Alternative lenders to resume share buybacks
TORONTO Alternative mortgage lenders Equitable Group Inc. and Home Capital Group Inc. are ready to buy back stock again after a pandemic-related timeout, a sign of confidence that follows a bumpy year, and one that comes as Canada's biggest banks remain barred from their own share repurchases.
Toronto-based Equitable, which provides loans and takes deposits via subsidiary Equitable Bank, on Dec. 21 announced it had received approval from the Toronto Stock Exchange for a normal course issuer bid (NCIB) of up to 1.14 million common shares and 297,250 preferred ones.
Equitable had previously said it would not introduce any buyback programs in 2020, even if its capital ratios surpassed its targets. However, the company's chief executive said its loan portfolio is performing better than expected and that it is on solid financial footing.
“Our capital levels are incredibly strong and so, therefore, we feel this is prudent,” Andrew Moor said.
“We certainly wouldn't be doing this if that wasn't the case.”
Home Capital, likewise, operates through federally regulated subsidiaries. The lender on Wednesday said it also plans to resume repurchases of common shares under its NCIB.
The company halted buybacks in March because of the pandemic, as the economic outlook darkened and customers rushed to defer mortgage payments, forcing lenders to build up their loan-loss reserves.
Yet that outlook brightened a bit as 2020 went on, with customers resuming loan payments and several vaccines being developed.
“With the passage of time and continued stability in its financial performance, Home Capital believes that it is appropriate to resume repurchases under its NCIB,” the company said in a press release.
Home Capital also said it intends to apply to renew its buyback program before it expires on Jan. 21 and that total repurchases under both the current and renewed NCIBS are not expected to top $50 million.
Equitable said it plans to repurchase a maximum of 630,000 common shares under its NCIB, which would be around $63 million in stock at current prices. Those purchases were eligible to begin on Dec. 23.