995,256	$	17,696,471
The notes contained in the Company's First Quarter 2012 Report are an integral part of these unaudited interim consolidated financial statements.

Consolidated Statements of Changes in Shareholders' Equity
							Net Unrealized		Net Unrealized		Total
							(Losses) Gains		Losses on		Accumulated
							on Securities		Cash Flow		Other		Total
thousands of Canadian dollars,	Capital		Contributed		Retained		Available for		Hedges,		Comprehensive		Shareholders'
except per share amounts (Unaudited)	Stock		Surplus		Earnings		Sale, after Tax		after Tax		(Loss) Income		Equity
Balance at December 31, 2011	$	55,104	$	5,873	$	722,999	$	(4,141)	$	(5,050)	$	(9,191)	$	774,785
Comprehensive income		-		-		52,534		2,862		269		3,131		55,665
Stock options settled (note 9(A))		6,431		(1,254)		-		-		-		-		5,177
Amortization of fair value of
employee stock options (note 10(A))		-		588		-		-		-		-		588
Repurchase of shares (note 9(A))		(41)		-		(1,159)		-		-		-		(1,200)
Dividends paid
($0.20 per share)		-		-		(6,979)		-		-		-		(6,979)
Balance at March 31, 2012	$	61,494	$	5,207	$	767,395	$	(1,279)	$	(4,781)	$	(6,060)	$	828,036
Balance at December 31, 2010	$	50,427	$	4,571	$	567,681	$	5,906	$	-	$	5,906	$	628,585
Comprehensive income		-		-		43,178		(2,080)		(499)		(2,579)		40,599
Stock options settled (note 9(A))		3,955		(858)		-		-		-		-		3,097
Amortization of fair value of
employee stock options (note 10(A))		-		452		-		-		-		-		452
Repurchase of shares (note 9(A))		(55)		-		(1,948)		-		-		-		(2,003)
Dividends paid
($0.18 per share)		-		-		(6,268)		-		-		-		(6,268)
Balance at March 31, 2011	$	54,327	$	4,165	$	602,643	$	3,826	$	(499)	$	3,327	$	664,462
The notes contained in the Company's First Quarter 2012 Report are an integral part of these unaudited interim consolidated financial statements.

Consolidated Statements of Cash Flows
			For the three months ended
			March 31		March 31
thousands of Canadian dollars (Unaudited)				2012		2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period			$	52,534	$	43,178
Adjustments to determine cash flows relating to operating activities:
	Deferred income taxes			(1,546)		272
	Amortization of capital assets			705		686
	Amortization of intangible assets			1,591		15
	Amortization of net premium on securities			929		718
	Amortization of securitization and senior debt transaction costs			3,460		1,558
	Provision for credit losses (note 5(E))			4,498		974
	Change in accrued interest payable			39,292		30,189
	Change in accrued interest receivable			(667)		(2,345)
	Realized net gains and unrealized losses on securities			(308)		(2,029)
	Settlement of derivatives			-		(1,647)
	Loss (gain) on derivatives			(4,285)		1,819
	Net increase in mortgages			(313,250)		(826,250)
	Net increase in personal and credit card loans			(4,810)		(39,634)
	Net increase (decrease) in deposits			375,002		(118,432)
	Proceeds from obligations under repurchase agreement			49,720		-
	Activity in securitization liabilities
		Proceeds from securitization of mortgage-backed security liabilities		-		729,843
		Settlement and repayment of securitization liabilities		(181,242)		(178,183)
	Amortization of fair value of employee stock options (note 10)			588		452
	Changes in taxes payable and other			(29,472)		(15,074)
Cash flows used in operating activities				(7,261)		(373,890)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of shares				(1,200)		(2,003)
Exercise of employee stock options				5,177		3,097
Dividends paid				(6,954)		(6,254)
Cash flows used in financing activities				(2,977)		(5,160)
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in available for sale and held for trading securities
	Purchases			(243,855)		(123,139)
	Proceeds from sales			7,145		67,671
	Proceeds from maturities			7,058		3,435
Purchases of capital assets				(1,629)		(735)
Purchases of intangible assets				(2,890)		(3,592)
Cash flows used in investing activities				(234,171)		(56,360)
Net decrease in cash and cash equivalents during the period				(244,409)		(435,410)
Cash and cash equivalents at beginning of the period				665,806		846,824
Cash and Cash Equivalents at End of the Period (note 4(A))			$	421,397	$	411,414
Supplementary Disclosure of Cash Flow Information
Dividends received			$	4,671	$	4,189
Interest received				194,561		169,208
Interest paid				74,681		70,709
Income taxes paid				33,571		10,348
The notes contained in the Company's First Quarter 2012 Report are an integral part of these unaudited interim consolidated financial statements.

Caution Regarding Forward-Looking Statements

From time to time Home Capital Group Inc. (the "Company" or "Home Capital") 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 on pages 48 through 58 of the Company's 2011 Annual Report, as well as its other publicly filed information, which are 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 and business risk, reputational risk and regulatory and legal 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 in this quarterly report.   Forward-looking statements are typically identified by words such as "will,"  "believe," "expect," "anticipate," "estimate," "plan," "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 uncertainties, 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 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 2012 and its effect on Home Capital's business are material factors the Company considers when setting its objectives and outlook.  In determining expectations for economic growth, both broadly and in the financial services sector, the Company primarily considers historical economic data provided by the Canadian government and its agencies.  In setting and reviewing the outlook and objectives for 2012, management's expectations continue to assume:

• The Canadian economy will produce modest growth in 2012, but will be heavily influenced by the economic conditions in the United States and global markets.  Inflation will generally be within the Bank of Canada's target of 1%-3%.
  
  
• Interest rates will remain at current rates or increase marginally in 2012 as the Bank of Canada leaves its target for the overnight rate at its current level or modestly increases the rate later in 2012.
  
  
• The housing market will remain resilient to global uncertainty with balanced supply and demand conditions in most regions.  Declining housing starts and flat resale activity on stable prices through most of Canada will continue with the market activity moderating from previous activity levels.
  
  
• Unemployment will remain stable or improve slightly as the economy grows, while a larger labour force will tend to offset job growth. Consumer debt levels will remain serviceable by Canadian households.
  
  
• Net interest margins overall are expected to remain in the current range.  Margins are expected to remain stable as returns on the increased traditional portfolio offset declining returns on the securitized portfolio throughout 2012.
  
  
• Credit quality will remain sound with actual losses within the low end of Home Capital's historical range.
  
  
• Current Canada Mortgage and Housing Corporation (CMHC) policies remain substantially unchanged.

Non-GAAP Measures

The Company applies IFRS which are the generally accepted accounting principles (GAAP) for Canadian publically accountable enterprises. 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 used in this report can be found under Non-GAAP Measures in the Management's Discussion and Analysis included in the Company's First Quarter 2012 Report.

Regulatory Filings

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.

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, Visa products and payment card services. Licensed to conduct business across Canada, Home Trust has branch offices in Ontario, Alberta, British Columbia, Nova Scotia and Quebec.

 

 

Gerald M. Soloway, CEO, or
Martin Reid, President
416-360-4663
www.homecapital.com