Strong S&P Global Ratings risk-adjusted capital (RAC) ratio Asset quality track record that remains good Evolving business strategy and concentrated exposure to the riskier nonprime segment of the Canadian mortgage market High dependence on the third-party brokered channel for mortgage and deposit origination Historical control weaknesses relating to income and employment verification, with prior fraudulent activity in broker-originated mortgages, although recent enhancements in risk controls have been observed The positive outlook implies at least a one-in-three chance that we could raise the long-term ratings within one year. We could raise our ratings on HCG if we gain more clarity regarding the company's long-term strategic direction such that we have more comfort in the bank's projected S&P Global Ratings' RAC ratio
