Canada's national mortgage agency posts quarterly earnings report
The Canada Mortgage and Housing Corporation (CMHC) released its Quarterly Financial Report for Q1 2024, revealing a 13% year-over-year increase in net income to $374 million.
CMHC attributed the rise to higher volumes in multi-unit insurance products, increased mortgage funding, and higher investment income.
Its multi-unit insurance volumes increased by nearly $6 billion compared to the same quarter last year. This growth corresponds to almost 20,000 additional housing units insured, totalling over 63,000 units in Q1 2024. Of these, close to 25,000 units were for new construction, driven largely by the uptake of the MLI Select product.
CMHC guaranteed $52 billion in new securities, up from $43 billion in Q1 2023, reflecting increased guarantee limits announced in September 2023 by the Government of Canada.
The crown corporation’s board of directors declared a $145 million dividend to its shareholder, the Government of Canada.
"We are pleased with the success of our multi-unit insurance products. An increase of nearly 42% in units and 72% in insured volumes is encouraging and very positive for the housing market,” Nadine Leblanc, interim chief financial officer and senior vice president of corporate services at CMHC, said in the financial report. “We are also very happy to see the investments in housing announced by the Government of Canada in Budget 2024 and will continue to work diligently to deliver these important initiatives for Canadians."
High interest rates continue to affect the housing market, as evidenced by a slight increase in CMHC’s mortgage arrears, now at 0.29% (up from 0.28%). While still low compared to historical trends, the uptick reflects the financial strain many Canadians are experiencing due to rising borrowing costs.
This strain is also evident in the recent financial results of Canada's major banks, which have set aside more funds for potential bad loans amid rising unemployment and interest rates.
Canada’s big banks have reported their quarterly financial results over the past week. Provisions for credit losses at RBC were higher than analysts' forecasts, while CIBC recorded lower loan loss provisions in its commercial banking segment.
"Overall, financial risks are low and within risk tolerances. Credit risk and liquidity risk remain low and stable," CMHC said. "The strong credit quality and diversification of our investment portfolios continue to provide resiliency and mitigate the impact of uncertain market and economic conditions. Homeowner insurance risk is stable, and arrears remain low. Multi-unit insurance risk remains moderate, though we continue to monitor the business and financial impact of the increasing share of MLI Select loans in our multi-unit portfolio."
Despite these challenges, CMHC said the financial risks of its tolerances its investment portfolios are “low and within risk.”
“Credit risk and liquidity risk remain low and stable,” CMHC said. “Market risk is consistent with established risk limits and tolerances. The strong credit quality and diversification of our investment portfolios continues to provide resiliency and mitigate the impact of uncertain market and economic conditions. Homeowner insurance risk is stable and arrears remain low. Multi-unit insurance risk remains moderate, though we continue to monitor the business and financial impact of the increasing share of MLI Select loans in our multi-unit portfolio.”
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