Laurentian Bank Of Canada · TSX:LB
Laurentian Bank Of Canada — Investor Day (May 2024)
70 slides from Laurentian Bank Of Canada's investor day presentation, May 31, 2024
Slide 1: Investor Day 2024
1 Investor Day 2024 May 31, 2024
Slide 2: Forward-looking statements
INVESTOR DAY 2024 2 Forward-looking statements From time to time, Laurentian Bank of Canada and, as applicable its subsidiaries (collectively referred to as the Bank) various other significant risks, as described in the relevant pages of the 2023 Annual Report, including the MD&A, will make written
Slide 3: Our Path Forward
3 Our Path Forward Éric Provost President & Chief Executive Officer
Slide 4: Who we are
OUR PATH FORWARD 4 Who we are Laurentian Bank has a 175+ year history of supporting underserved customers Personal & Commercial Banking Segment Capital Markets Segment COMMERCIAL BANKING PERSONAL BANKING CAPITAL MARKETS Our Our Our growth engine: community pillar: support engine: A specialized lendi
Slide 5: Our Laurentian Bank team
OUR PATH FORWARD 5 Our Laurentian Bank team Our team is performance-oriented, inspired and engaged, and works in an inclusive environment ~2,800 Employees Reduction in voluntary ~40% turnover rate FY21 – FY23 8% increase in Employee ~80% Engagement - in line with industry average FY21 – FY23 To fill
Slide 6: Our cultural evolution
OUR PATH FORWARD 6 Our cultural evolution Moving forward, we will continue to evolve our culture from activity-based to impact-oriented FROM: TO: What we say about ourselves Apologetic for our missteps > Proud of our path forward How we define our leaders Responsible for activities > Accountable for
Slide 7: ESG at Laurentian Bank
OUR PATH FORWARD 7 ESG at Laurentian Bank We will continue to support sustainable environmental, social, and economic change Environment Social Governance We are creating a more We are fostering an inclusive We are practicing sound sustainable future for all and and equitable workplace governance an
Slide 8: Our ambition
Our ambition Foster prosperity for all customers through specialized commercial banking and low-cost banking services to grow savings for middle- class Canadians.
Slide 9: Building a stronger economy, serving the middle-class, enhancing competition
9 Building a Serving the middle- Enhancing stronger economy class competition We contribute to the prosperity We contribute to the prosperity We offer a differentiated of all our customers by building a of middle-class Canadians by offering through our specialized stronger economy through encouragin
Slide 10: Our business segment strategies
OUR PATH FORWARD 10 Our business segment strategies We will succeed by focusing on the execution of our strategy across the Bank Personal & Commercial Banking Segment Capital Markets Segment Key Focus Areas Compete where we have Efficiency and Drive accountability for Harness the power of an edge an
Slide 11: Seasoned leadership team
OUR PATH FORWARD 11 Seasoned leadership team Our seasoned leadership team brings significant industry experience and a diverse skillset to build for the future Enterprise leaders Transformation leaders Éric Provost Sébastien Bélair Bindu Cudjoe Benoit Bertrand Sophie Boucher President and CEO EVP, C
Slide 12: We made significant progress on our last plan
OUR PATH FORWARD 12 We made significant progress on our last plan In 2021, we launched a strategic plan and made significant progress Exceeded our Closed top-five Grew syndicate Commercial Loan digital pain points in positions in Capital Growth target Personal Banking Markets with core government an
Slide 13: Key learnings from our recent strategic review
OUR PATH FORWARD 13 Key learnings from our recent strategic review Through summer of 2023, our strategic review allowed us to reflect on our current state We need to develop We need to better appropriate manage capabilities in expenses of foundational We have too We are too Personal Banking technolo
Slide 14: Building a stronger bank
OUR PATH FORWARD 14 Building a stronger bank Today is about addressing the key learnings from our strategic review and charting the course to a stronger tomorrow Engage in strategic Invest in process partnerships to bolster our simplification and re- technology ecosystem and engineering to improve i
Slide 15: We have already embarked on the journey
OUR PATH FORWARD 15 We have already embarked on the journey Over the past six months this team has already started executing and has successfully implemented several key initiatives across a number of pillars Customer Simplification Technology • Revamped leadership team • Divested from businesses (e
Slide 16: Personal & Commercial Banking Segment
Personal & Commercial Banking Segment
Slide 17: Commercial Banking
Commercial Banking
Slide 18: Who we are
COMMERCIAL BANKING 18 Who we are We efficiently achieved over 3x growth in commercial assets since 2013, while maintaining a disciplined approach over the business mix Commercial Loan Evolution1 $Billions $18 $18 $17 Equipment Finance Inventory Finance $14 $12 $13 $13 Commercial SME $12 Commercial R
Slide 19: Our business sectors
COMMERCIAL BANKING 19 Our business sectors We serve our customers through 4 key specializations Inventory Equipment Commercial Commercial Financing Financing Real Estate SME Northpoint Commercial LBC Capital (a subsidiary Financing of residential, Offers financing solutions, Finance (a subsidiary of
Slide 20: Inventory Financing overview
COMMERCIAL BANKING 20 Inventory Financing overview Inventory Financing offers solutions for dealers and manufacturers across Canada and the U.S., where we are a top-three player Where we operate Where we are growing Geographic segmentation Marine RVs Tech / appliances Outdoor equipment Manufactured
Slide 21: Equipment Financing overview
COMMERCIAL BANKING 21 Equipment Financing overview We offer equipment financing solutions for suppliers and businesses Our customers Geographic segmentation We support businesses by financing the acquisition, sale, and refinancing of their equipment in the following industries: Transport Constructio
Slide 22: Commercial Real Estate overview
COMMERCIAL BANKING 22 Commercial Real Estate overview We finance residential, commercial and industrial projects across Canada with top-tier developers Our customers Geographic segmentation Developers responsible Asset Managers who Investors looking to We have repeat for revenue-generating oversee t
Slide 23: Commercial SME overview
COMMERCIAL BANKING 23 Commercial SME overview We offer financing solutions through specialized teams in the small and medium enterprise space Our customers Geographic segmentation Daycare Manufacturing Insurance Brokerage firms Business transfers 100% Our business model Our customer experience NPS R
Slide 24: What we said in 2021
COMMERCIAL BANKING 24 What we said in 2021 Commercial Banking was identified as our growth engine, and we were able to grow our portfolio at ~7% CAGR from 2021 to now Continued to focus on our specialized sectors Key challenges ü Increased the number of relationship managers and dedicated resources
Slide 25: Megatrends shaping the commercial opportunity set
COMMERCIAL BANKING 25 Megatrends shaping the commercial opportunity set Going forward, there are many opportunities in the specialized lending market Widening ranges of economic outcomes Long term shortage of housing across industries, geographies, and supply and affordability challenges are househo
Slide 26: Headroom for growth
COMMERCIAL BANKING 26 Headroom for growth We see significant growth headroom where we already have specialization, strong relationships, and a track record of profitability Inventory Equipment Commercial Financing Financing Real Estate Strength of customer ‘World-Class’ ‘Excellent’ ‘Excellent’ relat
Slide 27: Our approach going forward
COMMERCIAL BANKING Our approach going forward We will continue to grow through our specialized approach, further diversification into adjacent sectors and by building on the strength of our customer relationships How we will win in Commercial Banking Grow organically and through Objective 1 partners
Slide 28: Objective 1: Grow organically and through partnerships
COMMERCIAL BANKING 28 Objective 1: Grow organically and through partnerships A strong partnership strategy will help us accelerate growth Organic growth opportunities Partnership benefits Increase specialized Deepen existing Maximizes operational Improves capability Drives salesforce relationships c
Slide 29: Objective 2: Maximize value of our ecosystems
COMMERCIAL BANKING 29 Objective 2: Maximize value of our ecosystems An ecosystem play could open opportunities for Laurentian Bank to leverage core capabilities for growth Growing existing ecosystem Moving beyond existing ecosystem Dealers Payroll and payments Inventory Finance revenue Accounting pl
Slide 30: Objective 3: Diversify into adjacent sectors
COMMERCIAL BANKING 30 Objective 3: Diversify into adjacent sectors A diversified portfolio strategy will fortify the business against headwinds Specialized industry knowledge Capitalize on emerging trends and leverage ability to identify and price risks appropriately Tools & systems Integrate tailor
Slide 31: Success measurements
COMMERCIAL BANKING 31 Success measurements We will continue to profitably grow our commercial business through our specialized lending capabilities Commercial Banking Medium-Term Targets Loan Growth High single-digit growth NPS Maintain industry leading position in our specializations Efficiency Rat
Slide 32: Personal Banking
Personal Banking
Slide 33: Who we are
PERSONAL BANKING 33 Who we are Our retail customer network creates an opportunity to strengthen our position in a core Canadian market Franchise snapshot Key highlights Laurentian Bank is the third-largest Quebec-based bank with 57 branches across Quebec 57 branches and a national advisor and broker
Slide 34: What we said in 2021
PERSONAL BANKING 34 What we said in 2021 We began repositioning our Personal Banking business for growth and made good progress Created one performance-oriented personal bank ü Introduced a new operating model, along with sales management Key challenges discipline and new training and development to
Slide 35: Voice of the customer
PERSONAL BANKING 35 Voice of the customer Our customers value our employees and the advice offering “ The professionalism of my advisor is remarkable. She always arrives well prepared “ My advisor is fantastic, professional, attentive and always available for my requests, which is why I stay at Laur
Slide 36: Market opportunity
PERSONAL BANKING 36 Market opportunity We see a real alternative for customers that are taken for granted by their banks - the middle-class and younger population - that will enable growth for our organization Middle-class population that we can capture1 Young customers are Competitive digital open
Slide 37: What it will take to 'win'
PERSONAL BANKING 37 What it will take to ‘win’ Evolving our technology and digital capabilities to better serve our customers Seamless digital and Customer-centric Strategic partnerships mobile experience through experiences through tailored to enhance product offerings user-friendly, responsive and
Slide 38: Provide value to customers
PERSONAL BANKING 38 Provide value to customers We believe in putting more money back into our customers’ pockets Average bank Annual account fee1 ~$250 Annual interest amount ‘lost’ on ~$50 - $100 Deliver enhanced value account balances2 to our customers by actively returning savings to their Net an
Slide 39: Our approach going forward
PERSONAL BANKING 39 Our approach going forward Focus on the middle class, simplify our product offering, and improve our organizational performance How we will win in Personal Banking Improve our product offering, including Objective 1 self-serve options Objective 2 Simplify our Bank Accelerate tech
Slide 40: Objective 1: Improve our product offering
PERSONAL BANKING 40 Objective 1: Improve our product offering We will improve our retail bank proposition to meet the needs of the middle class and drive greater deposit gathering capabilities through new offerings Near-term Medium-term Launch products aligned Complete our digital Self-serve options
Slide 41: Objective 2: Simplify our bank
PERSONAL BANKING 41 Objective 2: Simplify our bank We will reduce the complexity throughout our organization to serve our customers more effectively Optimize product Reimagine our Improve operations portfolio to align with physical presence to through systems and needs of target bring our frontlines
Slide 42: Objective 3: Leverage strategic partnerships
PERSONAL BANKING 42 Objective 3: Leverage strategic partnerships We will continue to establish strategic partnerships with independent 3rd party providers to build new capabilities at pace and scale Benefits of partnerships Enable faster speed to market Streamline our processes Drive efficiency and
Slide 43: Success measurements
PERSONAL BANKING 43 Success measurements As we move forward, we will measure our success against a few key indicators Personal Banking medium-term metrics NPS + 10 points Digitization Core day-to-day retail products available digitally Medium-Term Retail Deposit Target High single digit growth Effic
Slide 44: Capital Markets Segment
Capital Markets Segment
Slide 45: What we said in 2021
CAPITAL MARKETS 45 What we said in 2021 Capital markets provided a focused and aligned offering Acted as an alternative to large banks Key challenges ü Provided a high level of service and offered targeted capabilities for our customers Macro-economic challenges: • Rate hikes • Low economic growth E
Slide 46: Our approach going forward
CAPITAL MARKETS 46 Our approach going forward Capital Markets will maintain strong connectivity to institutional and government partners while maintaining alignment in key product segments with commercial customers Fixed income F/X We will continue to specialize We will continue to have strong in a
Slide 47: Success measurements
CAPITAL MARKETS 47 Success measurements As we move forward, we will measure our success against a few key indicators Capital Markets Medium-Term metrics We will grow in our Fixed Income and Foreign Exchange Specialization specializations We will maintain connectivity and alignment in key offerings w
Slide 48: Technology & Operations
Technology & Operations
Slide 49: Key technology challenges
TECHNOLOGY & OPERATIONS 49 Key technology challenges We are focused on simplifying our technology stack and processes while improving our resiliency and digital capabilities Simplify Transform Complex Manual Capability Execution Complexity of tech High degree of Capability gaps History of portfolio
Slide 50: Acting on our opportunities
TECHNOLOGY & OPERATIONS 50 Acting on our opportunities While we have made progress, we still have work to do in order to improve the customer experience Changes we have introduced Path ahead New Introduced Accelerated Modernization Embracing Portfolio leadership and process investments and simplific
Slide 51: Acting to simplify our operations
TECHNOLOGY & OPERATIONS 51 Acting to simplify our operations Principles that will define our actions to reduce our expenses Where we work How we work How we organize work • We will maintain our hybrid • We will reduce manual • We will align our structure and work environment to attract processes to
Slide 52: Our Financial Path
52 Our Financial Path Yvan Deschamps Executive Vice President & Chief Financial Officer
Slide 53: Financial highlights
OUR FINANCIAL PATH Financial highlights Our financial performance demonstrates continued resilience and persistence as we drive towards our target state Diluted EPS1 Adjusted Diluted EPS1,2 ($0.27) $4.02 $1B+ % 1.80% Revenue1 Q2/24 Net Interest Net Income1 Adjusted Net Income1,2 Margin2 ($0MM) $187M
Slide 54: Capital standing
OUR FINANCIAL PATH 54 Capital standing We have employed a prudent capital management strategy with a strong base to weather economic turmoil Laurentian Bank Capital Ratios1 Canadian Banking CET1 Capital Ratios %, Q2/24 %, Q2/24 for Laurentian Bank, Q1/24 for other banks3 Regulatory Minimum Actual Ra
Slide 55: Diversified funding strategy
OUR FINANCIAL PATH 55 Diversified funding strategy Our funding base is resilient and enables us to drive growth for the organization Liquidity Coverage Ratio (LCR) Trend1 Built strong LCR buffer Funding stability with strong %, FY21-Q2/24 to weather economic liquidity base turmoil and fund loan Comp
Slide 56: Credit and risk management
OUR FINANCIAL PATH 56 Credit and risk management We have sustained a robust credit risk management approach with our highly secured loan portfolio Prudent risk management with strong Provision for Credit Losses Basis Points, FY08-Q2/24 underwriting practices ü Historical losses at about half the ind
Slide 57: Recent performance
OUR FINANCIAL PATH 57 Recent performance Despite making progress on loan and deposit growth, the Bank’s overall financial performance has been lacking progress through FY23 FY22 target FY22 status Previous mid-term targets FY23 status Loan Growth Mid single digit Mid single digit Deposit Growth Mid
Slide 58: Performance versus the industry
OUR FINANCIAL PATH 58 Performance versus the industry Our focus on short-term expense management led to a deferral of crucial long-term investments – and considering recent revenue impact due to the economic environment, no sustainable efficiency gains could be generated Revenue Growth Lower YoY Gro
Slide 59: Our performance drivers
OUR FINANCIAL PATH 59 Our performance drivers To derive sustainable efficiency gains, not only do we need to pursue our efficient Commercial Banking growth as the economic uncertainty vanishes, we also recognize the imperative to improve operations in Personal Banking Adjusted Efficiency Ratio1 FY21
Slide 60: Our path to achieve our ambition
OUR FINANCIAL PATH 60 Our path to achieve our ambition Double-digit Adjusted ROE1 There are a handful of key levers that could advance us towards our Adjusted ROE target Our ambition Expense improvement Revenue growth Our starting point • Driven by focused execution of our strategy, competing • Impr
Slide 61: Financial roadmap
OUR FINANCIAL PATH 61 Financial roadmap We have laid out directional business segments objectives to help achieve our medium-term objectives Key Enablers Personal & Commercial Banking Segment Capital Markets Segment COMMERCIAL BANKING PERSONAL BANKING CAPITAL MARKETS Objective Objective Objective Gr
Slide 62: Financial targets
OUR FINANCIAL PATH 62 Financial targets We have established medium-term financial targets Growth drivers Financial targets Metrics Mid-term targets Metrics Mid-term targets Adjusted diluted Loan growth Mid single digit Double-digit EPS1 growth Deposit Adjusted Return on Mid single digit Double-digit
Slide 63: Conclusion
63 Conclusion Éric Provost President & Chief Executive Officer
Slide 64: Who we plan to be
CONCLUSION 64 Who we plan to be The successful execution of our strategy will lead to a stronger and more profitable institution Personal & Commercial Banking Segment Capital Markets Segment COMMERCIAL BANKING PERSONAL BANKING CAPITAL MARKETS Refreshed Remains the Our support growth engine: communit
Slide 65: The actions we will take
CONCLUSION 65 The actions we will take We have an integrated plan to achieve our ambition Commercial Business Funding Technology Focus on finance mix profitability Develop our Grow our specialized Grow our deposit base Accelerate our Simplify our product ecosystem by commercial business by enhancing
Slide 66: Our path forward
66 Our path forward Foster prosperity for all customers through specialized commercial banking and low-cost banking services to grow savings for middle-class Canadians ≤ 60% Double-digit Adjusted Our ambition Efficiency Leading NPS Adjusted ROE1 Ratio1 Focus Optimize Grow our efforts our cost struct
Slide 67: Appendices
Appendices ——————EEE
Slide 68: Adjusting items
APPENDICIES 68 Adjusting items Trailing last twelve months: Q2/23-Q2/24 Pre-tax After-tax Impact impact ($MM) impact ($MM) ($ / share) P&C Banking impairment charges $155.9 $125.6 $2.87 Restructuring and other impairment charges 65.1 47.8 1.10 Strategic review-related charges 5.9 4.4 0.10 Amortizati
Slide 69: Non-GAAP financial measures
APPENDICIES 69 Non-GAAP financial measures Trailing last twelve months: In $MM Q2/23-Q2/24 Non-interest expenses $971.5 Less: Pre-tax impact of adjusting items(1) 239.8 Adjusted non-interest expenses $731.7 Income (loss) before income taxes -$17.1 Pre-tax impact of adjusting items(1) 239.8 Adjusted
Slide 70: Investor relations contact
Investor relations contact Raphael Ambeault Head, Investor Relations (514) 601-0944 raphael.ambeault@laurentianbank.ca www.lbcfg.ca/investors-centre