Laurentian Bank Of Canada · TSX:LB
Laurentian Bank Of Canada — Q3 2021 Earnings Presentation
24 slides from Laurentian Bank Of Canada's earnings presentation, Sep 1, 2021
Slide 1: Investor Presentation Third Quarter 2021
INVESTOR PRESENTATION Third Quarter 2021 September 1, 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: Q3/21 Financial Highlights
Adjusted Net Adjusted Diluted Adjusted PCL (bps)(2) Income ($MM)(1) EPS(1) Efficiency Ratio(1) Q3/21 Financial +25% +23% +30bps YoY YoY -20bps YoY Highlights $59.0 69.9% 27 YoY $56.7 $1.23 $1.25 1.33 $47.1 68.1% $1.02 68.4% 66.6 • Strong performance 7 in Real Estate Financing 3 • Capital Markets sec
Slide 5: Q3 Key Developments
Q3 Key Developments Purchased group annuity contracts to de-risk pension plans Real Estate Finance Group Y-o-Y growth of 18% Announced new Chief Information Technology Officer, Beel Yaqub Created new Residential Real Estate Secured Lending business unit to deliver a more seamless customer experience
Slide 6: Three Strategic Pillars
Three Strategic Pillars Cultivating a Driving an “Agile Engaging and “Customer and Innovative” empowering our First” Culture Mindset employees to work as “One Team” 6 6
Slide 7: 2021 Priorities
2021 Priorities Renew the senior Increase our efforts Conduct a leadership team on cost discipline thorough review and organizational while pivoting to of all of Laurentian structure structural cost Bank’s operations containment and develop a opportunities new strategic plan 7
Slide 8: Mortgage Business
Mortgage Business People Process Te c h n o l o g y New Residential Real Estate Implementation of “DocuSign”, Integration of Automated Secured Lending business a digital tool for ease, Valuation Management unit to deliver a more convenience and collection system to improve seamless customer of custo
Slide 9: Financial Review
YVAN DESCHAMPS Executive Vice President and Chief Financial Officer Financial Review 9
Slide 10: Q3/21 Financial Performance
Q3/21 Financial Performance Y/Y Highlights Reported ($MM) Q3/21 Y/Y Q/Q • Revenue growth mainly due to increased lending fees and financial market Total revenue $ 254.9 +3% +2% related revenues Provision for credit losses (PCL) $ 5.4 -76% +125% • Materially lower PCLs as Q3/20 was impacted by the pa
Slide 11: Net Interest Income
Net Interest Income Net Interest Income and Margin ($MM, %) Key Assets ($B) Q3/21 Y/Y Q/Q 1.86% 1.82% 1.84% 1.88% 1.86% Liquid assets $ 10.5 +7% +6% Personal loans $ 3.8 -11% -3% Residential mortgage loans $ 15.7 -1% -1% $173.5 $169.3 $173.1 $171.5 $174.7 Commercial loans (1) $ 13.5 +6% +2% Q3/20 Q4
Slide 12: Other Income
Other Income ($MM) Q3/21 Y/Y Q/Q Y/Y Highlights Lending fees $ 18.7 +20% +10% Other income increased by $5.1MM, mainly from: Fees and securities brokerage commissions 16.1 +28% -6% • An increase of $3.1MM in lending fees driven by an improvement in Commissions from sales of mutual funds 12.5 +17% +6
Slide 13: Adjusted Non-Interest Expenses (NIE)
Adjusted Non-Interest Expenses (NIE) Adjusted NIE ($MM) (1) Q3/21 Y/Y Q/Q Y/Y Highlights Salaries and employee benefits $ 96.9 +5% -1% Adjusted non-interest expenses increased by $5.2MM, mainly from: Premises and technology 49.2 -2% -1% • Salaries and employee benefits increased by $4.5MM on an adju
Slide 14: Well Diversified and Stable Sources of Funding
Well Diversified and Stable Sources of Funding Funding ($B) Y/Y Highlights • An increase in debt related to securitization of $1.4B was offset by a 36.9 36.9 37.0 decrease in term deposits sourced from Advisors & Brokers to optimize 2.6 2.7 2.7 Shareholders' equity funding sources and align deposits
Slide 15: Strong Capital Position
Strong Capital Position Common Equity Tier 1 Capital Ratio (CET1)(1) Risk-Weighted Assets (RWA) ($B) 10.3% 10.1% 19.9 19.7 9.8% 19.7 19.7 19.7 9.6% 9.4% Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 Evolution of the CET1 Ratio (%) Y/Y Highlights 0.3 0.0 10.3 (1) • CET1 ratio increased
Slide 16: 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(3) 12.7 13.2 1.7 1.4 Commercial Lending ($B) 10% 6%4% 1.7 British Columbia 1.4 1.4 Inventory financing 1.5 Alberta & Prairies 2.2 Equipment financing 2.1 2.4 28% Ontario Ot
Slide 17: High Quality Residential Mortgage Loan Portfolio
High Quality Residential Mortgage Loan Portfolio Insured vs Uninsured A Pan-Canadian Portfolio(2) 3% 39% 34% 35% 10% Conventional British Columbia Prime insured 13% Alberta & Prairies 38% 57% 56% Alt-A Ontario 53% Quebec 8% 9% 36% 9% Atlantic Provinces Q3/20 Q2/21 Q3/21 Credit Quality 30 Insured, Un
Slide 18: Allowances for Credit Losses
Allowances for Credit Losses Allowances for Credit Losses (ACL) ($MM) Y/Y Highlights 193.6 • ACL increased by $14.1MM mainly related to an increase in the 185.0 185.5 183.3 169.2 impaired commercial loan portfolio 155.7 76.4 86.5 110.1 59.7 71.5 88.5 90.0 Q/Q Highlights 45.9 • ACL decreased by $2.2M
Slide 19: Provision for Credit Losses
Provision for Credit Losses Provision for Credit Losses (PCL) ($MM) Maintaining a Prudent Approach to Provisioning Y/Y Highlights 24.2 22.3 • PCL decreased by $16.9MM as a result of the lower provisions on 16.8 13.1 impaired loans due to the prior year impact of the pandemic and releases 2.4 5.4 of
Slide 20: Impaired Loans
Impaired Loans Gross Impaired Loans ($MM, bps) Net Impaired Loans ($MM, bps) 84 62 82 82 81 59 77 56 51 53 202.9 196.3 274.4 272.7 274.2 265.9 187.6 255.3 166.8 175.8 119.3 115.2 112.8 174.6 170.8 178.1 165.0 185.2 99.5 112.1 66.8 65.8 66.3 65.2 62.2 61.3 67.3 62.6 57.5 57.7 33.0 36.1 29.8 23.0 18.1
Slide 21: Key Takeaways
Key Takeaways 1 Momentum built in first half of 2021 continued into Q3 • Strong performance in Real Estate Financing, second highest quarter on record for Capital Markets, and low provision for credit losses • Healthy liquidity levels and strong capital position with CET1 at 10.3%, up 20 bps Q/Q and
Slide 22: Appendices
Appendices FRANÇOIS LAURIN 22
Slide 23: Adjusting Items
Adjusting Items Q3/21 Q2/21 Q3/20 Net Net Net Pre-Tax Income EPS Pre-Tax Income EPS Pre-Tax Income EPS Effect After-Tax Effect Effect After-Tax Effect Effect After-Tax Effect ($MM) Effect ($/Share) ($MM) Effect ($/Share) ($MM) Effect ($/Share) ($MM) ($MM) ($MM) Net gain on the settlement of pension
Slide 24: 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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