Noah Zivitz

Managing Editor, BNN Bloomberg

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For the first time in half a decade, Home Capital Group Inc. is about to pay a dividend.

The mortgage lender said in a release Thursday morning that shareholders of record as of March 15 will receive a payment of 15 cents per common share at the end of next month.

That will be the first dividend paid by the company since February of 2017, which was in the midst of a crisis amid a run on deposits that was triggered by a regulatory probe into its mortgage underwriting practices. That probe led to firing of its then-chief executive and a flurry of activity to shore up its finances, which culminated with an investment by Warren Buffett’s Berkshire Hathaway Inc.

But Yousry Bissada, Home Capital’s president and chief executive officer, was in no mood to reflect on the company’s half-decade-old brush with the brink Thursday.

“We look at our situation as it is today,” he said in an interview. “We’ve been building the business, building the earnings.”

Indeed, Home Capital said on Thursday its single-family mortgage originations rose to $2.27 billion in the fourth quarter, compared to $2.01 billion in the third quarter.

Bissada said demand for homes is “so strong,” and brushed off the idea that upcoming moves by central banks to hike their policy rates will slow the stampede of buyers. He pointed to the rising yield on five-year Government of Canada bonds, which influences the pricing of fixed-rate mortgages and was hovering around 1.75 per cent on Thursday, compared to its recent low of 1.18 per cent in mid-December. 

“Everyone talks about (how) the rates are going to rise. They actually have been rising in the bond market — doesn't seem to have slowed it down,” he said.

Bissada added that the government’s target of welcoming 1.3 million immigrants over the next three years will also drive demand, as will millennials who he said are “hitting their stride” in the housing market. 

“Even with an interest-rate increase, even if some people aren't able to afford the same size of mortgage, if they decide they're going to jump in, they just may buy a smaller home or go a little further,” he added.

Home Capital Group also said on Thursday its net income slipped to $52.7 million in the fourth quarter from $55.3 million a year earlier. On an adjusted basis, it earned $1.06 per share; analysts, on average, were expecting $1.08 in adjusted per-share profit. 

Home Capital said it set aside $1 million in the most recent quarter for loans that could go bad. By contrast, in the fourth quarter of 2020, it released $7.7 million from its loan loss provisions.