Desjardins Group's caisse network and business sectors experienced
Its capitalization ratio among the best in the industry.
Desjardins won national and international recognitions for its
and financial performance.
LÉVIS, QC, Feb. 25 /CNW Telbec/ -
Total income of $11.7 billion, up by close to 10% at the end of fiscal
Strong balance sheet supported by a capitalization of over $13 billion,
up 15.1% since December 31, 2009
Total capital funding of $2.1 billion: $1.6 billion from Canadian
institutional investors and $0.5 million from members
Tier 1 capital ratio of 17.7%
Assets of over $172 billion, up 9.4% from one year earlier
Quality loan portfolio, with a gross impaired loans ratio of 0.44%, one
of the best in the Canadian banking industry
Deposit growth of $6.8 billion, evidence of a dynamic caisse network
Named "Bank of the Year 2010" in Canada by The Banker, a London-based British magazine
Winner in the social responsibility category of the Prix québécois de l'entreprise citoyenne - Québec corporate citizenship award, presented by L'actualité magazine and Korn Ferry/International
One of the Canada's 10 Most Admired Corporate Cultures of 2010 ProgramTM
7th place among the 50 Best Corporate Citizens in Canada, as awarded by Corporate Knights' Magazine
Take-over bid on the shares in Western Financial Group aimed at
continuing Desjardins Group's business development in the rest of
Successful launch of Desjardins mobile services, with close to 3 million
transactions in the first 3 months
Key financial data
For the year
ended December 31
For the quarter
ended December 31
in millions of $ and as a %)
Combined surplus earnings before
Return on equity
BALANCE SHEET AND RATIOS
In millions of $ and as a %
As at December 31, 2010
As at December 31, 2009*
Tier 1 capital ratio
Total capital ratio
Gross impaired loans ratio
* 2009 figures have been restated
For the fiscal year ended December 31, 2010, Desjardins Group, the
largest cooperative financial group in Canada, announces surplus
earnings before member dividends of $1,437 million, an increase of
$363 million or 33.8% from the previous year. Return on equity was
11.6%, compared to 10.2% for 2009.
"We owe these exceptional results to our dynamic caisse network and all
our business sectors," said Ms. Monique F. Leroux, Chair of the Board,
President and CEO. "These results clearly demonstrate the relevance of
the cooperative financial model. Now more than ever, Desjardins Group
is viewed as an industry leader, here in Canada and around the world.
This is particularly true given the recent accolades that we received
this past year. I would like to thank our members and clients for the
trust they have shown us. I would also like to thank our 6,000 elected
officers and 42,000 employees for their ongoing commitment that
contributed to our success. In conclusion, this success was achieved by
remaining a solid and effective cooperative financial group at work for
the benefit of its members and communities. Through these efforts,
we're building a foundation of sustainable prosperity from which future
generations will benefit."
Total income was $11,685 million, up $1,015 million or 9.5% compared to
the previous year. Net interest income was $3,886 million, a
$364 million or 10.3% increase over 2010, mainly due to the strong
performance by the caisses in the mortgage and business loan markets.
More specifically, there was substantial growth in outstanding
mortgages to individuals, which were up $5.2 billion at the end of
2010. This was due to strong momentum in housing starts and the resale
market, an average selling price for houses and a rate environment that
continued to favour buyers. In addition, consumer spending boosted
credit card and point-of-sale financing activities, which further
enhanced net interest income. Despite strong competition in the
insurance industry, net premiums, which consist of life and health
insurance and property and casualty insurance premiums as well as
annuity premiums, rose $121 million or 2.8%, to $4,368 million as at
December 31, 2010.
Other income stood at $3,431 million, up $530 million or 18.3%. This
increase was due to transaction income and income from
available-for-sale securities and brokerage, investment fund and trust
services. This increase was largely offset by higher actuarial
liabilities related to life and health insurance activities.
Non-interest expense grew $254 million or 4.9% from fiscal 2009, to
$5,403 million as at December 31, 2010. This increase was mainly due to
higher salaries and fringe benefits, partly as a result of the annual
indexing of salaries and expenses related to pension plans.
Expenses related to claims, benefits, annuities and changes in insurance
provisions totalled $4,168 million in 2010, up $410 million or 10.9%
from 2009. A large part of this increase was due to actuarial
liabilities related to life and health insurance activities, which were
higher because of an increase in the fair value of matched investments.
Desjardins Group's productivity ratio improved by 2.6 points in 2010,
from 71.9% for 2010 compared to 74.5% for the previous year as a result
of income growth and ongoing Group-wide efforts to improve
productivity. The Group's productivity index is calculated as
non-interest expense to total income, net of expenses related to
claims, benefits and annuities, and changes in insurance provisions.
Desjardins Group's approach allows it to distribute surplus earnings and
achieve a healthy balance between development, capitalization and
sustainability. At the end of fiscal 2010, in a context of prudent
management that has accounted for the impact of new accounting
standards (International Financial Reporting Standards, or IFRS) on the
capital ratios of financial institutions, the provision for member
dividends, which is calculated on the basis of the surplus earnings of
the caisse network, was $305 million, compared to $282 million
distributed in 2009. In addition, an amount of $80 million was returned
to the community in the form of sponsorships, donations and bursaries.
In all, member dividends and contributions to the community totalled
Quality loan portfolio
The quality of Desjardins Group's loan portfolio remains excellent. At
the end of fiscal 2010, provisions for credit losses had declined
$63 million from one year earlier, to $197 million.
Gross impaired loans outstanding stood at $512 million, up $3 million
since December 31, 2009. The ratio of gross impaired loans to the total gross loan portfolio was
0.44% at the end of 2010, or approximately the same as in 2009.
Desjardins Group continues to have one of the best ratios in the
Canadian banking industry.
Assets over $172 billion, up 9.4%
Desjardins Group had $172.3 billion in total assets at the end of 2010,
up $14.8 billion or 9.4% from $157.4 billion recorded one year earlier.
This increase was essentially due to increases in residential mortgages
outstanding and the value of the Group's securities portfolio.
Deposits grow $6.8 billion
As at December 31, 2010, Desjardins Group's outstanding deposits had
grown $6.8 billion or 6.4% over the year, to $112.9 billion. This
compares to a growth of $4.7 billion or 4.7% recorded in 2009.
Personal savings, which is the main source of financing, grew 4.4% or
$3.3 billion, to $78.8 billion. At the end of fiscal 2010, personal
savings represented 69.7% of the total savings portfolio.
Desjardins Group was also very active in savings recruitment from
business and government. As at December 31, 2010, outstanding deposits
by businesses and governments stood at $23.4 billion, up 7.1% or
$1.5 billion since December 31, 2009.
Savings from deposit-taking institutions and other sources, such as
securities issued on capital markets, grew 21.5% or $1.9 billion during
the same period, to $10.8 billion.
Sustained growth in off-balance sheet savings in 2010
Despite a few turbulent periods in 2010 due to concerns over the
strength of the global economic recovery and the debt problems of some
European countries, the Canadian stock market experienced strong
growth. The S&P/TSX index of the Toronto stock exchange rose 14.4% for
the year, compared to the 30.7% jump recorded in 2009.
This was a good environment for sales of off-balance sheet savings
products, such as investment funds and other securities, which
recaptured the interest of investors. Desjardins Group was very active
in this area; outstanding assets administered or managed for members
and clients grew $6.1 billion, or 14.4% for the year, to $48.5 billion.
This compares with a $8.6 billion or 27.2% jump recorded at the end of
A strong capital base
Desjardins Group's Tier 1 capital ratio, determined under the regulatory
framework of Basel II, was 17.7% as at December 31, 2010, compared to
15.8% as at December 31, 2009. This was above the Group's
capitalization target of 15.0% and remains one of the best ratios in
the industry. The total capital ratio was 18.7%, compared to 15.8% as
at December 31, 2009.
Funding and capital supply
In fiscal 2010, Caisse centrale Desjardins (CCD) launched several issues
of debt securities in different markets in order to achieve even better
diversification of the Group's sources of financing and further extend
the average term.
Caisse centrale Desjardins floated three issues on the Canadian market -
one in February, one in June and one in October - for $400 million,
$500 million and $600 million, respectively. As in previous years, CCD
also floated an issue in the European market, for an amount of
$1.7 billion. Finally, on September 8, 2010, it successfully floated an
issue of fixed-rate, medium-term deposit notes in the United States for
$1 billion. This made Desjardins Group the first Canadian cooperative
financial institution to issue senior debt on the U.S. market.
Furthermore, Capital Desjardins inc. launched two issues of senior notes
in May and November 2010 worth $900 million and $700 million,
Finally, caisse members also participated in the capitalization of their
financial cooperative by purchasing $506 million worth of permanent
shares in 2010.
Senior management appointments
In the interest of fully realizing the potential of the new structure
implemented almost two years ago, continuing to pursue Desjardins
Group's strategic and cooperative development, and strengthening its
market position, Ms. Monique F. Leroux, Chair of the Board, President
and CEO, has made some changes and appointments to several senior
Ms. Leroux wants to focus more on the promotion of cooperation within
the Group and communities, organizational strategy and development,
governance and the engagement of the Group's elected officers and
employees. To this end, Marc Laplante, the current Senior Executive
Vice-President, Strategy, Performance and Development for Desjardins
Group, will take on an expanded role and responsibilities, becoming
Senior Executive Vice-President for both the Group and the Fédération.
He will manage operational files for the Group and the Fédération. He
will also coordinate the Group's main strategic and organization-wide
projects, as well as Desjardins Group's various senior management
Réal Bellemare, currently Vice-President, Corporate Banking and Capital
Market Risk and Special Assignments, has been promoted to the position
of Executive Vice-President, Risk Management, and will report to Mr.
Laplante. An MBA graduate of HEC Montréal, Mr. Bellemare has many years
of risk management experience. He will sit on Desjardins Group's Senior
Ms. Leroux also announced the appointment of Louis-Daniel Gauvin,
currently Senior Vice-President and Chief Risk Officer, to the position
of Senior Vice-President and General Manager, Caisse centrale
Desjardins (CCD) and Capital Desjardins Inc. Mr. Gauvin will be
responsible for investor relations at a time when the Group plans to
grow its presence in national and international financial markets. He
will also be responsible for the Group's compliance activities and
regulatory relations. Mr. Gauvin will continue to sit on Desjardins
Group's Management Committee.
Finally, Ms. Leroux announced the retirement of Bruno Morin, General
Manager of CCD and Capital Desjardins Inc., and expressed her
appreciation for his contributions to the success of the Group and CCD.
Mr. Morin will continue as General Manager of Capital régional et
coopérative Desjardins (CRCD) and will remain on the boards of some of
the Group's components.
These appointments take effect on February 25, 2011.
Results by business segment
Personal Services and Business and Institutional Services
The Personal Services and Business and Institutional Services segment
offers the members and clients of Desjardins Group a broad range of
standard financial services and products that are mainly distributed by
the caisse network. Its products are also available through
For fiscal 2010, surplus earnings before member dividends attributable
to the Personal Services and Business and Institutional Services
segment were $840 million, up 32.9% or $208 million compared to 2009.
The segment reported total income of $5.4 billion, up $466 million or
9.4%. These results include a $486 million or 15.3% increase in net
interest income. The dynamic caisse network made a major contribution
to this increase through greater mortgage and business loans
outstanding. More specifically, by the end of 2010 residential mortgage
loans outstanding had grown by a substantial $5.3 billion. This
performance takes into account strong growth in housing starts, the
resale market and the average selling price for properties, all in an
interest rate environment that continued to favour buyers. In addition,
consumer spending boosted credit card and point-of-sale financing
activities, which further enhanced net interest income.
Investment income for fiscal 2010 totalled $109 million, or $64 million
less than in 2009, which was an exceptional year for investments.
Other income grew $44 million, or 2.7%, compared to fiscal 2009. This
increase was mainly due to growth in activities that generated
additional service charges and lending fees and credit card service
As a result of proactive management of the loan portfolio and credit
card and point-of-sale financing activities, provisions for credit
losses declined $61 million or 23.6% compared to 2009.
Non-interest expense grew $263 million or 6.9%. This was mainly due to
higher salaries and fringe benefits due to the annual indexation of
salaries and expenses related to pension plans.
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 advisory services
and products tailored to individuals' changing needs for asset
management and financial security. These products are distributed by
the caisse network and through complementary networks.
This segment posted $279 million in surplus earnings before member
dividends for 2010, 18.7% more than the $235 million reported for the
previous year. This growth was mainly the result of strong business in
insurance and annuities and increased assets under management.
Total income for the segment stood at $4,958 million, up $532 million or
12.0%, compared to 2009. This growth came mainly from a $347 million
increase in transaction income, most of which was offset by a change in
actuarial liabilities, which appear under the heading Claims, benefits,
annuities and changes in insurance provisions. Furthermore, a
$124 million increase was recorded in income from fees earned on asset
management, the distribution of savings products, brokerage services
and private management.
Total sales of personal insurance, in particular by financial security
advisors assigned to Desjardins caisses, the SFL network and Desjardins
Financial Security Independent Network financial centres, were
$55 million for the year. This was 12.2% more than the $49 million
reported for 2009.
Premium volume for personal insurance was $467 million, up $30 million
compared to 2009. Premium volume generated by the network of financial
security advisors assigned to Desjardins caisses grew 15.8% in 2010.
Due to remarkable sales growth over the last few years in the different
distribution networks, premiums cashed increased by 3.4% or
$12.1 million from fiscal 2009. In addition, premiums for products
distributed without a representative totalled $76 million, representing
an increase of $10 million from 2009.
Sales of group retirement savings reached $372 million and sales of
individual savings stood at $959 million. Sales of mutual funds
totalled $477 million, up 51.7% compared to 2009.
Expenditures associated with expenses related to claims, benefits,
annuities and changes in insurance provisions increased by
$346 million, primarily due to higher actuarial liabilities as a result
of an increase in the fair value of matched investments.
Non-interest expense grew $139 million, or 10.3%. This increase was
mainly due to growth in commissions on sales of savings products, in
remuneration paid to caisses, and in salaries and fringe benefits.
Property and Casualty Insurance
The Property and Casualty Insurance segment offers the members and
clients of Desjardins Group a range of auto and home insurance products
for individuals and businesses. In addition to being sold through the
caisse network, these products are distributed by many call centres,
over the Internet and, for some, through an intelligent telephone
The Property and Casualty Insurance segment's surplus earnings before
member dividends were $103 million for 2010, up $9 million or 9.6% from
the previous year. This growth, which was due to increased net premiums
and other income, was partly offset by a greater auto loss ratio
related to injury claims in Ontario.
Total income for the segment was $1,606 million, up $97 million or 6.4%
from fiscal 2009 due to growth in premiums and other income. The
increase in other income resulted from gains realized in the portfolio
of fixed income securities and stock market performance.
The greater number of policies resulted in a $147 million or 9.8%
increase in gross premiums written compared to 2009. The caisse network
contributed $26 million to this growth. In the individual insurance
market, the increase stemmed from successful growth initiatives in the
Greater Montreal area and in Ontario as well as from the private label
partnership signed in 2009 with a Canadian financial institution.
In group insurance, adding new partners and renewing existing agreements
allowed the segment to post a 6.9% growth. In commercial lines, gross
premiums written in Québec grew 10.5% compared to fiscal 2009.
The combined ratio, which corresponds to claims and operating expenses
divided by net premiums earned, stood at 94.7%, up 0.3 point over
The winter of 2010 was characterized by particularly mild weather, which
led to few claims in the first six months of 2010 in both property and
auto insurance. However, the auto claims experience in Ontario related
to personal injuries (particularly in the Greater Toronto area)
deteriorated in the second half of 2010, leading to a significant
increase in provisions for claims.
The increase in non-interest expense was due to a higher salaries
expense, the result of having more employees and advertising. These
initiatives that were undertaken to support business growth.
The "Other" heading consists mainly of treasury activities related to
the operations of Caisse centrale Desjardins. The segment is also
responsible for all ABTN securities held by Desjardins Group, and
records consolidation adjustments for all the components of Desjardins
Combined surplus earnings under the "Other" heading stood at
$215 million for 2010, up $102 million or 90.3% from fiscal 2009. This
increase was due in part to a net positive change of $64 million in all
items related to the restructured term notes (ABTN) portfolio,
including the implementation of hedges, as well as the change in the
fair value of derivatives and the application of hedge accounting, up
$41 million after income taxes compared to the previous year.
As at December 31, 2010, treasury activities had contributed $88 million
to net surplus earnings, $20 million less than for fiscal 2009 when
market conditions were particularly favourable.
Finally, Desjardins Group's combined results included consolidation
adjustments such as the adjustment to employee future benefits, which
declined $12 million from 2009.
2010 Fourth Quarter Results
For the fourth quarter ended December 31, 2010, Desjardins Group
recorded surplus earnings before member dividends of $181 million. This
was $267 million or 32.2% less than the surplus earnings recorded for
the same quarter of 2009. The decline was due in part to a $142 million
increase in claims, benefits, annuities and changes in insurance
provisions, write-offs of certain assets and an increase in provisions
related to agreements with suppliers and the investment portfolio.
The return on equity for the quarter was 5.5%, compared with 9.5% for
the fourth quarter of 2009. The Tier 1 capital ratio was 17.7%,
compared to 15.8% one year earlier.
Non-interest expense grew $75 million, or 5.3%, largely due to
adjustments related to salaries and fringe benefits.
Rise of total income
Desjardins Group's total income for the fourth quarter was
$2,669 million, up $86 million or 3.3% compared to the same quarter of
2009. Net interest income grew $38 million or 4.0% compared to the same
quarter of 2009, to $979 million. This growth stemmed mainly from
increased personal loans outstanding and the credit card and
point-of-sale financing activities of the Personal Services and
Business and Institutional Services segment.
Other income for the fourth quarter declined $53 million or 9.5%, to
$507 million. This compares to $560 million for the same period of
2009, which was particularly favourable. This difference was also due
to less transaction income.
Moderate growth in non-interest expense
Non-interest expense for the fourth quarter of 2010 totalled
$1,499 million, up $75 million or 5.3% from the same period of last
year, mainly due to increased salaries and fringe benefits as a result
of the annual indexing of salaries. Provisions for credit losses for
the fourth quarter of 2010 were $41 million or $16 million less than
for the same period of last year. This was mainly due to a good return
on the credit portfolio of Desjardins Card Services, improved portfolio
quality and shorter terms on the business loans made by Caisse centrale
Desjardins. As mentioned above, expenses related to claims, benefits,
annuities and changes in insurance provisions totalled $915 million, up
$142 million or 18.4% from the same quarter of 2009.
Results by business segment
Personal Services and Business and Institutional Services
The Personal Services and Business and Institutional Services segment
ended the fourth quarter of 2010 with $152 million in surplus earnings
before member dividends. This represents an 11.1% or $19 million
decline from the same period of last year. The difference stemmed
mainly from the fact that transaction income and income from
available-for-sale securities was higher in the fourth quarter of 2009
than it was in the same period of 2010.
The segment's total income for the fourth quarter of 2010 was
$1,366 million, up 4.4% or $57 million from the same period of 2009.
Other income declined 4.4% or $19 million compared to the same quarter
Wealth Management and Life and Health Insurance
For the fourth quarter of 2010, the Wealth Management and Life and
Health Insurance segment posted $43 million in surplus earnings before
member dividends, a $15 million or 25.9% decline from the same period
of 2009. The difference was largely due to the reversal of a temporary
gain resulting from the management of interest rate risk in the
market-linked temporary investments (MLTI) program in a net amount of
The segment's total income was $1,026 million, up $59 million or 6.1%
from the same period of 2009. This increase was mainly due to
activities related to life and health insurance, where net premiums
increased $67 million.
Property and Casualty Insurance
In the fourth quarter of 2010, the Property and Casualty Insurance
segment contributed $10 million to Desjardins Group's combined surplus
earnings. This was $17 million less than its contribution for the same
period of 2009.
The Other heading posted a $24 million deficit before member dividends
for the fourth quarter, a $35 million decline from the same quarter of
2009. This was due to write-offs of certain assets, an increase in
provisions related to agreements with suppliers and the investment
portfolio and the adjustment to the pension cost.
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 the improved economic
and social well-being of people and communities. For more information,
SOURCE DESJARDINS GROUP
For further information:
(for journalists only):
|André Chapleau |
Director, Media Relations
514-281-7229 - 1-866-866-7000, ext. 7229
Senior Vice-President, Finance and Treasury
and Chief Financial Officer