With the COVID-19 pandemic continuing to wreak havoc on Canada’s financial markets, alternative lender MCAN Mortgage Corporation suffered a 168% year-over-year decrease in net income during the first quarter.
The net loss of $9.7 million was from before the pandemic even took hold, MCAN said.
“In the first quarter of 2020, we recorded a $15.7 million net loss on securities compared to an $8.0 million net gain on securities in the first quarter of 2019, due primarily to fair value changes in our real estate investment trust portfolio,” MCAN said in a statement. “The net loss on securities in Q1 2020 negatively impacted earnings per share by $0.65, while the net gain on securities in Q1 2019 positively impacted earnings per share by $0.34.
MCAN’s mortgage arrears also shot up from $16 million as of the end of December 2019, to $36 million as of March 31 – and this will likely worsen in the near future if data from the Bank of Canada is any indication.
“The Canadian economy, market and the world as we knew it in early March took a dramatic turn due to the COVID-19 pandemic,” MCAN said. “Leading up to this, the Canadian markets where we do business were strong, with an affordable housing shortage, strong employment and were experiencing a positive impact from growing immigration.”
In its statement, the company said that it is anticipating a rough few months ahead.
“We do not know how COVID-19 will evolve and whether the gradual reopening of the economy will cause further waves of infections and subsequently, further retraction,” MCAN said. “A return to full operations across all economic sectors is not anticipated until there is a vaccine that is effective and widely disseminated globally. As a result, the return to normalization of economic activity is expected to be protracted over an extended period of time and will encompass continuing restrictions on the conduct of business and normal day to day life of Canadians.”