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• Revenue grew 17% year-over-year, or 20% on a constant currency basis to $716 million
• On-Demand GMV grew 15% year-over-year, or 18% on a constant currency basis to $4.7 billion
• Profit for the quarter was positive at $15 million
• Adjusted EBITDA improved by $62 million year-over-year to an all-time high of $90 million
• Operating Cash Flow of $338 million in the third quarter, and Adjusted Free Cash Flow of $76 million on a trailing 12-month basis

SINGAPORE, Nov. 11, 2024 (GLOBE NEWSWIRE) — Grab Holdings Limited GRAB today announced unaudited financial results for the third quarter ended September 30, 2024.

“Third quarter 2024 was a strong quarter for us as investments we made across the business drove an acceleration of our On-Demand GMV growth. We are serving more users than ever before, with 42 million Monthly Transacting Users on our platform,” said Anthony Tan, Group Chief Executive Officer and Co-Founder of Grab. “We remain bullish on the long-term growth outlook of Southeast Asia, and are firing on all cylinders to capture the strong user demand trends, improve income opportunities for our ecosystem partners, and drive tech-led innovations to enhance the efficiency of our marketplace.”

“We delivered our eleventh consecutive quarter of Adjusted EBITDA improvement, our second positive Profit for the quarter, and the highest quarterly Adjusted Free Cash Flow to date for the business,” said Peter Oey, Chief Financial Officer of Grab. “With the strong momentum we are seeing across the business heading into the end of the year, we expect to deliver sequential On-Demand GMV growth in the fourth quarter and are raising our full year 2024 Group Revenue and Group Adjusted EBITDA outlook.”

Group Third Quarter 2024 Key Operational and Financial Highlights

• Revenue grew 17% year-over-year (“YoY”) to $716 million in the third quarter of 2024, or 20% on a constant currency basis³, driven by revenue growth across all segments.

• On-Demand GMV grew 15% YoY, or 18% YoY on a constant currency basis, underpinned by 19% YoY growth in On-Demand MTUs and 22% increase in On-Demand transactions.

• Total incentives were $462 million in the third quarter of 2024, while On-Demand incentives as a proportion of On-Demand GMV declined on a quarter-over-quarter (“QoQ”) basis to 9.8% versus 10.1% in the second quarter of 2024 as we optimized incentive spend that was used to support product launches.

• Operating loss in the third quarter was $38 million, representing an improvement of $55 million YoY, primarily attributable to increases in revenue.

• Profit for the quarter was $15 million, an improvement of $114 million YoY, primarily due to improvements in Group Adjusted EBITDA, an increase in net finance income, and lower share-based compensation expenses. This was partially offset by an increase in other expenses and income tax expenses. Share-based compensation expenses for the quarter were $53 million.

• Group Adjusted EBITDA was $90 million for the quarter, an improvement of $62 million YoY compared to $28 million in the prior year period, attributed to On-Demand GMV and revenue growth, improving profitability on a Segment Adjusted EBITDA basis, and lower regional corporate costs⁴.

• Regional corporate costs⁴ for the quarter were $88 million, compared to $97 million in the same period in 2023. We remain focused on driving cost efficiencies across our organization, with staff costs within regional corporate costs declining 14% YoY.

• Cash liquidity⁵ totaled $6.1 billion at the end of the third quarter, compared to $5.6 billion at the end of the prior quarter, with a substantial portion of the cash inflow attributed to the growth in deposits from customers in the banking business, which increased to over $1 billion from $730 million from the prior quarter. Our net cash liquidity⁶ was $5.8 billion at the end of the third quarter, compared to $5.3 billion at the end of the prior quarter.

• During the third quarter, pursuant to our $500 million share repurchase program, we repurchased an additional 17.7 million shares with an aggregate principal amount of $58.2 million. Cumulatively, we have repurchased and retired 57 million shares with the aggregate principal amount of $189 million as of 30 September 2024.

• Net cash from operating activities was $338 million in the third quarter of 2024, an improvement of $17 million YoY, mainly driven by an increase in deposits from customers in the banking business and an improvement in profit before income tax. Adjusted Free Cash Flow was positive at $138 million in the third quarter of 2024, improving by $144 million YoY. On a trailing 12-month basis, Adjusted Free Cash Flow was $76 million, improving by $348 million YoY.

Business Outlook

The guidance represents our expectations as of the date of this press release, and may be subject to change.

Segment Financial and Operational Highlights

Deliveries

• Deliveries revenue grew 13% YoY, or 16% YoY on a constant currency basis, to $380 million in the third quarter from $335 million in the prior year period, amid strong GMV growth.

• Deliveries GMV grew 12% YoY, or 16% YoY on a constant currency basis, to $2,965 million in the third quarter of 2024. This represents a growth reacceleration compared to the second quarter, driven by increases in transaction volumes and Deliveries MTUs.

• Deliveries segment adjusted EBITDA as a percentage of GMV was 1.8% in the third quarter of 2024, compared to 1.3% in the third quarter of 2023, primarily driven by improved monetization of our Food business and increased contributions from Advertising. Notably, Advertising revenue as a proportion of Deliveries GMV increased to 1.6% in the third quarter from 1.1% in the prior year period.

• Saver Deliveries, which has seen adoption increasing to 32% of Deliveries transactions⁷ in the third quarter from 14% in the prior year period, continues to drive greater cost efficiencies. During the quarter, 6 in 10 Saver Deliveries transactions were batched.

• Saver Deliveries also continues to be an important strategic initiative to increase user engagement. Saver Deliveries users saw average transaction frequency increase 12% in the 6 months post-Saver adoption, relative to their 6-month average transaction frequency prior to Saver adoption.

Mobility

• Mobility revenues continued to grow strongly, rising 17% YoY or 20% YoY on a constant currency basis in the third quarter of 2024, driven by GMV growth.

• Mobility GMV increased 20% YoY, or 24% YoY on a constant currency basis, to $1,694 million during the quarter. The strong growth was driven by Mobility MTUs which grew 23% YoY and average Mobility transactions per MTU which increased 7% YoY.

• Mobility segment adjusted EBITDA as a percentage of Mobility GMV was 8.8% in the third quarter of 2024, expanding by 62 basis points QoQ. The sequential improvement was driven by increased contributions from our High Value Mobility rides⁸, where GMV from High Value Mobility rides increased 30% YoY.

• During the quarter, total monthly active driver supply grew 13% YoY to largely recover to pre-COVID levels, while quarterly driver-partner retention rates remained stable at 90%. Our continued efforts to improve driver supply resulted in the proportion of surged⁹ Mobility rides being reduced by 12 percentage points YoY.

Financial Services

• Revenue for Financial Services grew 34% YoY, or 38% YoY on a constant currency basis, to $64 million in the third quarter of 2024. The YoY growth was driven by increased contributions from GrabFin’s lending business, new contributions from our digital bank, and optimization of payment incentives.

• Segment adjusted EBITDA for the quarter improved by 27% YoY to negative $26 million, attributed to growth and monetization of our lending products that drove higher revenues and margins, along with reductions in overhead expenses.

• We continued to focus on lending to our ecosystem partners through GrabFin and our digital bank, with total loans disbursed growing by 38% YoY and 13% QoQ to $567 million during the quarter. Our total loan portfolio outstanding at the end of the third quarter grew 81% YoY to $498 million from $275 million in the prior year period.

• Customer deposits in our digital bank business tripled to reach $1.1 billion as of the end of the third quarter from $362 million as of the end of the same period last year, and grew 50% QoQ from $730 million as of the end of the prior quarter. The strong growth was mainly driven by an increased number of deposit customers across our digital banks, and the launch of Boost Pocket in GXS Bank, a term deposit product that boosts the interest rate that customers can earn on their savings.

Others

• Revenue for Others was $1 million in the third quarter of 2024 while Segment Adjusted EBITDA grew 7% YoY to $0.4 million.

About Grab

Grab is a leading superapp in Southeast Asia, operating across the deliveries, mobility and digital financial services sectors. Serving over 700 cities in eight Southeast Asian countries – Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – Grab enables millions of people everyday to order food or groceries, send packages, hail a ride or taxi, pay for online purchases or access services such as lending and insurance, all through a single app. Grab was founded in 2012 with the mission to drive Southeast Asia forward by creating economic empowerment for everyone. Grab strives to serve a triple bottom line – we aim to simultaneously deliver financial performance for our shareholders and have a positive social impact, which includes economic empowerment for millions of people in the region, while mitigating our environmental footprint.

We use our website as a means of disclosing material non-public information. Such disclosures will be included on our website in the “Investor Relations” section or at investors.grab.com. Accordingly, investors should monitor such sections of our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. Information contained on, or that can be accessed through, our website does not constitute a part of this document and is not incorporated by reference herein.

Forward-Looking Statements

This document and the announced investor webcast contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this document and the webcast, including but not limited to, statements about Grab’s goals, targets, projections, outlooks, beliefs, expectations, strategy, plans, objectives of management for future operations of Grab, and growth opportunities, are forward-looking statements. Some of these forward-looking statements can be identified by the use of forward-looking words, including “anticipate,” “expect,” “suggest,” “plan,” “believe,” “intend,” “estimate,” “target,” “project,” “should,” “could,” “would,” “may,” “will,” “forecast” or other similar expressions. Forward-looking statements are based upon estimates and forecasts and reflect the views, assumptions, expectations, and opinions of Grab, which involve inherent risks and uncertainties, and therefore should not be relied upon as being necessarily indicative of future results. A number of factors, including macro-economic, industry, business, regulatory and other risks, could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to: Grab’s ability to grow at the desired rate or scale and its ability to manage its growth; its ability to further develop its business, including new products and services; its ability to attract and retain partners and consumers; its ability to compete effectively in the intensely competitive and constantly changing market; its ability to continue to raise sufficient capital; its ability to reduce net losses and the use of partner and consumer incentives, and to achieve profitability; potential impact of the complex legal and regulatory environment on its business; its ability to protect and maintain its brand and reputation; general economic conditions, in particular as a result of currency exchange fluctuations and inflation; expected growth of markets in which Grab operates or may operate; and its ability to defend any legal or governmental proceedings instituted against it. In addition to the foregoing factors, you should also carefully consider the other risks and uncertainties described under “Item 3. Key Information – D. Risk Factors” and in other sections of Grab’s annual report on Form 20-F for the year ended December 31, 2023, as well as in other documents filed by Grab from time to time with the U.S. Securities and Exchange Commission (the “SEC”).

Forward-looking statements speak only as of the date they are made. Grab does not undertake any obligation to update any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as required under applicable law.

Unaudited Financial Information

Grab’s unaudited selected financial data for the three months and nine months ended September 30, 2024 and 2023 included in this document and the investor webcast is based on financial data derived from Grab’s management accounts that have not been reviewed or audited.

Certain amounts and percentages that appear in this document may not sum due to rounding.

Non-IFRS Financial Measures

This document and the investor webcast include references to non-IFRS financial measures, which include: Adjusted EBITDA, Segment Adjusted EBITDA, Segment Adjusted EBITDA margin, Total Segment Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Free Cash Flow. Grab uses Adjusted EBITDA, Segment Adjusted EBITDA, Segment Adjusted EBITDA margin, Total Segment Adjusted EBITDA, and Adjusted EBITDA margin for financial and operational decision-making and as a means to evaluate period-to-period comparisons, and Grab’s management believes that these non-IFRS financial measures provide meaningful supplemental information regarding its performance by excluding certain items that may not be indicative of its recurring core business operating results. For example, Grab’s management uses Total Segment Adjusted EBITDA as a useful indicator of the economics of Grab’s business segments, as it does not include regional corporate costs. Adjusted Free Cash Flow excludes the effects of the movement in working capital for our lending and digital banking deposit activities. Grab uses Adjusted Free Cash Flow to monitor business performance and assess its cash flow activity other than its lending and digital banking deposit activities, and Grab’s management believes that the additional disclosure serves as a useful indicator for comparison with the cash flow reporting of certain of its peers.

However, there are a number of limitations related to the use of non-IFRS financial measures, and as such, the presentation of these non-IFRS financial measures should not be considered in isolation from, or as an alternative to, financial measures determined in accordance with IFRS. In addition, these non-IFRS financial measures may differ from non-IFRS financial measures with comparable names used by other companies. See below for additional explanations about the non-IFRS financial measures, including their definitions and a reconciliation of these measures to the most directly comparable IFRS financial measures. With regard to forward-looking non-IFRS guidance and targets provided in this document and the investor webcast, Grab is unable to provide a reconciliation of these forward-looking non-IFRS measures to the most directly comparable IFRS measures without unreasonable efforts because the information needed to reconcile these measures is dependent on future events, many of which Grab is unable to control or predict.

Explanation of non-IFRS financial measures:

• Adjusted EBITDA is a non-IFRS financial measure calculated as profit (loss) for the period adjusted to exclude: (i) net interest income (expenses), (ii) net other income (expenses), (iii) income tax expenses (credit), (iv) depreciation and amortization, (v) share-based compensation expenses, (vi) costs related to mergers and acquisitions, (vii) foreign exchange gain (loss), (viii) impairment losses on goodwill and non-financial assets, (ix) fair value changes on investments, (x) restructuring costs, (xi) legal, tax and regulatory settlement provisions and (xii) share listing and associated expenses. Starting from January 2024, realized foreign exchange gain (loss) is additionally excluded from Adjusted EBITDA (as compared to only unrealized foreign exchange gain (loss) in previous reports). Grab’s management believes that this change enhances the comparison of Grab with certain of its peers. Adjusted EBITDA for all periods presented in this earnings release reflect this new definition of Adjusted EBITDA.
• Segment Adjusted EBITDA is a non-IFRS financial measure, representing the Adjusted EBITDA of each of our four business segments, excluding, in each case, regional corporate costs.
• Segment Adjusted EBITDA margin is a non-IFRS financial measure, calculated as Segment Adjusted EBITDA divided by Gross Merchandise Value. For Financial Services and Others, Segment Adjusted EBITDA margin is calculated as Segment Adjusted EBITDA divided by Revenue.
• Total Segment Adjusted EBITDA is a non-IFRS financial measure, representing the sum of Adjusted EBITDA of our four business segments.
• Adjusted EBITDA margin is a non-IFRS financial measure calculated as Adjusted EBITDA divided by Revenue.
• Adjusted Free Cash Flow is a non-IFRS financial measure, defined as net cash flows from operating activities less capital expenditures, excluding changes in working capital related to loans and advances to customers, and deposits from the digital banking business.

We compare the percent change in our current period results from the corresponding prior period using constant currency. We present constant currency growth rate information to provide a framework for assessing how our underlying GMV and revenue performed excluding the effect of foreign currency rate fluctuations. We calculate constant currency by translating our current period financial results using the corresponding prior period’s monthly exchange rates for our transacted currencies other than the U.S. dollar.

Operating Metrics
Gross Merchandise Value (GMV) is an operating metric representing the sum of the total dollar value of transactions from Grab’s products and services, including any applicable taxes, tips, tolls, surcharges and fees, over the period of measurement. GMV includes sales made through offline stores. GMV is a metric by which Grab understands, evaluates and manages its business, and Grab’s management believes is necessary for investors to understand and evaluate its business. GMV provides useful information to investors as it represents the amount of customer spend that is being directed through Grab’s platform. This metric enables Grab and investors to understand, evaluate and compare the total amount of customer spending that is being directed through its platform over a period of time. Grab presents GMV as a metric to understand and compare, and to enable investors to understand and compare, Grab’s aggregate operating results, which captures significant trends in its business over time.

Monthly Transacting User (MTUs) is defined as the monthly number of unique users who transact via Grab’s apps (including OVO, GXS Bank, GXBank and MoveIt), where transact means to have successfully paid for or utilized any of Grab’s products or services (including lending and offline Jaya Grocer transactions where users record their Jaya Grocer loyalty points on the Grab app). MTUs over a quarterly or annual period are calculated based on the average of the MTUs for each month in the relevant period. MTUs is a metric by which Grab understands, evaluates and manages its business, and Grab’s management believes is necessary for investors to understand and evaluate its business.

Partner incentives is an operating metric representing the dollar value of incentives granted to driver- and merchant-partners, the effect of which is to reduce revenue. For certain delivery offerings where Grab is contractually responsible for delivery services provided to end-users, incentives granted to driver-partners are recognized in cost of revenue.

Consumer incentives is an operating metric representing the dollar value of discounts and promotions offered to consumers, the effect of which is to reduce revenue. Partner incentives and consumer incentives are metrics by which we understand, evaluate and manage our business, and we believe are necessary for investors to understand and evaluate our business. We believe these metrics capture significant trends in our business over time.

Loan portfolio is an operating metric representing the total of current and non-current loan receivables in the financial services segment, net of expected credit loss allowances.

Industry and Market Data
This document may contain information, estimates and other statistical data derived from third party sources , including research, surveys or studies, some of which are preliminary drafts, conducted by third parties, information provided by customers and/or industry or general publications. Such information involves a number of assumptions and limitations due to the nature of the techniques and methodologies used in market research, and as such neither Grab nor the third-party sources can guarantee the accuracy of such information. You are cautioned not to give undue weight to such estimates. Grab has not independently verified such third-party information, and makes no representation as to the accuracy of such third-party information.

Unaudited Summary of Financial Results

Condensed consolidated statement of profit or loss and other comprehensive income

The number of outstanding Class A and Class B ordinary shares was 3,909 million and 118 million as of September 30, 2024, and 3,800 million and 112 million, respectively, as of September 30, 2023. 269 million and 354 million potentially dilutive outstanding securities were excluded from the computation of diluted loss per ordinary share because their effects would have been antidilutive for the nine months ended September 30, 2024 and 2023 respectively, or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period.

Condensed consolidated statement of financial position

Condensed consolidated statement of cash flows

For inquiries regarding Grab, please contact:

Media
press@grab.com

Investors
investor.relations@grab.com

Source: Grab Holdings Limited
¹ We consider the Mobility and Deliveries segments to represent our On-Demand businesses. On-Demand GMV is defined as the sum of Mobility and Deliveries GMV.

² The total of current and non-current loan receivables in the financial services segment, net of expected credit loss allowances.

³ We calculate constant currency by translating our current period financial results using the corresponding prior period’s monthly exchange rates for our transacted currencies other than the U.S. dollar.

⁴ Regional corporate costs are costs that are not attributed to any of the business segments, including certain cost of revenue, research and development expenses, general and administrative expenses and marketing expenses. These regional costs of revenue include cloud computing costs. These regional research and development expenses also include mapping and payment technologies and support and development of the internal technology infrastructure. These general and administrative expenses also include certain shared costs such as finance, accounting, tax, human resources, technology and legal costs. Regional corporate costs exclude share-based compensation expenses and capitalized software costs.

⁵ Cash liquidity includes cash on hand, time deposits, marketable securities and restricted cash.

⁶ Net cash liquidity includes cash liquidity less loans and borrowings.

⁷ Includes completed food and groceries transactions.

⁸ Includes Advance Booking, Premium Fleets, and Paid Priority Mobility services.

⁹ Surged Mobility rides are defined as completed rides where demand exceeds supply in a specified region and/or where pricing regulations adherence is required.

Return on average shareholders’ equity¹ reaches 18.16% for the quarter

TORONTO, Nov. 11, 2024 /CNW/ – MCAN Mortgage Corporation d/b/a MCAN Financial Group (“MCAN”, the “Company” or “we”) MKP reported net income of $26.9 million ($0.70 earnings per share) for the third quarter of 2024, an increase from net income of $18.5 million ($0.53 earnings per share) in the third quarter of 2023.

Third quarter 2024 return on average shareholders’ equity¹ was 18.16% compared to 14.20% for the same period in the prior year.

Our Q3 results were mainly impacted by higher unrealized fair value gains on our REIT portfolio and higher income from our investment in MCAP compared to the same prior year period. 

For year to date 2024, we reported net income of $69.9 million ($1.87 earnings per share), an increase from net income of $57.6 million ($1.66 earnings per share) for the same prior year period.

Return on average shareholders’ equity¹ was 16.29% for year to date 2024 compared to 15.06% for the same prior year period.

We reported higher total net income for the year to date mainly as a result of higher unrealized fair value gains on our REIT portfolio, higher income from MCAP and higher net securitized mortgage spread income partially offset by slightly lower net corporate mortgage spread income compared to the same prior year period. We continued to manage our portfolio in a declining interest rate environment.

We are committed to a strategy of managing controllable factors to protect our bottom line and taking advantage of opportunities that arise in the current market environment.  

The Board of Directors declared a fourth quarter regular cash dividend of $0.39 per share to be paid on January 2, 2025 to shareholders of record as of December 13, 2024. As a mortgage investment corporation, we pay out all of our taxable income to shareholders through dividends. 

“We had a strong quarter, with total assets surpassing $5.2 billion and net income exceeding last year’s figures, thanks to the various levers we have in our business during a declining interest rate environment as well as better performance from our investment in MCAP. We also successfully raised additional capital in the quarter through our at-the-market program to help us grow,” said CEO Don Coulter. “In this environment, we are continuing to see solid origination and renewal volumes across the entire loan book as well as good credit quality. Looking ahead, we are focused on MCAN’s strategic growth and positioning in the Canadian mortgage market.”

HIGHLIGHTS

• Total assets reached $5.21 billion at September 30, 2024, a net increase of $474 million (10.0%) from December 31, 2023.
• Corporate assets totalled $2.88 billion at September 30, 2024, a net increase of $124 million (4.5%) from December 31, 2023.
  • Construction and commercial mortgages totalled $1.02 billion at September 30, 2024, a net decrease of $93 million (8%) from December 31, 2023. Year to date 2024, the movement in the construction and commercial portfolios is attributed to net originations of $420 million in new construction and commercial mortgages, offset by repayments from completing projects. Originations in the third quarter were lower compared to the same period in 2023; however, we have seen some extensions of projects due to normal construction delays or normal delays relating to the permitting and zoning process. To date, projects continue to progress toward completion.
  • Uninsured residential mortgages totalled $1.11 billion at September 30, 2024, a net increase of $139 million (14%) from December 31, 2023. Uninsured residential mortgage originations totalled $311 million year to date 2024, an increase of $27 million (9%) from the same period in 2023. The economic and interest rate environment and its impact on the housing market and borrowers has improved somewhat due to expectations about further interest rate cuts. We have also seen solid uninsured residential mortgage renewal rates with renewals of $350 million year to date 2024 compared to $380 million for the same period in 2023 as borrowers find it more convenient to stay with their existing lender in the current market environment.
  • Non-marketable securities totalled $114 million at September 30, 2024, an increase of $4 million (4%) from December 31, 2023 with $69 million of remaining commitments expected to fund over the next five years.
  • Marketable securities totalled $59 million at September 30, 2024, a net increase of $9 million (17%) from December 31, 2023 due to net unrealized fair value gains. In 2024, we saw REIT prices increase due to a declining interest rate environment.
• Securitized mortgages totalled $2.29 billion at September 30, 2024, a net increase of $360 million (19%) from December 31, 2023, due to higher securitization volumes.
  • Overall, total insured residential mortgage origination volumes are higher due to declining mortgage rates compared to the higher interest rate environment in the prior year. Insured residential mortgage originations totalled $528 million year to date 2024, an increase of $153 million (41%) from the same period in 2023. Insured residential mortgage securitizations totalled $591 million year to date 2024, an increase of $360 million (155%) from the same period in 2023. Insured residential mortgages being held for upcoming securitizations totalled $251 million at September 30, 2024, a net decrease of $26 million (9%) from December 31, 2023. We use various channels in funding the insured residential mortgage portfolio, in the context of market conditions and net contributions over the life of the mortgages, in order to support our overall business. As we have seen more favourable securitization spreads, we opted to securitize our insured residential mortgages as opposed to selling them at the commitment stage.

FINANCIAL UPDATE

• Net corporate mortgage spread income¹ is derived from both our residential lending portfolio and our construction and commercial portfolio. It decreased by $3.0 million for Q3 2024 from Q3 2023 and decreased $1.9 million for year to date 2024 from year to date 2023 mainly due to a reduction in the spread of corporate mortgages over term deposit interest and expenses partially offset by a higher average corporate mortgage portfolio balance. The decrease in the spread is mainly due to higher effective interest rates on our term deposits and fair value hedge costs. Year to date, this was partially offset by higher average mortgage rates primarily due to the impact of the higher rate environment on our floating rate residential construction loans.
• Net securitized mortgage spread income¹ increased by $1.1 million for Q3 2024 from Q3 2023 and increased $2.0 million year to date 2024 from year to date 2023 due to a higher average securitized mortgage portfolio balance and an increase in the spread of securitized mortgages over liabilities. We have seen better economics on securitizations as the spread of Government of Canada bond yields versus our mortgage rates has widened on the expectation of a declining interest rate environment.
• For Q3 2024, we had a provision for credit losses on our corporate mortgage portfolio of $1.3 million compared to a provision for credit losses of $0.4 million in Q3 2023. For year to date 2024, we had a provision for credit losses on our corporate mortgage portfolio of $2.1 million compared to a provision for credit losses of $2.4 million for year to date 2023. For year to date 2024, the provision was mainly due to less favourable underlying economic forecasts relating to unemployment rates and interest provisioning on impaired residential construction loans.
• Equity income from MCAP Commercial LP totalled $6.7 million in Q3 2024, an increase of $2.4 million (55%) from $4.3 million in Q3 2023, and totalled $21.6 million for year to date 2024, an increase of $4.0 million (23%) from $17.6 million year to date 2023. For Q3 2024 and year to date 2024, the increase was primarily due to (i) higher securitized mortgage net interest income from more favourable spreads and a higher average securitized portfolio; (ii) higher mortgage origination fees as a result of wider mortgage spreads and hedge losses; and (iii) higher investment revenue from higher average balances of non-securitized mortgages. These were partially offset by (i) higher interest expense on credit facilities; (ii) higher securitization expenses; and (iii) lower financial instrument gains mainly due to hedge losses.
• Net unrealized fair value gain on our marketable securities of $9.6 million in Q3 2024 compared to a $3.6 million net unrealized fair value loss in Q3 2023, and a $8.6 million net unrealized fair value gain for year to date 2024 compared to a $7.7 million net unrealized fair value loss for year to date 2023. We expect some additional recovery in the REIT market given a declining interest rate environment. We are long term investors and continue to realize the benefits of solid cash flows and distributions from these investments. Year to date, we received distributions of $2.3 million (distribution yield¹ of 6.02%) from our REITs compared to $2.8 million (distribution yield¹ of 6.22%) in 2023.
• Net unrealized fair value loss on our non-marketable securities of $3.9 million in Q3 2024 mainly related to updated property valuations partially offset by increased density approval on one underlying property. In Q3 2023, we had a $2.1 million net unrealized fair value gain on our non-marketable securities investments due to value-add leasing activity on one underlying property investment. For year to date 2024, we had a net unrealized fair value loss on our non-marketable securities of $3.6 million mainly related to the same factors as for Q3 2024 mentioned above. For 2023 year to date, we had a $2.1 million net unrealized fair value gain on our non-marketable securities investments due to the same factors as described for Q3 2023 mentioned above. Our non-marketable securities are either held for long-term capital appreciation or distribution income and they tend to improve the diversification, and risk and reward characteristics of our overall investment portfolio. Our real estate development fund investments tend to have less predictable cash flows that are predicated on the completion of the development projects within these funds.

Credit Quality

• Arrears total mortgage ratio¹ was 3.06% at September 30, 2024 compared to 3.04% at June 30, 2024 and 2.70% at December 31, 2023. The majority of our residential mortgage arrears activity occurs in the 1-30 day category, in which the bulk of arrears are resolved and do not migrate to arrears categories over 30 days. While greater than 30 days arrears has increased in our uninsured residential mortgages, we believe overall that we have a quality uninsured residential mortgage loan portfolio with an average LTV of 63.5% at September 30, 2024 compared to 64.5% at June 30, 2024 and 63.4% at December 31, 2023 based on an industry index of current real estate values. We have also seen our arrears stabilize since Q1 2024. With respect to our construction and commercial loan portfolio, we have a strong track record with our default management processes and asset recovery programs as the need arises.
• Impaired corporate mortgage ratio¹ was 2.26% at September 30, 2024 compared to 3.50% at June 30, 2024 and 3.26% at December 31, 2023. At September 30, 2024, impaired mortgages mainly represent four impaired construction mortgages where asset recovery programs have been initiated.
• Impaired total mortgage ratio¹ was 1.19% at September 30, 2024 compared to 1.90% at June 30, 2024 and 1.82% at December 31, 2023. The decrease to our impaired total mortgage ratio is mainly due to fewer impaired construction mortgages as they were either brought current or we recovered all past due interest and principal.

Capital

• We have a Base Shelf prospectus allowing us to make certain public offerings of debt or equity securities during the period that it is effective, through Prospectus Supplements.
  • We have an ATM Program, established pursuant to a Prospectus Supplement to our Base Shelf prospectus, allowing us to issue up to $30 million common shares to the public from time to time at the market prices prevailing at the time of sale. In Q3 2024, we sold 182,600 common shares at a weighted average price of $17.75 for gross proceeds of $3.2 million and net proceeds of $3.0 million including $65 thousand of agent commission paid and $155 thousand of other share issuance costs under the ATM Program. At September 30, 2024, we have $25.1 million remaining available to be issued through our ATM Program. The volume and timing of distributions under the ATM Program are determined at MCAN’s sole discretion.
• We issued $2.2 million in new common shares in Q3 2024 (Q3 2023 – $4.0 million) and $14.8 million year to date 2024 (year to date 2023 – $14.5 million) through the Dividend Reinvestment Plan (“DRIP”). The DRIP participation rate for the 2024 third quarter dividend was 15% (2024 second quarter – 30%; 2023 third quarter – 30%). The DRIP is a program that has historically provided MCAN with a reliable source of new capital and existing shareholders an opportunity to acquire additional shares at a discount to market value.
• Income tax assets to capital ratio³ was 5.38 at September 30, 2024 compared to 5.34 at June 30, 2024 and 5.52 at December 31, 2023.
• Common Equity Tier 1 (“CET 1”) and Tier 1 Capital to risk-weighted assets ratios² were 19.94% at September 30, 2024 compared to 19.10% at June 30, 2024 and 17.61% at December 31, 2023. Total Capital to risk-weighted assets ratio² was 20.19% at September 30, 2024 compared to 19.35% at June 30, 2024 and 17.91% at December 31, 2023. Leverage ratio² was 9.99% at September 30, 2024 compared to 9.85% at June 30, 2024 and 9.49% at December 31, 2023. Improvement to our capital and leverage ratios in 2024 was due to the timing of our overnight marketed offering in Q1 2024.

FURTHER INFORMATION

Complete copies of the Company’s 2024 Third Quarter Report will be filed on the System for Electronic Document Analysis and Retrieval (“SEDAR+”) at www.sedarplus.ca and on the Company’s website at www.mcanfinancial.com.

For our Outlook, refer to the “Outlook” section of the 2024 Third Quarter Report.

MCAN is a public company listed on the Toronto Stock Exchange under the symbol MKP and is a reporting issuer in all provinces and territories in Canada.  MCAN also qualifies as a mortgage investment corporation (“MIC”) under the Tax Act. MCAN is the largest MIC in Canada and the only federally regulated MIC.  

The Company’s primary objective is to generate a reliable stream of income by investing in a diversified portfolio of Canadian mortgages, including residential mortgages, residential construction, non-residential construction and commercial loans, as well as other types of securities, loans and real estate investments. MCAN employs leverage by issuing term deposits that are eligible for Canada Deposit Insurance Corporation deposit insurance. MCAN is Investing in Communities and Homes for Canadians.

For how to enroll in the DRIP, please refer to the Management Information Circular dated March 15, 2024 or visit our website at www.mcanfinancial.com/investors/regulatory filings/dividends – historical. Under the DRIP, dividends paid to shareholders are automatically reinvested in common shares issued out of treasury at the weighted average trading price for the five days preceding such issue less a discount of 2% until further notice from MCAN.

NON-GAAP AND OTHER FINANCIAL MEASURES

This news release references a number of non-generally accepted accounting principles (“non-GAAP”) and other financial measures and ratios to assess our performance such as return on average shareholders’ equity, net corporate mortgage spread income, net securitized mortgage spread income, impaired corporate mortgage ratio, impaired total mortgage ratio, and arrears total mortgage ratio.  These measures are not calculated in accordance with International Financial Reporting Standards (“IFRS”), are not defined by IFRS and do not have standardized meanings that would ensure consistency and comparability between companies using these measures.  These metrics are considered to be non-GAAP and other financial measures and are incorporated by reference and defined in the “Non-GAAP and Other Financial Measures” section of our 2024 Third Quarter Management’s Discussion and Analysis of Operations (“MD&A”) available on SEDAR+ at www.sedarplus.ca. Below are reconciliations for our non-GAAP financial measures included in this news release using the most directly comparable IFRS financial measures.

Net Corporate Mortgage Spread Income
Non-GAAP financial measure that is an indicator of net interest profitability of income-earning assets less cost of funding for our corporate mortgage portfolio.  It is calculated as the difference between corporate mortgage interest and term deposit interest and expenses.

Net Securitized Mortgage Spread Income
Non-GAAP financial measure that is an indicator of net interest profitability of income-earning securitization assets less cost of securitization liabilities for our securitized mortgage portfolio.  It is calculated as the difference between securitized mortgage interest and interest on financial liabilities from securitization. 

A CAUTION ABOUT FORWARD-LOOKING INFORMATION AND STATEMENTS

This news release contains forward-looking information within the meaning of applicable Canadian securities laws.  All information contained in this news release, other than statements of current and historical fact, is forward-looking information. All of the forward-looking information in this news release is qualified by this cautionary note. Often, but not always, forward-looking information can be identified by the use of words such as “may,” “believe,” “will,” “anticipate,” “expect,” “planned,” “estimate,” “project,” “future,” and variations of these or similar words or other expressions that are predictions of, or indicate, future events and trends and that do not relate to historical matters. Forward-looking information in this news release includes, among others, statements and assumptions with respect to:

• the current business environment, economic environment and outlook;
• possible or assumed future results;
• our ability to create shareholder value;
• our business goals and strategy;
• the potential impact of new regulations and changes to existing regulations;
• the stability of home prices;
• the effect of challenging conditions on us;
• the performance of our investments;
• factors affecting our competitive position within the housing lending market;
• international trade, international economic uncertainties, failures of international financial institutions and geopolitical uncertainties and their impact on the Canadian economy;
• sufficiency of our access to liquidity and capital resources;
• the timing and effect of interest rate changes on our cash flows; and
• the declaration and payment of dividends.

Forward-looking information is not, and cannot be, a guarantee of future results or events. Forward-looking information reflects management’s current beliefs and is based on information currently available to management. Forward-looking information is based on, among other things, opinions, assumptions, estimates and analyses that, while considered reasonable by us at the date the forward-looking information is provided, inherently are subject to significant risks, uncertainties, contingencies and other factors that may cause actual results and events to be materially different from those expressed or implied by the forward-looking information. 

The material factors or assumptions that we identified and were applied by us in drawing conclusions or making forecasts or projections set out in the forward-looking information, include, but are not limited to: 

• our ability to successfully implement and realize on our business goals and strategy;
• government regulation of our business and the cost to us of such regulation;
• factors and assumptions regarding interest rates, including the effect of Bank of Canada actions already taken;
• the effect of supply chain issues;
• the effect of inflation;
• housing sales and residential mortgage borrowing activities;
• the effect of household debt service levels;
• the effect of competition;
• systems failure or cyber and security breaches;
• the availability of funding and capital to meet our requirements;
• investor appetite for securitization products;
• the value of mortgage originations;
• the expected spread between interest earned on mortgage portfolios and interest paid on deposits;
• the relative uncertainty and volatility of real estate markets;
• acceptance of our products in the marketplace;
• the stage of the real estate cycle and the maturity phase of the mortgage market;
• impact on housing demand from changing population demographics and immigration patterns;
• our ability to forecast future changes to borrower credit and credit scores, loan to value ratios and other forward-looking factors used in assessing expected credit losses and rates of default;
• availability of key personnel;
• our operating cost structure;
• the current tax regime; and
• operations within, and market conditions relating to, our equity and other investments.

External geopolitical conflicts, and government and Bank of Canada economic policy have resulted in uncertainty relating to the Company’s internal expectations, estimates, projections, assumptions and beliefs, including with respect to the Canadian economy, employment conditions, interest rates, supply chain issues, inflation, levels of housing activity and household debt service levels. There can be no assurance that such expectations, estimates, projections, assumptions and beliefs will continue to be valid. The impacts that any further or escalating geopolitical conflicts will have on our business is uncertain and difficult to predict. 

Reliance should not be placed on forward-looking information because it involves known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from anticipated future results expressed or implied by such forward-looking information. Factors that could cause actual results to differ materially from those set forth in the forward-looking information include, but are not limited to, the risk that any of the above opinions, estimates or assumptions are inaccurate and the other risks and uncertainties referred to in our Annual Information Form for the year ended December 31, 2023, our MD&A and our other public filings with the applicable Canadian regulatory authorities.

Subject to applicable securities law requirements, we undertake no obligation to publicly update or revise any forward-looking information after the date of this news release whether as a result of new information, future events or otherwise or to explain any material difference between subsequent actual events and any forward-looking information.  However, any further disclosures made on related subjects in subsequent reports should be consulted.

SOURCE MCAN Mortgage Corporation

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