Laurentian Bank Of Canada · TSX:LB
Laurentian Bank Of Canada — Q2 2021 Earnings Presentation
23 slides from Laurentian Bank Of Canada's earnings presentation, Jun 2, 2021
Slide 1: Investor Presentation Second Quarter 2021
INVESTOR PRESENTATION Second Quarter 2021 June 2, 2021 1
Slide 2: Caution Regarding Forward-Looking Statements
Caution Regarding Forward-Looking Statements The Bank may, from time to time, make written or oral forward-looking statements within the meaning of applicable securities legislation, including in this document and the documents incorporated by reference herein, and in other documents filed with Cana
Slide 3: Strategic Direction
RANIA LLEWELLYN President and Chief Executive Officer Strategic Direction 3
Slide 4: Q2/21 Financial Highlights
Q2/21 Financial Highlights Adjusted Net Income(1) Adjusted Diluted EPS(1) Adjusted Efficiency PCL(2) Ratio(1) 376% 515% YoY YoY Strong Performance in Capital Markets $56.7MM $1.23 69.9% 3bps Low Provision for 490 640 Credit Losses bps bps Including a Reserve YoY YoY Release Net Income Diluted EPS Ef
Slide 5: Q2 Key Developments
Q2 Key Developments Following the employee vote, the Canada Industrial Relations Board revoked the union certification covering the unionized employees S&P Global Ratings and DBRS Morningstar upgraded their ratings outlook on the Bank from negative to stable, recognizing the solid progress that the
Slide 6: Three Strategic Pillars
Three Strategic Pillars Cultivating a “Customer First” Culture Driving an “Agile and Innovative” Mindset Engaging and Empowering our employees to work as “One Team” 6
Slide 7: 2021 Priorities
2021 Priorities Renew the senior Increase our efforts on cost Conduct a thorough review leadership team and discipline while pivoting to of all of Laurentian Bank’s organizational structure structural cost optimization operations and develop a new opportunities strategic plan 7
Slide 8: Financial Review
YVAN DESCHAMPS Executive Vice President and Chief Financial Officer Financial Review 8
Slide 9: Q2/21 Financial Performance
Q2/21 Financial Performance Y/Y Highlights Reported ($MM) Q2/21 Y/Y Q/Q • Continued strong contribution from Capital Markets leading to higher Total revenue $ 249.8 +4% +1% revenues Provision for credit losses (PCL) $ 2.4 -96% -86% • Materially lower PCLs as Q2/20 was impacted by the start of the pa
Slide 10: Net Interest Income
Net Interest Income Net Interest Income and Margin ($MM, %) Key Assets ($B) Q2/21 Y/Y Q/Q 1.88% 1.86% 1.82% 1.84% 1.88% Liquid assets $ 10.0 +1% -5% Personal loans $ 3.9 -10% -2% Residential mortgage loans $ 15.9 -% -1% $170.7 $173.5 $169.3 $173.1 $171.5 Commercial loans(1) $ 13.2 -2% -% Q2/20 Q3/20
Slide 11: Other Income
Other Income ($MM) Q2/21 Y/Y Q/Q Y/Y Highlights Other income increased by $8.9MM, mainly from: Lending fees $ 17.0 +15% +6% • An increase of $4.5MM from Capital Markets revenues and treasury Fees and securities brokerage commissions 17.1 +40% +21% activities Commissions from sales of mutual funds 11
Slide 12: Adjusted Non-Interest Expenses (NIE)
Adjusted Non-Interest Expenses (NIE) Adjusted NIE ($MM) Q2/21 Y/Y Q/Q Y/Y Highlights Adjusted non-interest expenses decreased by $5.0MM Salaries and employee benefits $ 97.5 +4% +2% • Salaries and employee benefits increased by $3.5MM as higher Premises and technology 49.9 -2% +3% performance-based
Slide 13: Well Diversified and Stable Sources of Funding
Well Diversified and Stable Sources of Funding Funding ($B) Y/Y Highlights • An increase in debt related to securitization of $1.6B was offset by a 37.5 37.2 36.9 decrease in term deposits sourced from Advisors & Brokers of $1.7B 2.6 2.6 2.7 Shareholders' equity and a decrease in wholesale deposits
Slide 14: Strong Capital Position
Strong Capital Position Common Equity Tier 1 Capital Ratio (CET1)(1) Risk-Weighted Assets (RWA) ($B) 20.9 10.1% 19.9 9.8% 19.7 19.7 19.7 9.6% 9.4% 8.8% Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Evolution of the CET1 Ratio (%) Y/Y Highlights 10.1(1) 0.3 0.0 0.1 • CET1 ratio increase
Slide 15: Strong and Diversified Commercial Loan Portfolio
Strong and Diversified Commercial Loan Portfolio Commercial Loan Portfolio(1) A pan-Canadian Portfolio and a U.S. 13.5 Presence(2) 13.2 13.2 Commercial Lending ($B) 13% 5%4% 2.6 1.9 1.7 British Columbia 1.4 1.4 Inventory financing 1.5 Alberta & Prairies 2.2 2.2 Equipment financing 2.4 28% Ontario Ot
Slide 16: High Quality Residential Mortgage Loan Portfolio
High Quality Residential Mortgage Loan Portfolio Insured vs Uninsured A Pan-Canadian Portfolio(2) 3% 35% 34% 43% 10% Conventional British Columbia Prime insured 13% Alberta & Prairies 38% 57% 57% Alt-A Ontario 50% Quebec 8% 36% 7% 9% Atlantic Provinces Q2/20 Q1/21 Q2/21 Credit Quality 30 Insured, Un
Slide 17: Allowances for Credit Losses
Allowances for Credit Losses Allowances for Credit Losses (ACL) ($MM) 193.6 169.2 185.0 185.5 Y/Y Highlights 155.7 • ACL increased by $29.8MM driven by severe economic conditions 76.4 86.5 88.5 resulting from the global pandemic 59.7 71.5 108.5 107.1 Q/Q Highlights 96.0 97.8 97.0 • ACL decreased by
Slide 18: Provision for Credit Losses
Provision for Credit Losses Provision for Credit Losses (PCL) ($MM) Maintaining a Prudent Approach to Provisioning 54.9 Y/Y Highlights 23.5 • PCL decreased by $52.5MM reflecting the impact of COVID-19 on performing loans in Q2/20, $9.9MM releases of provisions on performing 22.3 24.2 loans, and lowe
Slide 19: Impaired Loans
Impaired Loans Gross Impaired Loans ($MM, bps) Net Impaired Loans ($MM, bps) 84 62 82 82 77 59 56 70 52 51 202.9 196.3 274.3 272.7 274.1 187.6 255.3 175.6 235.2 166.8 119.3 115.2 174.6 170.8 178.1 112.8 165.0 104.3 99.5 152.9 66.8 65.8 66.3 65.2 62.2 61.3 58.7 67.3 57.7 57.5 23.6 33.0 36.1 29.8 23.0
Slide 20: Key Takeaways
Key Takeaways 1 Momentum built in Q1 continues into Q2 • Strong capital position: CET1 10.1% representing $350MM in excess capital • Sound credit quality underpinned by disciplined underwriting, good diversification, strong collateral • Well diversified and stable sources of funding 2 Maintaining fo
Slide 21: Appendices
Appendices FRANÇOIS LAURIN 21
Slide 22: Adjusting Items
Adjusting Items Q2/21 Q1/21 Q2/20 Pre-Tax After-Tax EPS Pre-Tax After-Tax EPS Pre-Tax After-Tax EPS Effect Effect Effect Effect Effect Effect Effect Effect Effect ($MM) ($MM) ($/Share) ($MM) ($MM) ($/Share) ($MM) ($MM) ($/Share) Restructuring charges(1) $ 1.9 $ 1.4 $ 0.03 $ 0.6 $ 0.5 $ 0.01 $ 0.3 $
Slide 23: Note to Users
Note to Users Management uses both generally accepted accounting principles (GAAP) and non-GAAP measures to assess the Bank’s performance. Results prepared in accordance with GAAP are referred to as “reported” results, except for Pre-tax pre-provision income which is a non-GAAP measure. Non-GAAP mea
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