(Reuters) - Shares of Canadian lender Home Capital Group HCG.TO fell more than 7 percent in early trading, a day after the company posted an 85 percent drop in mortgage originations in the third-quarter from a year ago.
The company said total mortgage originations in the quarter was C$385 million ($301 million), compared with C$2.54 billion a year earlier.
Shares of the company fell as much as 7.7 percent to C$13.26. The stock was among the biggest losers on the Toronto Stock Exchange .GSPTSE.
“Challenges growing in the loan book may indicate that broker relationships are proving tough to repair, which would cloud our outlook for regaining share in a competitive non-prime origination environment in 2018,” Raymond James analysts wrote in a note.
Home Capital said in June it would sell a portfolio of commercial mortgage assets valued at C$1.2 billion to trim outstanding debt on a C$2 billion emergency facility it agreed with the Healthcare of Ontario Pension Plan (HOOPP) in April.
The expensive bridge financing provided by HOOPP affected the company’s ability to originate new mortgages since it could not afford to lend money at lower rates than its cost of borrowing.
Home Capital said in a statement on Tuesday the process of restoring loan growth had been slower than planned and was the management’s top priority.
Up to Tuesday’s close, the lender’s stock had fallen about 54 percent this year.
($1 = 1.2780 Canadian dollars)
Reporting by John Benny in Bengaluru; Editing by Saumyadeb Chakrabarty
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