Home Capital Provides Update On Q2 2017 Expenses and GIC Deposit Inflows

TORONTO, June 29, 2017 /CNW/ - Home Capital Group Inc. ("Home Capital" or the "Company") (TSX: HCG) today updated a number of significant items expected to impact second quarter financial results for the period ending June 30, 2017.  Full financial results for the second quarter are expected to be released on August 2, 2017.

Expenses

The Company estimates second quarter 2017 operating results will include the impact of increased expenses totaling approximately $175 million ($233 million pre-tax).

Robert Blowes, Interim Chief Financial Officer commented: "The serious liquidity event that occurred late in April required the Company to take quick and dramatic steps, liquidating assets and arranging a rescue financing facility. Most of the costs associated with these actions will be reflected in results for the second quarter. In addition, we will record the expenses associated with the global settlement of the OSC and Class Action matters, net of insurance, and an increased provision for costs associated with the repositioning of our business. These expenses are in addition to our normal operating costs and will result in a net loss in the second quarter."

Second quarter 2017 increased costs include the following:

Incremental costs incurred in connection with liquidity event


$210 million

Asset impairment charge and restructuring costs


$15 million

Costs related to the OSC matter and related class action


$8 million

Incremental costs incurred in connection with the liquidity event include a $100 million commitment fee and transaction costs related to the previously announced $2 billion emergency credit facility completed on May 1, 2017, a $73 million realized loss on the sale of the Company's available for sale asset portfolio, and higher than normal interest, professional and legal costs. Of the $73 million loss realized on the available for sale assets, $46 million was previously recorded in accumulated other comprehensive income.

The asset impairment charge and restructuring costs relate to the remaining goodwill, intangible and other assets within our PSiGate and prepaid cards businesses and additional restructuring costs related to Project Expo, the Company's expense reduction initiative.

Costs related to the OSC matter and related class action are net of expected insurance recoveries.

Deposit Inflows

The Company also provided information regarding the growth of its Guaranteed Investment Certificate (GIC) deposit inflows, including Oaken and broker GIC deposits.

"We have been encouraged by the increasing strength of our deposit inflows, particularly since the recent announcement of the equity investment and new credit facility provided by Berkshire Hathaway. We believe that the improvement in deposit taking indicates a significant increase in depositor confidence in the Company", said Alan Hibben, Director, Home Capital.

Daily Gross GIC Deposits


($) Millions

June 27

$55

June 26

$70

Average Daily Gross GIC Deposits
for the Week Ended


($) Millions

June 23

$38

June 16

$25

June 9

$22

June 2

$16

May 26

$17

May 19

$8

May 12

$4

May 5

$5

April 28

$16

April 21

$32

April 14

$30

April 7

$29

March 31

$25

March 24

$30

March 17

$38

March 10

$38

March 3

$41

Caution Regarding Forward-looking Statements
This press release contains forward-looking information within the meaning of applicable Canadian securities legislation. Please refer to the Home Capital's 2016 Annual Report, available on Home Capital's website at www.homecapital.com, and on the Canadian Securities Administrators' website at www.sedar.com, for Home Capital's Caution Regarding Forward-looking Statements.

About Home Capital Group Inc.
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 its direct to consumer deposit brand, Oaken Financial. Home Trust also conducts business through its wholly owned subsidiary, Home Bank. 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.

For further information: Investors: Laura Lepore, Assistant Vice President, Investor Relations (416) 933-5652, laura.lepore@hometrust.ca; Media: Boyd Erman, Longview Communications Inc., (416) 649-8007 berman@longviewcomms.ca; or Peter Block, Longview Communications Inc., (416) 649-8008 pblock@longviewcomms.ca

RELATED LINKS
http://www.homecapital.com

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