Laurentian Bank Of Canada · TSX:LB
Laurentian Bank Of Canada — Q2 2020 Earnings Presentation
31 slides from Laurentian Bank Of Canada's earnings presentation, May 28, 2020
Slide 1: Investor Presentation Second Quarter 2020
20200528 – V21 INVESTOR PRESENTATION Second Quarter 2020 1
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements In this document and in other documents filed with Canadian regulatory authorities or in other communications, we may, from time to time, make written or oral forward-looking statements within the meaning of applicable securities legislation. Forward-look
Slide 3: François Desjardins, President and Chief Executive Officer
FRANÇOIS DESJARDINS President and Chief Executive Officer 3
Slide 4: A proactive approach to support our customers
A proactive approach to support our customers Helping customers improve their financial health in good times and bad Offering customers Early activation of 80% of our Team support & advice including Business Continuity Plan members working safely Relief programs for those from home in need 4
Slide 5: A solid foundation
A solid foundation Providing the Bank with operational flexibility Strong capital High level of Conservative credit position liquidity portfolio 5
Slide 6: Completing what we started
Completing what we started Setting a strong foundation, working on profitable growth and enhancing performance Expanding the Advisor Timely digital offering Working to complete team as 100% Advice as consumer adoption core banking model gains accelerates momentum 6
Slide 7: Years Strong: There when it counts, since 1846
YEARS STRONG There when it counts, since 1846. Laurentian Bank Financial Group has been helping Canadians for nearly 175 years, by providing the financial advice and tools you need to achieve every goal Learn more LAURENTIAN BANK
Slide 8: François Laurin, Executive Vice-President and CFO
FRANÇOIS LAURIN Executive Vice-President And Chief Financial Officer 8
Slide 9: Financial Results
FINANCIAL RESULTS 9
Slide 10: Q2/20 Financial Performance
Q2/20 Financial Performance Q2/20 Highlights Adjusted(1) Q2/20 Q/Q Y/Y Y/Y and Q/Q Net Income ($M) $ 11.9 -68% -76% • Impacted by an increase in provisions for credit losses, driven by an adverse shift in Diluted EPS $ 0.20 -75% -81% forward looking economic scenarios related to ROE 1.5% -430 bps -6
Slide 11: Adjusting Items in Q2/20
Adjusting Items in Q2/20 ($ millions, except per share amounts) Q2/20 Q1/20 Q2/19 Before After Before After Before After EPS EPS EPS taxes taxes taxes taxes taxes taxes Adjusting items Restructuring charges Severance charges $ 0.2 $ 0.1 $ 0.01 $ 2.8 $ 2.1 $ 0.05 $ 2.4 $ 1.8 $ 0.04 Other restructurin
Slide 12: Total Revenue
Total Revenue Q2/20 Highlights Q2/20 Q/Q Y/Y ($ millions) Y/Y Net interest income $170.7 1% 4% • Total revenue was relatively unchanged • Net interest income up by $6.2M, mainly due to a Other income 69.4 -1% -8% higher proportion of higher-yielding loans to business customers and an improvement in
Slide 13: Net Interest Margin (NIM)
Net Interest Margin (NIM) Q2/20 Highlights Net Interest Margin Y/Y (on average earning assets) 1.88% • NIM up by 11 bps Y/Y mainly as a result of the 1.85% 1.84% 1.81% 1.77% change in the loan portfolio mix and the improvement in funding costs, and was partly offset by the decrease in the Prime/BA s
Slide 14: Other Income
Other Income ($ millions) Q2/20 Q/Q Y/Y Q2/20 Highlights Lending fees $ 14.8 -3% 1% Y/Y • Other income down by $5.9M mainly due to a Fees and securities brokerage commissions 12.2 15% 5% decrease of: • $1.9M in service charges due to the Commissions from sales of ongoing changes to the retail bankin
Slide 15: Adjusted Non-Interest Expenses (NIE)
Adjusted Non-Interest Expenses (NIE) Q2/20 Highlights Adjusted NIE Q2/20 Q/Q Y/Y ($ millions) • Adjusted Y/Y up by $3.4M Salaries and employee benefits $ 94.0 -1% 4% − Salaries and employee benefits up $3.5M, mainly due to higher wages and special Premises and technology 50.7 2% 0% compensation paid
Slide 16: Well Diversified and Stable Sources of Funding
Well Diversified and Stable Sources of Funding Funding Shareholders' equity ($ billions) Total deposits decreased by 7% Y/Y, mainly as a result of lower asset levels, and remained stable Q/Q 37.8 37.1 37.5 • Institutional deposits decreased by $0.9B Y/Y and Subordinated debt 2.6 2.6 2.6 $0.4B Q/Q 0.
Slide 17: Regulatory Capital
Regulatory Capital Common Equity Tier 1 Capital Ratio Risk-Weighted Assets (RWA) ($ billions) (CET1) 9.0% 9.0% 9.0% 9.0% 20.5 20.4 20.6 20.9 8.8% 20.4 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Evolution of the CET1 Ratio (in %) 9.0 - - 8.8 (0.1) (0.0) (0.0) 0.0 (0.2) 0.1 CET1 as at
Slide 18: Risk Review
RISK REVIEW 18
Slide 19: Positioning the Bank for Profitable Growth
Positioning the Bank for Profitable Growth Loan Portfolio Mix Total loans decreased by $0.4B Y/Y and increased ($ billions) by $0.2B Q/Q • Commercial loans increased by 6% Y/Y and by 3% 34.1 33.5 33.7 Q/Q. The Q/Q increase is mainly due to inventory and equipment financing volumes 37% 12.7 39% 13.2
Slide 20: Residential Mortgage Loan Portfolio – High Quality
Residential Mortgage Loan Portfolio – High Quality Insured, Uninsured & Loan to Value (LTV) Insured vs Uninsured by Province – Conservative LTV’s 45% 43% % of Residential Mortgage Loan Portfolio LTV %(1) Conventional Prime Insured As at April 30, 2020 Uninsured Insured 48% 50% Alt-A British Columbia
Slide 21: Commercial Loan Portfolio: Strong, Diversified and Growing
Commercial Loan Portfolio: Strong, Diversified and Growing Commercial Loan Portfolio Commercial Loans A pan-Canadian Portfolio (In $ Billions) (As a % of total loans) and a U.S. Presence (As a % of commercial loan portfolio) 13.5 (As at April 30, 2020) 2.6 8.0 Inventory financing 1.5 0.1 Equipment f
Slide 22: Payment deferrals
Payment deferrals As at April 30, 2020 $ Deferred As a % of loan $ Loan value (Millions of Canadian dollars ) payments portfolio Personal loans 1 6 0.1% Residential Mortgages 50 3,061 19.3% Commercial loans(1) 58 1,374 10.5% Total 109 4,441 13.3% (1) Including BAs 22
Slide 23: Forward-looking Economic Scenarios
Forward-looking Economic Scenarios High weights were assigned to the base and downside scenarios, with a small residual weight to the upside scenario Base Downside Upside Relatively is short but steep recession Recession is more pronounced due to Milder recession and the economic activity followed b
Slide 24: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL Q2/20 Q1/20 Q2/19 ($ millions) Personal Loans Q2/20 Highlights Stage 1 and 2 $ 9.6 $ (2.9) $ (1.8) • PCL increased by $45.7M Y/Y and $40.0M Stage 3 7.8 6.9 6.1 Q/Q mainly due to provisions in the 17.4 4.0 4.3 commercial and personal loan portfolio Residential Mo
Slide 25: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) Provision for Credit Losses (PCL) 1.44% (As a % of average loans and acceptances) Q2/20 Highlights • Provision for Credit Loss ratio continues to compare favorably to the 6 major 0.67% Canadian banks due to our 0.39% 0.38% disciplined underwriting 0.33% 0.34% standa
Slide 26: Impaired Loans
Impaired Loans Net Impaired Loans (NIL)(1) (As a % of loans and acceptances) 0.53% • Net impaired loans of $175.5M increased by 0.42% 0.45% 0.42% 0.40% $33.2M Y/Y and $34.8M Q/Q Q2/19 Q3/19 Q4/19 Q1/20 Q2/20 Gross Impaired Loans • Gross impaired loans of $235.2M, increased by (As a % of loans and ac
Slide 27: Appendices
APPENDICES 27
Slide 28: High Quality Mortgage Loan Portfolio – Low Loan-to-Value
High Quality Mortgage Loan Portfolio – Low Loan-to-Value We target the high end of the Alt-A market Loan-to-Value Distribution through low LTV ratios (As at April 30, 2020) 68% • Vast majority of uninsured and Alt-A mortgages 52% have LTVs of 75% or less 38% 33% 32% • 93% of Conventional portfolio 2
Slide 29: High Quality Mortgage Loan Portfolio – Low Loan-to-Value
High Quality Mortgage Loan Portfolio – Low Loan-to-Value Beacon Distribution We target high end of the Alt-A market through (As at April 30, 2020) high beacon scores 87% 78% 72% • Vast majority of Alt-A and uninsured portfolios with beacon scores > 650 • 89% of Conventional portfolio 5% 9% 11% 8% 11
Slide 30: Non-GAAP Measures
Non-GAAP Measures ($ millions, except per share amounts) Q2/20 Q1/20 Q2/19 Reported net income $ 8.9 $ 32.2 $ 43.3 Adjusting items, net of income taxes(1) Restructuring charges Severances charges 0.1 2.1 1.8 Other restructuring charges 0.1 (0.1) 0.7 0.2 2.0 2.5 Items related to business combinations
Slide 31: Investor Relations Contact
Investor Relations Contact Susan Cohen Director, Investor Relations (514) 970-0564 susan.cohen@lbcfg.ca 31
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