MCAN Financial Group Reports Q3 Results, Mortgage Originations Rise as Risk Buffers Tighten

Toronto | 6 Nov 2025, 10:00 EST —

MCAN Financial Group Ltd (TSX: MKP) has posted steady third-quarter 2025 results that underline both the resilience and the caution defining Canada’s alternative mortgage sector. The Toronto-based mortgage investment corporation (MIC) reported net income of C$ 20.5 million, up about 2 % quarter-over-quarter, driven by strong loan originations and sustained demand for uninsured residential products — but also by a noticeable increase in loan-loss provisions.

Earnings Snapshot

For the three months ended 30 September 2025, MCAN recorded earnings per share (EPS) of C$ 0.52 on total revenue of roughly C$ 64 million. Its assets under management rose to ~C$ 7.0 billion, a 10 % increase from a year earlier. Book value per share stood at C$ 15.85.

The company’s Board declared a C$ 0.41 per-share cash dividend, payable in December — marking MCAN’s 40th consecutive quarter of stable distributions. That continuity matters to income-focused investors who view MICs as a defensive alternative to public REITs or high-yield bonds.

Lending Momentum and Shift in Mix

MCAN’s uninsured residential mortgage originations jumped about 30 % quarter-over-quarter, reflecting renewed borrower activity as bond yields softened and buyers anticipated rate cuts in 2026. However, insured and construction mortgage volumes remained largely flat, a signal that developers and builders are still hesitant amid supply-chain pressures and labour shortages.

In a statement, CEO Karen Weaver said, “Our core portfolio continues to perform well, with low arrears and consistent yield growth. That said, we are building a more defensive balance sheet given persistent geopolitical and economic volatility.”

MCAN also launched a new uninsured residential mortgage securitization program, which will allow it to fund loans more efficiently and manage capital requirements under Basel III rules. The program could support future growth without significant equity dilution.

Credit Quality and Risk Provisions

While overall credit performance remains sound, MCAN increased its provisions for expected credit losses (CECL) to C$ 7.4 million, up from C$ 5.9 million in Q2. The company cited a slower-than-expected recovery in commercial real estate values and pockets of strain among small builders as key reasons.

According to the firm’s MD&A, average loan-to-value (LTV) across its residential portfolio was 61 %, while delinquencies over 90 days stood below 0.25 %. This suggests that even as the firm expands its uninsured book, it remains conservative on leverage and risk.

Market Environment

The third quarter coincided with sharply mixed signals in Canada’s housing sector. Home sales in Toronto and Vancouver continued to ease through October, but mortgage competition intensified as bond yields retreated. Alternative lenders like MCAN, Home Capital, and Equitable Bank benefited from renewal activity and the shift toward shorter-term fixed products.

However, with inflation still hovering near the upper end of the Bank of Canada’s target range, credit spreads for non-prime and uninsured lending remained elevated. This helps earnings margins but increases default sensitivity.

Analyst Perspective

Analysts view MCAN’s steady performance as a sign of sector discipline amid transition. Mortgage strategist Benjamin Reynolds of Bay Street Research wrote, “The firm is balancing growth and prudence well. Loan originations are healthy, but capital ratios remain strong. That will matter as 2026 renewals begin to test household cash flows.”

Another observer noted that MCAN’s dividend yield — currently near 8 % — remains among the highest in the Canadian financial sector. Still, higher provisions and a slower real-estate cycle could cap share-price upside in the near term.

Dividend and Capital Position

Following the dividend announcement, MCAN’s capital ratio stood at 16.8 %, comfortably above regulatory minimums. Management emphasized its commitment to a “disciplined payout policy” aligned with earnings growth and loan performance.

The firm is also evaluating additional funding channels for 2026, including covered bonds and private-placement notes to diversify liquidity beyond traditional deposits.

Outlook for 2026

MCAN expects the Canadian housing market to remain subdued in the first half of 2026 but believes lower interest rates and rising immigration will restore volume momentum by late year. Management is forecasting mid-single-digit growth in originations and a stable net interest margin around 3 %.

The company also plans to expand its partnerships with mortgage brokers and independent lenders to capture new borrower segments outside major metros.

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MCAN Financial Group continues to demonstrate measured growth in a volatile market. By tightening risk controls while increasing originations, the firm signals that Canada’s non-bank mortgage sector can still deliver returns — but with a sharper focus on credit quality as 2026 approaches.