Two years after near disaster, the lender tops the alternative mortgage market and its stock price has doubled. Investors want to know what’s next
The Financial Post takes a look at 11 people and companies we’ll be watching closely in the new year.
As part of that transformation, he said the lender wanted to create a culture that was “transparent, accountable and had sustainable risk as part of its core management style.” It also sold off “non-core” parts of its business and bought a lot of its stock back. The company is now eyeing opportunities to grow in major urban centres, namely Vancouver, Calgary, Montreal and Toronto. It is also looking to diversify its balance sheet somewhat, as the lender set a target of getting commercial mortgages up to 15 per cent of its total on-balance sheet loans over the next three years or so, from its current level of around 10 per cent. The lender’s total loan portfolio at the end of the third quarter was $17 billion.
There’s no doubt Bissada is proud of what Home Capital has managed to achieve since he was appointed in August 2017. After all, the name of November’s investor day was “Proud of our Home.” Bissada also highlighted subsidiary Home Trust Co., which in 2019 won the Lender of the Year: Bank award at the Mortgage Awards of Excellence.
Furthermore, Home Capital has benefited from a recent resurgence in the Canadian housing market and an economic cycle that has yet to quit its upturn and fall into recession. A change in the forecast could give the lender and its peers a jolt. M Partners analyst Andrew Hood said the focus on a sustainable risk culture is key to smoothing over concerns people may have about the Canadian real estate market, as well as Home Capital’s recent history. The company, he noted, stressed it will zoom all the way down to the neighbourhood level when it is deciding to whether to make a loan.
In addition to the buybacks, Home Capital is spending on technology, which Bissada called “table stakes” for any executive. The plans include spending around $60 million over three to five years on upgrading its information-technology systems. For example, it announced on Dec. 11 that it had determined its point-of-sale lending business fell into the latter category following a review of its consumer retail loan portfolio.
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