HCG AGM 2012 - Home Capital · PDF filethe financial performance and condition of Home...
Transcript of HCG AGM 2012 - Home Capital · PDF filethe financial performance and condition of Home...
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Annual MeetingMay 16, 2012
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Dr. Kevin P.D. SmithChairman
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Gerald M. SolowayCEO
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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 forward-looking statements. Forward-looking statements are made in connection with business objectives and targets, Company operations, anticipated financial results and the outlook for the Company, its industry, and the Canadian economy. Accordingly, the audience is cautioned against undue reliance on these remarks.”
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DELIVERING
OUTSTANDINGSHAREHOLDER VALUEFOR 25 YEARS
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Recession 1990-1994
25 Years of Outstanding Performance
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1986
Employees
Equity
Assets
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$3M
$50M
1986 1990 1994
Weatheredthe storm
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20011998
25 Years of Outstanding Performance
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Assets > $500M
1999
Opened branches in Vancouver, Calgary
Assets > $1B
1986 1998 1999 20011990 1994
First quarterly dividend
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2002
25 Years of Outstanding Performance
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Opened office in Halifax
2004
Market cap > $1B
2007
20042002
L I S T E D O NHCG
Office in Montreal
1986 1998 1999 20011990 1994 2007
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2008 2011
25 Years of Outstanding Performance
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Employees
Equity
Assets
> 550
$775M
$17.7B
Today2008
Accelerator Program
• Insured mortgage products
200420021986 1998 1999 20011990 1994 2007
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OUTSTANDINGPERFORMANCE
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Record 2011 Results
Results Target
30.4%Adjusted net income
30.4%Adjusted diluted EPS
14.0%Total assets
27.4%Return on equity
11.1%Quarterly dividends
15-20%
15-20%
13-18%
20%
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Results Versus Q1, 2011
Continued Strong Momentum – Q1, 2012
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$52.5MNet income
$1.52Diluted EPS
$18BTotal assets
26.2%Return on equity
$0.22Quarterly dividends
21.7%
22.6%
12.4%
10.0%
All business lines had solid growth
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Successful Performance to Continue
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Recessions
Recessions
Global turmoil
Global turmoil
Challengingm
arketsC
hallengingm
arkets
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Resilient Housing Market
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Canada remains in an enviable position
Balanced supply and
demand
Low unemployment
Consumers servicing
debts
Solid real estate
fundamentals
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Portfolio Well-Positioned for Current Economy
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Insured
40%Loan to
value ratio<70%
60%
Non-performing loans and losses low
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2012 Market Forecast
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No housingbubble
Real estate Flat
Interest rates Modestincreases
Economy Improving
Unemployment Lower
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Solid Performance Going Forward
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CreditLosses
Low
ProductDemand
Strong
MortgageApplicant
Quality
Improving
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Martin ReidPresident
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Value Enhancing Strategies
Businessexecution
Strongbalance sheet
Prudent riskmanagement
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Solidshareholder
returns
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2011 MinimumGoalQ1, 2012
Solid Capital Ratios and Credit Performance
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17.3%Tier 1
20.5%Total Capital
13%
14%
17.5%
21.6%
Net Impaired Loans 0.25% 0.28%
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Strengthened Capital Base
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• $150M 5.2% long-termsenior debentures
Proceeds used to support:
• Regulatory capital requirements
• Growth objectives
Raised Capital Advantages
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Solid Credit Ratings
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BBB
Home Capital Group
BBB
BBB
BBB+
Home Trust
BBB
BBBH I G H
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Meeting New Global Financial Requirements
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Home Capital is well positioned to adopt all benchmarks
Basel III Reforms
2013
T I M I N G
• Capital• Liquidity
P R O P O S A L STo increase:
• Risk management
• Regulation• Supervision
M E A S U R E SMore stringent:
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Positioned for the FutureStrengthened Operating Team
• Enhanced :– risk management– internal audit– compliance
• Appointed Robert Blowes as CFO of Home Capital and Home Trust– several other key appointments
• Strengthened senior team:– internal audit– compliance– marketing– human resources
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Positioned for the FutureSAP Banking Platform
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Efficient
Competitive
Responsive
Internet portals for brokers
Increased productivity
Improved information
Real-time tracking
Improved compliance
Enhanced customer service
Key Benefits
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Positioned for the FutureImprove Operational Efficiency
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Enhancedprofitability
OrganizationalEffectiveness Group
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Positioned for the FutureGrowth Management
Completed expansion of Toronto Head Office:
Accommodate a growing team
Attract and retain the best people
Ongoing training and succession programs
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Theright people
Theright position
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Continuing to Enhance Value
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Newtechnologies
Evolvingsolutions
Highest levels of execution
Businessexecution
Strongbalance sheet
Prudent riskmanagement
Solidshareholder
returns
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Pino Decina
Senior VP, Mortgage Lending
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Successful Positioning of Mortgage Business
Focus on Traditional Alternative Mortgage Segment
• Do not meet all lending requirements of traditional lenders
• Require additional documentation
• High quality customers
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Leader in Alternative Mortgages
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• Deep knowledge of target customer
• Know and understand the sector
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Strong Non-Insured Mortgage Growth
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$2.85B
$3.51B
2010 2011
Non-Insured Mortgage Originations
23.2%
Up 22.2% Q1, 2012
• Strengthened credit performance
• Our core, highly profitable business
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Large Addressable Market
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Total Canadian Mortgage Market
$1 trillion Target Market
Lots of room for growth
Home TrustShare
$6B or 3%
$200B
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Growing the Insured Mortgage Business
• Reinvigorating Accelerator Program
• Mortgages insured against loss as long as underwriting criteria met
• In the event of a default, Home Capital is made whole by:
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Will offer Accelerator Program while evaluating new opportunities
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Strong Performance of Consumer and Commercial Lending
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Equityline Visa Program
7,700new accounts
Solid profitability going forward
CommercialLending
Modestgrowth
Focus on profitabilityand performance
RetailCredit
Continuedgrowth
Generating positive returns
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Focused On Growing Our Share
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• Build on leading position
• Meet the needs of underserved niches
• Offer full “One-stop shop”
• Expand geographically
• Maintain industry-leading service
Canada’s leading alternativefinancial institution
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Gerald M. Soloway
CEO
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Building On Growth and Progress
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Proven Business Model
Businessexecution
Strongbalance sheet
Prudent riskmanagement
Solidshareholder
returns
Key to our successis our people
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On-Track to Meet 2012 Goals
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Objective
Total Earnings 13-18%
Total Loans 13-18%
Return on Equity 20%
Minimum Tier 1 Ratio 13%
Provision for Credit Losses 0.05%-0.15%
Total Capital Ratio 14%
Diluted EPS 13-18%
Efficiency Ratio (TEB) 28-34%
Q1, 2012
21.7%
7.8%
26.2%
17.5%
0.11%
21.6%
22.6%
27.7%
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Home Capital – Excellent 25 Year Return
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5,000%
621%
1986 2011
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$0
$200
$400
$600
$800
$1,000
$1,200
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Home Capital – Excellent 10 Year Return
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Value of $100 Investment
S&P/TSX Composite Index
$983
$197$154
S&P/TSX Financials Index
Home Capital
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Annual MeetingMay 16, 2012
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