Q1 2018 Financial Results Presentation May 9, 2018 Forward-Looking - PowerPoint PPT Presentation

Q1 2018 Financial Results Presentation May 9, 2018

Forward-Looking Statements From time to time Home Capital Group Inc. (the Company) makes written and verbal forward-looking statements. These are included in the Annual Report, periodic reports to shareholders, regulatory filings, press releases, Company presentations and other Company communications. Forward-looking statements are made in connection with business objectives and targets, Company strategies, operations, anticipated financial results and the outlook for the Company, its industry, and the Canadian economy. These statements regarding expected future performance are “financial outlooks” within the meaning of National Instrument 51-102. Please see the risk factors, which are set forth in detail in the Risk Management section of the 2018 Q1 Report, as well as the Company’s other publicly filed information, which is available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com, for the material factors that could cause the Company’s actual results to differ materially from these statements. These risk factors are material risk factors a reader should consider, and include credit risk, liquidity and funding risk, structural interest rate risk, operational risk, investment risk, strategic risk, reputational risk, compliance risk and capital adequacy risk along with additional risk factors that may affect future results. Forward-looking statements can be found in the Report to the Shareholders and Outlook section in the 2018 First Quarter Report. Forward-looking statements are typically identified by words such as “will,” “believe,” “expect,” “anticipate,” “intend,” “should,” “estimate,” “plan,” “forecast,” “may,” and “could” or other similar expressions. By their very nature, these statements require the Company to make assumptions and are subject to inherent risks and uncertainty, general and specific, which may cause actual results to differ materially from the expectations expressed in the forward-looking statements. These risks and uncertainties include, but are not limited to, global capital market activity, changes in government monetary and economic policies, changes in interest rates, inflation levels and general economic conditions, legislative and regulatory developments, competition and technological change. The preceding list is not exhaustive of possible factors. These and other factors should be considered carefully and readers are cautioned not to place undue reliance on these forward-looking statements. The Company presents forward-looking statements to assist shareholders in understanding the Company’s assumptions and expectations about the future that are relevant in management’s setting of performance goals, strategic priorities and outlook. The Company presents its outlook to assist shareholders in understanding management’s expectations on how the future will impact the financial performance of the Company. These forward-looking statements may not be appropriate for other purposes. The Company does not undertake to update any forward-looking statements, whether written or verbal, that may be made from time to time by it or on its behalf, except as required by securities laws. 2

CEO Q1 2018 Highlights  Good start to 2018 - Home is back – Q1 2018 results mark another positive step forward towards being the leader in Alt-A lending – Growing originations and increasing core residential loan balances sequentially  Robust balance sheet – Strong capital and liquidity position  Strategic Priorities – Good progress made on near term priorities – Focused on Alt A market – Investing in technology 3

Q1 2018 CEO Highlights Good growth and momentum in business  Increasing originations - total originations of $1.16 billion increased 32.9% quarter over quarter  Quality of new applications improved and turn down rate continues to improve  Focused on growing residential and commercial business through broker education initiatives that provide greater clarity on residential lending products and risk appetite, improving service for a better broker and customer experience  Increasing renewal levels in Q1 2018  Commercial segment continues to focus on building a healthy pipeline and adding underwriting resources  Improving operational execution by investing in people, process and technology Strong Capital Position  CET 1 Capital 23.64% - Capital position provides flexibility  Reviewing opportunities to build and deploy our capital in a manner that emphasizes creating long-term value and avoiding excessive risk 4

Q1 2018 CEO Highlights Strategic Priorities – Build a sustainable risk culture – Be the leader in Alt-A in service, technology and solutions – Develop robust and diverse liquidity sources and maintain a strong balance sheet – Profitably grow residential and commercial business, increase market share, relative to market conditions – Increase renewal and retention rates – Deepen broker relationships and increase outreach to advance higher-quality applications – Assess opportunities for the business as it relates to operating in the context of an evolving regulatory environment 5

First Quarter 2018 Financial Results 6

Q1 2018 Financial Performance Highlights Improving Profitability , Increasing Originations and Growing Single-Family Loan Balances  Net income of $34.6 million in Q1 2018, an increase of 13.0%, from $30.6 million in Q4 2017  Increasing originations – total originations $1.16 billion in Q1 2018 vs. $ 872.1 million in Q4 2017  Non-securitized single-family residential mortgages $10.26 billion, an increase of 2.3% or $227.3 million from $10.04 billion at Q4 2017, down $2.36 billion or 18.7% from Q1 2017  Non-interest expense of $51.4 million in Q1 2018 decreased 21.5% or $14.1 million from $65.5 million in Q4 2017 and decreased $13.1 million from $64.5 million in Q1 2017, a decrease of 20.3% Non-interest expenses are expected to increase for the remainder of 2018 principally due to salaries and benefits expenses and other operating – expenses from lingering impact of costs stemming from the liquidity event Quarterly salaries and benefits expense will increase between $5-6 million over Q1 2018 levels in subsequent quarters –  A number of factors stemming from the liquidity event in Q2 2017 continue to impact financial results when compared to 2017 performance Mortgage portfolio performing well with low losses  Weighted average current loan-to-value (LTV) (1) of the uninsured residential mortgage portfolio was 58.5% vs. 55.3% at Q4 2017 and 60.4% at the end of Q1 2017  High credit quality with low provisions for credit losses  Provision for credit losses (PCL) as a percentage of gross uninsured loans of 0.20%, compared to 0.12% at Q4 2017  98.9% of the mortgage portfolio is current, with 0.29% over 90 days past due  IFRS 9 accounting may increase volatility of PCL in future periods Deposit funding stable and ample liquidity available  Aggregate available liquidity and credit facility of approximately $3.45 billion including the undrawn amount of $2 billion under the Berkshire Hathaway credit facility as at Q1 2018 – Reviewing opportunities to replace the credit facility  Able to raise or lower broker and Oaken deposit rates to match net deposit flows to mortgage origination volumes 7 1. Weighted average current LTV is defined in the Q1 2018 Management’s Discussion and Analysis.