INVESTOR UPDATE Third Quarter 2016 November 2, 2016 - PowerPoint PPT Presentation

INVESTOR UPDATE Third Quarter 2016 November 2, 2016

Forward-Looking Statements This presentation provides management with the opportunity to discuss the financial performance and condition of Home Capital Group Inc. and Home Trust Company and, as such may contain forward-looking information about strategies and expected financial results. Various factors, many difficult to predict and to control, could cause actual results to differ materially from results projected in forward-looking statements. Accordingly, the audience is cautioned against undue reliance on these remarks. 2

Agenda • Financial Performance • Performance Targets • Capital Management • Risk Management • 2016 Outlook Third Quarter 2016 3

Performance Against Mid-Term Targets Third Quarter 2016 4

Mid-term Objectives (3-5 Years) • In response to a more challenging business environment, HCG has upgraded processes, changed business relationships, increased regulatory compliance activities and introduced additional risk management procedures. This is essential for the future health of HCG. • These changes resulted in increased costs and has strained the ability to grow assets and net revenue. The focus is on increasing operating leverage by improving revenue growth from potential opportunities that the evolving housing environment presents and by taking a harder look at expenses. • However , looking ahead, it’s likely that HCG will reduce its mid-term targets when it reports Q4 2016. Mid-Term Objectives  Average pay out 19% - 26% of  Maintain strong capital ratios earnings as dividends  Average annual growth in diluted  Average annualized return on earnings per share (adjusted) of equity (adjusted) in excess of 16% 8% - 13%

Q3 2016 Results Increase (Decrease) Q3 2016 Results vs. Q3 2015 Reported Net Income $66.2M (8.6%) Reported Diluted EPS $1.01 (1.9%) Return on Shareholders’ Equity 16.9% Total Loans Under Administration $26.0B 11.0% Payout Ratio 23.8% Total Capital Ratio 16.97% CET 1 Ratio 16.54% * The Company’s results were not impacted by any items of note in Q3 2016 and Q3 2015. 6

Financial Performance Third Quarter 2016 7

Q3 2016 Financial Results Q3 2016 Q2 2016 Q3 2015 Net Income $66.2M $66.3M $72.4M Revenue* $243.9M $242.5M $247.2M NIM (TEB) 2.34% 2.38% 2.38% Loans Under Administration $26.0B $25.7B $23.4B Efficiency Ratio* 37.7% 37.2% 30.8% Provision as a % of Gross Uninsured 0.04% 0.08% 0.08% Loans NPL Ratio 0.31% 0.33% 0.30% CET1 Ratio 16.54% 16.38% 18.06% 8

Mortgage Originations 1,600.0 1,400.0 1,200.0 1,000.0 Q3 2015 800.0 Q4 2015 600.0 Q1 2016 400.0 Q2 2016 Q3 2016 200.0 - Traditional Single- ACE Plus Mortgages Accelerator Single- Residential Non-Residential family Residential family Residential Commercial Commercial Mortgages Mortgages Mortgages Mortgages Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Traditional Single-family Residential Mortgages $1,402.3M $1,163.3M $995.4M $1,253.0M $1,416.8M ACE Plus Mortgages $112.1M $141.0M $69.2M $115.4M $116.7M Accelerator Single-family Residential $416.3M $515.9M $363.8M $464.8M $446.7M Mortgages Residential Commercial Mortgages $347.9M $133.7M $182.9M $382.0M $212.8M Non-Residential Commercial Mortgages $219.3M $200.3M $171.1M $259.7M $347.6M Total Mortgage Originations $2,498.0M $2,154.2M $1,782.4M $2,474.9M $2,540.7M 9

Net Interest Margin NIM (TEB) Spread of Non-Securitized Loans over Deposits (TEB) 2.97% 2.97% 2.46% 2.93% 2.38% 2.38% 2.91% 2.38% 2.34% 2.89% Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 NIM Securitized Assets (TEB) NIM Non Securitized Assets (TEB) CMHC-Sponsored Securitization 2.89% Bank-Sponsored Securitization 2.83% 1.99% 1.85% 2.76% 2.70% 2.74% 0.60% 0.47% 0.42% 0.52% 0.45% Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 10

Historical Share Price Performance HCG Share Price $60.00 $0.30 Share Price Dividend $0.24 $50.00 $0.25 $40.00 $0.20 $30.00 $0.15 $27.00 $20.00 $0.10 $10.00 $0.05 $- $- Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q3 2016 dividend of $0.24 per share or 23.8% of net income Share price and dividend yield has been adjusted for the stock dividend of one common share for each issued and outstanding common share that was paid on March 10, 2014. 11

Capital Management 12

Capital & Liquidity Basel III Common Equity Tier 1 • Continued to maintain strong CET 1, Tier 1 18.31% 18.28% 18.06% capital and total capital ratios of 16.54%, 16.53% and 16.97%, respectively 16.54% 16.38% • Conservative leverage ratio at 7.08% • The Company paid a quarterly dividend of $0.24 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 per common share. Basel III Total Capital • Payout ratio of 23.8% in Q3 2016 20.70% 20.63% 20.51% 16.97% 16.82% Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Leverage Ratio 7.46% 7.36% 7.17% 7.08% 6.77% Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 13

Risk Management 14

Mortgage Lending • Total on-balance sheet mortgage portfolio balance of $17.2B, of which 89.2% of the portfolio is residential mortgages • 21.1% of the residential mortgage portfolio is insured • Weighted average current loan-to-value (LTV) of the uninsured residential mortgage portfolio was 63.6% • 98.5% of the mortgage portfolio is current, with 0.32% over 90 days past due • Condominiums represent 8.7% of the residential mortgage portfolio, with 22.6% insured • 2.6% of the uninsured mortgage portfolio was in energy producing regions Equity Single-Family Residential Loans by Province Insured Uninsured Line Total % Visa British Columbia $288.5M $601.4M $2.8M $892.7M 6.0% Alberta $297.7M $323.5M $11.0M $632.1M 4.3% Ontario $2,101.9M $10,072.9M $306.1M $12,480.9M 84.5% Quebec $108.5M $307.3M $1.3M $417.1M 2.8% Other $204.0M $144.1M $2.2M $350.3M 2.4% Total $3,000.6M $11,449.2M $323.4M $14,773.2M 100.0% 15

Non-Performing vs. Net Write Offs as a % of Gross Loans 0.40% Non Performing Loans as a Percentage of Gross Loans Net Writeoff's as a Percentage of Gross Loans 0.35% 0.31% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.03% 0.00% Q3 2010 Q3 2011 Q3 2012 Q3 2013 Q3 2014 Q3 2015 Q3 2016 • Prudent strategies to maintain a high credit quality • Close monitoring of non performing loans and proactive measures to minimize losses 16

2016 Outlook 17

Outlook for 2016 Assumptions about the performance of the Canadian economy in 2016 and its effect on Home Capital’s business are material factors the Company considers when setting its objectives, targets and outlook. In determining expectations for economic growth, both broadly and in the financial services sector, the Company primarily considers historical and forecasted economic data provided by the Canadian government and its agencies. In setting and reviewing its targets, objectives and outlook for the remainder of 2016, management’s expectations continue to assume : • The Canadian economy is expected to be relatively stable in 2016, supported by expanded Federal Government spending; however, it will continue to be impacted by adverse effects related to fluctuations in oil prices and other commodities. The Company has limited exposure in energy producing regions. • Generally the Company expects stable employment conditions, in its established regions; however, unemployment rates in energy producing regions are expected to continue to increase in 2016. Also, the Company expects inflation will generally be within the Bank of Canada’s target of 1% to 3%, leading to stable credit losses and consistent demand for the Company’s lending products in its established regions. Credit losses and delinquencies in the energy producing regions may increase, but given the Company’s limited exposure, this is not expected to be significant. • The Canadian economy will continue to be influenced by the economic conditions in the United States and global markets and further adjustments in commodity prices; as such, the Company is prepared for the variability to plan that may result. • The Company is assuming that overnight interest rates will remain at the current very low rate for 2016. This is expected to continue to support relatively low mortgage interest rates for the foreseeable future. • The Company believes that the current and expected levels of housing activity indicate a stable real estate market overall. Please see Market Conditions under the 2016 Outlook for more discussion on the Company’s expectations for the housing market and the impact of the recent changes unveiled by the government to the mortgage market. • The Company expects that consumer debt levels, while elevated, will remain serviceable by Canadian households. • The Company will have access to the mortgage and deposit markets through broker networks. 18

Appendices 19