Strong business growth driven by the added value of the service offer
Desjardins, dedicated to serving its members and committed to developing
Ranked third among Most Sustainable Co-operatives in the World according to the Toronto-based magazine Corporate Knights.
Among the 30 best employers in Quebec according to an Aon Hewitt study.
More assistance to SMEs with the launch of Phase II of the Capital Croissance PME fund, which is funded by Capital régional et coopératif Desjardins and
the Caisse de dépôt et placement du Québec.
Giving a total of $52 million back to members and the community in the
first quarter, including the provision for member dividends,
sponsorships and donations.
Desjardins, an outstanding and growing organization
Key Financial Data
FINANCIAL POSITION AND KEY RATIOS
(in millions of $ and as a %)
As at March 31,
As at December 31,
Tier 1a capital ratio(2)
Total capital ratio(2)
Gross impaired loans/gross loans ratio
For the quarters ended
(in millions of $ and as a %)
Surplus earnings before member dividends
Return on equity
Data for 2012 have been restated in accordance with the application of
new accounting policies that took effect on January 1, 2013.
Ratios for 2013 have been calculated according to the guideline on
adequacy of capital base standards applicable to financial services
cooperatives, issued by the AMF under the Basel III Accord, while the
ratios for 2012 were calculated under the Basel II Capital Accord.
CREDIT RATINGS OF SECURITIES ISSUED
Caisse centrale Desjardins
Senior medium and long term
Capital Desjardins inc.
Senior medium and long term
LÉVIS, QC, May 10, 2013 /CNW Telbec/ - At the end of the first quarter
ended March 31, 2013, Desjardins Group (www.desjardins.com), the leading financial cooperative group in Canada, posted $378
million in surplus earnings before member dividends, compared to
$398 million for the same quarter of 2012. For purposes of comparison,
the data from 2012 have been restated in accordance with the
application of new accounting policies that took effect on January 1,
2013. Return on equity was 9.8%, compared to 11.7% for the same quarter
"Our caisse network and our insurance companies have posted strong
business volume growth," explained Monique F. Leroux, Chair of the
Board, President and Chief Executive Officer. "This is clear evidence
of the added value of our service offer. However, the low interest rate
environment has affected our profit margin and profitability, which we
take as an incentive to continue exercising sound and prudent
management of the Group's affairs. This includes maintaining the
Group's solid capitalization, which remains one of the best in the
Canadian financial industry."
Operating income for this first quarter was $2,859 million, up
$86 million or 3.1% compared to the same quarter of 2012. Despite the
fact that the overall loan portfolio grew $8.0 billion or 6.3% over the
last year, net interest income suffered due to the low interest rate
environment, falling $30 million in the first quarter of 2013, to
$934 million. Business growth in insurance activities generated a 7.7%
increase in net premiums, which stood at $1,323 million. Other
operating income reached $602 million, up $21 million or 3.6% from the
same quarter of 2012.
Investment income for the first quarter of 2013 stood at $132 million,
up $47 million or 55.3% compared to the same period last year. This
increase was largely the result of investment income related to life
and health insurance activities due to an increase in the fair value of
assets used to support liabilities. This increase was partially offset
by an increase in related actuarial liabilities.
The provision for credit losses for the first quarter of 2013 totalled
$60 million, down $22 million or 26.8% compared to the same quarter of
2012. This change resulted from an adjustment to the credit allowance
due to changes in credit risk developments in 2012.
Expenses related to claims, benefits, annuities and changes in insurance
and investment contract liabilities came to $921 million, up
$175 million or 23.5% from the same quarter of 2012. This change was
primarily due to an increase in actuarial liabilities included under
"Insurance and investment contract liabilities," in particular as a
result of changes in the fair value of investments. It should be
recalled that particularly mild weather conditions in the first quarter
of 2012 led to lower claims for the period.
Non-interest expense reached $1,528 million, up $12 million or 0.8%
compared to the first quarter of 2012. This was primarily due to an
expansion of the workforce to support business growth and the annual
indexing of salaries.
A total of $52 million was given back to members and the community in
the first quarter, including donations and sponsorships. The provision
for member dividends was $36 million compared to $51 million for the
same period last year. Each of these amounts takes into account the
adjustment to the previous year's provision. Desjardins Group's
approach to distributing surplus earnings seeks a healthy balance
between development and capitalization, for the benefit of members and
Assets of $201.6 billion, up 2.4%
As at March 31, 2013, Desjardins Group had $201.6 billion in total
assets, up $4.8 billion or 2.4% from December 31, 2012. Despite a less
favourable economic environment, particularly in the housing market,
demand for credit remained vigorous as shown by the sustained growth in
loan portfolio during the quarter.
As at March 31, 2013, the loan portfolio, net of the allowance for
credit losses, was $134.1 billion, up $1.5 billion or 1.1% since
December 31, 2012. Residential mortgage loans, which accounted for
64.4% of the total credit portfolio on the same date, grew $705 million
or 0.8% during the first quarter of 2013, to $86.6 billion. These are
excellent results given the pronounced slowdown in the Quebec and
Ontario housing markets during this period. And this is a clear
indication that the caisses are providing services that are aligned
with their members' needs.
Loans to business and government grew $809 million or 2.8% over the same
period, to $29.4 billion at the end of the first quarter.
Quality loan portfolio
The quality of Desjardins Group's loan portfolio remains excellent. As
at March 31, 2013, gross impaired loans outstanding stood at
$469 million, up $3 million from December 31, 2012. The ratio of gross
impaired loans to the total gross loan portfolio was 0.35% at the end
of the first quarter. This was identical to the ratio obtained as at
December 31, 2012. It remains one of the best ratios in Canadian
Savings recruitment grows
As at March 31, 2013, Desjardins Group's outstanding deposits stood at
$131.1 billion, up $1.4 billion or 1.1% from December 31, 2012.
Personal savings grew $1.1 billion or 1.3% over the same period, to
$85.5 billion. It should be mentioned that personal savings represented
65.3% of the total loan portfolio on this date.
Deposits from businesses and governments increased $259 million, or
0.6%, since the end of fiscal 2012, to $43.3 billion as at March 31,
2013. Deposits from deposit-taking institutions and other sources stood
at $2.2 billion on the same date, up $70 million or 3.2% at the end of
the first quarter of 2013.
A strong capital base
Despite applying new capitalization rules (the Basel III Accord),
Desjardins Group continues to be one of the best capitalized financial
institutions in Canada. Its Tier 1a and total capital ratios were 16.0%
and 18.9%, respectively, as at March 31, 2013, well above the 15%
objective set by Desjardins Group. The Tier 1 and total capital ratios
as at December 31, 2012 were 16.8% and 19.3%, respectively. However,
because of the changes to the regulatory framework, the ratios for the
first quarter of 2013 cannot be compared to the fiscal 2012 ratios.
Stable and diversified funding
In order to ensure stable and diversified funding, Caisse centrale
Desjardins (CCD) diversifies its sources of financing on the
institutional capital markets.
This strategy led CCD to participate in new issues of mortgage
securities under the National Housing Act as part of the Canada Mortgage Bonds Program. In the first three months
of 2013, CCD was active in this market for a total participation of
Credit ratings still among the best in the country
In the first quarter of 2013, Moody's downgraded the credit ratings of
CCD and Capital Desjardins inc. as well as the ratings of five other Canadian financial institutions.
The agency stated that this decision was essentially due to the
economic situation in Canada, which shows troubling signs, including
high household debt levels and elevated housing prices.
Even after the downgrade, the credit ratings of CCD and Capital
Desjardins inc. remain among the best in Canada and compare favourably with those of
several large international and Canadian financial institutions.
Results by business segment
Personal Services and Business and Institutional Services
The Personal Services and Business and Institutional Services segment
offers Desjardins Group's members and clients a comprehensive range of
standard financial services and products that are mainly distributed by
the caisse network, but also by its Desjardins Business Centres and the
major accounts team. The segment also makes its products available
through complementary distribution networks and mortgage
representatives, by phone, online, via applications for mobile devices,
as well as at ATMs.
For the first quarter of 2013, surplus earnings before member dividends
attributable to the Personal Services and Business and Institutional
Services segment, on the strength of a large network of caisses with
close ties to their members and clients, were $169 million, down
$11 million or 6.1% from one year earlier.
The segment posted operating income of $1,303 million, down $24 million
from the same quarter of 2012. This decline resulted from a $17 million
or 1.9% decrease in net interest income, mainly due to the ongoing low
interest rate environment. The drop in net interest income was
mitigated by an $8.3 billion increase in the entire portfolio of
outstanding loans over the last year. Other operating income declined
$7 million or 1.7% from the first quarter of 2012, to $409 million.
Investment income stood at $17 million, down $34 million from one year
earlier. This was primarily due to the disposal of an investment that
generated a non-recurring $21 million gain in the first quarter of 2012
and a lower return on the caisse network's surplus liquidities and
investments due to the ongoing low interest rate environment. This
decrease was offset by higher trading income as a result of a market
environment that was less volatile than one year earlier.
The provision for credit losses was $60 million in the first quarter of
2013, down $22 million or 26.8% from the same quarter of 2012. The
change was due to a credit allowance adjustment following changes in
credit risk developments in 2012.
Non-interest expense for the quarter was $1,047 million, $12 million or
1.1% less than the same period of 2012. The difference was due to a
lower pension expense, which was partially offset by growth in the
sector's operations and credit card rewards program.
Wealth Management and Life and Health Insurance
The Wealth Management and Life and Health Insurance segment offers the
members and clients of Desjardins Group a range of services tailored to
the changing wealth management and financial security needs of
individuals, groups, businesses and cooperatives. These products and
services are distributed through the caisse network and complementary
distribution networks, by phone, online and via applications for mobile
For the first quarter of 2013, the segment posted $126 million in
surplus earnings, up $69 million or 121.1% from the same quarter of
2012. The increase was essentially due to life and health insurance
Operating income stood at $1,100 million, up $70 million due to a
$61 million increase in net insurance premiums, while annuity premiums
fell $10 million. Group insurance premiums purchased increased 9.1%
compared to the first quarter of 2012. Other operating income rose $19
million, primarily due to growth in assets under management arising
from the distribution of various savings products. Investment income
increased $119 million to $39 million, compared to an $80 million loss
recorded in the same quarter of 2012. This difference was largely the
result of an increase in investment income associated with life and
health insurance activities due to an increase in the fair value of
assets used to support liabilities. The increase was offset by changes
in actuarial liabilities.
Expenses related to claims, benefits, annuities and changes in insurance
and investment contract liabilities totalled $547 million, up
$92 million or 20.2% from the first quarter of 2012. The increase was
due to a $44 million increase in benefits, arising primarily from
growth in group insurance activities. It was also due to the
$35 million increase in actuarial liabilities included in "Insurance
and investment contract liabilities," which included a $106 million
increase in the fair value of investments and a $41 million downward
adjustment resulting from a review of certain actuarial assumptions.
Non-interest expenses for the first quarter of 2013 came to
$424 million, an increase of $4 million or 1.0%, compared to the
corresponding quarter in 2012.
Property and Casualty Insurance
The Property and Casualty Insurance segment offers insurance products
that provide the members and clients of Desjardins Group with
protection in the event of a loss. It includes the activities of
Desjardins General Insurance Group Inc. and Western Financial Group
Inc. In addition to being sold through the caisse network, the products
of this segment are distributed by many Client Contact Centres and
Desjardins Business Centres, by a network of brokers, by a network of
exclusive agents in the field, over the Internet and via applications
for mobile devices.
This segment's surplus earnings for the first quarter were $24 million,
down $44 million or 64.7% from the same period of 2012. This decrease
was primarily due to a less favourable loss ratio in 2013 in all
segments and in all parts of the country.
Operating income was $551 million, due in large part to a $49 million
increase in net premium income as a result of an increase in policies
issued following multiple growth initiatives. All segments and regions
contributed to this increase. Other operating income was up $4 million,
essentially because of higher commission income from Western Financial Group Inc. Investment income was down $4 million from the end of the same period
of 2012, to $29 million. This decline was nevertheless mitigated by the
gains realized on disposals of investments, offset by an increase in
the value of investments in 2013 (compared to a decrease recorded in
the same quarter of 2012).
The loss ratio for property and casualty segment's insurers rose from
63.3% in the first quarter of 2012 to 74.8% one year later. The main
cause was an increase in claims as a result of less favourable weather
in early 2013. The loss ratio for the first quarter of 2013 was more
representative of past claims experience for this time of year. It
should be recalled that the weather was particularly mild in the first
quarter of 2012, and this resulted in fewer claims during the period.
Non-interest expense was $173 million at the end of the quarter, up
$15 million or 9.5% from the same period of 2012. This increase is
mainly attributable to Western Financial Group Inc., given the growth
in its activities.
The "Other" category does not correspond to a specific area of
activities. It mainly includes treasury activities related to the
operations of Caisse centrale Desjardins and financial intermediation
between the caisses' liquidity surpluses and needs. The segment also
includes the results for the Federation's support functions, the
activities of Capital Desjardins Inc., those of Fonds de sécurité
Desjardins and operating results related to the asset-backed term notes
(ABTN) held by Desjardins Group. The category also includes Desjardins
Technology Group, which brings together all of Desjardins Group's
IT-related activities. In addition to the various adjustments required
to prepare the interim combined financial statements, this category
captures eliminations of inter-segment balances.
Surplus earnings before member dividends for the Other category stood at
$59 million, mainly due to a $27 million positive change in the fair
value of the ABTN portfolio, net of hedging positions, treasury
activities and surplus earnings from investments made by the Fonds de
Cooperating in building the future
Ranked 23rd among the World's Safest Banks 2013 by Global Finance magazine, Desjardins Group, the leading cooperative financial group in
Canada, inspires trust around the world through the commitment of its
people, its financial strength and its contribution to sustainable
prosperity. Desjardins Group's mission is to contribute to improving
the social and economic well-being of people and communities. For more
information, visit: www.desjardins.com.
Caution concerning forward-looking statements
Certain statements made in this press release may be forward-looking.
Forward-looking statements, by their very nature, are subject to
inherent risks and uncertainties that may be general or specific and
are based on several assumptions which may give rise to the possibility
that actual results or events could differ materially from our
expectations expressed in or implied by such forward-looking
statements. Various factors beyond Desjardins Group's control could
influence the accuracy of the forward-looking statements in this press
release. Although Desjardins Group believes that the expectations
expressed in these forward-looking statements are reasonable, it can
give no assurance or guarantee that these expectations will prove to be
correct. Desjardins Group cautions readers against placing undue
reliance on forward-looking statements when making decisions.
Desjardins Group does not undertake to update any forward-looking
statements that could be made from time to time by or on behalf of
Desjardins Group, except as required under applicable securities
SOURCE: Desjardins Group
For further information:
(for journalists only):
Director, Media Relations
1 866 866-7000, ext. 7229
Daniel Dupuis, CPA, CA
Senior Vice-President, Finance and
Chief Financial Officer