Home Capital Reports Another Strong Quarter:

• Diluted Earnings per Share up 13.2% year over year to $1.72;
• Adjusted Diluted Earnings per Share^* up 19.1% year over year to $1.81;
• Assets Under Administration Surpass $20 billion and Shareholders' Equity Increases to over $1 billion

TORONTO, May 8, 2013 /CNW/ - Home Capital Group (TSX: HCG) today reported another quarter of strong results for the three months ended March 31, 2013.

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

^* Table 2 provides a reconciliation of net income to adjusted net income and adjusted diluted earnings per share.

FINANCIAL HIGHLIGHTS

(Unaudited)	For the three months ended
(000s, except Per Share and Percentage Amounts)	March 31				December 31			March 31
		2013			2012			2012
OPERATING RESULTS
Net Income	$	59,725		$	58,965		$	52,534
Total Revenue		231,194			227,649			214,682
Diluted Earnings per Share	$	1.72		$	1.70		$	1.52
Return on Shareholders' Equity		24.0%			25.0%			26.2%
Return on Average Assets		1.3%			1.2%			1.2%
Net Interest Margin (TEB)^1		2.17%			2.13%			2.02%
Provision as a Percentage of Gross Loans (annualized)		0.11%			0.09%			0.11%
Efficiency Ratio (TEB)^1		28.3%			27.3%			27.7%
								As at
		March 31			December 31			March 31
		2013			2012			2012
BALANCE SHEET HIGHLIGHTS
Total Assets	$	19,358,563		$	18,800,079		$	17,995,256
Total Assets Under Administration^2		20,377,074			19,681,750			17,995,256
Total Loans^3,4		17,429,982			17,159,913			16,451,745
Securitized Loans On-Balance Sheet^3		6,710,556			6,706,160			8,001,414
Total Loans Under Administration^3,4,5		18,448,493			18,041,584			16,451,745
Liquid Assets		823,973			771,772			683,511
Deposits		10,642,280			10,136,599			8,297,126
Shareholders' Equity		1,021,813			968,213			828,036
FINANCIAL STRENGTH
Capital Measures^6
Risk-Weighted Assets		5,738,257			5,491,513			4,704,529
Common Equity Tier 1 Capital Ratio		16.57%			N/A			N/A
Tier 1 Capital Ratio		16.57%			17.01%			17.49%
Total Capital Ratio		19.82%			20.68%			21.62%
Assets to Regulatory Capital Multiple		13.98			13.98			13.64
Credit Quality
Net Non-Performing Loans as a Percentage of Gross Loans		0.32%			0.33%			0.28%
Allowance as a Percentage of Gross Non-Performing Loans		59.9%			57.0%			67.6%
Share Information
Book Value per Common Share	$	29.53		$	27.96		$	23.83
Common Share Price - Close	$	58.74		$	59.07		$	50.34
Market Capitalization	$	2,032,404		$	2,045,594		$	1,749,365
Number of Common Shares Outstanding		34,600			34,630			34,751

¹ See definition of Taxable Equivalent Basis (TEB) under Non-GAAP Measures of the unaudited interim consolidated financial report.
²Total assets under administration include total on-balance sheet assets and off-balance sheet loans.
³In the quarter the Company classified Home Trust mortgages used as CMB replacement assets as securitized mortgages.  In prior periods these were classified as pledged securities.  Prior periods have been restated to reflect the current classification.
⁴ Total loans include loans held for sale.
⁵Loans under administration includes total loans and off-balance sheet loans.
⁶These figures relate to the Company's operating subsidiary, Home Trust Company and are calculated under Basel III for 2013 and Basel II for 2012.

FIRST QUARTER 2013 HIGHLIGHTS

Key results for Q1 2013 included:

• Net income increased to $59.7 million, up 13.7% over Q1 2012 and 1.3% over Q4 2012. Net income reflects $1.8 million in after tax charges related to IFRS implementation (see the Non-Interest Income section of the MD&A) and $1.5 million in after-tax charges related to the resolution of disputed loans to commercial condominium corporations (see the Provision and Allowance for Credit Losses section of the MD&A). Without these charges, adjusted net income, as defined in Table 2, was $63.0 million representing an increase of 20.0% over Q1 2012.
   
• Diluted earnings per share were $1.72 for the quarter representing increases of 13.2% over the $1.52 earned in Q1 2012 and increases of 1.2% over the $1.70 earned in Q4 2012.  Adjusting for charges for IFRS implementation and the condominium loan resolution, adjusted diluted earnings per share¹ were $1.81, 19.1% higher than Q1 2012.
  
  
• Net interest income, before provisions, continued its upward trend, reaching $101.9 million in Q1 2013, increasing 15.5% over the $88.2 million recorded in Q1 2012 and 2.0% over the $99.9 million earned in Q4 2012. This reflects net on-balance sheet loan growth and improving total net interest margin.
  
  
• Net interest margin (TEB) increased to 2.17% in Q1 2013 from 2.02% in Q1 2012 and 2.13% in Q4 2012. The increase reflects the combination of the shift to higher yielding traditional mortgages relative to securitized mortgages and, when compared to Q1 2012, improved spreads earned on non-securitized lending.
  
  
• Return on equity at 24.0% for the quarter remains strong and continues well in excess of the Company's minimum performance objective of 20%.
  
  
• The loan portfolio credit quality remains solid with continued low non-performing loans and credit losses well within expected levels. Net non-performing loans as a percentage of gross loans (NPL ratio) ended the quarter at 0.32% compared to 0.33% at the end of 2012 and 0.28% at the end of Q1 2012. The annualized credit provision as a percentage of gross loans (PCL ratio) remains within expectations at 0.11%, compared to 0.09% in Q4 2012 and 0.11% in Q1 2012. Excluding the provisions related to the resolution of disputed loans to the two condominium corporations the PCL ratio would have been 0.06% in the quarter.
  
  
• Home Trust adopted the new Basel III capital requirements in Q1 2013 and continues to significantly exceed regulatory minimums. Under Basel III, Home Trust's Common Equity Tier 1 ratio (CET 1 ratio) was 16.57%, while Tier 1 and Total Capital Ratios were 16.57% and 19.82%, respectively.  Home Trust's assets to capital multiple was 13.98 at the end of the quarter compared to 13.98 at December 31, 2012 and 13.64 at March 31, 2012.
  
  
• Total loans under administration, which includes securitized mortgages that qualify for off-balance sheet accounting, grew to $18.45 billion, reflecting increases of $2.00 billion or 12.1% from $16.45 billion one year ago, and $0.41 billion or 2.3% from $18.04 billion at the end of 2012 (9.0% on an annualized basis). At this point the Company still expects to meet its loans under administration growth target of 10-15% year over year.
  
  
• Product demand was strong in the quarter, with $1.38 billion in total mortgage originations up from $1.19 billion originated in Q1 2012. Even though Q1 2012 benefited from milder weather and increased activity ahead of mortgage insurance changes, the Company was able to increase year over year originations. Q1 2013 originations were behind Q4 2012 originations of $1.47 billion primarily due to seasonal factors.
  
  
• Traditional mortgage originations increased to $0.99 billion in Q1 2013 from $0.92 billion in Q1 2012 and declined seasonally from $1.16 billion in Q4 2012. The Company continues to experience strong demand for its traditional product offerings combined with high credit quality. This continues to enhance profitability and asset quality.

• Accelerator (insured) mortgage originations declined to $121.6 million in Q1 2013 from $172.7 million in Q1 2012 and from $174.2 million in Q4 2012 reflecting the Company's continued preference for high margin assets on balance sheet.
  
  
• The Company continues to pursue strategies for transactions that will qualify lower margin, insured single-family residential mortgages for off-balance sheet treatment and lead to increased growth in this loan portfolio.  Ongoing dialogue with regulators and other interested parties regarding these strategies has continued and management remains cautiously optimistic that a solution can be attained.
  
  
• Multi-unit residential mortgage originations were $202.6 million in Q1 2013 compared to $27.5 million in Q1 2012 and $57.2 million in Q4 2012.  In the quarter the Company securitized and sold $156.2 million of insured multi-unit residential mortgages that qualified for off-balance sheet accounting compared to $64.6 million last quarter.  These transactions resulted in securitization gains of $1.4 million in the quarter compared to $0.7 million last quarter. This securitization program was initiated in the second quarter of 2012.  The Company is pleased with the results and anticipates that this program will continue to enhance profitability and experience modest growth.
  
  
• Store and apartment mortgage advances were $23.6 million in Q1 2013 compared to $37.9 million in Q1 2012 and $24.8 million in Q4 2012.
  
  
• Commercial mortgage advances were $30.7 million in Q1 2013 compared to $27.7 million in Q1 2012 and $52.4 million in Q4 2012.  The Company continues to be selective and focuses on opportunities that present strong credit and risk profiles.
  
  

¹Table 2 provides a reconciliation of net income to adjusted net income and adjusted diluted earnings per share.

Data from the Canadian Real Estate Association indicates that real estate markets have softened in the first quarter of 2013 with an overall decline in housing activity of approximately 15% when compared to the first quarter of 2012.  Average prices across Canada rose marginally in the quarter and the rate of appreciation of home prices has moderated, with pockets of pricing declines in certain markets.  The Company's view and observations are that housing markets remain in balanced territory and remain healthy overall. Declines in housing activity were not unexpected given the strong start to spring last year, ahead of changes to mortgage insurance rules. While the Company experienced overall originations below the last quarter of 2012, the activity was within management's expectations given seasonality and the slower start to the spring housing market this year. The Company continues to observe good demand for its traditional mortgage products from customers with strong credit profiles and originations in this product were up over the same period last year.  The Company anticipates that demand for its traditional products to continue to be robust, but recognizes that overall markets have softened and demand could be reduced in future quarters.  Management is prepared to adjust its strategy in such a situation. 

During the quarter the Company continued its deposit diversification initiative by further building balances in its brokered high interest savings account and in GICs directly with customers.  These efforts will be further bolstered by the launch of a direct to consumer savings account later this year combined with continued advertising and business development activities and investment in information technology infrastructure to build the direct deposit channel and enhance deposit diversification.

Beginning on January 1, 2013 the Company's subsidiary Home Trust was subject to, and fully compliant with, the new regulatory capital rules known as Basel III. Generally, the new rules introduced higher minimum capital targets along with requirements for higher quality capital. Home Trust was well positioned to adopt the new rules as it already well exceeded minimum regulatory capital ratios and maintained a simple structure of high quality capital.

To further strengthen the Company's Board of Directors, Ms. Diana Graham will stand as a nominee for election to the board at the upcoming Annual General Meeting. Ms. Graham brings extensive experience to the Board, including governance, credit, operational, market and enterprise risk management, in both the United States and Canada, most recently retiring from the position of Chief Risk Officer at a Canadian financial institution. We are confident that Ms. Graham's significant experience and depth of knowledge will be assets to the Board and the Company.

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 a quarterly dividend of $0.26 per Common share, payable on June 1, 2013 to shareholders of record at the close of business on May 17, 2013.

The Company continues to deliver solid results in terms of growth and increased returns. Despite the persistent international economic instability and modest economic improvement in Canada, the Company's performance continues to reflect the strength and the successful execution of the Company's core strategy. 

With solid performance in all aspects of Home Capital's business, management continues to expect the positive performance the Company experienced during the first quarter of 2013 to continue for the remainder of year. 

(Signed)

GERALD M. SOLOWAY 
Chief Executive Officer 

(Signed)

KEVIN P.D. SMITH
Chair of the Board
May 8, 2013    

Additional information concerning the Company's targets and related expectations for 2013, including the risks and assumptions underlying these expectations, may be found in Management's Discussion and Analysis (MD&A) of the quarterly report.

Conference Call and Webcast

First Quarter Results Conference Call
The conference call will take place on Thursday, May 9, 2013 at 10:30 a.m. ET. 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. ET Thursday, May 9, 2013 and midnight ET Thursday, May 16, 2013 by calling 416-849-0833 or 1-855-859-2056 (enter passcode 36458511). 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 Meeting Notice

The Annual 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 15, 2013 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. 

Consolidated Statements of Income

			For the three months ended
thousands of Canadian dollars, except per share amounts			March 31			December 31			March 31
(Unaudited)			2013			2012			2012
Net Interest Income Non-Securitized Assets
Interest from loans		$	148,031		$	144,310		$	117,565
Dividends from securities			3,193			3,502			3,964
Other interest			1,456			949			1,047
			152,680			148,761			122,576
Interest on deposits			62,938			61,873			53,128
Interest on senior debt			1,583			1,825			1,653
Net interest income non-securitized assets			88,159			85,063			67,795
Net Interest Income Securitized Loans and Assets
Interest income from securitized loans and assets			61,337			64,351			76,616
Interest expense on securitization liabilities			47,610			49,506			56,192
Net interest income securitized loans and assets			13,727			14,845			20,424
Total Net Interest Income			101,886			99,908			88,219
Provision for credit losses			4,667			3,685			4,498
			97,219			96,223			83,721
Non-Interest Income
Fees and other income			14,972			11,059			10,897
Securitization income			1,587			5,659			-
Net realized and unrealized gains (losses) on securities and mortgages			2,274			(883)			308
Net realized and unrealized (loss) gain on derivatives			(1,656)			(1,298)			4,285
			17,177			14,537			15,490
			114,396			110,760			99,211
Non-Interest Expenses
Salaries and benefits			16,950			14,991			13,999
Premises			2,445			2,562			1,998
Other operating expenses			14,574			14,067			13,171
			33,969			31,620			29,168
Income Before Income Taxes			80,427			79,140			70,043
Income taxes
	Current		23,456			22,649			19,055
	Deferred		(2,754)			(2,474)			(1,546)
			20,702			20,175			17,509
NET INCOME		$	59,725		$	58,965		$	52,534
NET INCOME PER COMMON SHARE
Basic		$	1.72		$	1.70		$	1.52
Diluted		$	1.72		$	1.70		$	1.52
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic			34,630			34,655			34,550
Diluted			34,825			34,779			34,593
Total number of outstanding common shares			34,600			34,630			34,751
Book value per common share		$	29.53		$	27.96		$	23.83

Consolidated Statements of Comprehensive Income

	For the three months ended
	March 31				December 31			March 31
thousands of Canadian dollars (Unaudited)		2013			2012			2012
NET INCOME	$	59,725		$	58,965		$	52,534
OTHER COMPREHENSIVE INCOME
Available for Sale Securities
Net unrealized gains on securities available for sale		7,165			1,471			4,393
Net (gains) losses reclassified to net income		(1,946)			457			(364)
		5,219			1,928			4,029
Income tax expense		1,381			509			1,167
		3,838			1,419			2,862
Cash Flow Hedges
Net unrealized gains on cash flow hedges		-			-			26
Net losses reclassified to net income		367			376			353
		367			376			379
Income tax expense		95			99			110
		272			277			269
Total other comprehensive income		4,110			1,696			3,131
COMPREHENSIVE INCOME	$	63,835		$	60,661		$	55,665

Consolidated Balance Sheets

			March 31			December 31
thousands of Canadian dollars (Unaudited)			2013			2012
ASSETS
Cash and Cash Equivalents		$	631,080		$	301,863
Available for Sale Securities			404,254			414,344
Loans held for sale			43,434			21,921
Loans
Securitized mortgages			6,710,556			6,706,160
Non-securitized mortgages and loans			10,675,992			10,431,832
			17,386,548			17,137,992
Collective allowance for credit losses			(30,300)			(30,000)
			17,356,248			17,107,992
Other
Restricted cash			130,083			137,424
Pledged securities			551,008			588,069
Derivative assets			44,643			45,388
Other assets			114,528			100,983
Goodwill and intangible assets			83,285			82,095
			923,547			953,959
		$	19,358,563		$	18,800,079
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Deposits payable on demand		$	96,513		$	105,923
Deposits payable on a fixed date			10,545,767			10,030,676
			10,642,280			10,136,599
Senior Debt			152,092			150,684
Securitization Liabilities
Mortgage-backed security liabilities			1,271,879			1,301,693
Canada Mortgage Bond liabilities			6,036,475			6,034,202
			7,308,354			7,335,895
Other
Derivative liabilities			2,941			2,386
Other liabilities			198,037			170,502
Deferred tax liabilities			33,046			35,800
			234,024			208,688
			18,336,750			17,831,866
Shareholders' Equity
Capital stock			61,850			61,903
Contributed surplus			6,729			6,224
Retained earnings			952,869			903,831
Accumulated other comprehensive income (loss)			365			(3,745)
			1,021,813			968,213
		$	19,358,563		$	18,800,079

Consolidated Statements of Changes in Shareholders' Equity

							Net Unrealized		Net Unrealized		Total
							Gains (Losses)		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, 2012	$	61,903	$	6,224	$	903,831	$	432	$	(4,177)	$	(3,745)	$	968,213
Comprehensive income		-		-		59,725		3,838		272		4,110		63,835
Amortization of fair value of
employee stock options		-		505		-		-		-		-		505
Repurchase of shares		(53)		-		(1,693)		-		-		-		(1,746)
Dividends paid
($0.26 per share)		-		-		(8,994)		-		-		-		(8,994)
Balance at March 31, 2013	$	61,850	$	6,729	$	952,869	$	4,270	$	(3,905)	$	365	$	1,021,813
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		6,431		(1,254)		-		-		-		-		5,177
Amortization of fair value of
employee stock options		-		588		-		-		-		-		588
Repurchase of shares		(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

Consolidated Statements of Cash Flows

			For the three months ended
			March 31			March 31
thousands of Canadian dollars (Unaudited)			2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period		$	59,725		$	52,534
Adjustments to determine cash flows relating to operating activities:
	Deferred income taxes		(2,754)			(1,546)
	Amortization of capital assets		686			705
	Amortization of intangible assets		1,927			1,591
	Amortization of net premium on securities		477			929
	Amortization of securitization and senior debt transaction costs		3,114			3,460
	Provision for credit losses		4,667			4,498
	Change in accrued interest payable		40,909			39,292
	Change in accrued interest receivable		(2,105)			(667)
	Net realized and unrealized gains on securities and mortgages		(2,274)			(308)
	Realized gain on securitization		(1,587)			-
	Settlement of derivatives		3,115			-
	Loss (gain) on derivatives		1,857			(4,285)
	Net increase in mortgages		(679,017)			(313,250)
	Net increase in  credit card loans and other consumer retail loans		(6,667)			(4,810)
	Net increase in deposits		505,681			375,002
	Proceeds from obligations under repurchase agreement		-			49,720
	Proceeds from sale of mortgage-backed securities		143,553			-
	Proceeds from securitization of mortgage-backed security liabilities		285,616			-
	Settlement and repayment of securitization liabilities		(316,334)			(181,242)
	Amortization of fair value of employee stock options		505			588
	Changes in taxes payable and other		(6,039)			(19,777)
Cash flows provided by operating activities			35,055			2,434
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of shares			(1,746)			(1,200)
Exercise of employee stock options			-			5,177
Dividends paid to shareholders			(9,003)			(6,954)
Cash flows used in financing activities			(10,749)			(2,977)
CASH FLOWS FROM INVESTING ACTIVITIES
Activity in securities
Purchases			(895,985)			(243,855)
Proceeds from sales			321,975			7,145
Proceeds from maturities			883,337			7,058
Purchases of capital assets			(1,299)			(1,629)
Purchases of intangible assets			(3,117)			(2,890)
Cash flows provided by (used in) investing activities			304,911			(234,171)
Net  increase (decrease) in cash and cash equivalents during the period			329,217			(234,714)
Cash and cash equivalents at beginning of the period			301,863			534,394
Cash and Cash Equivalents at End of the Period		$	631,080		$	299,680
Supplementary Disclosure of Cash Flow Information
Dividends received on investments		$	1,768		$	4,671
Interest received			147,027			194,561
Interest paid			23,613			74,681
Income taxes paid			38,744			33,571

Home Capital published its financial objectives for 2013 on page 18 of the Company's 2012 Annual Report. The following table compares actual performance to date against each of these objectives.

Table 1: 2013 Targets and Performance

					For the three months ended March 31, 2013
			2013 Targets		Actual Results		Amount		Increase over 2012
Growth in net income			13%-18%		13.7%	$	59,725	$	7,191
Growth in diluted earnings per share			13%-18%		13.2%		1.72		0.20
Growth in total loans under administration^1			10%-15%		9.0%		18,448,493		406,909
Return on shareholders' equity			20.0%		24.0%
Efficiency ratio (TEB)^2			28.0% - 34.0%		28.3%
Provision as a percentage of gross loans (annualized)			0.10% - 0.18%		0.11%

^1 Change represents growth over December 31, 2012 on an annualized basis and includes loans held for sale. ^2 See definition of TEB under Non-GAAP Measures in the unaudited interim consolidated financial report.

 

Table 2: Reconciliation of Net Income to Adjusted Net Income

		Quarter
(000s, except % and per share amounts)		Q1		Q4	%		Q1	%
Reconciliation of Net Income to Adjusted Net Income
Net income per Consolidated Statements of Income	$	59,725	$	58,965	1.3%	$	52,534	13.7%
Adjustment for derivative restructuring - IFRS conversion (net of tax)		1,783	$	2,602	(31.5)%		-	-
Adjustment for disputed loans to condominium corporations (net of tax)		1,508		-	-		-	-
Adjusted Net Income^1	$	63,016	$	61,567	2.4%	$	52,534	20.0%
Adjusted Basic Earnings per Share^1	$	1.82	$	1.78	2.2%	$	1.52	19.7%
Adjusted Diluted Earnings per Share^1	$	1.81	$	1.77	2.3%	$	1.52	19.1%

^1 Adjusted net income and Adjusted earnings per share are defined in the Non-GAAP section of the MD&A.

 

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. 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 55 through 68 of the Company's 2012 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, funding and liquidity 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 the quarterly report. Forward-looking statements are typically identified by words such as "will,"  "believe," "expect," "anticipate," "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 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 2013 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 and forecasted economic data provided by the Canadian government and its agencies.  In setting and reviewing the outlook and objectives for the remainder of 2013, management's expectations continue to assume:

• The Canadian economy will produce modest growth in 2013 with relatively stable to modestly improving employment conditions in most regions. The economy will continue to 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% to 3%.
  
  
• The Bank of Canada continues to indicate that increases to its target overnight interest rate are not imminent and, as such, the Company is assuming the rate will remain at its current level for most of 2013. This is expected to continue to support low mortgage interest rates.
  
  
• The housing market will remain relatively stable with balanced supply and demand conditions in most regions supported by continued low interest rates, relatively stable to modestly improving employment, and immigration.  There will be declines in housing starts and resale activity compared to prior years with stable to modestly declining prices throughout most of Canada.
  
  
• Consumer debt levels will remain serviceable by Canadian households.
  
  

Non-GAAP Measures
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 can be found under Non-GAAP Measures in the Management's Discussion and Analysis included in the Company's First Quarter 2013 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.

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 deposits, residential and non-residential mortgage lending, securitization of insured residential first mortgage products, consumer lending and credit card services. Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and Manitoba.

 

 

SOURCE: Home Capital Group Inc.

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