Fiixedxed IIncomencome IInvestornvestor PresentationPresentation Q1 2021Results
All figures are in Canadian dollars and as at March 31, 2021, unless otherwise specified. Caution Concerning Forward Looking Statements
This presenta on contains forward-looking statements regarding, among other things, Desjardins Group’s business objec ves and priori es, fi nancial targets and maturity profi le. These statements include, but are not limited to, observa ons regarding the possible impact of the COVID-19 pandemic on its opera ons, results and our fi nancial posi on, as well as on economic condi ons and fi nancial markets. Such statements are typically iden fi ed by words or phrases such as “believe”, “expect”, “an cipate”, “intend”, “es mate”, “plan”, “forecast”, “aim” and “may”, words and expressions of similar import, and future and condi onal verbs.
By their very nature, such statements involve assump ons, uncertain es and inherent risks, both general and specifi c. It is therefore possible that, due to many factors, the assump ons formulated may be incorrect, or the predic ons, forecasts or forward-looking statements as well as Desjardins Group’s objec ves and priori es may not materialize or may prove to be inaccurate and that actual results diff er materially. Furthermore, the uncertainty created by the COVID-19 pandemic has sharply increased this risk by genera ng addi onal diffi cul es in determining assump ons, forecasts or other forward-looking statements compared to previous periods. Desjardins Group cau ons readers against placing undue reliance on these forward-looking statements when making decisions, given actual results, condi ons, ac ons or future events could diff er signifi cantly from the targets, expecta ons, es mates or inten ons advanced in them, explicitly or implicitly.
A number of factors, many of which are beyond Desjardins Group’s control and the eff ects of which can be diffi cult to predict, could infl uence, individually or collec vely, the accuracy of the forward-looking statements in this presenta on. These factors include in par cular: credit, market, liquidity, opera onal, insurance, strategic and reputa on risks; pension plan risk; environmental or social risk; legal and regulatory risk; COVID-19 pandemic; climate change; government, corporate and household indebtedness; technological advancement and regulatory developments; interest rate fl uctua ons and geopoli cal uncertainty; general economic and business condi ons in regions in which Desjardins Group operates; security breaches; monetary policies; the cri cal accoun ng es mates and accoun ng standards applied by Desjardins Group; new products and services to maintain or increase Desjardins Group’s market share; geographic concentra on; acquisi ons and joint arrangements; credit ra ngs; changes in tax laws; unexpected changes in consumer spending and saving habits; talent recruitment and reten on of key posi ons; the ability to implement Desjardins Group’s disaster recovery plan within a reasonable me; the poten al impact on opera ons of interna onal confl icts; public health crises, such as pandemics and epidemics, or any other similar disease aff ec ng the local, na onal or global economy; and Desjardins Group’s ability to an cipate and properly manage the risks associated with these factors properly despite a disciplined risk management environment.
It is important to note that the above list of factors that could infl uence future results is not exhaus ve. Other factors could have an adverse eff ect on Desjardins Group’s results. Addi onal informa on about these and other factors is found in the “Risk management” sec ons of Desjardins Group’s most recently published annual and any subsequent quarterly MD&As and in the sec on “COVID-19 pandemic” of Desjardins Group’s last annual and quarterly MD&As.
Any forward-looking statements contained in this presenta on represent the views of management only as at the date hereof, and are presented for the purpose of assis ng readers in understanding and interpre ng Desjardins Group’s balance sheet as at the dates indicated or its results for the periods then ended, as well as its strategic priori es and objec ves as considered on the dates hereof. These statements may not be appropriate for other purposes. Desjardins Group does not undertake to update any oral or wri en forward-looking statements that could be made from me to me by or on behalf of Desjardins Group, except as required under applicable securi es legisla on.
DISCLAIMER 2 About DESJARDINS
6th Largest fi nancial 7.5 Million members > 50,000 employees ins tu on in Canada1 and clients
$798 Million $377 Billion 22.1% Tier 1A Surplus earnings as at Total assets as at (CET1 ra o for Banks) March 31, 2021 March 31, 2021
$445 Million in 2020 A Strong, Shared Carbon Neutral Redistributed to members Commitment to Ac on Since 2017 and the community On climate change
Ambi on To become everyone’s #1 choice
Named one of the world’s top 6th safest fi nancial insƟ tuƟ on in North Ranked the best performing 100 best employers America and 34th in the world fi nancial insƟ tuƟ on in Canada
1. By asset size. ABOUT DESJARDINS3 Organizational Chart
215 caisses
Capital Desjardins Inc. Fédéra ons des caisses Desjardins Desjardins Security Fund du Québec
Desjardins Desjardins General Desjardins Desjardins Global Desjardins Trust Financial Security Insurance Group Securi es Asset Management
ORGANIZATIONAL CHART4 FINANCIAL RESULTS
5 Key Highlights
ADJUSTED SURPLUS EARNINGS $M TOTAL ASSETS $B
2,419 2,289 2,197 15.3% 377
360 362 350 180% 798 327
285
20181 20191 2020 Q1 2020 Q1 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 PROVISIONS FOR CREDIT LOSSES $M CAPITAL AND TLAC RATIOS
324 271 TIER 1A (CET1): 22.1% TOTAL: 22.6%
169
99 LEVERAGE RATIO: 8.7% TLAC: 25.5%
4
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021
1. Adjusted to exclude non-recurrent gains related to the sale of the por olio of merchants receiving Desjardins Group services under the Mone co brand (2019), the transac on involving Qtrade Canada Inc. and the interest in Northwest & Ethical Investments L.P. (2018). FINANCIAL RESULTS6 Personal and Business Services
ABOUT DESJARDINS1 ADJUSTED SURPLUS EARNINGS $M 1,604 Caisses2 215 Points of sale 851 1,300 1,314 ATM 1,687 Market shares in Quebec Personal savings 41% 118%
Residen al mortgages 39% 414 Agricultural credit 39% 190 Consumer credit 24% 20193 Commercial & Industrial 20% 2018 2020 Q1 2020 Q1 2021
AWARDS AND RECOGNITION ASSETS AND DEPOSITS $B
Voted the “coolest” fi nancial ins tu on in 2018 and 209 second “coolest” in 2019 according to Quebec millennials. 201 203 204 206 Named one of the world’s top 100 best employers by 185 186 183 175 Forbes Magazine. 165
Named one of Canada’s top employers for Young People.
Named one of Canada’s top Family-Friendly employers.
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Average deposits Average loans
1. As at December 31, 2020 2. As at March 31, 2021 FINANCIAL RESULTS 7 3. Adjusted to exclude the gain related to the sale of the en re por olio of merchants receiving Desjardins Group services under the Mone co brand. Wealth Management and Life and Health Insurance
PAN CANADIAN PRESENCE1 ASSETS UNDER MANAGEMENT $B 77.5 77.2 Wealth Management 67.6 # 1in Quebec and# 1 in Canada for 63.4 market-linked guaranteed investments 57.4
Life and Health Insurance
# 3 in Quebec # 5 in Canada 2018 2019 2020 Q1 2020 Q1 2021
ADJUSTED SURPLUS EARNINGS $M PREMIUMS $B 737 697 503 609 547 526 872 893 901
163 167 125 3,301 3,249 3,284 222 222 -41 832 840
2018 2019 2020 Q1 2020 Q1 2021 2 2018 2019 2020 Q1 2020 Q1 2021 Group premiums Individual premiums Annuity premiums
1. As at December 31, 2020 2. Adjusted to exclude the gain related to the transac on involving Qtrade Canada Inc. and the interest in Northwest & Ethical Investments L.P. FINANCIAL RESULTS8 Property and Casualty Insurance
PAN CANADIAN PRESENCE1 RATIOS % Important Property and Casualty insurer 99.199.1 96.596.5 86.286.2 90.590.5 # 2in Quebec # 2in Canada 79.079.0 73.973.9 71.771.7 62.662.6 66.866.8 th 28 consecu ve year of underwri ng profi ts 56.256.2
25.225.2 24.824.8 23.623.6 23.723.7 22.822.8 Auto insurance premium discounts of $155M granted to members and clients as a relief measure to support them during the COVID-19 pandemic. 2018 2019 2020 Q1 2020 Q1 2021 Loss ra o Expense ra o Combined ra o
ADJUSTED SURPLUS EARNINGS $M GROSS WRITTEN PREMIUMS $M
622 5,536 5,726 4,920
240%
248 5.7% 173 187 1,244 1,315 73
2018 2019 2020 Q1 2020 Q1 2021 2018 2019 2020 Q1 2020 Q1 2021
1. As at December 31, 2020 FINANCIAL RESULTS9 BALANCE SHEET QUALITY
10 Loan Portfolio
GROSS IMPAIRED LOANS RATIO
1.35% 1.43% 1.44% 1.38% LOAN BOOK AND ACCEPTANCES 1.08%
1.05% 1.10% 0.94% 0.84% 0.75% 0.64% 24% 0.56% 0.63% 0.62% 0.57% Business and 0.26% 0.26% 0.27% 0.27% 0.23% government
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Residen al mortgages Cons., credit cards and other loans Business and government Total loan portofolio Total of GROSS IMPAIRED LOANS Consumer, credit $216B AND NEW FORMATIONS cards and12% other loans
1,340 1,323 1,307 1,236 64% 1,167 851 Residen al mortgages 634 608 483 440
Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 New forma ons ($M) Gross impaired loans (M$)
BALANCE SHEET QUALITY 11 COVID-19 – Members and Clients Assistance Programs
Substan al decline in deferral exposure. DECREASE IN DEFERRAL EXPOSURE $B
We maintain relief measures, notably for harder hit Total : 35.3Total : 9.8 Total : 3.6 Total : 3.3 members and clients, such as : 1.2
Payment relief for all their fi nancing products 16.2 Reduce interest rates on credit cards 0.2 17.9 5.0 0.1 0.1 Personalized support for regaining good 1.7 1.4 fi nancial health 4.6 1.8 1.8 Q2 2020 Q3 2020 Q4 2020 Q1 2021 All relief demands are analysed on a case-by-case Residen al mortgages Business and government basis. Cons., credit cards and other loans
Ac ve deferrals Expired deferrals Product types1 % of por olio Balance ($B) Balance ($B) % Current % Delinquent balance Residen al mortgages 1.8 1.3 16.9 99.3 0.7 Insured 0.4 1.0 5.9 99.1 0.9 Uninsured and Heloc's 1.4 1.4 10.9 99.4 0.6
Consumer, credit cards and other loans 0.1 0.3 1.9 96.0 4.0 Credit cards 0.02 0.2 0.9 94.3 5.7 Personal loans 0.04 0.3 1.0 97.4 2.6
Business and government 1.4 2.7 15.9 99.5 0.5
1. Amounts have been reclassifi ed to represent the categories shown in our fi nancial statements. BALANCE SHEET QUALITY 12 Residential Mortgage Loan Portfolio
RESIDENTIAL MORTGAGE PORTFOLIO GROWTH IN RESIDENTIAL PORTFOLIO $B
138 136 134 132 128 Insured 127 Heloc (term mortgages) 39% 27%
Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Total of GROSS IMPAIRED LOANS $138B 0.27% 0.27% 0.26% 0.26% 0.26% 0.23% 374 366 333 341 326 323 4% 30% Heloc (lines of credit) Conven onal term mortgages
Average LTV of 55.2% Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Residen al mortgages GIL amount in $MResiden al mortgages GIL ra o (%)
BALANCE SHEET QUALITY13 Business and Government loan portfolio
Por olio of high quality and well diversifi ed. Gross impaired loans ra o of 1.38%. Mining, oil and gas represent 0.7% of Business and Government loan por olio.
% Gross loans Impaired loans Gross impaired loans ra o (%) Borrower category of por olio ($M) ($M) Q1 2021 Q4 2020 Q3 2020 Real estate 22 11,629 37 0.32 0.41 0.20 Agriculture 19 9,839 111 1.13 1.28 1.12 Manufacturing 8 4,292 117 2.73 2.57 2.94 Construc on 8 4,124 112 2.72 3.00 4.23 Health care 7 3,772 33 0.87 0.95 0.98 Retail trade 7 3,646 80 2.19 2.15 2.47 Public agency 6 3,119 Accommoda on 4 1,886 51 2.70 2.62 1.91 Wholesale trade 3 1,676 33 1.97 2.23 1.06 Transporta on 3 1,349 35 2.59 2.50 2.40 Rest of the por olio 13 7,356 118 1.60 1.52 1.58 Total 100 52,688 727 1.38 1.44 1.43
BALANCE SHEET QUALITY 14 Exposure COVID-19– Most impacted industries
We con nue to support and off er solu ons to our members and clients. In partnership with the Quebec and Canadian governments, we par cipate in assistance programs that provide liquidity to fi nance opera ons or increase the working capital of businesses having temporary diffi cul es due to the COVID-19 pandemic. Sectors most impacted by the COVID-19 represent 6% of our total loan por olio.
% of total TOTAL LOAN PORTFOLIO COVID-19: Most impacted $B loan Selected vulnerable segments sectors por olio Accommoda on and food 2.0 0.9 All segments services Arts and entertainments 0.8 0.4 All segments Film and sound recording Informa on industry 0.1 0.0 industries Mining, oil and gas 0.3 0.2 All segments Total of Real estate 6.7 3.1 Shopping centers Auto dealers, electronics and $216B Retail trade 1.7 0.8 appliance stores, furniture, clothing stores Transport ac vi es: Air transport, sightseeing and leisure, public Transporta on 1.3 0.6 transport and land passenger, truck, water Total 12.9 6.0 COVID-19 – Most impacted sectors
BALANCE SHEET QUALITY 15 LIQUIDITY and FUNDING
16 Robust Liquidity Position
TOTAL DEPOSITS LIQUIDITY PORTFOLIO
Business and government Long term wholesale funding 25% Other issuers 12% 13% 6% Equi es
Total of Subordinated debt Total of Short terms funding 7% $232B 1% (NVCC and CDI) $83B
56% 80% Individual deposits Canadian, provincial and other governments
81% from personal & business 80% in high quality assets sectors
LIQUIDITY AND FUNDING17 Global Funding Programs
PROGRAM CURRENCY LIMIT
Commercial paper – Canada Canadian None
Commercial paper – United States United States US$15B
Short term Commercial paper – Europe Euro €3B
Medium term notes – Canada Canadian C$10B
Medium-term and subordinated notes Mul -currency €7B
Covered Bonds Mul -currency C$17B
Securi za on program (CMHC) Canadian Alloca on Mid-Long term NVCC Subordinated debts Canadian C$3B
LIQUIDITY AND FUNDING18 Global Funding Programs
BY PROGRAM TYPE BY CURRENCY1
EUR Mortgage Covered Bonds 13% securi za on 22% USD 28% 31% 2% GBP
Total of Total of 17% $44B $44B
Term debt Subordinated debt non-NVCC (CDI) 2% Subordinated debt 1% (NVCC) 54% 30% CAD Short term debt
1. Exchange rate used at the me of issuance of securi es. LIQUIDITY AND FUNDING19 Maturity Profi le
In $M, as at March 31, 2021
7,000
6,000
5,000 3,6293,629 780780 733733 2,5002,500 1,3261,326 4,000
1,1421,142 1,7561,756 3,000 1,7301,730 1,0301,030 3,2333,233
2,000 2,2582,258 500500 1,8071,807 1,0001,000
1,000 1,8501,850 1,5201,520 1,3301,330 800800 1,0001,000 1,0001,000 0 2021 2022 2023 2024 2025 >2026
Term debt Subordinated debt non-NVCC (CDI) Mortgage securi za on
Covered Bonds Subordinated debt NVCC
Note: exchange rate used at the me of issuance of securi es. LIQUIDITY AND FUNDING 20 CAPITAL and BAIL-IN
21 Leading North American Financial Institution
TIER 1A OR COMMON EQUITY TIER 1 CAPITAL RATIO1 %
Canadian Banks 22.1 22.122.1 Tier 1A/ Tier 1A/ American Banks CET1 CET1
14.6 13.7 13.6 13.0 12.8 12.6 12.6 12.5 12.4 12.3 12.3 12.2 11.9 11.7 11.7 10.5 10.1 9.9 TD RBC BNS PNC NBC CIBC BMO Truist Citigroup JP Morgan US Bancorp US Capital One Capital Wells Fargo State Street Northern Trust Fifth Third Bank Bank of America Bank of NY Mellon
1. As at Q1 2021 for Canadian Banks and American Banks. Only American Banks with more than US$60B of deposits are illustrated. Sources: Financial Reports of Desjardins Group, American Banks and Canadian Banks CAPITAL AND BAIL IN 22 Tier 1A Capital and Leverage Ratios
LEVERAGE RATIO TIER 1A CAPITAL RATIO CET1
Desjardins 8.7% Desjardins 22.1%
BMO 4.8% TD 13.6%
RBC 4.8% RBC 12.5%
BNS 4.7% BMO 12.4%
CIBC 4.7% CIBC 12.3%
TD 4.5% BNS 12.2%
NBC 4.3% NBC 11.7%
Canadian Banks Canadian Banks 4.6% 12.5% (average) (average)
Total Loss Absorbing Capacity (TLAC) TLAC Ra o 25.5% TLAC Leverage Ra o 10.0%
Sources: Canadian Banks and Desjardins Group’s Financial Reports CAPITAL AND BAIL IN 23 Credit Ratings
MOODY’S S&P DBRS FITCH
Counterparty/Deposits 1 Aa1 A+ AA AA
Short-term debt P 1A 1R 1 high) F1+
Senior medium and long-term legacy debt 2 Aa2 A+ AA AA
Senior medium and long-term debt 3 A2 A AA low) AA
NVCC subordinated notes A2 BBB+ A low A
Covered Bonds Aaa AAA
Outlook Stable Stable Stable Stable
1. Represents Moody’s Counterparty Risk Ra ng and Deposit Ra ng, S&P’s Issuer Credit Ra ng, DBRS’ Long Term Deposit Ra ng and Fitch’s Long-Term Issuer Default Ra ng, counterparty Ra ng and Long Term Deposit Ra ng. 2. Includes senior debt issued prior to March 31, 2019, and senior debt issued on or a er March 31, 2019, which is excluded from the recapitaliza on regime applicable to Desjardins. 3. Includes senior debt issued on or a er March 31, 2019, subject to conversion under the recapitaliza on regime applicable to Desjardins.
CAPITAL AND BAIL IN 24 Contact information
Complexe Desjardins, Montreal
INVESTOR RELATIONS
PATRICK NADEAU Head of Investor and Ra ng Agency Rela ons 1-866-866-7000 ext. 5558634 [email protected] www.desjardins.com/ca/about-us/investor-rela ons
CONTACT INFORMATION25