Q3 2022 Home Capital Group Inc Earnings Call
Good morning, My name is Chris and I'll be your conference operator today.
At this time I'd like to welcome everyone to the home Capital Group Q3 results Conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there'll be a question and answer session.
If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
To withdraw your question. Please press star one again.
Thank you Jill Macrae head of Investor Relations you may begin.
Thank you, Chris and good morning, everybody will.
It will begin this call with some brief relaxing Ministry decided president and Chief Executive Officer, and Brad <unk>, Chief Financial Officer, followed by an opportunity for questions.
Before we begin I would like to point out that this call may contain forward looking statements and that actual results.
Seriously, some forecasts projections or conclusions in that statement.
Please refer to our advisor and forward looking statements on slide two of the presentation.
I would also like to remind listeners that the company assesses its performance on a reported and adjusted basis and considers both to be useful in assessing underlying business performance.
And Brad will be referring to both adjusted and reported results in their remarks.
Now my pleasure to turn the call over to use for the status.
Good morning, and thank you Jill.
Before turning to our Q3 results, let me start with a quote from Statistics, Canada report that was released in September of this year.
Everyone needs a place to call home.
At home isn't just a roof over your head.
<unk> can also be a source of security dignity and identity.
This quote tells you how we understand and look at the housing market.
Our house, it's not like a financial asset and investment manager will sell when the price drops.
People are invested in their homes in every sense of the word.
Let me share some thoughts with you on the market environment.
With six decisive interest rate increases by the bank of Canada, we are seeing.
And new cycle for the economy and the housing market.
A rate environment that does not been seen in generation and the generation.
Inflationary pressures that are the highest since the 19 eighties.
The bank of Canada is determined to fight inflation to rate increases and quantitative tightening.
These efforts by the Central Bank are essential to restore price stability in the economy.
But they have made it more expensive to borrow.
All of this has created near term pressure on the housing market in the interest of long term sustainability.
Turning to home capital now.
Let me tell you about.
One the impact of market conditions on our results here at home.
Two how we are responding.
And three why do we believe people why we believe we are well prepared to handle any conditions, we may encounter going forward.
Following a strong start in the first half of the year single family originations have slowed in the third quarter compared with last year.
Let's put this in context.
In the first half of this year, we reported two of our strongest quarters in single family originations.
A slowdown in that pace is still meaningful activity level.
Our single family originations this quarter were comparable to Q3, 2020, and we considered that a strong quarter.
Looking ahead, we believe that housing activity will continue to soften as the market adjusts to rising rate environment.
Adding to our commercial volumes.
Rising rates can create near term pressure on commercial activity as well.
However, the long term outlook for commercial volumes is more constructive.
This is underpinned by a multiyear requirement to add to the housing stock in Canada, particularly in multi unit dwellings.
We have a good pipeline of quality opportunities with credit worthy origination partners.
Let me tell you about how we're responding to this environment here at home.
We're not standing still during the slow down phase of the market.
We continue to focus on delivering excellent service and support our broker partners.
We're driving value through building out our deposit side.
We have been happy with the growth in both our broker deposits and Oaken channel.
We are prudently managing our expenses, while taking advantage of opportunities to improve and expand our service quality.
Our investments and our ignite project have allowed us to manage expenses.
Last quarter, we went live on our new SAP <unk> banking service system we.
We did this while handling significant deposit inflows during the summer months.
The new system will provide us with the benefits such as improved stability enhanced reporting capabilities and.
And the ability to bring new products or features to market quickly as needed to grow the business.
In the past four years, we have upgraded all over 90% of all our systems.
This is a major infrastructure upgrades that will deliver all of these benefits well into the future.
Let me give you an idea of what we expect looking forward.
We are confident about our business model and going into this rate cycle.
There are some strong drivers underpinning the long term health of the housing market.
We believe the demand for housing has been deferred and not eliminated as buyers adjust to changing borrowing costs and changing prices.
Client immigration levels for the next few years will provide a healthy supply of new homebuyers.
Federal Minister of Immigration recently announced plans to welcome 500000, new permanent residence in 2025.
And over 400000 in each of 2023 and 2024.
A large cohort of millennials, reaching home buying age is providing further demand for their first or even their second 12.
Rapidly rising rents are evidenced that potential buyers are turning to the rental market, while they remain on the sidelines.
All of this plus a strong employment picture bodes well for household income and credit performance.
And our credit our credit quality remained strong nonperforming loans and write offs are very low.
We believe Horner homeowners are making the necessary adjustments in their spending to keep their mortgage payments current.
If there is a prolonged downturn, we have the liquidity and capital resources to sustain us.
Looking more closely at capital, we completed our SMB and bought back over $44 million of shares during the quarter.
We're pleased to make this progress towards our target capital range.
The bid was not fully subscribed subscribed from which we can conclude that investors see additional upside potential in our share price or their investment time horizon.
We will continue to seek opportunities to add value through our capital program, while enjoying the flexibility made possible by holding capital during periods of uncertainty.
I'll now turn it over to Brad for a discussion on the financial results.
Thank you Sherry and good morning, everyone.
I'll provide some insight into the drivers of our results this quarter.
I'll be discussing our performance on a reported and adjusted basis.
The adjustment is due to a write down of some capitalized software development work as part of our ignite project.
Following our review, we recognized an impairment charge of $9 4 million.
On one of the ignite software development components and our other operating expenses.
The after tax impact to earnings was approximately $7 million after tax or <unk> 18 per share.
We assess cost and time to complete and chosen alternative solutions that we can implement more swiftly and at a lower cost.
This charge is related to that component. It has no impact on the future operations of the company other than reducing future amortization expense.
Starting with an overview of the quarter.
We recognize that the interest rate environment can provide both tailwind and headwinds.
So mortgage lending.
Our mandate is to take advantage of the opportunities afforded by the tailwind is to invest and strengthen our business to succeed through the softer part of the cycle.
We believe we have done this over the past two years that we will use. This time ahead to lay the groundwork for the company to thrive when we inevitably emerge from this period.
We look at growth in our assets and in our loans under administration as important measures of the health and success of our organization and are pleased this year to year over year double digit growth in both metrics this quarter.
We reported net income of Q3 of $31 million or <unk> 70 per share fully diluted on an adjusted basis net income was $38 million or <unk> 95 per share.
Return on equity was 8% and adjusted return on equity was nine 8%.
Book value per share grew by 11% year over year to end the quarter at $40 at 30 June .
Slide seven shows the factors that contributed to the change in our EPS compared with last year's earnings per share of $1 10.
The most significant contributor was a change in net interest income, which accounted for 24 of the variance.
The difference in provisions accounted for a further 12 sets.
Partially offsetting those two was a 21% reduction in average shares outstanding which benefited earnings by <unk> 16.
The margin pressure from rapid rate increases persisted into the third quarter.
Q3 margins were slightly below Q2 at 119%, but the pace of decline has slowed.
Our net interest income for the quarter was in line with Q2.
In fact of a five basis point reduction in net interest margin was offset by an increase in average assets.
We expect our margins to start to improve for the balance of the year and enter 2023.
As the impact of rate increases on our loans because evidenced over time.
Looking ahead.
Higher rates within our loan book will have a longer term impact on our results through retention and refinance volumes.
We continue to benefit from our investments in technology and operating efficiency.
Noninterest expenses of $72 $1 million. This quarter included the impact of the one time impairment charge.
Without this charge our expenses would have been $62 6 million, which is lower than Q3 of last year. Despite a 15% year over year increase in assets under administration.
Slide 10 shows our loan originations for the quarter with a 28% decrease in single family originations compared with Q3 of 2021, which was an exceptional year.
We had another strong quarter in our commercial loans with over $400 million in originations.
For the year to date, we have originated over $6 billion in single family residential loans and $1 $6 billion in commercial loans, which is higher than our originations for all of 2020.
As of the end of Q3.
We're reporting 19% growth in single family residential loans on balance sheet, and 5% growth in commercial loans.
Savings through our Oaken channel continued to grow by double digits year over year.
We finished the quarter with $4 8 billion in customer deposits.
Over three quarters of those deposits are in the form of term deposits as customers are enjoying the benefits of safe investments with attractive guaranteed returns.
Turning to a discussion of our credit provisions.
We booked $4 4 million in credit provisions this quarter compared with a reversal of $3 8 million in the year ago quarter.
This represents an annualized provision rate of eight basis points of gross loans.
Net write offs at $1 4 million in the quarter represented annual annualized rate of one basis point of gross loans.
Slide 14 shows the breakdown of our credit provisions in the quarter more.
More than 75% of provisions during the quarter were attributable to loans in stage, one and two classified as performing under either for RFS.
Growth in loans on balance sheet was the main source of the increase in provisions on performing loans.
As of the end of the quarter, we had $44 $1 million total allowance for future loan losses, with $4 6 million attributable to loans classified as impaired or stage III.
This represents coverage of 12% of our impaired loan portfolio.
<unk> with our prior quarter.
As we have good security for our loans in the form of high quality assets, we consider this level of coverage to be appropriate.
Our provisions incorporate forward looking economic assumptions under a variety of cases.
The use of multiple scenarios at $11 million to the allowance calculated you suggested the base case.
Slide 16 shows the composition of our gross nonperforming loans.
Total gross nonperforming loans of $37 6 million represent only 16 basis points of our gross loans consistent with the prior quarter and well below our long term average.
Our CET one capital ratio was $15 four 1% at the end of the quarter. Following our substantial issuer bid that used to be referred to earlier.
This is a reduction of more than 700 basis points. Since this time last year as we took definitive measures towards our stated target range of 14% to 15%.
We now expect to end the year above our target range as growth in risk weighted assets was lower than our estimates earlier in the year, we are experienced higher levels of loan growth.
We're evaluating both the economic environment and the most effective way of returning capital in this period of uncertainty.
Year to date, we have returned.
171, $3 million to shareholders through share repurchases and dividends.
In the last 12 months, we have bought back more than eight 4 million shares through substantial issuer bids.
We have also repurchased substantially all of the authorized number of shares under our normal course issuer bid expires in February of 2023.
Between the SIV.
And the NCI and the nine months to date, we have repurchased over 5 million shares at an average price of $29 11 per share.
These purchases have been accretive to earnings per share book value and return on equity while delivering on our commitment to achieve our target capital range.
Finally, the board declared a common share dividend of <unk> 15 per share.
Now I will provide an industry to make some concluding remarks.
Thank you Brett.
The housing market like the economy has always had periods of growth followed by periods of downturn.
We have weathered them in the past and come out stronger and that is what we expect to do again.
We will continue to execute on our objectives of prudent underwriting investment and our service capability and strategic risk management, while building an organization that we're all proud to call home.
Our role as a leading near Prime lender is strategically important to the financial services ecosystem.
We may call ownership accessible to a broader group of credit worthy borrowers.
And provide the benefits that I mentioned at the start of this call.
Security.
Dignity and identity.
This is how we deliver value to our shareholders.
I'll now ask Chris the operator to poll for questions.
Thank you.
As a reminder, if you would like to ask a question. Please press Star then one on your telephone keypad. Our first question is from Etienne Ricard.
BMO Your line is open.
Thank you and good morning.
Last quarter, you shared expectation.
You should expectation for net interest margins.
Two eventually bottom in Q3 now.
Now considering another step up in GIC rates in recent weeks when do you expect that interest margins two to bottom to the extent funding costs remain unchanged from here.
We're anticipating or forecasting that we are.
Wrapped up bottom of that range now and that.
Over the course of future quarters, we'll be able to see increases in net interest margin.
Okay Dmitry, we also increased mortgage rates and the same time period.
In the last week and a half we've increased them again.
Understood. So for Crystal clarity you expect Q4 net interest margin to two to improve relative to Q3.
We expect that it will not decline.
Yes.
Okay.
On credits.
All of the borrowers that would have taken on a mortgage.
The housing market run up in 2021.
Must be nearing the end of the of the.
I want to return by now.
I'm curious to hear.
What credit performance are you seeing from the <unk>.
2021 vintage relative to prior years.
The 2021, most mortgages I think you know HCN debt, our near prime or one year. So many.
Come up already for renewal and we're renewing them, we're renewing them at our current market rates, which.
Depending on when during this year, they got them could be anywhere between six and 8% range.
We have seen our renewals to be strong and we have not seen any lack of performance in credit the arrears are normal so.
We continue to.
Field.
The stress test is important people were underwritten at 2% more than what they were written a year ago.
And as I mentioned in my script comments people are very resilient at figuring out.
Paying their mortgage above all else.
Great.
Last question for me on capital allocation.
With the government planning, a 2% tax on buybacks.
Do you think about dividend growth relative to buybacks starting in 2024.
Well I think first we will.
Assess what what eventually is enacted we've heard what the what the plans are.
We will determine.
Chairman at that point, what the most effective way of returning capital to shareholders.
<unk>.
Yes.
It is the case.
Increasing dividends, that's something that we'll have our board evaluate at that time.
Thank you.
The next question is from Stephen Boland with Raymond James Your line is open.
Good morning, maybe just start with the impairment I just wanted to stand the timeline here so.
Nate you installed are paid for a module.
And then within a year or two you've kind of decided that it wasn't the right solution and you're kind of writing that off and putting in an alternative solution is that the right way to look at this.
So I would say.
No.
The key components.
All of that implemented and are running at.
Exit exited.
The post implementation phase.
This was one of the digital projects, we had there were roughly 8% components of ignite which was flat.
The migration was one of the most supported the.
Component that was in.
Impaired was related to digital.
And as we continue to work on that development, we identified an alternative that we could implement more quickly and at lower cost. So we cease development.
Secondly switch course.
Okay.
In general it seems like it's.
You mentioned, how the timeline has pushed into 2023.
Was expected to be done by last quarter, we thought or thoughts.
Is it.
I was just going to be mid 2023 years at substantially done now.
It's substantially complete over 90% of it is complete there's just one one piece that is.
Is going to probably take till mid 2023, but it's not a significant component in terms of the overall program.
In terms of cost.
And Steve just FERC greater greater clarity.
As Brad mentioned.
It's not 90% of one big project. It is a number of projects nine of them eight are done and have touched 90%. So many many upgrades are complete this is the remaining parts.
Okay. My second question is.
Especially on the single family originations. So I just wanted to make sure that everyone.
He knows what the market conditions are are slow I just wanted to the sequential decline.
And obviously there is seasonality here.
This is would you say this is market conditions or that you're you've become a little bit stricter underwriting or you've adjusted so youre not getting the same volume of business like our applications at the same level or.
Overall, it's just the market conditions are a lot slower.
The market is definitely slower Steve.
We feel we are just as the market has slowed the 40% to 50% range.
We slowed less than that so we feel we're getting our fair share of what's out there.
Our underwriting guidelines are prudent we're not relaxing them. They are the same and have stayed the same the volumes that we're doing there is still activity.
The immediate makes it sound like people have stopped buying and selling homes. That's not true at all there's still lots of activity and we're getting our fair share. So.
We think that will still continue at a at a slower pace than the first half of the year, but there will still be activity.
Okay. So when you say the same that means.
<unk> had tightened further lowered ltvs exited certain geographies things like that.
No.
We're cautious on the appraisals.
Appraisals, we're more cautious on the income, but we haven't changed the actual guidelines, but we're more cautious and look deeper in many situations to get comfortable.
Okay. Thanks, very much guys.
The next question is from Graham Ryding with TD Securities. Your line is open.
Hi, good morning.
Maybe just starting on the.
On the credit side.
Given the material move higher here and mortgage rates, particularly for people that have renewed within your business are you expecting arrears to build.
Higher in 2023 from from where they are sitting right now which doesn't show much deterioration.
We are prepared for it not expecting but preparing for it to go higher what I mean by that is we got lots of experience in the deferral program during the pandemic.
So we got to practice.
Arrears, what kind of volumes of people, we need in that in that part of our business. So so far we haven't seen it but we are prepared in the event.
<unk> goal.
Again, because people were stress test much of the business we wrote.
<unk> was between four and 5%. So we know most mortgages on renewal can handle between 6% to 7% and 2% above what they get now the renewals or even above that seven 5% to 8%. So that's the marginal increase relative to what we saw a year ago.
People continue to be very prudent in their payments and we are preparing for the worst.
But haven't seen that yet.
Okay understood.
Do you look.
When you have clients that come up for renewal do you look at their debt service ratios or is that you only do that when into new origination.
If the client has been current and made their payments. We don't look at it we will offer an automatic renewal, but if the client wants more money or has had problems making payments then we'll look at it.
Okay understood. So.
Would you have a feel for these borrowers like I'm trying to what I'm trying to get out and sort of like the retention levels I would expect youre going to be higher here. Because this can be a certain cohort of borrowers that are not able to to.
To move their mortgage somewhere else because they may not qualify somewhere else do you have that do you have it.
Visibility on how many of your borrowers renewing that would not qualify if you had to.
Underwrite them under a B 20 stress test at these higher rates.
We don't have visibility, but we have had increase in renewals and we believe for the exact reason USA plus.
Pain to go get a new mortgage all of the documents again and so on.
So.
If home is offering 750, and let's say the market is somewhere between seven and 750 <unk> have to qualify it.
Close to 9% or nine 5% so that is.
Painful to do you've got to go through the whole process.
Some people, maybe it's just easier to renew so we have observed some renewals but increase.
And as we've already discussed in the last question and they continue to perform very well.
Okay.
And then Brad just to.
<unk>.
Sort of.
The theme of capital are you still targeting to eventually move to 14% to 15% CET one ratio or given the market uncertainty are you comfortable sitting above that 15% level for sure.
Sort of the near term.
We're comfortable sitting about that rate for the.
For the near term that is very longer term.
<unk>.
<unk>.
We're just thinking that in times of uncertainty as we look forward, we will have a clearer view.
When we resolved.
Announce our Q4 results in February .
Understood. Okay. That's good to me thank you.
The next question is from Nigel D'souza with Veritas investment Research your line is open.
Thank you good morning, I wanted to follow up on the renewables line of questioning.
Looking at where mortgage rates are today, and where they were last year monthly mortgage payments are likely going up by around $1000 potentially more I was wondering if could give us a sense of is there a level of increase in the monthly mortgage payment, where you think palm capital clients would have difficulty.
Keeping up with those payments or is there a mortgage rate at which point do you think that the likelihood of the.
Delinquency increases.
Yeah, Nigel it's hard to give a general comment because each situation is different each mortgage or has a different situation.
Hard to give a blanket comment but.
We will at the beginning of the mortgage know that they can handle 2% more we will know the Tds. The GDS, we will know a lot of things about both the client and durability. While we also don't know is as a result of.
Strong employment update now gotten a raise a second job more higher paying jobs circumstances change.
Year.
So we think the book will perform well, but if the client has trouble we know that our LTV is under 60% in the mid fifties overall on our book and even the people that got mortgages last year are still well.
We've got a lot of rooms, so we.
We feel that they get in trouble.
They can get out because there is still a very big supply shortage and as I mentioned earlier in the call. There is still activity out there it's not like all households have stopped selling theres still activity Theres still.
Multiple offers are still these kind of things going on just not as frequent as it was earlier in the year. So we feel.
If they do get in trouble they can get out they performed well with us circumstances change and mortgage Georgia in particular business for cells are incredibly resilient at making sure that they make their payments.
And just to clarify one point there so on renewal.
If I understand correctly you are now looking at updated GDS Tds employment status is that correct. When we look at those as <unk>.
Borrower.
You've missed a payment or whereas in arrears.
Yes.
Just to recap Nigel if they've been good payers, we don't look we'll offer a renewal.
And <unk>.
Hope to get.
If there is payment bumps or they want more money, we will re underwrite them from scratch, we will do an appraisal well look at their income will look at everything again.
Hey, I'm sorry, if my payment bumps you mean, an increase in the monthly mortgage payment or for something else no sorry, like if they want to borrow more if they want to borrow more money than what they are.
Sure.
Got it and if I could switch to our provisions for credit losses, when I look at stage one provision.
Provisions for single family residential mortgages I noticed that there was actually a reversal there for stage, one and it seems to be driven by change in risk parameters and models for the most part just trying to get a sense of why that occurred given that.
Plus the outlook for unemployment and home price index.
<unk> improved this quarter.
Okay.
Give us one second Brad is pulling out you are looking at and Youll answered your question.
Sure.
Youre referring to the.
$6 9 million.
Correct, yes.
Thanks.
The overall was four eight so.
There was a change in risk parameters.
We had.
PD.
Overlay that.
We had adjusted to take into account.
<unk> are better predictions threat models.
So you're probably a default assumptions actually declining at the moment.
Despite rising interest rates.
Offset by.
The increase in models. So there is an overlay reduction in our modeling increase.
Okay.
And then last question just kind of minor point there.
Could you just remind me when I look at net realized gains or losses for securities law derivatives could you just remind me again, what the drivers are of that zero for security on loans again.
Philosophy I assume that's related to the rate environment does that is that correct.
That is correct.
Any color you could provide on what we're seeing there in terms of trends.
Well I think.
Tomorrow, those are mark to markets on our economic hedges. So those vary from the rate environment. So there is not.
Really a trend that goes along with those.
Okay. That's it for me thank you.
The next question is from Rubin Goldman is Garcia with RBC capital markets. Your line is open.
Oh, hi, thanks.
Geoff Kwan.
Hi.
Question Personalize just on expense growth just trying to understand how youre thinking about this in the current market environment, because obviously, we've got a slowing housing market more challenging economic environment.
Which would kind of suggest you might wanted to be more careful expense growth, but on the other hand, then you've obviously been trying to make some investments to improve the business. Just wondering how you think about the net on that.
Okay.
Yes.
So in the second quarter Wendover signals that there was potentially slowdown.
Immediately adjusted.
I think like every lender the volumes in the first and second quarter were so high people were.
<unk>, we stopped we anticipated some of that.
We hired four.
Lower volumes in the third and fourth quarter, which has turned out to be correct. So.
To answer your questions as early as May we were anticipating.
Where the market was growing and re looked at our hiring we didn't do any layoffs, but we didn't hire some people that we had intended because at the beginning of year. We thought the year was going to continue in this regard. So we are now running.
Might lean for the volumes that we're at and as I mentioned in the script comments were still investing in the business very heavily so theres a lot of people who are building technology.
Hi solution CRM solution database solutions to make the.
To make our clients' experience with home, even better including brokers, who deal with our ultimate customers. So that we continue to invest arrest we have slowed down.
So if we're looking out over the next year are you expecting the efficiency ratio too.
Improved versus where it is today or or stay flat or at home.
Thanks to the increase.
Well, we're certainly planning on having an improve over time Jeff.
Okay.
Just the other question that I had was in terms of.
Loan rich.
<unk>.
Yes.
Has that differed endo last today, our recent months versus say a year ago.
And does that differ.
On your accelerated versus your classic book.
Sorry, Jeff.
Okay.
Quite understand can you try to explain again I'm.
I'm just trying to understand is are you doing more loan rejections today than you would have been a year ago and does that differ between your classic versus euro you accelerate or above.
No not really anything measurable.
We're definitely getting less applications.
But we are accepting about the same amount.
Maybe we're getting a little more canceling before funding.
We've got an entire rates there shopping the market a little bit more so or approve to funding may have gone down not something huge but something that we notice but the key is just less applications with.
So people, who are getting mortgages are still high quality and can't afford at these rates.
Okay. Thank you.
The next.
As a reminder, please press star one if you would like to ask a question. The next question is from James Coyne with MBS. Your line is open.
Yes. Thanks.
Thanks.
First question is on the on fee income or I guess fees and other income noticed.
A nice step up there from a quarter to quarter and sort of like a run rate over the last several quarters.
Can you give us a little more color as to.
What's driving fees and other income was higher this quarter.
Well, it's certainly a concerted effort on our part to increase our fee income baltar altered our fee schedule and death.
We are.
Looking at <unk>.
<unk>, how we can increase that fee based revenue.
So altered fee schedule would suggest that this level is.
Is sustainable run.
Our run rate there is nothing one time ish in that number correct.
That's fair to say.
Okay great.
<unk>.
Yes.
Wanted to just ask about the credit card portfolio and I know, it's a small portfolio but.
Yes.
Noticed the decline and the payment rate this quarter.
Relative to what we've seen in previous quarters is there is there anything youre seeing in that portfolio.
From a credit performance payment performance.
As maybe a leading indicator for the rest of the year your book.
Mike Henry is here, who runs the credit card business I'll, just ask him to comment.
Yes. Thanks for that question. The simple answer is no. We're quite pleased with the performance of the portfolio credit indicators are strong.
It'll be something we watch very closely as the world.
<unk> around us because that'll be one of the first things that will signal us if there is trouble coming for customers, but we are well positioned to help them with that.
Okay, so that lower payment rate more.
In line with your expectations.
I'm going to be.
Too concerned at this stage I guess.
If I shift over to the origination performance.
When you're talking with the market slowing in the 40% to 50% range.
Looking at like housing data if you look at a like dollar volume was down maybe 25% to 30% year over year. So I'm wondering.
When you say, 40% to 50% Youre talking here.
Specifically focused on the <unk> market and how are you arriving at that.
At that number.
That was a GTA number I.
I should have been more clear.
And then.
You got to watch all of these numbers James as you know well.
Because.
The ones that were more interested as number of transactions as opposed to $1. An average is because averages.
$10 million homes are selling anymore on only $1 million homes. It looks like the average has gone down but so we look at the number of units more than anything and Thats that number came from some GTA stacked somewhere.
Okay.
Okay I appreciate that.
Specifically, just specifically trip in Korea, just if youre looking for the source.
Yeah got it thank you.
Couple more questions actually just one.
Around the capital allocation strategy.
First.
Going back to the <unk>.
Could you walk us through.
Your conversations your decision making process.
Maybe not increase the <unk> price after the shares traded above it.
At that point, and then a follow up on that on dividends.
Well Jamie.
We did take a look at the shares were trading.
Our view was that we would not have thought materially higher.
Up on BS IV by increasing the price so we chose not to.
Okay, and then last one with your platform.
Go ahead, yeah, and then on the on dividends just thinking about.
How youre thinking about.
That policy.
The dividend place from from earlier this year, how are you thinking about payout ratios into next year timing of dividend increases in terms of like is there an annual cadence you're looking to hit.
Maybe just walk us through.
How youre thinking about that as you're into next year.
Well.
The overall expectation is that we would grow our dividend over time Thats reviewed by the board on a quarterly basis.
With our year end results, that's what we would typically make an announcement on payout ratios and what we do for the dividend looking forward as mentioned earlier, we will have at least a few more months of experience and trying to determine the overall direction of the economy in the mortgage market.
In particular.
We will take a view then we will also probably know a little bit more about.
What's happening with government policy in terms of the approach.
The taxation of <unk>.
Share repurchases.
And that will have the ability to.
Cut back with comprehensive program.
Return on capital.
Okay.
Okay. Thank you that's it.
Right.
Thanks, Jamie.
We have no further questions at this time I'll turn it over to users disorder for any closing comments.
Thank you Chris and thank you all for your interest in home capital. Please contact Investor Relations. If you have any further questions I wish you all a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Please wait the conference will begin shortly.
Yes.
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