TORONTO–(BUSINESS WIRE)–Home Capital Group Inc. (“Home Capital” or “the Company”) (TSX:HCG)
today reported financial results for the three months ended March 31,
2019. This press release should be read in conjunction with the
Company’s 2019 First Quarter Report including Financial Statements and
Management’s Discussion and Analysis (MD&A), which are available on Home
Capital’s website at www.homecapital.com
and on SEDAR at www.sedar.com.

“The growth in our mortgage portfolio and deposits with Oaken Financial
show that more Canadians are trusting us to look after their financial
needs. 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,” said Yousry Bissada,
President and Chief Executive Officer. “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.

Asset growth: Positive year-over-year growth in both mortgage
originations of 4.9% and total loans of 9.6%

• Mortgage originations of $1.22 billion in Q1 2019, compared
  with $1.61 billion in Q4 2018 and $1.16 billion in Q1 2018
• Single-family mortgage originations of $933.2 million in Q1
  2019, compared with $1,160.1 million in Q4 2018 and $869.7 million in
  Q1 2018
• Total loans at the end of the quarter of $16.68 billion, an
  increase of 1.7% from Q4 2018 and 9.6% from Q1 2018
• Loans under administration of $23.11 billion up 0.8% from Q4
  2018 and up 2.5% from Q1 2018

Funding: Oaken share of total deposits reaches 21.8%

• Total deposits of $13.57 billion compared with $12.98 billion
  at the end of Q4 2018 and $12.08 billion at the end of Q1 2018
• Total Oaken deposits of $2.95 billion, an increase of 10.2%
  year to date and 34.3% from the end of Q1 2018
• Oaken’s share of total deposits was 21.8% at the end of Q1 2019
  compared with 20.7% at the end of Q4 2018 and 18.2% at the end of Q1
  2018

Net income: Net income of 45 cents per share up 4.7% from 43 cents
per share in Q1 2018

• Net income of $27.8 million or 45 cents per share, compared
  with $35.8 million or 46 cents per share for Q4 2018 and $34.6 million
  or 43 cents per share for Q1 2018
• 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
• Net interest margin of 2.01% compared with 1.99% in Q4 2018 and
  2.02% in Q1 2018
• Non-interest expenses of $60.0 million compared with $55.7
  million in Q4 2018 and $51.4 million in Q1 2018, an increase of 7.8%
  from Q4 2018 and 16.8% from Q1 2018
• Expense growth attributed to number of active employees
  returning to more normalized staffing levels compared to one year ago,
  in addition to $3.2 million of incremental amortization of legacy
  information systems adjusted as an item of note. There were no items
  of note in Q4 2018 or Q1 2018.

Credit Quality: Net write-offs of 0.02% of gross loans compared with
0.03% in Q1 2018

• 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
• Provision expense of 0.15% of gross loans on an annualized
  basis compared with 0.10% in Q4 2018 and 0.16% in Q1 2018, largely due
  to an increase in non-performing other consumer retail loans, offset
  by a lower allowance estimate on the commercial loan portfolio.
• 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

Return of Capital

Effective January 2, 2019, Home Capital commenced a normal course issuer
bid (“NCIB”) to permit the purchase of common shares of Home Capital
(“Common Shares”) through the facilities of the Toronto Stock Exchange
(the “TSX”), designated exchanges and alternative trading systems. The
price that Home Capital will pay for any Common Shares will be the
market price of such Common Shares at the time of acquisition or such
other price as may be permitted.

Under the NCIB, Home Capital may purchase for cancellation up to
4,753,517 of its Common Shares, representing approximately 10% of its
public float as of December 21, 2018, calculated in accordance with TSX
rules.

As at May 7, 2019, Home Capital had purchased 1,943,585 Common Shares
under the NCIB at an average price of approximately $16.88 per Common
Share. Purchases under the NCIB will terminate on January 1, 2020, or on
such earlier date as Home Capital may complete its purchases pursuant to
the Notice of Intention submitted to the TSX.

Outlook

Home Capital expects that the Canadian real estate market will be stable
for the balance of 2019 with improving affordability, healthy levels of
competition and stable interest rates. “We believe the key drivers of
our Q1 results will continue to support our growth for the balance of
the year,” said Mr. Bissada. “Through dedication to customer service,
attention to risk management and strategic deployment of capital, we
expect to continue to create long-term value for our shareholders and
our customers.”

The Company’s 2019 First Quarter Financial Report, including
Management’s Discussion and Analysis, for the three months ended March
31, 2019 is available at www.homecapital.com
and on the Canadian Securities Administrators’ website at www.sedar.com.

First Quarter 2019 Results Conference Call and Slide Presentation
Webcast

The conference call will take place on Wednesday, May 8, 2019, at 8:00
a.m. ET. Participants are asked to call approximately 10 minutes in
advance at toll-free 1-866-393-4306 throughout North America.
Participants calling from outside of North America may dial
1-734-385-2616. The call will also be accessible in listen-only mode on
Home Capital’s website at www.homecapital.com
in the Investor Relations section of the website.

Conference Call Archive

A telephone replay of the call will be available between 11:00 a.m. ET
Wednesday, May 8, 2019 and midnight ET Wednesday, May 15, 2019 by
calling 1-855-859-2056 (enter passcode 5324937). The archived audio
webcast will be available for 90 days on Home Capital’s website at www.homecapital.com.

¹ See definition of Taxable Equivalent Basis (TEB) under
Non-GAAP Measures in the Company’s 2019 First Quarter Report.
²
See definition of Adjusted Net Income, Adjusted Diluted Earnings
per Share, Adjusted Return on Shareholders’ Equity and Adjusted
Efficiency Ratio under Non-GAAP Measures in the Company’s 2019 First
Quarter Report.
³ Total assets and loans under
administration include both on- and off-balance sheet amounts.
⁴
Total loans include loans held for sale and are presented gross of
allowance for credit losses.
⁵ These figures relate to
the Company’s operating subsidiary, Home Trust Company.
⁶ NPL
indicates non-performing loans, defined as Stage 3 loans under IFRS 9 Financial
Instruments. See definition of impaired or non-performing loans
under Glossary of Terms in the Company’s 2019 First Quarter Report.

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 in the Risk Management
section of this report, as well as the Company’s other publicly filed
information, which is 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 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 in the 2019 First
Quarter 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, 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 2019 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 the remainder of 2019, management
continues to assume:

• The Canadian economy is expected to be relatively stable in 2019.
  However, it will continue to be influenced by economic conditions in
  the United States and global markets, including the impact from the
  renegotiated trade agreement with the United States and Mexico and
  from other global trade relations; the Company is prepared for
  potential volatility.
• Stable employment conditions in the Company’s established regions.
  Also, the Company expects inflation will generally be within the Bank
  of Canada’s target of 1% to 3%, leading to stable credit losses and
  demand for the Company’s lending products in its established regions.
• The Bank of Canada overnight interest rate will remain stable in 2019.
• Current and expected levels of housing activity indicate a relatively
  stable real estate market overall and in particular for the Company’s
  key Greater Toronto Area (GTA) market. Please see Market Conditions
  under the 2019 Outlook in the Company’s 2019 First Quarter Report for
  more discussion on the Company’s expectations for the housing market.
• Debt service levels of Canadian households will remain manageable in
  2019; however, high levels of consumer debt make the economy more
  vulnerable to higher interest rates and any economic weakness.
• Access to the mortgage and deposit markets through broker networks
  will be maintained.

Non-GAAP Measures

The Company has adopted IFRS as its accounting framework. IFRS are the
generally accepted accounting principles (GAAP) for Canadian publicly
accountable enterprises for years beginning on or after January 1, 2011.
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 2019 First Quarter 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
residential and non-residential mortgage lending, securitization of
insured residential mortgage products, consumer lending and credit card
services. In addition, Home Trust offers deposits via brokers and
financial planners, and through a direct to consumer brand, Oaken
Financial. Home Trust also conducts business through its wholly owned
subsidiary, Home Bank. Licensed to conduct business across Canada, we
have offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec
and Manitoba.

Contacts

Jill MacRae
Director, Investor Relations
(416) 933-4991
[email protected]