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.