Home Capital Group’s profits had already suffered noticeable hits even before the coronavirus outbreak took hold of the Canadian financial system, the alternative lender said.
The Toronto-based company’s net income for the first quarter was at $27.7 million, representing a drop of $9.5 million from Q4 2019.
Originations were at $1.62 billion during the first quarter, compared to the $1.22 billion during the same period last year. However, slower market activity began to creep in towards the tail-end of the quarter, according to Home Capital CFO Brad Kotush.
“Typically, changes in transaction volume will take some time to flow through to changes in funding volumes, so it is logical to expect originations in the second quarter to decline from past levels,” Kotush told The Financial Post.
And while total revenue grew by 22.5% annually to reach $127.2 million, provisions for credit losses swelled by 397.9% year-over-year to end up at $30.2 million.
The lender said that as of April 30, it has deferred payments on 9,903 loans with a total value of $3.93 billion.
“We cannot know how long this period of self-isolation will last or forecast with certainty what the ultimate economic effects will be,” said Yousry Bissada, Home Capital chief executive. “What we do know is that we’re here to help, and that we are very well-positioned to offer that help.”