Home Capital Group is a Canadian holding company. Through its subsidiary Home Trust Company, it provides Canadians a range of credit products including mortgages, credit cards and deposit services. It is regulated under federal legislation.
Home Trust operates mainly in regions considered low risk where above average returns may be achieved; it also tends to focus on areas largely ignored by other mortgage lenders. During the 2008 economic crisis, it faced less competition (the number of competitors was halved over the last couple years) and its customer base is unique (overrepresented by people who have had credit problems).
Mortgaged properties are residential and non-residential and include apartment and office buildings, hotels, construction and industrial complexes (retail mortgage lending which is also one of the main sources of organic growth, is at the core of the company’s business). In 2009, its stock outperformed that of eight major competitors in the uninsured mortgage market.
In 2010, it improved the technology used in data/information transfers, which increased the speed and overall efficiency of transactions. When the government of Canada added restrictions to mortgage lending, concerns were raised about new disruptions to Canada’s housing market. Home Capital considered it beneficial to the market’s overall stability.
On November 25, 2013, Home Trust launched Oaken Financial to provide financial services directly to consumers through the Internet.
On November 10, 2014, Home Trust announced that it intends to apply to the Minister of Finance to charter a Schedule I bank subsidiary to be called Home Trust Bank in English (“Banque Home Trust” in French).
In July 2015, Home Capital Group suspended 45 brokers for creating mortgages with fraudulent income information;, the estimated value of mortgages from the suspended brokers on Home Capital’s books is $1.5-2 billion.
In March 2017, President and CEO Martin Reid was fired by the company. This came two weeks after several current and former officers and directors have received enforcement notices from the Ontario Securities Commission related to the company’s past disclosure practices and, in some cases, trades in its shares.
On June 22, 2017, it was announced that companies run by Warren Buffett will be making a $400 million equity investment in Home Capital Group. In addition, a subsidiary of Buffett’s Berkshire Hathaway will extend a $2 billion line of credit to the company. Shares of Home Capital Group closed the day with a 27% gain subsequent to the news of Buffett’s investment.
Traded as: TSX: HCG
Industry: Credit Mortgage lending
Founded: 1977
Headquarters: Toronto, Canada
Products: Credit cards Securities; Retirement Savings Plan
Divisions: Home Trust Company
Website: www.homecapital.com/index.asp