Laurentian Bank Of Canada · TSX:LB
Laurentian Bank Of Canada — Q1 2020 Earnings Presentation
30 slides from Laurentian Bank Of Canada's earnings presentation, 2020
Slide 1: Investor Presentation First Quarter 2020
INVESTOR PRESENTATION First 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
FRANÇOIS DESJARDINS President and Chief Executive Officer 3
Slide 4: We are rebuilding growth engines
We are rebuilding growth engines We expect a return to net positive loan growth by year-end Good growth in Gaining traction in Stabilizing loan loans to business underwriting new portfolio customers: +7% y/y residential mortgages 4
Slide 5: Beginning to see real progress from foundational work
Beginning to see real progress from foundational work Successful launch of digital offering with $1 billion of new deposits Expand customer base Cross-selling Funding across Canada opportunities diversification 5
Slide 6: Substantial portion of the transformation already behind us
Substantial portion of the transformation already behind us Building a better and different banking experience for our customers Focused on finishing 100% Advice model Working on efficiency core banking gaining momentum 6
Slide 7: Well positioned for the future
Well positioned for the future Stronger financial institution than ever before Strong capital Healthy level of Industry low loan loss position liquidity ratio 7
Slide 8: François Laurin
FRANÇOIS LAURIN Executive Vice-President And Chief Financial Officer 8
Slide 9: Financial Results
FINANCIAL RESULTS 9
Slide 10: Q1/20 Financial Performance
Q1/20 Financial Performance Q1/20 Highlights Adjusted(1) Q1/20 Q/Q Y/Y Y/Y and Q/Q Net Income ($M) $ 36.9 -23% -17% • Impacted by lower revenues and higher expenses, as well as an increase in Diluted EPS $ 0.79 -25% -19% provisions for credit losses in the commercial ROE 5.8% -200 bps -150 bps loan
Slide 11: Adjusting Items in Q1/20
Adjusting Items in Q1/20 ($ millions, except per share amounts) Q1/20 Q4/19 Q1/19 Before After Before After Before After EPS EPS EPS taxes taxes taxes taxes taxes taxes Adjusting items Restructuring charges Severance charges $ 2.8 $ 2.1 $ 0.05 $ 1.7 $ 1.3 $ 0.03 $ 1.3 $ 1.0 $ 0.02 Other restructurin
Slide 12: Total Revenue
Total Revenue Q1/20 Highlights ($ millions) Q1/20 Q/Q Y/Y Y/Y • Total revenue down by $3.6M or by 1% Net interest income $168.8 -3% -2% • Net interest income down by $3.8M, mainly due Other income 69.9 2% − to lower loan and deposit volumes, partly offset by an improvement in business mix Total reve
Slide 13: Net Interest Margin (NIM)
Net Interest Margin (NIM) Q1/20 Highlights Net Interest Margin Y/Y (on average earning assets) • NIM up by 1 bp Y/Y mainly as a result of the 1.85% 1.84% 1.80% 1.81% change in mix in the loan portfolio 1.77% Q/Q • NIM down by 3 bps mainly as a result of: − Impact of IFRS 16, Leases Q1/19 Q2/19 Q3/19
Slide 14: Other Income
Other Income ($ millions) Q1/20 Q/Q Y/Y Q1/20 Highlights Lending fees $ 15.3 -8% 5% Y/Y Commissions from sales of • Other income was relatively unchanged, up mutual funds 10.9 2% 2% by $0.2M Fees and securities brokerage • Market related revenues up by $1.5M commissions 10.6 -11% 6% driven by strong
Slide 15: Adjusted Non-Interest Expenses (NIE)
Adjusted Non-Interest Expenses (NIE) Q1/20 Highlights Adjusted NIE Q1/20 Q/Q Y/Y ($ millions) • Adjusted Y/Y up by $3.5M Salaries and employee benefits $ 95.3 12% 3% − Salaries and employee benefits up $3.2M, partly due to higher share-based and Premises and performance-based compensation, 49.8 2% 1
Slide 16: Well Diversified and Stable Sources of Funding
Well Diversified and Stable Sources of Funding Funding Shareholders' equity ($ billions) Total deposits decreased by 11% Y/Y and 2% Q/Q mainly as a result of lower asset levels 38.4 37.5 37.1 • Institutional deposits decreased by $1.1B Y/Y and 2.5 2.6 Subordinated debt 2.6 $0.5B Q/Q 0.3 0.3 0.3 • Cl
Slide 17: Regulatory Capital
Regulatory Capital Common Equity Tier 1 Capital Ratio Risk-Weighted Assets (RWA) ($ billions) (CET1) 9.0% 9.0% 9.0% 9.0% 8.9% 20.5 20.5 20.4 20.4 20.6 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Evolution of the CET1 Ratio (in %) 0.2 9.0 - 0.1 9.0 (0.2) (0.1) (0.0) CET1 as at Growth
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 $0.6B Y/Y and are ($ billions) relatively stable Q/Q • Commercial loans up by 7% Y/Y and by 2% Q/Q. 34.1 33.7 33.5 The Q/Q increase is mainly due to inventory financing volumes, as well as equipment financing oper
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% 44% % of Residential Mortgage Loan Portfolio LTV %(1) Conventional Prime Insured As at January 31, 2020 Uninsured Insured 48% 50% Alt-A British Columb
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) 13.2 (As at January 31, 2020) 2.5 Inventory financing 8.0 1.4 0.1 Equipment
Slide 22: Provision for Credit Losses (PCL)
Provision for Credit Losses (PCL) PCL Q1/20 Q4/19 Q1/19 Q1/20 Highlights ($ millions) Personal Loans • PCL up $4.4M Y/Y and $2.3M Q/Q mainly Stage 1 and 2 $ (2.9) $ 2.4 $ (2.9) due to provisions in the commercial loan Stage 3 6.9 3.1 7.3 portfolio 4.0 5.5 4.4 Residential Mortgage Loans • Economic co
Slide 23: Impaired Loans
Impaired Loans Net Impaired Loans (NIL)(1) • Loan portfolios continue to perform well (As a % of loans and acceptances) 0.43% 0.42% 0.45% 0.42% 0.40% • Net impaired loans of $140.8M remain within historical fluctuations • We are provisioned adequately Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Gross Impaired Loa
Slide 24: Appendices
APPENDICES 24
Slide 25: High Quality Mortgage Loan Portfolio – Low Loan-to-Value
High Quality Mortgage Loan Portfolio – Low Loan-to-Value Loan-to-Value Distribution We target the high end of the Alt-A market (As at January 31, 2020) through low LTV ratios 53% 53% 32% 32% • Vast majority of uninsured and Alt-A 29% 24% 21% mortgages have LTVs of 75% or less 18% 19% 8% • 93% of Con
Slide 26: High Quality Mortgage Loan Portfolio – Low Loan-to-Value
High Quality Mortgage Loan Portfolio – Low Loan-to-Value Beacon Distribution We target high end of the Alt-A market (As at January 31, 2020) through high beacon scores 86% 79% 57% • Vast majority of Alt-A and uninsured portfolios with beacon scores > 650 20% 18% 5% 8% 8% 11% • 90% of Conventional po
Slide 27: Non-GAAP Measures
Non-GAAP Measures ($ millions, except per share amounts) Q1/20 Q4/19 Q1/19 Reported net income $ 32.2 $ 41.3 $ 40.3 Adjusting items, net of income taxes(1) Restructuring charges Severances charges 2.1 1.3 1.0 Other restructuring charges (0.1) 2.7 0.5 2.0 4.0 1.5 Items related to business combination
Slide 28: Working toward our strategic objectives
Working toward our strategic objectives Our 2022 strategic objectives What is completed What must be achieved Foundation Building a strong foundation: Implementation of the foundation of the core banking system Migrate all remaining products and accounts to the new core banking system Rebuild a prop
Slide 29: Our New 2022 Medium-Term Financial Objectives
Our New 2022 Medium-Term Financial Objectives Q1/20 Performance(1) Adjusted Adjusted Adjusted Adjusted ROE Efficiency Ratio Diluted EPS Operating Leverage Narrow gap to 250 bps by 2022(2) < 63% by 2022 Grow by 5% to 10% annually Positive Loans to Business Customers Q1/20 2022 Grow by $4.3B to $17.5B
Slide 30: Investor Relations Contact
Investor Relations Contact Susan Cohen Director, Investor Relations (514) 284-4500, ext. 40452 susan.cohen@lbcfg.ca 30
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