Mcan Mortgage Corporation · TSX:MKP
Mcan Mortgage — Q1 2025 Earnings Presentation
19 slides from Mcan Mortgage's earnings presentation, May 7, 2025
Slide 1: Q1 2025 Results
Q1 2025 Results TSX: MKP 1 May 7, 2025
Slide 2: Forward Looking Information; Non-GAAP and Other Financial Measures
Forward Looking Information This presentation may contain forward-looking information within the meaning of applicable Canadian securities laws, including statements regarding the business and anticipated financial performance of MCAN Mortgage Corporation d/b/a MCAN Financial Group and its subsidiar
Slide 3: Business Overview
Business Overview
Slide 4: Business Model and Value Proposition
Business Model and Value Proposition MCAN is Canada's largest Mortgage Investment Corporation ("MIC") and the only MIC that is federally regulated. Uniquely structured as a flow-through MIC1 • Not taxed at the corporate level; all taxable earnings distributed annually • Compared to MIC peers: • Lowe
Slide 5: Q1 2025 Financial Highlights
Q1 2025 Financial Highlights $16.6M Net Income (+115% from Q4 2024) (PPPT Income1,2 $19.3M) • Mortgage lending business Earnings per Share started the year strong • Net interest income solid, $0.43 (+115% from Q4 2024) despite a Prime rate cut of (PPPT EPS1,2 $0.50) 50bps in the quarter • PCLs highe
Slide 6: Impaired Loans – Steady in Deteriorating Credit Cycle; Provisions Reflect Current Macro Environment
Impaired Loans – Steady in Deteriorating Credit Cycle; Provisions Reflect Current Macro Environment Impaired Loans ($MM) PCL – Performing Loans ($MM) 85.0 4.00% 3.42% 3.50% 75.0 $1.7 3.00% $0.6 $0.1 65.0 2.46% 2.31% $0.3 2.26% 55.0 2.00% $76.9 45.0 $71.6 -$1.7 1.00% $45.3 $44.5 35.0 $42.3 Q1 2024 Q2
Slide 7: Quality Returns to Shareholders
Quality Returns to Shareholders Dividend Total Shareholder Return 4% 165% $0.97 compound $0.85 annual 5-year total growth rate1 – MCAN Financial shareholder in regular return1 – S&P/TSX Composite dividends $1.44 $1.48 $1.56 $1.36 $1.36 $0.41 2020 2021 2022 2023 2024 2025 YTD 1992 1997 2001 2006 2011
Slide 8: Net Interest Income Growth Outpacing Mortgage Asset Growth – Strong Pricing Discipline
Net Interest Income Growth Outpacing Mortgage Asset Growth – Strong Pricing Discipline Net Interest Income ($MM) NII as a % of Average Mortgage Assets1 +152% 2.38% 2.09% 1.86% 1.75% 1.71% $94.2 $96.4 $62.7 $49.0 $38.2 2020 1 2021 2 2022 3 2023 4 2024 5 2020 1 2 2021 3 2022 2023 4 5 2024 Average Mort
Slide 9: Financial Overview
=> Financial Overview L.
Slide 10: Financial Overview – Solid Contribution from Core Lending; Higher Provisions in Current Environment
Financial Overview – Solid Contribution from Core Lending; Higher Provisions in Current Environment In $MM, unless otherwise noted and except for Q1 25 Q1 25/Q4 24 Q1 25/Q1 24 per share amounts Net interest income $23.8 -4% -1% • Core business contribution solid Q/Q despite uncertain economic Non-in
Slide 11: Net Interest Income – Stable Spreads Despite Economic Environment
Net Interest Income – Stable Spreads Despite Economic Environment Net Interest Income ($MM) and Spread1 7.20% 6.95% 30.0 6.45% 4.00% • Net spread on non-securitized mortgages 5.45% improved Q/Q due to pricing discipline 4.95% 3.50% • Net spread on securitized mortgages 25.0 $2.6 3.14% $2.6 $3.1 $3.6
Slide 12: Mortgage Balances and Fundings – Solid Originations and Renewals
Mortgage Balances and Fundings – Solid Originations and Renewals Mortgage Balances ($B) $4.9 $4.9 • Mortgage balances stable Q/Q $4.5 $4.7 $4.8 • Fundings and originations lower in Q1 – $2.3 $2.4 $2.4 $2.1 $2.2 geopolitical environment and uncertain interest rate environment impacting $1.1 $1.2 $1.1
Slide 13: Funding – Well-Established and Growing Funding Base
Funding – Well-Established and Growing Funding Base Funding ($B) +12% $4.7 $4.8 • Funding base well established to support $4.5 $4.6 business growth $4.3 • Securitization and term deposits provide source of low-cost funding 51% 51% 50% 48% 48% • MCAN Wealth direct-to-consumer term deposit channel es
Slide 14: Allowance for Credit Losses – Well Reserved for Current Credit Cycle
Allowance for Credit Losses – Well Reserved for Current Credit Cycle Allowance on Performing Loans ($MM) $1.6 $0.2 $9.0 $0.0 $7.3 • Performing (Stage 1 and 2) • Q/Q increase due to greater macroeconomic uncertainty impacting expected credit loss modelling • Non-Performing (Impaired) (Stage 3) Allowa
Slide 15: Non-Interest Income
Non-Interest Income Non-Interest Income ($MM) Q1 2024 Q4 2024 Q1 2025 Equity income from MCAP Commercial LP 7,183 7,227 5,571 Distribution income from securities 2,582 2,702 2,741 Fees 873 873 1,080 Net gain (loss) on securities 27 (11,326) 1,099 Other ― ― 12 Total non-interest income 10,665 (524) 1
Slide 16: Non-Interest Expense – Normalizing in Q1
Non-Interest Expense – Normalizing in Q1 Non-Interest Expense ($MM) Efficiency Ratio1 68.7% $7.8 $7.8 $6.8 43.4% $6.3 $5.2 37.4% 35.7% 29.6% $8.8 $6.6 $7.1 $6.0 $6.3 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 Salaries and Benefits General and Administrative Effic
Slide 17: Capital Ratios – Healthy and Within Regulatory and Internal Risk Appetite Guidelines
Capital Ratios – Healthy and Within Regulatory and Internal Risk Appetite Guidelines Capital Ratios • Capital ratios continue to move in line with 15.00 21.00% 20.19% 19.43% our business strategy of optimizing the 19.23% 19.35% 19.28% 13.00 balance sheet, growing assets utilizing 16.00% excess capit
Slide 18: Closing Comments
Closing Comments • Q1 Review Solid results from the core lending business Loans continue to perform, evidence of strong underwriting and credit monitoring Optimizing balance sheet within existing capital • Long-Term Objectives Sustained 13-15% average ROE Sustained 10% average annual growth in asset
Slide 19: Derek Sutherland and Santokh Birk – Contact Details
Derek Sutherland Santokh Birk President and Chief Executive Officer SVP and Chief Financial Officer (416) 203-5931 (289) 454-4196 MCAN Financial Group 700-200 King Street West, Toronto, ON M5H 3T4 (416) 572-4880 | mcanexecutive@mcanfinancial.com mcanfinancial.com | TSX: MKP 19