Home Capital Reports Another Record Quarter and Dividend Increase

Home Capital Reports Another Record Quarter and Dividend Increase 


    --  Diluted Earnings per Share of $1.65 up 18.7% Year over Year;
    --  Dividend Increase of 18.2%, or 4 Cents per Share to $0.26
        Quarterly;
    --  Return on Equity Continues Strong at 25.6% for the Quarter and
        25.7% Year to Date

TORONTO, Nov. 7, 2012 /CNW/ - Home Capital Group (TSX: HCG) today reported 
another quarter of strong results for the three months ended September 30, 
2012.

The Company's Third Quarter Report, including Management's Discussion and 
Analysis, is available on www.homecapital.com and on the Canadian Securities 
Administrators' website at www.sedar.com.

FINANCIAL HIGHLIGHTS
                                                                                   

(Unaudited)( )                 For the three months ended For the nine months ended

(000s, except
Per Share and
Percentage                                                                September
Amounts)( )      September 30       June 30  September 30  September 30          30
                        2012          2012          2011          2012        2011 

OPERATING
RESULTS( )                                                                         

Net Income( )   $      57,254 $      53,230 $      48,417 $     163,018 $   139,747

Adjusted Net
Income(1 )             57,254        53,230        48,417       163,018     142,172

Total Revenue
( )                   226,603       218,751       198,694       660,036     581,875

Earnings per
Share -
Basic/Diluted
( )             $   1.65/1.65 $   1.54/1.54 $   1.40/1.39 $   4.70/4.68 $ 4.03/4.02

Adjusted
Earnings per
Share -
Basic/Diluted
(1 )                1.65/1.65     1.54/1.54     1.40/1.39     4.70/4.68   4.10/4.09

Return on
Shareholders'
Equity( )               25.6%         25.1%         27.0%         25.7%       27.4%

Return on
Average Assets
( )                      1.2%          1.2%          1.2%          1.2%        1.1%

Net Interest
Margin (TEB)
(2 )                    2.14%         2.09%         2.14%         2.08%       2.06%

Net Interest
Margin
Non-Securitized
Assets (TEB)
(2 )                    3.17%         3.05%         3.11%         3.09%       3.04%

Net Interest
Margin
Securitized
Assets( )               0.89%         1.05%         1.35%         0.97%       1.28%

Provision as a
Percentage of
Gross Loans
(annualized)( )         0.10%         0.05%         0.06%         0.09%       0.04%

Efficiency
Ratio (TEB)(2 )         28.1%         27.8%         27.4%         27.9%       28.2%

As at( )         September 30       June 30   December 31  September 30            
                        2012          2012          2011          2011             

BALANCE SHEET
HIGHLIGHTS( )                                                                      

Total Assets( ) $ 19,241,999  $ 18,526,458  $ 17,696,471  $ 17,072,125             

Total Loans(3 )   17,292,395    16,966,961    16,089,648    15,782,646             

Securitized
Loans
On-Balance
Sheet( )           7,238,946     7,582,154     8,243,350     8,502,466             

Loans Under
Administration
(4 )              17,460,528    17,039,727    16,089,648    15,782,646             

Liquid Assets
( )                  998,219       669,681       808,222       646,695             

Deposits( )        9,870,691     9,007,464     7,922,124     7,220,517             

Shareholders'
Equity( )            919,618       869,439       774,785       731,216             

FINANCIAL
STRENGTH( )                                                                        

Capital
Measures(5 )                                                                       

Risk-Weighted
Assets( )       $  5,271,674  $  5,003,579  $  4,549,696  $  4,269,175             

Tier 1 Capital
Ratio( )               16.97%        17.09%        17.29%        17.67%            

Total Capital
Ratio( )               20.78%        21.09%        20.46%        21.05%            

Credit Quality
( )                                                                                

Non-Performing
Loans as a
Percentage of
Gross Loans( )          0.28%         0.31%         0.25%         0.32%            

Allowance as a
Percentage of
Gross
Non-Performing
Loans( )                64.7%         58.7%         74.9%         62.6%            

Share
Information( )                                                                     

Book Value per
Common Share( ) $      26.53  $      25.05  $      22.38  $      21.10             

Common Share
Price - Close
( )             $      51.44  $      45.18  $      49.10  $      43.60             

Market
Capitalization
( )             $  1,783,322  $  1,568,243  $  1,700,088  $  1,510,696             

Number of
Common Shares
Outstanding( )        34,668        34,711        34,625        34,649             
                                                                           

(1 )See definition of Adjusted Net Income under Non-GAAP Measures of the 
unaudited interim consolidated financial report and reconciliation to net 
income in Table 2 of the Management's Discussion and Analysis.
(2 )See definition of Taxable Equivalent Basis (TEB) under Non-GAAP Measures 
of the unaudited interim consolidated financial report.
(3 )Total loans include loans held for sale.
(4 )Loans under administration includes total loans and off-balance sheet 
loans.
(5 )These figures relate to the Company's operating subsidiary, Home Trust 
Company

THIRD QUARTER 2012 HIGHLIGHTS

Key results for the third quarter of 2012 included:
    --  Net income increased to $57.3 million in the third quarter and
        to $163.0 million for the nine months ended September 30, 2012,
        representing increases of 18.3% and 16.7% over the $48.4
        million and $139.7 million earned in the comparable periods of
        2011. The second quarter included an unfavourable tax
        adjustment of $2.0 million related to Ontario tax rate
        adjustments and, excluding this adjustment, net income is up
        18.1% year over year. Net income for the third quarter is also
        up 7.6% from the $53.2 million recorded in the second quarter
        of 2012. These results put the Company solidly within the
        13%-18% net income growth target for 2012.
    --  Diluted earnings per share were $1.65 for the quarter and $4.68
        for the first nine months of 2012 representing increases of
        18.7% and 16.4% from $1.39 and $4.02 for the respective periods
        of 2011.
    --  Net interest income, before provisions, continued its upward
        trend, reaching $99.5 million in the third quarter and $281.6
        million year to date. This represents increases of 13.6% over
        the $87.6 million recorded in the third quarter of 2011 and
        14.7% over the $245.5 million earned in the first nine months
        of 2011 and reflects solid loan growth and continued strong
        demand for the Company's products.
    --  Net interest margin (TEB) of 2.14% in the third quarter was
        consistent with 2.14% in the third quarter of 2011 and up from
        2.09% in the second quarter of 2012.  On a year-to-date basis,
        net interest margin (TEB) increased to 2.08% compared to 2.06%
        in the same period last year.  Net interest margin (TEB) on
        non-securitized assets rose to 3.17% compared to 3.11% in the
        third quarter of 2011 and 3.05% in the second quarter of 2012.
    --  Net interest margin on securitized assets was 0.89%, a decline
        from 1.35% one year ago and 1.05% last quarter. During the
        second quarter the Company benefited from higher than expected
        prepayment penalties in the securitized portfolio producing an
        increase in the net interest margin. Compared to a year ago,
        the utilization of lower yielding assets as replacement assets
        in the CMB program and the maturity of higher yielding MBS
        portfolios are the primary contributors to lower margins in the
        securitized asset group.
    --  Return on equity at 25.6% for the quarter and 25.7% year to
        date remains solid and continues well in excess of the
        Company's minimum performance objective of 20%.
    --  The credit quality of the loans portfolio remains solid and
        credit losses are well within expected levels. Net
        non-performing loans ended the quarter at 0.28% of the total
        loans portfolio, up marginally from 0.25% at the end of 2011
        and down from 0.31% at the end of the second quarter. The
        provision for credit losses remains within expectations at
        0.10% of gross loans on an annualized basis, compared to 0.06%
        in the third quarter of 2011 and 0.05% in the second quarter of
        2012. The provision for credit losses ratio is within the
        Company's objective of 0.05% to 0.15% of gross loans. The
        increase in provisions reflects the repositioning of the
        portfolio to a higher proportion of uninsured loans.
    --  Tier 1 and Total capital ratios of 16.97% and 20.78%,
        respectively, at September 30, 2012 remain well above the
        Company's minimum targets.  Home Trust's asset to capital
        multiple was 14.07 at the end of the quarter compared to 14.44
        at December 31, 2011 and 13.78 at the end of the second
        quarter. The Company continues growing its assets, revenue and
        net income while maintaining prudent levels of capital.
    --  Total loans grew to $17.29 billion, reflecting increases of
        $1.51 billion or 9.6% from $15.78 billion one year ago, $1.20
        billion or 7.5% from $16.09 billion at the end of 2011 (10.0%
        on an annualized basis) and $325.4 million or 1.9% over $16.97
        billion at the end of last quarter. Total loans under
        administration, which includes mortgages securitized that
        qualify for off-balance sheet accounting, were $17.46 billion,
        representing an annualized increase of 11.4%. Annualized growth
        of loans and loans under administration year to date remains
        below the Company's growth target due to a higher than planned
        net reduction of insured loans which repositioned the loan
        portfolio to a smaller than planned, yet more profitable, total
        portfolio. The Company expects year-over-year loan growth to
        remain below the target range of 13%-18% for the balance of
        2012, while net income remains solidly within the target range.
    --  The total value of mortgages originated in the third quarter
        grew to $1.68 billion from $1.30 billion originated in the
        third quarter of 2011. Originations were $4.53 billion for the
        first nine months of the year compared to $3.87 billion in the
        same period last year.
    --  Originations of traditional mortgages increased to $1.26
        billion in the third quarter and $3.39 billion year to date
        from $941.1 million and $2.57 billion in the comparable periods
        of 2011. The Company is experiencing strong demand for its
        traditional product offerings combined with high credit
        quality. This continues to enhance profitability.
    --  Accelerator (insured) mortgage originations declined to $236.7
        million in the third quarter and $630.5 million year to date
        from $293.5 million and $915.1 million in the comparative
        periods of 2011. The Company expects to increase the rate of
        origination of Accelerator mortgages in the coming months.
    --  Multi-unit residential mortgage originations were $114.3
        million in the quarter and $229.6 million year to date compared
        to $7.0 million and $130.5 million in the comparable periods of
        2011. The Company securitized and sold $96.5 million of
        multi-unit residential mortgages in the quarter and $72.8
        million last quarter.  These transactions qualified for
        off-balance sheet and gain on sale accounting and resulted in
        securitization gains of $1.2 million in the quarter and $1.3
        million last quarter. This securitization program was initiated
        in the second quarter of this year.  The Company is pleased
        with the results and anticipates that this program will
        experience modest growth going forward.
    --  Non-residential mortgage advances were $46.6 million in the
        quarter and $157.8 million year to date compared to $32.4
        million and $140.7 million in the comparable periods of 2011.
        The Company continues to be very selective and focuses on
        opportunities that present strong credit and risk profiles and
        that are within the Company's risk tolerance.
    --  Store and apartment advances were $18.2 million for the quarter
        and $93.9 million year to date compared to $26.8 million and
        $87.4 million in the comparable periods of 2011.
    --  The Company opened 847 new Visa accounts in the third quarter
        compared to 2,108 accounts opened in the third quarter of 2011
        and 1,793 accounts last quarter. The decline through the
        current year reflects the Company's caution in marketing,
        approvals and advances and the anticipated adoption of OSFI's
        B-20 draft guideline provisions.  After further review and
        confirmation of the requirements of B-20, the Company is
        pleased that it can resume prudent growth of its Equityline
        Visa program within the requirements of Guideline B-20 and the
        Company's risk appetite.  The Company will again increase focus
        on this product segment and expects growth to resume within its
        risk tolerance and OSFI's guidelines, beginning in the fourth
        quarter.

Favourable market opportunities continue to support the Company's strategy and 
the Company has been able to expand the loans portfolio while generally 
improving credit quality. The average credit score for traditional mortgage 
originations for the first nine months of 2012 is up from the same period of 
2011, while loan to value ratios are relatively stable. The Company remains 
proactive and prudent in its lending practices, taking into account local 
economic and market conditions. Continued low levels of loan losses reflect 
the Company's diligent underwriting combined with strong collection standards 
and loan resolution strategies. As mentioned last quarter, OSFI released Final 
Guideline B-20 - Residential Mortgage Underwriting Practices and Procedures 
requiring full implementation by the end of 2012. The Company has already made 
changes, where required, to comply with a significant number of the B-20 
provisions and will be fully compliant before the end of 2012. The changes 
required for B-20 are not expected to materially affect the Company's growth 
or progress.

This quarter marked the beginning of two exciting new initiatives for the 
Company, a high interest savings account and a preferred Visa product. The 
high interest savings account provides an alternative to financial advisors 
for their clients who are looking for higher interest savings. This initiative 
is an important part of a wider strategy to diversify funding sources over 
time. Late in the third quarter, the Company also launched a new preferred 
Visa card product focused exclusively on existing mortgage customers of the 
Company. The program offers an unsecured Visa with modest credit limits at 
attractive rates to customers who have demonstrated good credit behavior. This 
product further broadens the array of products and services available to the 
Company's customers. These initiatives further position the Company for 
growth, but did not have a significant impact on quarterly results.

Also during the quarter, OSFI released the anticipated draft guidelines for 
Basel III, which will become effective in January 2013. The changes that 
affect Home Trust primarily relate to the components and definitions of 
regulatory capital, minimum capital targets and new liquidity requirements. 
The Company's analysis indicates that Home Trust presently meets the 
requirements of Basel III. Please see the Capital Management section of the 
MD&A for further discussion.

Subsequent to the end of the quarter, and in light of the Company's solid 
performance, profitability and strong financial position, the Board of 
Directors declared an increase of $0.04 in the quarterly dividend to $0.26 per 
Common share, payable on December 1, 2012 to shareholders of record at the 
close of business on November 16, 2012.

The Company continues to deliver solid results in terms of growth, increased 
returns and increased dividends. Despite the persistent international economic 
instability and modest economic improvement in Canada, the Company's 
performance continues to reflect the strength and the successful execution of 
the Company's core strategy.

With solid performance in all aspects of Home Capital's business, management 
expects that the positive performance the Company experienced during the first 
three quarters of 2012 will continue in the fourth quarter and into 2013.

(signed)                     (signed)

GERALD M. SOLOWAY            KEVIN P.D. SMITH

Chief Executive Officer      Chairman of the Board

November 7, 2012                        

Additional information concerning the Company's targets and related 
expectations for 2012, including the risks and assumptions underlying these 
expectations, may be found in Management's Discussion and Analysis (MD&A) of 
this quarterly report.

Conference Call and Webcast

Third Quarter Results Conference Call
The conference call will take place on Thursday, November 8, 2012, at 10:30 
a.m. Participants are asked to call 5 to 15 minutes in advance, 647-427-7450 
in Toronto or toll-free 1-888-231-8191 throughout North America. The call will 
also be accessible in listen-only mode via the Internet at www.homecapital.com.

Conference Call Archive
A telephone replay of the call will be available between 1:30 p.m.Thursday, 
November 8, 2012 and midnight Thursday, November 15, 2012 by calling 
416-849-0833 or 1-855-859-2056 (enter passcode 39208745). The archived audio 
web cast will be available for 90 days on CNW Group's website at 
www.newswire.ca and Home Capital's website at www.homecapital.com.

2012 OBJECTIVES AND PERFORMANCE

Home Capital published its financial objectives for 2012 on page 15 of the 
Company's 2011 Annual Report. The following table compares actual performance 
to date against each of these objectives.
                                                           

Table 1: 2012
Targets and
Performance( )                                                         
                                                                       
                                For the nine months ended September 30,
                                                                   2012
                 2012 Targets      Actual                 Increase over
                         (1 ) Results(1 )        Amount            2011

Growth in net
income( )          13%-18%( )    16.7%( ) $    163,018  $        23,271

Growth in
diluted
earnings per
share( )           13%-18%( )    16.4%( )         4.68             0.66

Growth in total
loans(2 )          13%-18%( )    10.0%( )   17,292,395        1,202,747

Return on
shareholders'
equity( )            20.0%( )    25.7%( )                              

Efficiency      28.0% - 34.0%
ratio (TEB)(3 )           ( )    27.9%( )                              

Capital ratios
(4 )                                                                   


               Minimum of                                          
  Tier 1( )            13%( )   16.97%( )                 
               Minimum of                                          
  Total( )             14%( )   20.78%( )                 
Provision as a
percentage of
gross loans     0.05% - 0.15%
(annualized)( )           ( )    0.09%( )                               
                                                        
(1) Objectives and results for net income and diluted earnings per share are 
for the current year.
(2) Change represents growth over December 31, 2011 on an annualized basis and 
includes loans held for sale.
(3) See definition of TEB under Non-GAAP Measures in the unaudited interim 
consolidated financial report.
(4) Based on the Company's wholly owned subsidiary, Home Trust Company. 


                            

Consolidated Statements of Income                                     
                      For the three months ended   For the nine months
                                                                 ended

thousands of     September    June 30  September  September  September
Canadian                30                    30         30         30
dollars, except
per share
amounts

(Unaudited)          2012       2012       2011       2012       2011 

Net Interest                                                          
Income
Non-Securitized
Assets

Interest from   $ 138,271  $ 125,576  $ 102,617  $ 381,412  $ 289,932 
loans

Dividends from      3,172      3,533      4,887     10,669     13,858 
securities

Other interest      1,093        930      1,334      3,070      4,246 
                  142,536    130,039    108,838    395,151    308,036 

Interest on        58,962     56,043     48,160    168,133    140,368 
deposits

Interest on         1,648      1,705      1,644      5,006      2,691 
senior debt

Net interest       81,926     72,291     59,034    222,012    164,977 
income
non-securitized
assets
                                                                      

Net Interest                                                          
Income
Securitized
Loans and
Assets

Interest income    70,618     76,286     84,195    223,520    248,615 
from
securitized
loans and
assets

Interest           53,053     54,723     55,617    163,968    168,052 
expense on
securitization
liabilities

Net interest       17,565     21,563     28,578     59,552     80,563 
income
securitized
loans and
assets
                                                                      

Total Net          99,491     93,854     87,612    281,564    245,540 
Interest Income

Provision for       4,239      2,298      2,349     11,035      4,540 
credit losses
(note 5(E))
                   95,252     91,556     85,263    270,529    241,000 

Non-Interest                                                          
Income

Fees and other     12,485     12,025      9,697     35,407     26,703 
income

Realized net       (1,172)     1,676      1,224        812      5,394 
gains and
unrealized
losses on
securities and
mortgages

Net realized        2,136     (1,275)    (5,260)     5,146     (6,873)
and unrealized
gain (loss) on
derivatives
(note 14)
                   13,449     12,426      5,661     41,365     25,224 
                  108,701    103,982     90,924    311,894    266,224 

Non-Interest                                                          
Expenses 

Salaries and       15,465     14,501     13,509     43,965     39,339 
benefits

Premises            2,296      1,977      1,997      6,271      5,769 

Other operating    14,304     13,404     10,530     40,879     32,787 
expenses
                   32,065     29,882     26,036     91,115     77,895 
                                                                      

Income Before      76,636     74,100     64,888    220,779    188,329 
Income Taxes 

Income taxes                                                          
(note 12(A))

  Current          19,904     20,568     18,249     59,527     50,414 

  Deferred           (522)       302     (1,778)    (1,766)    (1,832)
                   19,382     20,870     16,471     57,761     48,582 

NET INCOME      $  57,254  $  53,230  $  48,417  $ 163,018  $ 139,747 
                                                                      

NET INCOME PER                                                        
COMMON SHARE

Basic           $    1.65  $    1.54  $    1.40  $    4.70  $    4.03 

Diluted         $    1.65  $    1.54  $    1.39  $    4.68  $    4.02 

AVERAGE NUMBER                                                        
OF COMMON
SHARES
OUTSTANDING 

Basic              34,697     34,476     34,682     34,705     34,691 

Diluted            34,803     34,509     34,804     34,825     34,804 
                                                                      

Total number of    34,668     34,711     34,649     34,668     34,649 
outstanding
common shares
(note 9(A))

Book value per  $   26.53  $   25.05  $   21.10  $   26.53  $   21.10 
common share
                                                                      

The accompanying notes are an integral part of                        
these unaudited interim consolidated financial
statements.
                                                               

Consolidated Statements of Comprehensive                              
Income
                  For the three months ended For the nine months ended
              September   June 30  September September 30 September 30
                     30                   30

thousands of      2012      2012       2011         2012         2011 
Canadian
dollars
(Unaudited)
                                                                      

NET INCOME    $ 57,254  $ 53,230  $  48,417  $   163,018  $   139,747 
                                                                      

OTHER                                                                 
COMPREHENSIVE
INCOME (LOSS)
                                                                      

Available for                                                         
Sale
Securities
(note 4(B))

Net              1,667    (1,069)    (9,221)       4,991       (9,302)
unrealized
gains
(losses) on
securities
available for
sale

Net losses       1,141    (1,348)    (1,499)        (571)      (5,989)
(gains)
reclassified
to net income
                 2,808    (2,417)   (10,720)       4,420      (15,291)

Income tax         742      (643)    (2,707)       1,266       (3,875)
expense
(recovery)
                 2,066    (1,774)    (8,013)       3,154      (11,416)
                                                                      

Cash Flow                                                             
Hedges (note
14)

Net                  -      (396)    (3,430)        (370)      (6,747)
unrealized
losses on
cash flow
hedges

Net losses         376       357        189        1,086          280 
reclassified
to net income
                   376       (39)    (3,241)         716       (6,467)

Income tax          99       (89)      (843)         120       (1,682)
expense
(recovery)
                   277        50     (2,398)         596       (4,785)
                                                                      

Total other      2,343    (1,724)   (10,411)       3,750      (16,201)
comprehensive
income (loss)
                                                                      

COMPREHENSIVE $ 59,597  $ 51,506  $  38,006  $   166,768  $   123,546 
INCOME
                                                                      

The accompanying notes are an integral part                           
of these unaudited interim consolidated
financial statements.
                                                             

Consolidated Balance Sheets                                            
                                                                       
                               September 30       June 30   December 31

thousands of Canadian dollars         2012          2012          2011 
(Unaudited)

ASSETS                                                                 

Cash Resources (note 4(A))    $    543,825  $    301,330  $    665,806 

Securities (note 4(B))                                                 

Available for sale                 401,830       425,834       391,754 

Pledged securities (notes 4        784,098       628,836       341,588 
(C) and 6(B))
                                 1,185,928     1,054,670       733,342 

Loans held for sale                 36,405        29,811             - 

Loans (note 5)                                                         

Residential mortgages            8,456,791     7,749,484     6,339,883 

Securitized residential          7,238,946     7,582,154     8,243,350 
mortgages (note 6)

Non-residential mortgages          993,174     1,037,385       946,222 

Personal and credit card           567,079       568,127       560,193 
loans
                                17,255,990    16,937,150    16,089,648 

Collective allowance for           (29,800)      (29,500)      (29,440)
credit losses (note 5(E))
                                17,226,190    16,907,650    16,060,208 

Other                                                                  

Derivative assets (note 14)         57,651        59,284        72,424 

Other assets (note 7)              102,741        84,534        79,650 

Capital assets                       7,165         7,278         5,372 

Intangible assets                   66,342        66,149        63,917 

Goodwill                            15,752        15,752        15,752 
                                   249,651       232,997       237,115 
                              $ 19,241,999  $ 18,526,458  $ 17,696,471 

LIABILITIES AND SHAREHOLDERS'                                          
EQUITY

Liabilities                                                            

Deposits                                                               

  Deposits payable on demand  $     31,736  $     42,098  $     62,746 

  Deposits payable on a fixed    9,838,955     8,965,366     7,859,378 
  date
                                 9,870,691     9,007,464     7,922,124 

Senior Debt (note 13)              153,724       152,524       153,336 

Securitization Liabilities                                             
(note 6(C))

  Mortgage-backed security       1,923,017     2,078,300     2,417,801 
  liabilities

  Canada Mortgage Bond           6,155,475     6,160,259     6,231,274 
  liabilities
                                 8,078,492     8,238,559     8,649,075 

Other                                                                  

Obligations related to                   -        43,418             - 
securities sold under
repurchase agreement (notes 4
(C) and 5(F))

Derivative liabilities (note         3,767         4,043         3,458 
14)

Income taxes payable                 8,689        15,893        17,628 

Other liabilities (note 8)         168,743       156,320       136,025 

Deferred tax liabilities            38,275        38,798        40,040 
(note 12(C))
                                   219,474       258,472       197,151 
                                18,322,381    17,657,019    16,921,686 

Shareholders' Equity                                                   

Capital stock (note 9)              61,873        61,662        55,104 

Contributed surplus                  5,847         5,543         5,873 

Retained earnings                  857,339       810,018       722,999 

Accumulated other                   (5,441)       (7,784)       (9,191)
comprehensive loss (note 11)
                                   919,618       869,439       774,785 
                              $ 19,241,999  $ 18,526,458  $ 17,696,471 
                                                                       

The accompanying notes are an integral part of these                   
unaudited interim consolidated financial statements.
                                                             

Consolidated Statements of Changes in Shareholders' Equity
                                                                                                
                                                      Net        Net         Total              
                                               Unrealized Unrealized
                                                 (Losses)  Losses on   Accumulated              
                                                    Gains
                                                       on  Cash Flow         Other         Total
                                               Securities

thousands of    Capital Contributed   Retained  Available    Hedges, Comprehensive Shareholders'
Canadian                                              for
dollars,

except per        Stock     Surplus   Earnings      Sale,  after Tax (Loss) Income        Equity
share amounts                                   after Tax
(Unaudited)

Balance at    $ 55,104  $    5,873  $ 722,999  $  (4,141) $  (5,050) $     (9,191) $    774,785 
December 31,
2011

Comprehensive        -           -    163,018      3,154        596         3,750       166,768 
income

Stock options    6,988      (1,379)         -          -          -             -         5,609 
settled (note
9(A))

Amortization                                                                                    
of fair value
of

employee             -       1,353          -          -          -             -         1,353 
stock options
(note 10(A))

Repurchase of     (219)          -     (5,743)         -          -             -        (5,962)
shares (note
9(A))

Dividends                                                                                       
paid

($0.64 per           -           -    (22,935)         -          -             -       (22,935)
share)

Balance at    $ 61,873  $    5,847  $ 857,339  $    (987) $  (4,454) $     (5,441) $    919,618 
September 30,
2012
                                                                                                

Balance at    $ 50,427  $    4,571  $ 567,681  $   5,906  $       -  $      5,906  $    628,585 
December 31,
2010

Comprehensive        -           -    139,747    (11,416)    (4,785)      (16,201)      123,546 
income

Stock options    4,237        (933)         -          -          -             -         3,304 
settled (note
9(A))

Amortization                                                                                    
of fair value
of

employee             -       1,815          -          -          -             -         1,815 
stock options
(note 10(A))

Repurchase of     (175)          -     (5,724)         -          -             -        (5,899)
shares (note
9(A))

Dividends                                                                                       
paid

($0.56 per           -           -    (20,135)         -          -             -       (20,135)
share)

Balance at    $ 54,489  $    5,453  $ 681,569  $  (5,510) $  (4,785) $    (10,295) $    731,216 
September 30,
2011
                                                                                                

The accompanying notes are an integral part of these unaudited interim consolidated             
financial statements.
                                                                                      

Consolidated Statements of Cash Flows
                                              For the nine months ended
                                             September 30  September 30

thousands of Canadian dollars (Unaudited)           2012          2011 

CASH FLOWS FROM OPERATING ACTIVITIES                                   

Net income for the period                   $    163,018  $    139,747 

Adjustments to determine cash flows                                    
relating to operating activities:            

  Deferred income taxes                           (1,766)       (1,832)

  Amortization of capital assets                   2,477         2,181 

  Amortization of intangible assets                4,854            65 

  Amortization of net premium on securities        2,046            33 

  Amortization of securitization and senior       10,141         6,736 
  debt transaction costs

  Provision for credit losses                     11,035         4,540 

  Change in accrued interest payable              31,090        21,581 

  Change in accrued interest receivable           (6,733)       (3,647)

  Realized net gains and unrealized losses          (812)       (5,394)
  on securities and mortgages

  Settlement of derivatives                         (370)       (6,747)

  (Gain) loss on derivatives                      (5,147)        6,265 

  Net increase in mortgages                   (1,205,378)   (1,602,452)

  Net increase in personal and credit card        (7,112)      (92,742)
  loans

  Net increase in deposits                     1,948,567       624,538 

  Activity in securitization liabilities                               
    Proceeds from securitization of              152,303     1,044,863 
    mortgage-backed security liabilities
    Settlement and repayment of                 (710,644)     (456,891)
    securitization liabilities

  Amortization of fair value of employee           1,353         1,815 
  stock options

  Changes in taxes payable and other             (28,162)        8,720 

Cash flows provided by (used in) operating       360,760      (308,621)
activities                                   

CASH FLOWS FROM FINANCING ACTIVITIES                                   

Repurchase of shares                              (5,962)       (5,899)

Exercise of employee stock options                 5,609         3,304 

Issuance of senior debt                                -       149,072 

Dividends paid to shareholders                   (22,233)      (19,440)

Cash flows (used in) provided by financing       (22,586)      127,037 
activities                                   

CASH FLOWS FROM INVESTING ACTIVITIES                                   

Activity in securities                                                 

  Purchases                                   (2,912,033)     (592,802)

  Proceeds from sales                            325,515       273,078 

  Proceeds from maturities                     2,137,912        87,158 

Purchases of capital assets                       (4,270)       (1,774)

Purchases of intangible assets                    (7,279)      (13,199)

Cash flows used in investing activities         (460,155)     (247,539)

Net decrease in cash and cash equivalents       (121,981)     (429,123)
during the period                            

Cash and cash equivalents at beginning of        665,806       846,824 
the period                                   

Cash and Cash Equivalents at End of the          543,825  $    417,701 
Period (note 4(A))                          $

Supplementary Disclosure of Cash Flow                                  
Information                                  

Dividends received on investments           $      8,898  $     13,034 

Interest received                                372,892       536,701 

Interest paid                                    142,049       291,124 

Income taxes paid                                 72,262        27,952 
                                                                       

The accompanying notes are an integral part of these unaudited interim
consolidated financial statements.
                                                             

Caution Regarding Forward-Looking Statements

From time to time Home Capital Group Inc. (the "Company" or "Home Capital") 
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 on pages 48 through 58 of the Company's 
2011 Annual Report, as well as its other publicly filed information, which are 
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 and business risk, reputational risk and 
regulatory and legal risk along with additional risk factors that may affect 
future results. Forward-looking statements can be found in the Report to the 
Shareholders and the Outlook Section in the quarterly report. 
Forward-looking statements are typically identified by words such as "will," 
"believe," "expect," "anticipate," "estimate," "plan," "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 uncertainties, 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 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.

Assumptions about the performance of the Canadian economy in 2012 and its 
effect on Home Capital's business are material factors the Company considers 
when setting its objectives and outlook. In determining expectations for 
economic growth, both broadly and in the financial services sector, the 
Company primarily considers historical economic data provided by the Canadian 
government and its agencies. In setting and reviewing the outlook and 
objectives for 2012, management's expectations assume:
    --  The Canadian economy will continue to produce modest growth in
        2012, but will be heavily influenced by the economic conditions
        in the United States and global markets.  Inflation will
        generally be within the Bank of Canada's target of 1%-3%.
    --  Interest rates will remain at current rates for the balance of
        2012 as the Bank of Canada leaves its target for the overnight
        rate at its current level.
    --  The housing market will remain resilient to global uncertainty
        with balanced supply and demand conditions in most regions. 
        Declining housing starts and softening resale activity on
        stable prices through most of Canada will continue with the
        market moderating from previous activity levels.
    --  Unemployment will remain stable or improve slightly as the
        economy grows, while a larger labour force will tend to offset
        job growth.
    --  Consumer debt levels will remain serviceable by Canadian
        households.
    --  Net interest margins overall are expected to remain in the
        current range.  Margins are expected to remain stable as
        returns on the increased traditional portfolio offset declining
        returns on the securitized portfolio throughout 2012.
    --  Credit quality will remain sound with actual losses within the
        low end of Home Capital's historical range.
    --  The recent changes to Canada Mortgage and Housing Corporation
        (CMHC) policies will continue to temper the real estate market.

Non-GAAP Measures

The Company applies International Financial Reporting Standards (IFRS) which 
are the generally accepted accounting principles (GAAP) for Canadian 
publically accountable enterprises. The Company uses a number of financial 
measures to assess its performance. Some of these measures are not 
calculated in accordance with GAAP, are not defined by GAAP, and do not have 
standardized meanings that would ensure consistency and comparability between 
companies using these measures. Definitions of non-GAAP measures can be 
found under Non-GAAP Measures in the Management's Discussion and Analysis 
included in the Company's Third Quarter 2012 Report.

Regulatory Filings

The Company's continuous disclosure materials, including interim filings, 
annual Management's Discussion and Analysis and audited consolidated financial 
statements, Annual Information Form, Notice of Annual Meeting of Shareholders 
and Proxy Circular are available on the Company's website at 
www.homecapital.com, and on the Canadian Securities Administrators' website at 
www.sedar.com.

Home Capital Group Inc. is a public company, traded on the Toronto Stock 
Exchange (HCG), operating through its principal subsidiary, Home Trust 
Company. Home Trust is a federally regulated trust company offering deposits, 
residential and non-residential mortgage lending, securitization of insured 
residential first mortgage products, consumer lending and credit card 
services. Licensed to conduct business across Canada, Home Trust has branch 
offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec and 
Manitoba.









Gerald M. Soloway, CEO, or Martin Reid, President 416-360-4663 
www.homecapital.com

SOURCE: Home Capital Group Inc.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/November2012/07/c5698.html

CO: Home Capital Group Inc.
ST: Ontario
NI: FIN ERN DIV CONF 

-0- Nov/07/2012 22:00 GMT


 
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