Home Capital shares skyrocket on strong earnings
TORONTO Home Capital Group Inc. shares surged Wednesday after the once-embattled alternative mortgage lender said it plans on buying back more stock after profits, deposits and loan originations all rose in its latest quarter.
Toronto-based Home Capital spent about $394.3 million on buying back stock over the past year, and announced Wednesday it plans to repurchase up to $150 million more of its own shares by the first quarter of 2020. The company also said it continues to consider reinstating its dividend.
When the upcoming buyback wraps up, Home Capital said it plans on applying to renew a regular repurchasing program, known as a normal course issuer bid.
“We’re delivering on our commitment to return capital to shareholders,” said Yousry Bissada, president and chief executive of Home Capital, during a conference call.
An update on the company’s capital plan noted that its board of directors will continue to review options for deploying capital, “including further share repurchases and payment of common share dividends.”
Home Capital suspended its quarterly dividend in May 2017 to “prudently manage liquidity.” The move came as the lender’s deposit balances were falling in the wake of claims of misleading disclosure by the Ontario Securities Commission.
However, Home Capital has been on the comeback trail. The company reported Wednesday that deposits for the third quarter ended Sept. 30 were $13.52 billion, up from $13.51 billion for the previous three months and an increase from $12.36 billion a year earlier.
Home Capital also reported a profit of $39 million for the quarter, up from $32.6 million a year earlier.
Its stock closed Wednesday at $33.15, up 14.3 per cent for the day. Since the end of 2018, it has gained more than 130 per cent.