HAVE YOU L OKED - Laurentian bank · PDF fileThe Bank uses both generally accepted accounting...
Transcript of HAVE YOU L OKED - Laurentian bank · PDF fileThe Bank uses both generally accepted accounting...
Agenda
Opening Remarks Gladys CaronIntroduction Réjean Robitaille
Financial Highlightspresentation and Q & A Michel C. Lauzon
Real Estate & Commercial presentation and Q & A Paul Hurtubise
Break
Retail & SME Quebecpresentation and Q & A Luc Bernard
B2B Trust presentation and Q & A François Desjardins
Laurentian Bank Securities & Capital Markets presentation and Q & A Michel C. Trudeau
Closing Remarks Réjean Robitaille
Questions and Answers
Symbol: LB, TSX 2
Caution regarding forward - looking statements
In this document and in other documents filed with Canadian regulatory authorities or in other communications, Laurentian Bank of Canada (the “Bank”) may from time to time make written or oral forward-looking statements within the meaning of applicable securities legislation. Forward- looking statements include, but are not limited to, statements regarding the Bank's business plan and financial objectives. These statements typically use the conditional, as well as words such as prospects, believe, estimate, forecast, project, expect, anticipate, plan, may, should, could, would or the negative of these terms or variations of them or similar terminology.
By their very nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties, both general and in nature. It is therefore possible that the forecasts, projections and other forward-looking statements will not be achieved or will prove to be inaccurate. Although the Bank believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct.
The Bank cautions readers against placing undue reliance on forward-looking statements when making decisions, as the actual results could differ considerably from the opinions, plans, objectives, expectations, forecasts, estimates and intentions expressed in such forward-looking statements due to various material factors. Among other things, these factors include capital market activity, changes in government, monetary, fiscal and economic policies, changes in interest rates, inflation levels and general economic conditions, legislative and regulatory developments, competition, credit ratings, scarcity of human resources and technological environment. The Bank further cautions that the foregoing list of factors is not exhaustive. For more information on the risk, uncertainties and assumptions that would cause the Bank's actual results to differ from current expectations, please also refer to the Bank's public filings available at www.sedar.com.
The Bank does not undertake to update any forward-looking statements, whether oral or written, made by itself or on its behalf, except to the extent required by securities regulations.
NON-GAAP FINANCIAL MEASURESThe Bank uses both generally accepted accounting principles (“GAAP”) and certain non-GAAP measures to assess its performance. Non-GAAP measures do not have any standardized meaning and are unlikely to be comparable to any similar measures presented by other companies. The Bank believes that these non-GAAP financial measures provide investors and analysts with useful information soth at they can better understand financial results and analyze the Bank’s growth and profitability potential more effectively.
Symbol: LB, TSX 3
Established
Track
Record
A solid track record of:Improving profitability: EPS up 87% over the past 4 yearsGrowing balance sheet: Loans and BAs and deposits up 43% and 50% respectively over the past 4 yearsBeing more efficient: Efficiency ratio improved by 770 basis points over the past 4 years
Our strong performance has resulted in:DBRS upgrading our credit rating in 2008Standard & Poor's raising our credit rating in 2010, being the first bank in North America to be upgraded since the financial crisis
Symbol: LB, TSX 5
Milestones
in our
development
1846: Founded as Montreal City and District Savings Bank
1965: Allowed to offer services outside the city of Montreal
1981: Allowed to offer services outside of Quebec
1987: Became a chartered Bank and renamed Laurentian Bank of Canada
1993: Laurentian Bank Securities created
2000: Creation of B2B Trust
Symbol: LB, TSX 6
Milestones
in our
development
1990’s: An acquisition phase
Expanded the Quebec operation
Added several branches in Ontario and western Canada
Laid the foundation for B2B Trust
2000’s: A repositioning and consolidation phase
Refocused our operations
Reduced our credit risk
Restructured the Bank
Symbol: LB, TSX 7
Repositioning enhanced our focus
Focus on Geography
Quebec focus for Retail Financial Services, SME and Retail brokerage
National focus for Real Estate, B2B Trust and LBS
Focus on Clients
Young families
Small and mid-size businesses
Real estate developers
Independent financial advisors
Government & municipal entities, small cap companies
Symbol: LB, TSX 8
RETAIL AND SME-QUEBECBranch networkAutomated Teller Machines Internet and Telebanking CentreMortgage brokersSME-QuebecPoint-of-saleloans
Diversified
activities
across
Canada
Over 1 million banking relationships
B2B TRUSTSecurities brokersLife insurance brokersMutualfundrepresentativesDeposit brokersMortgage brokers
REAL ESTATE & COMMERCIAL Real-estatefinancingCommercial financing
LAURENTIAN BANK SECURITIES AND CAPITAL MARKETSInstitutional brokerageRetail brokerage
Symbol: LB, TSX 12
Consequently
we
have achieved
Record profitability in 2010
Six consecutive years of increasing EPS – only Canadian bank to have accomplished this
Six consecutive years of growing loans and BAs
Five consecutive years of increasing deposits
A track record firmly established
Symbol: LB, TSX 13
Our three pillarsSupporting organic and sustainable growth
Symbol: LB, TSX 14
FOCUS
Focus exclusively on profitable markets in Quebec and in larger Canadian cities, where we hold comparative and distinctive advantages and can allocate the required investment to generate growth
AGILE GROWTH
Agile growth promoted through our culture of proximity and service and made possible by our light organizational structure, enabling us to be opportunistic
EXECUTION
Strictly adhere to excellence in execution, owing to our commitment to deliver strong results and facilitated by our proactive approach to our business plan and to risk management
$ millions 2006 2007 2008 2009 2010Average annual growth
2006-2010
Retail & SME Quebec 259* 284 299 306 324 6%
Real Estate & Commercial 59* 46* 57 68 85 11%
B2B Trust 74 81 87 91 114 14%
Total net interest income
357 390 405 424 496 10%
Net interest
income
growth
Increasing contribution from our 3 main growth engines
*Figures not restated to conform to current reporting
Symbol: LB, TSX 17
Other
income
growth
Growth in core & recurring revenues
*Credit insurance income, income from sales of mutual funds and card service revenues
Symbol: LB, TSX 18
$ millions2006-2010 Other Income: + 32%
$ millions 2006 2007 2008 2009 2010Average annual growth
2006-2010
Salaries and
employee
benefits
214 229 236 250 276 7%
Premises
and
technology
108 112 119 120 133 6%
Other
expenses
89 87 91 102 96 2%
Total
non‐interest
expense
411 427 446 472 504 6%
Non‐interest
expenses
Supporting growth and development
Symbol: LB, TSX 19
% 2006 2007 2008 2009 2010
Residential
mortgages 0.01 0.02 0.01 0.02 0.04
Personal
loans
(excluding
POS & investment
loans)1.17 1.01 0.84 0.97 1.08
Point of sale (POS)
financing
loans0.72 0.87 1.19 1.92 2.14
Investment
loans 0.00 0.00 0.03 0.08 0.08
Commercial mortgages, loans & BAs 0.58 0.53 0.42 0.57 0.95
Total – Laurentian Bank 0.32 0.30 0.34 0.35 0.38
Industry 0.20 0.29 0.50 0.92 0.58
Loan
losses
by portfolio
Loan loss provision as a % of loans and BAs
Symbol: LB, TSX 22
Impact of IFRS
Impact at transition Impact going forward
Securitization Gross-up of the balance sheet of approximately $2.7B Slight negative impact on retained earnings
Higher assets on balance sheetHigher net interest incomeLower net interest margins and other income
Employee benefits Potential reduction of retained earnings of $92.7M Decrease in pension costs
Loan provisioning and Business combinations
Potential impact should be limited
N/A
ROE N/A Higher
EPS N/A Neutral to slightly higher
Symbol: LB, TSX 24
Revenue growthfueled by continued healthy organic growth
and diversification of activities
Expensescontinued investments to support growth
Credit qualityprogressively improving
Capitalstrong foundation to support organic growth
Key TakeawaysOur foundation is strong and our operating model is simple
Symbol: LB, TSX 25
A NICHE APPROACH FOR A HIGH POTENTIAL MARKET
Paul HurtubiseSenior Vice-President Real Estate and Commercial
Delivered record new business activity and another year of record profitability in 2010
Increased net income by 43% to $49 million
Expanded real estate financing by 14% to $2.2B
Grew commercial loans and deposits in selected market segments
Real Estate
and Commercial –
Introduction
Symbol: LB, TSX 27
Two distinct markets…But one distinct goal… profitable growth
Real estate financing Commercial financing
Construction loans and fixed termloans for various real estateprojects:Office and commercial buildings,condominiums, residentialcomplexes
Operating credit facilities, depositsand transactional products for theoperational needs of companiesin sectors targeted by the Bank
Activities across CanadaActivities concentrated in Quebecand Ontario
8 offices:Toronto, Thornhill, Kitchener,Ottawa, Calgary, Vancouver,Montreal, Quebec City
6 offices:Toronto, Thornhill, Kitchener,Mississauga, Montreal andQuebec City
$1M to $30M loan per project(maximum exposure per group: $75M)
$1M to $25M loan maximum(maximum exposure per group: $75M)
Symbol: LB, TSX 28
Target marketReal estate developers and investors requiring variable and fixed-termfinancing of $1M to $30MSolid and experienced clients with a low risk profileLarger real estate loans through syndication
PositioningWidely recognized leadership and expertise in real estate financingacross Canada
Competitive advantage and distinctive promiseLong standing credibilityTimely execution of loan offeringsLimited number of relationships per account manager
Real Estate
financing
–
Profile
Our credibility and our timely execution make the difference
Symbol: LB, TSX 30
Real Estate
financing
profile
Growth with disciplined and rigorous underwriting
Symbol: LB, TSX 31
Real estate financing($ millions, as at October 31)
Target marketGeographic focus on Quebec, the GTA and south-western OntarioCompanies with financing needs of up to $25 millionSyndication market for diversification
PositioningRecognized as a leading mid-market financial service provider with thehighest level of customer service
Competitive advantage and distinctive promiseProactive, creative and flexible to meet our clients’ evolving needsLimited number of accounts per account managerFlat organizational structureRapid turn-around time
Commercial financing
–
Profile
Symbol: LB, TSX 32
Commercial financing
–
Loan
growth
Building relationships builds business
Symbol: LB, TSX 33
Commercial loans and BAs($ millions, as at October 31)
Real Estate
and Commercial strategies
Increase market penetration with emphasis on real estate financing and Quebec and Ontario mid-market loans
Expand our banking role by increasing our deposit portfolio and foreign exchange activities
Increase syndication activities
Improve efficiency through investments in information technology
Symbol: LB, TSX 34
FOCUS
Focus concentrated in segments we understand very well
AGILE GROWTH
Growing and increasingly profitable business segment
EXECUTION
Solid team in knowledge and experience, leading to excellent execution
Real Estate
and Commercial
–
Key Takeaways
Symbol: LB, TSX 35
Symbol: LB, TSX 37
19% increase in net income in 2010, compared to 2009, on the basis of continuing operations
14% growth in residential mortgages in 2010
10% growth in SME lending in 2010, 45% over the last three years
48% of the Bank’s deposits
76% of the residential mortgages of the Bank
31% of the Bank’s profits
Retail
and SME Quebec
–
Introduction
Retail
and SME – Profile
A strong franchise
Firmly rooted in Quebec
3rd largest network
Most admired bank brand in Quebec
A unique DNA
- Focus: Not being everything to everyone
- Discipline: Underwriting- Agility: Turnaround time- Proximity: To our clients- Execution: Customer oriented
2,600 Team members
Symbol: LB, TSX 38
Quebec
economy
A robust market, with strong economic fundamentals
Stronger job recovery than in Canada
Lower unemployment rate than in Ontario
Less chronic unemployment
More pent-up demand in housing
Symbol: LB, TSX 39
Retail
and SME – Progress
Achievements of the last 5 years
Strong
organic
growth
capacity
‐
In‐branch
advisors
(+15%)‐
SME account
managers (+75%)‐
New mobile bankers
(+100)45% of mortgage
origination
‐
New virtual
advisors
(+55)
Modernized
branches and infrastructure‐
New and Distinctive Boutique concept‐
Openings
/ relocations in high
potential
suburban
sectors‐
Improved
in‐branch
experience‐
Expanded
ATM network (+30%)‐
Exclusive ATM’s
in the Montrealsubway
and transit systemSymbol: LB, TSX 40
Retail
and SME – Progress
Improved sales culture
- Streamlined processes: divert 30% of time on administrative tasks to sales and customer care initiatives
Increased penetration rate of credit insurance, Visa and mutual funds by +25%
Number of customers holding 5 products or more increased by +15%
Symbol: LB, TSX 41
Retail
–
Mutual
funds
growth
Our focus on distribution is
paying
off
Symbol: LB, TSX 42
Mutual Funds Net Sales
Mid-term Strategy
Maximize share of wallet and customer profitability
Target market
Retail: Young families and emphasis on 3 urban markets (Montreal, Quebec and Gatineau)
SME: selective niche approach
Retail
and SME – Strategies
Symbol: LB, TSX 46
Increase our organic growth capacity:
Capitalize on the competitive edge that constitutes our fully deployed integrated knowledge base infrastructure
Technology critical for:Cross-sellingTargeted marketing campainPricing based on profitability, credit risk and loyaltyProviding unique customer experience across the boardAnticipating customer needs and behaviours
Retail
and SME – Strategies
Symbol: LB, TSX 47
Customer Relationship Manager
Marketing Campaign Manager
Analytical tools
Data warehouse
Increase our organic growth capacity:
Continue to increase our mobile sales force and SME account managers
Acceleration of the niche strategy in the SME market
Expansion of Insurance operation and product line
Improve our operational efficiency:Operational excellence and streamlining of end-to-end processesSimplification and bundling of productsConvert administrative tasks into sales and customer care initiatives
Retail
and SME – Strategies
Symbol: LB, TSX 48
FOCUS
Well
positioned
to leverage
transformed
operational
model
AGILE GROWTH
Renewed
and strong
franchise with
room to grow
EXECUTION
Simple strategy
Time –
tested
lending
discipline
Retail
and SME – Key Takeaways
Symbol: LB, TSX 49
51% of the Bank’s deposits
67% in GICs, 33% in high interest accounts
26% of the Bank’s loans
99% secured with either residential real estate, mutual or segregated funds
11% of the Bank’s non-interest expenses
30% of the Bank’s net income
B2B Trust
–
Introduction
Symbol: LB, TSX 51
Doubled the loan book ($2.8B to $5.2B)
Almost doubled the deposit book ($5.1B to $9.2B)
Signed over 40 distribution agreements, now having 65
Increased to 16 sales territories to cover 100% of the Canadian landscape
Doubled the number of employees to 400
B2B Trust
–
Progress
Deliberate and steady
Symbol: LB, TSX 52
B2B Trust –
Mission
B2B Trust is a traditional banking product manufacturer
Specializing exclusively in distribution through independently- minded financial advisors either:
- to complement core products they offer to their clients, or
- as a stand-alone offer to their clients
Products tailored to the specific needs and sales cycle of financial advisors and brokers
Symbol: LB, TSX 53
B2B Trust –
Brand
Banking that
works for
advisors
[ REALLY ]
[ INDEPENDENTLY‐MINDED ]
Symbol: LB, TSX 54
A recognized market leader solely dedicated to the financial community across Canada in 5 segments- Investment Advisors- Insurance Agents- Mutual Fund Advisors- Mortgage Brokers- Deposit Brokers
Offering a wide range of products in 5 categories- Investment and RSP loans- Mortgage loans- Banking accounts – HIIA and HISA- GIC deposits- Self-directed accounts
B2B Trust –
Distribution network
Symbol: LB, TSX 55
ProfilePremier third party supplier of investment and RSP lending products
in CanadaLeading supplier of wholesale deposit/GIC products, as well as high
interest accountsA growing player in the broker residential mortgage market
Competitive advantage and distinctive promiseThe only financial institution exclusively dedicated to independent
financial advisorsThe only one to provide products under a generic non-competing
brand nameRespectful of the relationship between a financial professional and
their end-clients, with the promise of never interfering in that relationship
B2B Trust – ProfileA distinctive positioning
Symbol: LB, TSX 56
Symbol: LB, TSX 57
Total Loans($ millions, as at October 31)
B2B Trust loan
portfolios
Rebuilding products one at a time
Secured personal loans
Granted to individuals in good financial standing
Lending decisions based on specific criteria confirming the borrower’s capacity to pay
Selected mutual funds and segregated funds comprise B2B Trust’s eligible list
Collateral registered in trust, as a supplementary guarantee
Regular monitoring through credit scoring of each client
B2B Trust investment
loans
Symbol: LB, TSX 58
Operational Excellence
Distribution Maximization
Revenue Maximization
Business Foundations
B2B Trust ‐
Strategies
Symbol: LB, TSX 62
B2B Trust – Key Takeaways
FOCUS
Focused and brand-consistent business strategies
AGILE GROWTH
Profitable business with a significant growth potential
Well diversified with low credit-risk activities
EXECUTION
Disciplined executive team with proven track record
Symbol: LB, TSX 63
THE BEST OF BOTH WORLDS
Michel C. TrudeauPresident and CEO Laurentian Bank Securities and Capital Markets
Solid platform in each business line
Selectively target our niches
Significant growth potential
Differentiate ourselves as a Bank-owned small cap investment dealer
Laurentian
Bank Securities &
Capital Markets
–
Introduction
Symbol: LB, TSX 65
Target marketInstitutional Fixed Income:
- Pan-Canadian coverage of government and corporate issuersInstitutional Equities:
- Research, sales, trading and corporate finance for small capitalization companies
Retail Brokerage: - Regional in Quebec through 14 offices
PositioningDominant brokerage firm amongst the mid-size tier across CanadaLargest research firm in QuebecMajor distributor of Agency products in the money market segment
Competitive advantage and distinctive promiseThe only Bank-owned dealer with a boutique mentality
Laurentian
Bank Securities &
Capital Markets
–
Profile
Symbol: LB, TSX 66
Mature operation, in business since 1996
Team of about 40 people operating in Montreal and Toronto
8th largest fixed income dealer in Canada in provincials
Dominant player in several products
Underwrite fixed income securities for provincial, municipal and corporate entities
Competitive market making and account coverage in Canadian fixed income securities
Institutional
–
Fixed
income
Adding value to investors and issuers
Symbol: LB, TSX 67
Youngest division of the group, in operation since 2006
Team of about 20 professionals, located in Montreal and Toronto
Analysts covering more than 50 companies in the following sectors:Mining – Technology – Transportation – Infrastructure – Healthcare – Consumer products – Special situations
Offers:- Equity capital markets and advisory services to small cap issuers- Research-driven approach to growth sectors- Dedicated sales and trading coverage of small cap market participants
Institutional
–
Equity
Only bank-owned dealer focusing exclusively on small cap niche
Symbol: LB, TSX 68
Began operations in 1998
85 retail advisors in 14 offices across Quebec, focusing in Montreal and Quebec City
Complete range of financial products and services
$2.3 billion of assets under administration
Retail
brokerage
Advisors more than doubled in 5 years
Symbol: LB, TSX 69
Laurentian
Bank Securities &
Capital Markets
Symbol: LB, TSX 70
*2006 and 2007 results exclude the Bank’s Capital Markets Operations
Laurentian
Bank Securities &
Capital Markets
‐
Strategies
Building for the future
Expand and increase our footprint in Fixed Income
Further develop our Institutional Equities presence
Continue to develop the retail sector
Symbol: LB, TSX 71
FOCUS
Focus facilitating continuous reinvestment in both young and moremature businesses
AGILE GROWTH
Agility to seize opportunities across all divisions
EXECUTION
Rigorous execution to achieve gradual and measured growth
Laurentian
Bank Securities &
Capital Markets
–
Key Takeaways
Symbol: LB, TSX 72
For questions on this presentation, please contact:Gladys Caron, Vice-President, Public Affairs, Communications and Investor RelationsTel: 514 284-4500, extension 7511 - Cell: 514 [email protected]