Home Capital Reports Another Strong Quarter and Dividend Increase:

Home Capital Reports Another Strong Quarter and Dividend Increase: 


    --  Diluted Earnings per Share up 14.9% year over year to $1.77;
    --  Dividend Increase of 7.7%, or 2 Cents per Share to $0.28
        Quarterly;
    --  Quarterly Net Income increases 15.7% year over year.

TORONTO, July 31, 2013 /CNW/ - Home Capital today reported another quarter of 
solid results and strong origination volumes.

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

FINANCIAL HIGHLIGHTS                                                        

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

(000s, except       June 30                   June 30      June 30
Per Share and
Percentage
Amounts)                        March 31                             June 30
                       2013         2013         2012         2013      2012

OPERATING                                                           
RESULTS                                                                     

Net Income     $     61,573 $     59,725 $     53,230 $    121,298 $ 105,764

Total Revenue       232,555      231,194      218,751      463,749   433,433

Diluted        $            $       1.72 $            $            $
Earnings per
Share                  1.77                      1.54         3.48      3.07

Return on                          24.0%                            
Shareholders'
Equity                23.6%                     25.1%        23.8%     25.7%

Return on                           1.3%                            
Average Assets         1.3%                      1.2%         1.3%      1.2%

Net Interest                       2.17%                            
Margin (TEB)
(1)                   2.14%                     2.09%        2.15%     2.05%

Provision as a                     0.11%                            
Percentage of
Gross Loans
(annualized)          0.10%                     0.05%        0.10%     0.08%

Efficiency                         28.3%                            
Ratio (TEB)(1)        28.6%                     27.8%        28.4%     27.8%
                                                             As at          
                                March 31     December               
                    June 30                        31      June 30          
                       2013         2013         2012         2012          

BALANCE SHEET                                                       
HIGHLIGHTS                                                                  

Total Assets   $ 19,532,958 $ 19,358,563 $ 18,800,079 $ 18,526,458          

Total Assets                  20,377,074                            
Under
Administration
(2)              20,577,505                19,681,750   18,599,224          

Total Loans                   17,429,982                            
(3,4)            17,794,420                17,159,913   17,049,785          

Securitized                    6,710,556                            
Loans
On-Balance
Sheet (3)         6,570,837                 6,706,160    7,664,978          

Total Loans                   18,448,493                            
Under
Administration
(3,4,5)          18,838,967                18,041,584   17,122,551          

Liquid Assets       884,908      823,973      771,772      677,908          

Deposits         11,168,639   10,642,280   10,136,599    9,007,464          

Shareholders'                  1,021,813                            
Equity            1,068,017                   968,213      869,439          

FINANCIAL                                                           
STRENGTH                                                                    

Capital                                                             
Measures (6)                                                                

Risk-Weighted  $            $  5,738,257 $            $             
Assets            5,984,644                 5,491,513    5,003,579          

Common Equity                     16.57%                            
Tier 1 Capital
Ratio                16.63%                       N/A          N/A          

Tier 1 Capital                    16.57%                            
Ratio                16.63%                    17.01%       17.09%          

Total Capital                     19.82%                            
Ratio                19.74%                    20.68%       21.09%          

Assets to                          13.98                            
Regulatory
Capital
Multiple              13.86                     13.98        13.78          

Credit Quality                                                              

Net                                0.32%                            
Non-Performing
Loans as a
Percentage of
Gross Loans           0.31%                     0.33%        0.31%          

Allowance as a                     59.9%                            
Percentage of
Gross
Non-Performing
Loans                 58.3%                     57.0%        58.7%          

Share                                                               
Information                                                                 

Book Value per $            $      29.53 $            $             
Common Share          30.83                     27.96        25.05          

Common Share   $            $      58.74 $            $             
Price - Close         55.53                     59.07        45.18          

Market         $            $  2,032,404 $            $             
Capitalization    1,923,948                 2,045,594    1,568,243          

Number of                         34,600                            
Common Shares
Outstanding          34,647                    34,630       34,711          

(1)See definition of Taxable Equivalent Basis (TEB) under Non-GAAP
Measures of the unaudited interim consolidated financial report.

(2)Total assets under administration include total on-balance sheet
assets and off-balance sheet loans.

(3)In 2013 the Company classified Home Trust mortgages used as CMB
replacement assets as securitized mortgages.  In 2012 these were
classified as pledged securities.  Prior periods in 2012 have been
restated to reflect the current classification.

(4)Total loans include loans held for sale.

(5)Loans under administration includes total loans and off-balance
sheet loans.

(6)These figures relate to the Company's operating subsidiary, Home
Trust Company and are calculated under Basel III for 2013 and Basel II
for 2012.
    SECOND QUARTER 2013 HIGHLIGHTS

Key results for the second quarter and the first six months of 2013 included:
    --  Net income increased to $61.6 million for the second quarter
        and to $121.3 million for the first six months of 2013, up
        15.7% and 14.7% over the comparable periods in 2012. Net income
        was reduced by $2.3 million in after tax charges related to
        IFRS implementation (see the Non-Interest Income section of the
        MD&A) offset by an increase from $2.0 million in investment tax
        credit benefits, after tax, related to a portion of the
        Company's development of a new banking platform (see the Income
        Taxes section of the MD&A). Without these items, adjusted net
        income, as defined in Table 2,( )was $61.9 million for Q2 2013
        and $124.9 million for the first six months of 2013,
        representing increases of 16.3% and 18.1% over the comparable
        periods of 2012. This was a marginal decline from adjusted net
        income of $63.0 million in Q1 2013, primarily due to lower
        income from gains on securitization.
    --  Diluted earnings per share were $1.77 for the quarter and $3.48
        year to date representing increases of 14.9% and 13.4% over the
        $1.54 and $3.07 earned in the comparable periods of 2012 and an
        increase of 2.9% over the $1.72 last quarter.  Adjusted diluted
        earnings per share(1) were $1.78 for the quarter and $3.59 year
        to date, 15.6% and 16.9% higher than the same periods of 2012
        and 1.7% below adjusted diluted earnings per share of $1.81
        last quarter.
    --  Net interest income, before provisions, continued in an upward
        trend, reaching $102.5 million in the second quarter and $204.4
        million year to date, increasing from $93.9 million and $182.1
        million recorded in the same periods of 2012 and from $101.9
        million earned in Q1 2013. The growth in net interest income
        reflects strong net on-balance sheet loan growth in the
        traditional loan portfolio, offset by continued reduction of
        the securitized portfolio, combined with strong total net
        interest margin.
    --  Net interest margin (TEB) was 2.14% in the quarter and 2.15% on
        a year to date basis. This is up from 2.09% and 2.05% in the
        same periods of 2012 and slightly below the 2.17% recorded last
        quarter. The increase year over year reflects the combination
        of the shift to higher yielding traditional mortgages relative
        to securitized mortgages and improved spreads earned on
        non-securitized lending.
    --  Return on equity at 23.6% for the quarter remains solid and
        continues to be in excess of the Company's minimum performance
        objective of 20%.
    --  The credit quality of the loan portfolio remains strong with
        continued low non-performing loans and credit losses that are
        well within expected levels. Net non-performing loans as a
        percentage of gross loans (NPL ratio) ended the quarter at
        0.31% compared to 0.32% at the end of last quarter and 0.31%
        one year ago. The annualized credit provision as a percentage
        of gross loans (PCL ratio) ratio remains within expectations at
        0.10%, compared to 0.11% in last quarter and 0.05% one year
        ago.
    --  Capital ratios under Basel III remain robust with Home Trust's
        Common Equity Tier 1 ratio (CET 1 ratio) ending the quarter at
        16.63%, while Tier 1 and Total Capital Ratios were 16.63% and
        19.74%, respectively.  Home Trust's assets to capital multiple
        was 13.86 at the end of the quarter compared to 13.98 at March
        31, 2013 and 13.78 one year ago.
    --  Total loans under administration, which includes securitized
        mortgages that qualify for off-balance sheet accounting,
        increased to $18.84 billion, reflecting increases of $1.72
        billion or 10.0% from $17.12 billion one year ago, and $0.80
        billion or 4.4% from $18.04 billion at the end of 2012 (8.8% on
        an annualized basis).
    --  The Company continued to experience strong loan demand in the
        quarter, with growth over Q1 2013 and last year in residential
        lending. Total mortgage originations were $1.63 billion
        compared to $1.38 billion last quarter.  This was down
        marginally from $1.67 billion in Q2 2012 reflecting lower
        multi-unit and non-residential originations offset by higher
        originations in residential lending. Year-to-date loan
        originations were $3.01 billion, up from $2.85 billion in 2012.
    --  Traditional mortgage originations increased to $1.24 billion in
        the quarter, up from $1.19 billion in Q2 2012 and $0.99 billion
        in Q1 2013. Year-to-date traditional mortgage originations were
        $2.23 billion, up from $2.10 billion last year. The Company
        continues to experience strong demand for its traditional
        product offerings, which continue to be of high credit quality.
        This continues to enhance profitability and asset quality.
    --  Accelerator (insured) residential mortgage originations
        increased to $260.3 million in the quarter, up from $121.6
        million last quarter and $221.1 million in Q2 2012.
        Year-to-date originations of $381.9 million are slightly below
        the $393.8 million originated in the same period last year as
        current year Q1 originations were lower given the slower start
        to the spring market in 2013. The Company continues to pursue
        strategies for transactions that will qualify lower margin,
        insured single-family residential mortgages for off-balance
        sheet treatment and lead to increased growth in this loan
        portfolio. The dialogue with regulators and other interested
        parties regarding these strategies has continued and management
        remains cautiously optimistic that a solution can be attained.
    --  Multi-unit residential mortgage originations were $54.3 million
        in the quarter and $257.0 million year to date compared to
        $87.8 million and $115.4 million in the same periods last year
        and $202.6 million last quarter. The Company securitized and
        sold $47.8 million in Q2 2013 resulting in $0.4 million in
        securitization gains. The insured multi-unit residential market
        is relatively limited and the Company participates as
        appropriate opportunities are available through various
        origination channels. Consequently, origination volumes can
        vary significantly from quarter to quarter.
    --  Commercial mortgage advances were $44.0 million for the quarter
        and $74.7 million year to date compared to $106.0 million and
        $133.7 million in the comparable periods of 2012 and $30.7
        million last quarter. Store and apartment mortgage advances
        were $27.5 million in the quarter and $51.1 million year to
        date compared to $37.8 million and $75.7 million in the
        comparable periods of 2012 and $23.6 million last quarter.  The
        Company continues to be selective and focuses on opportunities
        that present strong credit and low risk profiles.
    --  The consumer retail credit portfolio, which includes durable
        household goods, such as water heaters and larger-ticket home
        improvement items, reached $310.9 million in Q2 2013, up 55.3%
        from $200.2 million one year ago. The Company has been
        successful at expanding relationships with its business
        partners to increase this portfolio which offers attractive
        returns for the risk profile.

(1) Table 2 provides a reconciliation of net income to adjusted net income and 
adjusted diluted earnings per share.

Although real estate market activity was relatively weak in the early part of 
the current year, resulting in reduced levels of loan growth, the Company 
experienced increased demand for its mortgage lending products in the second 
quarter. The real estate market now appears to have adjusted to the changes in 
the Canada Mortgage and Housing Corporation ("CMHC") rules and the Office of 
the Superintendent of Financial Institutions Canada ("OSFI)" lending guideline 
which were introduced in 2012. Recent information indicates that modest 
increases in sales volumes and prices occurred in the quarter, suggesting that 
the objectives of the policy changes have been accomplished. This is 
consistent with the Company's expectations and indicates a healthy market with 
listings and sales in balance. The Company has not observed evidence of a 
"housing bubble" and expects that it will be able to continue to expand its 
share of the market through its network of brokers and its business 
development staff.

Late in the quarter, major flooding occurred in the province of Alberta. 
This event caused property damage and hardship for many Albertans and the 
Company has been responding to requests from borrowers. In order to assess 
the risk of losses arising from the flooding, the Company dispatched a team of 
evaluators from its Calgary, Vancouver and Toronto offices. While a number 
of borrowers were directly affected by this difficult situation, the 
preliminary indications are that the Company will not face significant losses 
as a result of the flooding. No additional provisions were recorded in this 
connection. Following the end of the quarter, the town of Lac-Mégantic, 
Quebec experienced a terrible accident and losses of lives and property. 
Although it did not have any direct association or losses as a result of this 
tragic situation, the Company recognizes the severe impact that this tragedy 
has had on the residents and their friends and relatives. Also following the 
quarter end, the Greater Toronto Area experienced a record amount of rainfall 
and consequent flooding, which disrupted the lives and businesses of many 
people. The Company does not expect that this unusual event will result in 
significant credit losses.

Senior Management and the Board of Directors are pleased to announce that the 
Company further strengthened its risk management group during the quarter with 
the appointment of David J. Novak to the position of Senior Vice President and 
Chief Risk Officer. Mr. Novak brings with him significant experience in 
quantitative analysis, risk management and asset liability management, having 
served in senior roles in the private sector and more recently with OSFI.

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 increased quarterly dividend of $0.28 per common share, 
payable on September 1, 2013 to shareholders of record at the close of 
business on August 12, 2013.

The Company continues to deliver solid results in terms of growth, high 
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 
its core strategy.

With solid performance in all aspects of Home Capital's business, management 
continues to expect the positive performance the Company experienced during 
the first half of 2013 to continue for the remainder of year.

(signed)                              (signed)
                                       

GERALD M. SOLOWAY                     KEVIN P.D. SMITH

Chief Executive Officer               Chair of the Board

July 31, 2013                        


Additional information concerning the Company's targets and related 
expectations for 2013, including the risks and assumptions underlying these 
expectations, may be found in Management's Discussion and Analysis (MD&A) of 
the quarterly report. 
Second Quarter Results Conference Call
The conference call will take place on Thursday, August 1, 2013 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, 
August 1, 2013 and midnight Thursday, August 8, 2013 by calling 416-849-0833 
or 1-855-859-2056 (enter passcode 16265448). 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. 
Consolidated Statements of Income                                       
                For the three months ended For the six months ended 
thousands of       June 30  March 31   June 30   June 30        June 30
Canadian
dollars, except
per share
amounts 
(Unaudited)           2013      2013      2012      2013           2012 
Net Interest                                                           
Income
Non-Securitized
Assets 
Interest from    $ 153,598 $ 148,031 $ 125,576 $ 301,629 $      243,141
loans (note 5
(F)) 
Dividends from       2,795     3,193     3,533     5,988          7,497
securities 
Other interest       1,778     1,456       930     3,234          1,977 
               158,171   152,680   130,039   310,851        252,615 
Interest on         65,640    62,938    56,043   128,578        109,171
deposits 
Interest on          1,601     1,583     1,705     3,184          3,358
senior debt 
Net interest        90,930    88,159    72,291   179,089        140,086
income
non-securitized
assets 
                                                                    
Net Interest                                                           
Income
Securitized
Loans and Assets 
Interest income     57,953    61,337    76,286   119,290        152,902
from securitized
loans and assets
(note 5(F)) 
Interest expense    46,351    47,610    54,723    93,961        110,915
on
securitization
liabilities 
Net interest        11,602    13,727    21,563    25,329         41,987
income
securitized
loans and assets 
                                                                    
Total Net          102,532   101,886    93,854   204,418        182,073
Interest Income 
Provision for        4,429     4,667     2,298     9,096          6,796
credit losses
(note 5(E)) 


                    98,103    97,219    91,556   195,322        175,277

Non-Interest                                                           
Income

Fees and other      15,406    14,972    10,757    30,378         21,654
income

Securitization         608     1,587     1,268     2,195          1,268
income

Net realized and     (215)     2,274     1,676     2,059          1,984
unrealized
(losses) gains
on securities
and mortgages

Net realized and       632   (1,656)   (1,275)   (1,024)          3,010
unrealized gain
(loss) on
derivatives
(note 13)
                    16,431    17,177    12,426    33,608         27,916
                   114,534   114,396   103,982   228,930        203,193

Non-Interest                                                           
Expenses

Salaries and        16,673    16,950    14,501    33,623         28,500
benefits

Premises             2,439     2,445     1,977     4,884          3,975

Other operating     15,160    14,574    13,404    29,734         26,575
expenses
                    34,272    33,969    29,882    68,241         59,050
                                                                       

Income Before       80,262    80,427    74,100   160,689        144,143
Income Taxes

Income taxes                                                           
(note 11(A))

  Current           16,077    23,456    20,568    39,533         39,623

  Deferred           2,612   (2,754)       302     (142)        (1,244)
                    18,689    20,702    20,870    39,391         38,379

NET INCOME       $  61,573 $  59,725 $  53,230 $ 121,298 $      105,764
                                                                       

NET INCOME PER                                                         
COMMON SHARE

Basic            $    1.78 $    1.72 $    1.54 $    3.50 $         3.07

Diluted          $    1.77 $    1.72 $    1.54 $    3.48 $         3.07

AVERAGE NUMBER                                                         
OF COMMON SHARES
OUTSTANDING

Basic               34,612    34,630    34,476    34,615         34,486

Diluted             34,850    34,825    34,509    34,828         34,491
                                                                       

Total number of     34,647    34,600    34,711    34,647         34,711
outstanding
common shares
(note 9(A))

Book value per   $   30.83 $   29.53 $   25.05 $   30.83 $        25.05
common share
                                                                       

Consolidated Statements of Comprehensive                  
Income                                                                 
                    For the three months ended For the six months ended
                   June 30  March 31   June 30   June 30        June 30

thousands of          2013      2013                      
Canadian
dollars
(Unaudited)                               2012      2013           2012
                                                                       

NET INCOME      $   61,573 $  59,725 $  53,230 $ 121,298 $      105,764
                                                                       

OTHER                                                     
COMPREHENSIVE
(LOSS) INCOME                                                          
                                                                       

Available for                                             
Sale Securities                                                        

Net unrealized    (10,737)     7,165                      
(losses) gains
on securities
available for
sale                                   (1,069)   (3,572)          3,324

Net gains          (1,162)   (1,946)                      
reclassified to
net income                             (1,348)   (3,108)        (1,712)
                  (11,899)     5,219   (2,417)   (6,680)          1,612

Income tax         (3,151)     1,381                      
(recovery)
expense                                  (643)   (1,770)            524
                   (8,748)     3,838   (1,774)   (4,910)          1,088
                                                                       

Cash Flow                                                 
Hedges (note
13)                                                                    

Net unrealized           -         -                      
losses on cash
flow hedges                              (396)         -          (370)

Net losses             372       367                      
reclassified to
net income                                 357       739            710
                       372       367      (39)       739            340

Income tax              97        95                      
expense
(recovery)                                (89)       192             21
                       275       272        50       547            319
                                                                       

Total other        (8,473)     4,110                      
comprehensive
(loss) income                          (1,724)   (4,363)          1,407
                                                                       

COMPREHENSIVE   $   53,100 $  63,835 $         $         $
INCOME                                  51,506   116,935        107,171
                                                                       

Consolidated Balance Sheets                                            
                                                                       
                                      June 30     March 31  December 31

thousands of Canadian dollars            2013         2013         2012
(Unaudited)

ASSETS                                                                 

Cash and Cash Equivalents (note  $    707,240 $    631,080 $    301,863
4(A))

Available for Sale Securities         396,557      404,254      414,344
(note 4(B))

Loans Held for Sale                    25,508       43,434       21,921

Loans (note 5)                                                         

Securitized mortgages (note 6)      6,570,837    6,710,556    6,706,160

Non-securitized mortgages and      11,198,075   10,675,992   10,431,832
loans
                                   17,768,912   17,386,548   17,137,992

Collective allowance for credit      (30,500)     (30,300)     (30,000)
losses (note 5(E))
                                   17,738,412   17,356,248   17,107,992

Other                                                                  

Restricted cash  (note 4(A))          136,165      130,083      137,424

Pledged securities  (notes 4(B)       304,269      551,008      588,069
and 6(C))

Derivative assets  (note 13)           28,739       44,643       45,388

Other assets  (note 7)                110,958      114,528      100,983

Goodwill and intangible assets         85,110       83,285       82,095
                                      665,241      923,547      953,959
                                 $ 19,532,958 $ 19,358,563 $ 18,800,079

LIABILITIES AND SHAREHOLDERS'                                          
EQUITY

Liabilities                                                            

Deposits                                                               

Deposits payable on demand       $    172,370 $     96,513 $    105,923

Deposits payable on a fixed date   10,996,269   10,545,767   10,030,676
                                   11,168,639   10,642,280   10,136,599

Senior Debt (note 12)                 148,300      152,092      150,684

Securitization Liabilities (note                                       
6(A))

Mortgage-backed security            1,103,266    1,271,879    1,301,693
liabilities

Canada Mortgage Bond liabilities    5,820,394    6,036,475    6,034,202
                                    6,923,660    7,308,354    7,335,895

Other                                                                  

Derivative liabilities  (note           1,704        2,941        2,386
13)

Other liabilities  (note 8)           186,744      198,037      170,502

Deferred tax liabilities  (note        35,894       33,046       35,800
11(C))
                                      224,342      234,024      208,688
                                   18,464,941   18,336,750   17,831,866

Shareholders' Equity                                                   

Capital stock  (note 9)                64,662       61,850       61,903

Contributed surplus                     6,419        6,729        6,224

Retained earnings                   1,005,044      952,869      903,831

Accumulated other comprehensive       (8,108)          365      (3,745)
(loss) income  (note 10)
                                    1,068,017    1,021,813      968,213
                                 $ 19,532,958 $ 19,358,563 $ 18,800,079
                                                                       

Consolidated Statements of Changes in Shareholders' Equity
                                                                                                 
                                                       Net        Net         Total              
                                                Unrealized Unrealized
                                                    Gains  Losses on    Accumulated              
                                                  (Losses)
                                                        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        Equity
share amounts                                    after Tax
(Unaudited)

Balance at    $ 61,903 $      6,224 $   903,831 $      432 $  (4,177) $     (3,745) $     968,213
December 31,
2012

Comprehensive        -            -     121,298    (4,910)        547       (4,363)       116,935
income

Stock options    2,825        (746)           -          -          -             -         2,079
settled (note
9(A))

Amortization                                                                                     
of fair value
of


employee         -          941           -          -          -             -           941
stock options
(note 9(B)) 
Repurchase of     (66)            -     (2,077)          -          -             -       (2,143)
shares (note
9(A)) 
Dividends                                                                                         
($0.52 per           -            -    (18,008)          -          -             -      (18,008)
share) 
Balance at    $ 64,662 $      6,419 $ 1,005,044 $  (4,478) $  (3,630) $     (8,108) $   1,068,017
June 30, 2013 
                                                                                              
Balance at    $ 55,104 $      5,873 $   722,999 $  (4,141) $  (5,050) $     (9,191) $     774,785
December 31,
2011 
Comprehensive        -            -     105,764      1,088        319         1,407       107,171
income 
Stock options    6,692      (1,302)           -          -          -             -         5,390
settled (note
9(A)) 
Amortization                                                                                     
of fair value
of 
employee         -          972           -          -          -             -           972
stock options
(note 9(B)) 
Repurchase of    (134)            -     (3,436)          -          -             -       (3,570)
shares (note
9(A)) 
Dividends                                                                                         
($0.42 per           -            -    (15,309)          -          -             -      (15,309)
share) 
Balance at    $ 61,662 $      5,543 $   810,018 $  (3,053) $  (4,731) $     (7,784) $     869,439
June 30, 2012 


                                                                                                 

Consolidated Statements of Cash Flows
                                               For the six months ended
                                                    June 30     June 30

thousands of Canadian dollars (Unaudited)              2013        2012

CASH FLOWS FROM OPERATING ACTIVITIES                                   

Net income for the period                     $     121,298 $   105,764

Adjustments to determine cash flows relating                           
to operating activities:

  Deferred income taxes                               (142)     (1,244)

  Amortization of capital assets                      1,444       1,569

  Amortization of intangible assets                   3,875       3,218

  Amortization of net premium on securities           1,210       1,461

  Amortization of securitization and senior           6,185       6,604
  debt transaction costs

  Provision for credit losses                         9,096       6,796

  Change in accrued interest payable                 23,608      20,108

  Change in accrued interest receivable             (1,184)     (3,104)

  Net realized and unrealized gains on              (2,059)     (1,984)
  securities and mortgages

  Realized gain on securitization                   (2,195)     (1,268)

  Settlement of derivatives                           3,115       (370)

  Loss (gain) on derivatives                          1,224     (3,010)

  Net increase in mortgages                     (1,085,637)   (947,215)

  Net decrease (increase) in pledged assets         539,277   (287,247)

  Net increase in credit card loans and other      (18,301)     (7,904)
  consumer retail loans

  Net increase in deposits                        1,032,040   1,085,340

  Proceeds from obligations under repurchase              -      43,418
  agreement

  Activity in securitization liabilities                               
    Proceeds from sale of mortgage-backed           198,522      72,733
    securities derecognized
    Proceeds from sale of mortgage-backed           536,149     125,886
    securities
    Settlement and repayment of                   (943,608)   (527,249)
    securitization liabilities

  Amortization of fair value of employee                941         972
  stock options

  Changes in taxes payable and other                (3,231)    (12,814)

Cash flows provided by operating activities         421,627   (319,540)

CASH FLOWS FROM FINANCING ACTIVITIES                                   

Repurchase of shares                                (2,143)     (3,570)

Exercise of employee stock options                    2,079       5,390

Dividends paid to shareholders                     (18,004)    (14,598)

Cash flows used in financing activities            (18,068)    (12,778)

CASH FLOWS FROM INVESTING ACTIVITIES                                   

Activity in securities                                                 

  Purchases                                       (117,246)   (217,469)

  Proceeds from sales                               129,223     185,453

Purchases of capital assets                         (3,269)     (3,475)

Purchases of intangible assets                      (6,890)     (5,450)

Cash flows provided by (used in) investing            1,818    (40,941)
activities

Net increase (decrease) in cash and cash            405,377   (373,259)
equivalents during the period

Cash and cash equivalents at beginning of the $     301,863 $   534,394
period

Cash and Cash Equivalents at End of the             707,240     161,135
Period (note 4(A))

Supplementary Disclosure of Cash Flow                                  
Information

Dividends received on investments             $       3,985 $     6,227

Interest received                                   301,013     240,433

Interest paid                                       108,153      91,087

Income taxes paid                                    54,965      43,874
                                                                       

Home Capital published its financial objectives for 2013 on page 18 of the 
Company's 2012 Annual Report. The following table compares actual performance 
to date against each of these objectives.

Table 1: 2013                                              
Targets and
Performance                                                            
                                                                       
                                 For the six months ended June 30, 2013
                              Actual Results       Amount Increase over
                 2013 Targets                                      2012

Growth in net                                $            $
income                13%-18%          14.7%      121,298        15,534

Growth in                                                  
diluted
earnings per
share                 13%-18%          13.4%         3.48          0.41

Growth in total                                            
loans under
administration
(1)                   10%-15%           8.8%   18,838,967       797,383

Return on                                                  
shareholders'
equity                  20.0%          23.8%                           

Efficiency                                                 
ratio (TEB)(2)  28.0% - 34.0%          28.4%                           

Provision as a                                             
percentage of
gross loans
(annualized)    0.10% - 0.18%          0.10%                           

(1) Change represents growth over December 31, 2012 on an annualized
basis and includes loans held for sale.

(2) See definition of TEB under Non-GAAP Measures in the unaudited
interim consolidated financial report.
    Table 2: Reconciliation of Net Income to Adjusted Net Income
                                                   Quarter               Year to date

(000s, except
% and per
share amounts)        Q2       Q1        %       Q2      %                          %
                    2013     2013   Change     2012 Change      2013      2012 Change

Reconciliation
of Net Income
to Adjusted
Net Income                                                                           

Net income per
above          $  61,573 $ 59,725     3.1% $ 53,230  15.7% $ 121,298 $ 105,764  14.7%

Adjustment for
derivative
restructuring
- IFRS
conversion
(net of tax)       2,309    1,783    29.5%        -      -     4,092 $       -      -

Adjustment for
disputed loans
to condominium
corporations
(net of tax)           -    1,508 (100.0)%        -      -     1,508         -      -

Adjustment for
investment tax
credit
benefits (net
of tax)          (1,985)        -        -        -      -   (1,985)         -      -

Adjusted Net
Income(1)      $  61,897 $ 63,016   (1.8)% $ 53,230  16.3% $ 124,913 $ 105,764  18.1%

Adjusted Basic
Earnings per
Share(1)       $    1.79 $   1.82   (1.6)% $   1.54  16.2% $    3.61 $    3.07  17.6%

Adjusted
Diluted
Earnings per
Share(1)       $    1.78 $   1.81   (1.7)% $   1.54  15.6% $    3.59 $    3.07  16.9%
                                                                                     

(1) Adjusted net income and Adjusted
earnings per share are defined in the
Non-GAAP section of the MD&A.                                                        
                                            

Caution Regarding Forward-Looking Statements

From time to time Home Capital Group Inc. 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 
55 through 68 of the Company's 2012 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, funding and liquidity 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," "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 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 2013 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 2013, 
management's expectations continue to assume:
    --  The Canadian economy will produce modest growth in 2013 with
        relatively stable to modestly improving employment conditions
        in most regions and inflation will generally be within the Bank
        of Canada's target of 1% to 3%, leading to stable credit losses
        and continued strong demand for the Company's lending products.
    --  The Canadian economy will continue to be heavily influenced by
        the economic conditions in the United States and global markets
        and, as such, the Company is prepared for the variability to
        plan that this may lead to.
    --  The Bank of Canada continues to indicate that increases to its
        target overnight interest rate are not imminent and, as such,
        the Company is assuming the rate will remain at its current
        level for the balance of 2013 and then begin a slow and
        measured increase. This is expected to continue to support
        relatively low mortgage interest rates for the foreseeable
        future.
    --  The housing market will remain relatively stable with balanced
        supply and demand conditions in most regions supported by
        continued low interest rates, relatively stable to modestly
        improving employment, and immigration.  There will be declines
        in housing starts and resale activity compared to prior years
        with stable to modestly declining prices throughout most of
        Canada. This supports continued stable credit quality and
        strong demand for the Company's products.
    --  Consumer debt levels will remain serviceable by Canadian
        households.

Non-GAAP Measures

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 Second Quarter 
2013 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.

About Home Capital

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.



SOURCE  Home Capital Group Inc. 
Gerald M. Soloway, CEO, or Martin Reid, President 416-360-4663 
www.homecapital.com 
To view this news release in HTML formatting, please use the following URL: 
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CO: Home Capital Group Inc.
ST: Ontario
NI: FIN ERN FIN CONF  
-0- Jul/31/2013 21:00 GMT