Pursuing Growth and Development Scotia Capital FINANCIALS SUMMIT CONFERENCE 2011

Transcription

1 Pursuing Growth and Development Scotia Capital FINANCIALS SUMMIT CONFERENCE 2011 Réjean Robitaille, President & CEO Toronto September 7, 2011

2 FORWARD-LOOKING STATEMENTS In this document and in other documents filed with Canadian regulatory authorities or in other communications, Laurentian Bank of Canada (the Bank ) may from time to time make written or oral forward-looking statements within the meaning of applicable securities legislation. Forward-looking statements include, but are not limited to, statements regarding the Bank's business plan and financial objectives. The forward-looking statements contained in this document are used to assist the Bank s security holders and financial analysts in obtaining a better understanding of the Bank s financial position and the results of operations as at and for the periods ended on the dates presented and may mot be appropriate for other purposes. Forward-looking statements typically use the conditional, as well as words such as prospects, believe, estimate, forecast, project, expect, anticipate, plan, may, should, could, would or the negative of these terms or variations of them or similar terminology. By their very nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties, both general and specific in nature. It is therefore possible that the forecasts, projections and other forward-looking statements will not be achieved or will prove to be inaccurate. Although the Bank believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. The pro-forma impact of Basel III on regulatory capital ratios is based on the Bank s interpretation of the proposed rules announced by the Basel Committee on Banking Supervision (BCBS) and related requirements of the Office of the Superintendent of Financial Institutions Canada (OSFI). The pro-forma impact of Basel III on regulatory capital ratios also includes the anticipated impact of International Financial Reporting Standards (IFRS) conversion. The Basel rules and impact of IFRS conversion could be subject to further change, which may impact the results of the Bank s analysis. The Bank cautions readers against placing undue reliance on forward-looking statements when making decisions, as the actual results could differ considerably from the opinions, plans, objectives, expectations, forecasts, estimates and intentions expressed in such forward-looking statements due to various material factors. Among other things, these factors include capital market activity, changes in government monetary, fiscal and economic policies, changes in interest rates, inflation levels and general economic conditions, legislative and regulatory developments, competition, credit ratings, scarcity of human resources and technological environment. The Bank further cautions that the foregoing list of factors is not exhaustive. For more information on the risks, uncertainties and assumptions that would cause the Bank s actual results to differ from current expectations, please also refer to the Bank s Annual Report under the title Integrated Risk Management Framework and other public filings available at With respect to the proposed MRS Companies transaction, such factors also include, but are not limited to: the possibility that the proposed transaction does not close when expected or at all because required regulatory or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all; the terms of the proposed transaction may need to be modified to satisfy such approvals or conditions; the anticipated benefits from the proposed transaction such as it being accretive to earnings and synergies may not be realized in the time frame anticipated; the ability to promptly and effectively integrate the businesses; reputational risks and the reaction of B2B Trust s or MRS Companies customers to the transaction; and diversion of management time on acquisition-related issues. The Bank does not undertake to update any forward-looking statements, whether oral or written, made by itself or on its behalf, except to the extent required by securities regulations. NON-GAAP FINANCIAL MEASURES The Bank uses both generally accepted accounting principles ( GAAP ) and certain non-gaap measures to assess its performance. Non-GAAP measures do not have any standardized meaning and are unlikely to be comparable to any similar measures presented by other companies. The Bank believes that these non-gaap financial measures provide investors and analysts with useful information so that they can better understand financial results and analyze the Bank s growth and profitability potential more effectively. For questions on this presentation, please contact: Gladys Caron, Vice-President, Public Affairs, Communications and Investor Relations Tel: , extension 7511 Cell: gladys.caron@banquelaurentienne.ca Susan Cohen, Director, Investor Relations Tel: , extension 4926 Cell: susan.cohen@banquelaurentienne.ca 2

3 OVERVIEW OF 3 rd QUARTER 2011 Q Q Variance Net income $35.3 M $30.1 M 17% Diluted EPS $1.34 $ % ROE 12.1% 11.0% 110 bps Efficiency ratio 71.6% 67.7% 390 bps Q HIGHLIGHTS Strong growth in other income from diversified sources Stable margins Q/Q Ongoing investment in business development Significantly lower provisions for loan losses Continued solid loan growth Symbol: LB, TSX 3

4 OUR SCORECARD Net Income: Loans & BAs: Net interest margin: Other income: Non-interest expenses: Credit quality: Up 9% YTD Up 7% Year-over-year Stable Up 14% YTD Investment in business development, higher regulatory costs Improved Symbol: LB, TSX 4

5 PURSUING OUR STRATEGY Acquisition of the MRS Companies Provides B2B Trust with new growth opportunities while creating a best-in-class provider of products and services to financial advisors Distribution agreement with Mackenzie Financial Enhances the Wealth Management offering with the distribution of Mackenzie funds to Québec retail customers Consistent with our strategy Beneficial to the Bank s performance Enhance existing operations Symbol: LB, TSX 5

6 RETAIL SEGMENT Position: #3 in Québec in terms of branches Target clientele: Young blue-collar families 1280* Number of branches in Québec Business strategy: Based on 3 networks - physical, virtual and mobile Share of wallet: Main metric 15% increase of clients with more than 5 categories of products over the past 5 years now 30% Two major competitive advantages: Only Québec-based banking institution to have a complete CRM system up and running Desjardins National LBC RBC BMO CIBC Customer satisfaction (J.D. Power ) RBC TD LBC TD Scotia A culture of quality of service 2 nd most admired banking institution in Québec for the last 3 years 2 nd place among Canadian Banks, according to J.D. Power, in terms of customer satisfaction * Desjardins operates 1280 points of service, including 405 branch head offices Symbol: LB, TSX CIBC Scotia BMO National

7 MORTGAGE LOANS AND REVENUE GROWTH Mortgage Loan Volume Growth Visa, Insurance and Mutual Fund Revenue Growth Retail & SME Québec Industry months % 14.5% 20% 17% 21% 18% 9.8% 7.2% 9.7% 8.1% 10.0% 10.4% 9.7% 6.6% 5.9% * 14% 9% 14% 9% 11% 8% 6% YTD 2011 Visa Insurance Mutual funds -4.9% * 8 months % Symbol: LB, TSX 7

8 IMPROVEMENT OF OUR WEALTH OFFER Mutual Fund Net Sales Growth Enhance our Wealth Management offering 120% Retail & SME Québec 113% 140% 100% Capitalize on the effectiveness of the Bank s distribution network in Québec to serve retail customers 80% 60% 40% 27% 58% 20% Will contribute to further increase share of wallet in the Retail segment, thanks to a leading family of funds 0% -20% -40% -60% -80% months % Symbol: LB, TSX 8

9 B2B TRUST PROFILE Premier third party supplier of investment and RSP lending products in Canada Leading supplier of wholesale deposit/gic products, as well as high interest accounts A growing player in the broker residential mortgage market Symbol: LB, TSX 9

10 B2B TRUST GROWTH Since 2006 Doubled the loan portfolio ($2.8B to $5.5B) Almost doubled the deposit portfolio ($5.1B to $9.2B) High quality loan portfolio Total Deposits ($ millions*) Total Loans ($ millions*) GIC and deposits HIIA Investment Loans (including RSPs) Mortgages and Other 9,141 9,184 9,248 5,238 5,478 5,127 5,581 6,156 3,072 3,069 3,250 2,787 3,568 1,259 4,069 1,331 4,503 1,672 2,312 2,462 5,127 5,58 1 6,156 6,069 6,115 5,998 1,258 1,529 2,309 2,738 2,831 2,926 3, *As at October 31, except for 2011 as at July Symbol: LB, TSX 10

11 ACQUISITION OF THE MRS COMPANIES Provides B2B Trust with new growth opportunities while reaffirming its position as a leader Strengthens product offering while providing a critical mass in selfdirected products Expands the advisor network with over 22,000 advisors Creates revenue and expense synergies and increases fee-based revenue B2B Trust segment* MRS** Combined Investment loans $2,934 M $279 M $3,213 M Mortgages $2,425 M $149 M $2,574 M Deposits $9,248 M $716 M $9,964 M Assets Under Administration (self-directed accounts) $3.7 B $21.6 B $25.3 B *As at July 31, 2011 **As at May 31, 2011 Symbol: LB, TSX 11

12 FINANCIAL IMPACT OF ACQUISITIONS ACCRETIVE ON AN OPERATING BASIS Capital Impact Reduces Tier I capital ratio (Basel II) by about 70 basis points Expect to reach the minimum Basel III requirements by January 1, 2013, based on applicable 2019 rules Earnings Impact 2012: marginally accretive excluding integration costs 2013: accretive by approximately $0.15-$0.20 per share, factoring in a potential $50 million common share issue in : increasingly accretive Integration Costs A non-recurring $25 million pre-tax cost of integration IT investments of $13 million pre-tax Symbol: LB, TSX 12

13 TWO COMPELLING TRANSACTIONS Significant steps towards enhancing the capabilities of two of our growth engines that will: Solidify the leadership position of B2B Trust Deepen the Wealth Management offering Accelerate growth Create long-term shareholder value Symbol: LB, TSX 13

14 QUESTIONS & ANSWERS

15 APPENDICES

16 Stock symbol: TSX- LB Recent stock price: $44.02 Annual dividend: 3.82% Stock Market Metrics Price/earnings ratio (trailing 4 quarters based on continuing operations): 8.8X Book value per share: $44.41 Market to book value: 1.0X Number of shares outstanding: million Market capitalization: $1.05 billion As at August 30, 2011 Symbol: LB, TSX 16

17 LAURENTIAN BANK OVERVIEW 3 rd largest financial institution in Québec in terms of branches and 7 th largest Canadian Schedule I chartered bank based on assets More than 200 points of service across Canada, including 157 retail branches and 424 ABMs $24.1 billion of assets on balance sheet as of July 31, 2011 Main markets: Province of Québec with significant activities elsewhere in Canada (37% of total loans come from outside of Québec) More than 3,800 employees Founded in 1846 Symbol: LB, TSX 17

18 4 BUSINESS SEGMENTS For the 9 months ended July 31, 2011 Retail & SME Québec Real Estate & Commercial B2B Trust LB Securities & Capital Markets % of total revenue (1) % of net income (1) 60% 31% 16% 35% 16% 29% 8% 5% Personal Banking: Transactional, financing and investment products and services Small and Medium-Sized Enterprises: Financing solutions and services such as exchange transactions, electronic banking and processing of international transactions Real estate financing throughout Canada Commercial financing in Ontario Commercial financing in Québec Financial products and services offering Distributed through a network of more than 15,000 independent financial advisors for distribution to their clients throughout Canada Complete range of brokerage services offered through a network of 15 offices in Québec and Ontario Institutional Fixed Income Institutional Equity Retail Brokerage Services Business Services Bank-related capital market activities Approximately 2,600 employees 157 retail branches in Québec 22 commercial offices in Québec Approximately 125 employees 14 offices in Ontario, Western Canada and Québec Approximately 400 employees Sales offices in Montréal, Calgary, Halifax and Vancouver Approximately 225 employees 15 offices in Québec and Ontario $9.2 billion in residential mortgage loans and home equity lines of credit $0.4 billion in personal lines of credit $1.0 billion in average commercial loans - SME Québec Total deposits: $9.4 B $0.7 billion in commercial loans $1.7 billion in commercial mortgage loans Total deposits: $0.5 B $3.0 billion in investment and RRSP loans $2.3 billion in brokered mortgages Total deposits: $9.2 B Assets under administration: $3.7 B Assets under administration: $2.2 B (1) Excluding Other segment Symbol: LB, TSX 18