MY TAKE ON Q4 RESULTS (PLEASE READ) Q4 results demonstrate a stable path to recovery, here are some highlights:
- Weighted-average LTV = 55.3%
- Robust downside risk buffer
- Delinquency rate continues to be ultra-low at 0.30%
- Ultra-high quality loan book (higher than some big 6 banks)
- Mortgage originations at Q4 increased 126% from Q3 to $872 million
- Of course it is still low compared to Q4 2016 but trend is pointing at the right direction, also its probably prudent to NOT advance too many mortgages at the current housing cycle (relative to Q4 2016)
- Net deposits inflows mid-way through Q4 i.e. company is expecting to ramp up loan originations, again heading the direction
- Deposits have been voluntarily lowered to match mortgage schedules and reduce drag on earnings
- Book value at 22.60/share
- Current share price is still at significant discount to book. significant share price appreciation potential (EQB is trading at 1.0x P/B and it doesn't have Berkshire Hathaway as majority shareholder; HCG should be trading at a premium to EQB. Honestly, if there is a major market downturn, who do you think have a better chance to survive?)
- One of the cheapest financial institutions in the world right now. Most FIs are trading at or over book value currently.
- You must be crazy to short a FI that is backed by the most investor in the world and currently trading at a discount to book
Good Job Yousry and team!