Laurentian Bank Of Canada · TSX:LB
Laurentian Bank Of Canada — Q4 2022 Earnings Presentation
38 slides from Laurentian Bank Of Canada's earnings presentation, Dec 9, 2022
Slide 1: Investor Presentation Fourth Quarter 2022
Investor Presentation Fourth Quarter 2022 December 9, 2022
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements From time to time, Laurentian Bank of Canada and, as applicable its subsidiaries (collectively referred to as the “Bank”) will make written or oral forward-looking statements within the meaning of applicable Canadian and United States (U.S.) securities le
Slide 3: Non-GAAP financial and other measures
Non-GAAP financial and other measures In addition to financial measures based on generally accepted accounting principles (GAAP), management uses non-GAAP financial measures to assess the Bank’s underlying ongoing business performance. Non-GAAP financial measures presented throughout this document a
Slide 4: Rania Llewellyn – Overview
Rania Llewellyn President & Chief Executive Officer Overview
Slide 5: Strong Annual Financial Results
Adjusted Net Income ($MM)(1)(4) Net Income ($MM) Adjusted PTPP ($MM)(1)(4) Strong Annual +12% +297% +9% Y/Y Y/Y Y/Y Financial Results $211 $237 $227 $319 $347 $269 $138 $114 $57 ✓ Solid execution leading to strong FY20 FY21 FY22 FY20 FY21 FY22 FY20 FY21 FY22 results Adjusted Diluted EPS ($)(2)(4) Di
Slide 6: Financial Targets
Financial Targets | Exceeded our FY2022 Financial Targets Financial Target 2022 Target 2022 Results Status Adjusted diluted earnings per share growth(1) >5%(2) 14% Adjusted return on common shareholders’ equity(1) >8.5% 9.3% Adjusted efficiency ratio(1) <68% 66.5% Adjusted operating leverage(1) Posi
Slide 7: Strategic Update
Strategic Update | Fourth Quarter Highlights Strategic Direction: Commercial Banking Priorities Launched reimagined credit Published our inaugural Sub-leased 50% of our card experience, reducing time Sustainable Bond Framework corporate office space to approval from 25 days to to make a positive imp
Slide 8: Strategic Plan Update
Strategic Plan Update
Slide 9: 5-Point Plan for Future Growth
Build One Winning Team Make the Better Choice Strategic Plan Update | 5-Point Plan for Future Growth Build One Winning Make Size Our Think Customer Simplify Make the Better Team Advantage First Choice Culture Commercial Banking Capital Markets Personal Banking Our Driving Force Our Growth Engine
Slide 10: Culture
Strategic Direction: Culture | Our Driving Force Culture Priorities 1 Inspire and engage our employees to work as One Team 2 Instil a Renewed our purpose Adopted work-from- Increased our performance- and introduced new home first approach, employee engagement oriented culture core values across laun
Slide 11: Commercial Banking
Strategic Direction: Commercial Banking | Our Growth Engine Commercial Banking Priorities 1 Continue to focus on our specialized sectors 2 Diversify geographically Commercial loan Exceeded our Delivering an and by industry growth up by medium-term excellent customer $4.1BN or 29% diversification tar
Slide 12: Capital Markets
Strategic Direction: Capital Markets | Our Focused & Aligned Offering Capital Markets Priorities 1 Be an alternative to large banks 2 Expand capabilities to further align with Commercial Banking Added real estate Had year-over-year Participated in 100% of research team to growth in FX, and a green a
Slide 13: Personal Banking
Strategic Direction: Personal Banking | Repositioning for Growth Personal Banking Priorities 1 Create one performance- oriented Personal Bank 2 Enhance focus products and Reduced our time to yes Launched our Closed top five digital processes for mortgages from more renewed brand with a pain points i
Slide 14: Operational Efficiency
Strategic Direction: Operational Efficiency | Path to Improved Efficiency Operational Efficiency Priorities 1 Leverage partners to access economies of scale and leading innovation Reduced excess data Reduced redundant Rolled out work from 2 Become an agile storage and technology home first approach
Slide 15: ESG
Strategic Direction: ESG | Integrating ESG across the Organization ESG Priorities 1 Integrating ESG across the organization Launched the Bank’s Achieved our objective of Published inaugural first ESG and TCFD moving to a low-risk Sustainable Bond reports, including ESG rating from Framework to conti
Slide 16: Strategic Outlook: FY2023 Priorities
Strategic Outlook | FY2023 Priorities Delivering excellent Driving Efficiencies Growing Deposits customer service Through Simplification Driving Growing efficiencies We will leverage data We aredeposits well positioned to Wethrough will continue to from our NPS program grow deposits by simplificatio
Slide 17: Yvan Deschamps – Financial Review
Yvan Deschamps Executive Vice President & Chief Financial Officer Financial Review
Slide 18: Strong FY22 Annual Performance
Financial Review | Strong FY22 Annual Performance Reported ($MM) 2022 Y/Y 2022 Highlights Total revenue $1,034.2 +3% • Total revenue up by $31.8MM, mainly due to higher interest income stemming from commercial loans Provision for credit losses (PCL) $56.9 +15% Non-interest expenses (NIE) $701.7 -20%
Slide 19: Loan Growth Drives Q4 Results
Financial Review | Loan Growth Drives Q4 Results Reported ($MM) Q4/22 Y/Y Q/Q Y/Y Highlights Total revenue $257.1 +3% -1% • Total revenue up by $6.7MM, mainly due to higher interest income stemming from commercial loan growth, partly offset by higher Provision for credit losses (PCL) $17.8 -28% +7%
Slide 20: Net Interest Income Growth
Financial Review | Net Interest Income Growth Net Interest Income and Margin ($MM, %) Key Assets ($B) Q4/22 Y/Y Q/Q Liquid assets(1) $11.8 19% -1% Personal loans $3.3 -11% -4% Residential mortgage loans $16.2 2% 2% Commercial loans(2) $18.2 29% 5% Key Liabilities ($B) Q4/22 Y/Y Q/Q Deposits – Person
Slide 21: Temporary NIM Headwinds
Financial Review | Temporary NIM Headwinds NIM Waterfall (Q2/22 to Q4/22) Temporary NIM Headwinds Period of steep central banks rate hikes • Net interest margin declined by 10 bps compared to the second quarter, mostly due to: o The speed and magnitude of the central banks rate 1.87% increases have
Slide 22: Market Volatility Impacting Other Income
Financial Review | Market Volatility Impacting Other Income Other Income ($MM) Q4/22 Y/Y Q/Q Y/Y Highlights Lending fees $17.4 -1% +2% • Other income decreased by $4.0MM, as the volatile market Fees and securities brokerage conditions unfavourably impacted financial markets related $13.1 -22% +23% c
Slide 23: Non-Interest Expenses Support Growth
Financial Review | Non-Interest Expenses (NIE) Support Growth NIE ($MM) Q4/22 Y/Y Q/Q Y/Y Highlights Salaries and employee benefits $89.6 +2% -10% • Adjusted NIE was up 4% from a year ago, mainly due to salary increases Premises and technology $47.0 +3% +6% and talent acquisition to support our stra
Slide 24: Well Diversified and Stable Sources of Funding
Financial Review | Well Diversified and Stable Sources of Funding Funding ($B) Y/Y Highlights Total funding increased by $5.2B • Debt related to securitization increased by $0.9B 0.3 • Total deposits increased by $4.1B 0.3 0.3 o Notice and demand deposits increased by $2.1B reflecting our strategy t
Slide 25: Strong Capital Position
Financial Review | Strong Capital Position Common Equity Tier 1 Capital Ratio (CET1)(1) Risk-Weighted Assets (RWA) ($B)(1) Evolution of the CET1 Ratio (%) Y/Y Highlights • CET1 ratio went from 10.2% to 9.1% as we redeployed capital accumulated during the pandemic to support sustainable, profitable c
Slide 26: Diversified Commercial Loan Portfolio
Financial Review | Diversified Commercial Loan Portfolio Commercial Loan Portfolio(1) A Pan-Canadian Portfolio and a U.S. Presence (as at October 31, 2022) Credit Quality Loan to Value (LTV) on Term Lending and Multi-residential Mortgage Portfolios • LTV on term loan portfolio: 58% • LTV on uninsure
Slide 27: High Quality Residential Mortgage Loan Portfolio
Financial Review | High Quality Residential Mortgage Loan Portfolio More than 80% of our residential portfolio is fixed of which >70% will mature in 2025 or later Insured vs Uninsured A Pan-Canadian Portfolio (as at October 31, 2022) Insured, Uninsured & Loan to Value (LTV) by Province(2) Credit Qua
Slide 28: Allowances for Credit Losses
Financial Review | Allowances for Credit Losses Allowances for Credit Losses (ACL) ($MM) Y/Y Highlights • ACL decreased by $1.4MM mainly due to write-offs and a return to performing status in impaired loans Q/Q Highlights • ACL increased by $8.0MM mainly due to commercial portfolio volume growth and
Slide 29: Provision for Credit Losses
Financial Review | Provision for Credit Losses Provision for Credit Losses (PCL) ($MM) Y/Y Highlights • PCL down by $7.1MM, as a result of lower provisions on performing loans which were recorded last year as part of the Bank's strategic review, partly offset by higher provisions on impaired loans •
Slide 30: Impaired Loans
Financial Review | Impaired Loans Gross Impaired Loans ($MM, bps) Net Impaired Loans ($MM, bps) Gross Impaired Loans (GIL) Net Formation ($MM) Y/Y Highlights • Gross impaired loans decreased by $93.2 MM driven by personal loans and commercial loans write-offs of previously provisioned accounts and l
Slide 31: Rania Llewellyn – Strategic Outlook
Rania Llewellyn President & Chief Executive Officer Strategic Outlook
Slide 32: Building on our Momentum
Strategic Outlook | Building on our Momentum Tremendous year executing against our plan Exceeded all of our 2022 Financial Targets Results speak to strength of our underlying business, focus on cost discipline and prudent approach to credit Focused on maintaining our healthy liquidity and capital le
Slide 33: Appendices
sit Appendices
Slide 34: Adjusting Items
Appendices | Adjusting Items Q4/22 Q3/22 Q4/21 2022 2021 Pre- After- Impact Pre- After- Impact Pre- After- Impact Pre- After- Impact Pre- After- Impact Tax Tax ($ / Tax Tax ($ / Tax Tax ($ / Tax Tax ($ / Tax Tax ($ / Impact Impact Share) Impact Impact Share) Impact Impact Impact Impact Impact Impact
Slide 35: Non-GAAP Financial Measures
Appendices | Non-GAAP Financial Measures In $MM Q4/22 Q3/22 Q4/21 2022 2021 Income before income taxes $65.1 $65.8 -$130.9 $275.7 $72.6 Provision for credit losses 17.8 16.6 24.9 56.9 49.5 Pre-tax pre-provision (PTPP) income(1) 83.0 82.5 -106.0 332.6 122.1 Pre-tax impact of adjusting items(2) 2.9 3.
Slide 36: Key Financial Drivers
Appendices | Key Financial Drivers Met / Exceed ⚫ Did not Meet 2022 Key Financial Drivers 2021 Actual 2022 Target Status Medium Term Results Loan Growth +1% Low single digit +12% Mid single digit Deposit Growth -4% Low single digit +18% Mid single digit Loan Portfolio Mix 42% Comm >42% 48% >45% Net
Slide 37: Achieving our FY22 KPIs
Appendices | Achieving our FY22 KPIs 2022 2022 2022 2022 2024 Culture 2021 2024 Commercial Banking 2021 Target Actual Target Actual Target Employee Engagement Index 74% 75% 77% ≥80% Loan Growth ($) $14B $15B $18B >$18B Employee Turnover 27% 25% 25% <20% % of Commercial loans in U.S. 14% 15% 24% >18%
Slide 38: Investor Relations Contact
Investor Relations Contact Andrew Chornenky Vice President, Investor Relations (416) 846-4845 Andrew.Chornenky@lbcfg.ca www.lbcfg.ca/investors-centre
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