Investor Presentation Q3 2017 2 CAUTION CONCERNING FORWARD-LOOKING STATEMENTS This presentation contains forward‐looking statements regarding, among other things, Desjardins Group’s business objectives and priorities, financial targets and maturity profile. Such statements are typically identified by words or phrases such as “believe”, “expect”, “anticipate”, “intend”, “estimate”, “plan” and “may”, words and expressions of similar import, and future and conditional verbs. By their very nature, such statements involve assumptions, uncertainties and inherent risks, both general and specific. It is therefore possible that, due to many factors, these forward‐looking statements may not materialize or may prove to be inaccurate and that actual results differ materially. Desjardins Group cautions readers against placing undue reliance on these forward‐looking statements since actual results, conditions, actions and future events could differ significantly from those anticipated. A number of factors, many of which are beyond Desjardins Group’s control and the effects of which can be difficult to predict, could influence the accuracy of the forward‐looking statements in this presentation. These factors include: credit, market, liquidity, operational, insurance, strategic, and reputation risks; regulatory and legal environment risk; environmental risk; risk related to pension plans; technological advancement and regulatory developments; cybersecurity; household indebtedness; real estate market trends; geopolitical risks; communication and information; general economic and business conditions in regions in which Desjardins Group operates; changes in the economic and financial environment in Quebec, Canada and globally; monetary policies; the accuracy and completeness of information concerning clients and counterparties; the critical accounting estimates and accounting standards applied by Desjardins Group; new products and services to maintain or increase Desjardins Group’s market share; the ability to recruit and retain key management personnel, including senior management; geographic concentration; acquisitions and joint arrangements; credit ratings; amendments to tax laws; unexpected changes in consumer spending and saving habits; the ability to implement Desjardins Group’s disaster recovery plan within a reasonable time; the potential impact of international conflicts or natural disasters; and Desjardins Group’s ability to anticipate and properly manage the risks associated with these factors. It is important to note that the above list of factors that could influence future results is not exhaustive. Other factors could have an adverse effect on Desjardins Group’s results. Additional information about these and other factors is found in the “Risk management” sections of Desjardins Group’s most recently published annual and quarterly MD&As. Any forward‐looking statements contained in this presentation represent the views of management only as at the date hereof, and are presented for the purpose of assisting readers in understanding and interpreting Desjardins Group’s balance sheet as at the dates indicated or its results for the periods then ended, as well as its business objectives and priorities. These statements may not be appropriate for other purposes. Desjardins Group does not undertake to update any oral or written forward‐looking statements that could be made from time to time by or on behalf of Desjardins Group, except as required under applicable securities legislation. 2 3 About Us 4 Financial Results 7 Balance Sheet Quality 11 Capital and Funding Strategies 15 Contact Information 26 3 4 HIGHLIGHTS AT SEPTEMBER 30, 2017 Results Balance Sheet Liquidity & Capital Nine months ended September 30, 2017 At September 30, 2017 At September 30, 2017 (Comparison against 9M 2016) (Comparison against December 31, 2016) $1,722 million $276 billion 17.8% Surplus earnings, up 36% Total assets, up 7% CET1 ratio (Tier 1A) $12.5 billion $172 billion 119.9% Total income, down to 2% Total deposits, up 7% Average LCR ratio The Banker 6th largest financial cooperative Strongest financial institution 100th most important financial group in the world by total in North America and 5th in institution by Tier 1 capital income the world (1) 1. July 2015 edition. ABOUT US 4 5 ORGANIZATION CHART 293 caisses Capital Desjardins Inc. Fédération des caisses Desjardins Desjardins Security du Québec Fund Desjardins Global Desjardins Desjardins General Desjardins Asset Desjardins Trust Financial Security Insurance Group Securities Management ABOUT US 5 6 MARKET LEADERSHIP LEADING MARKET SHARES IN QUEBEC Personal LIFE & HEALTH savings 42.4% #1 insurer in Quebec (ex aequo) #5 insurer in Canada . Extensive range of products Farm loans 39.1% . Offices across Canada GENERAL Residential #1 in direct distribution in Quebec 36.1% mortgages #2 insurer in Quebec #3 insurer in Canada Consumer credit 23.1% Commercial & industrial 22.3% . 47 full‐service branches loans . No. 6 fixed income group in Canada Source: Data at December 31, 2016; Market shares in Quebec: Desjardins Economic Studies; Life & Health Insurance: Canadian Life Insurers’ Annual Reports and Autorité des marchés financiers’ 2015 Annual Report on Financial Institutions; General Insurance: 2016 MSA Market Share Report; Desjardins Securities, ABOUT US 6 fixed‐income group: Market Trade Reporting System. 7 SOLID AND STEADY PROFITABILITY SURPLUS EARNINGS, MEMBER DIVIDENDS AND ROE ($M) Source: Desjardins Group’s Financial Reports Note: Since 2010, financial statements are prepared in accordance with IFRS. Previously, Desjardins Group issued financial FINANCIAL RESULTS 7 statements prepared in accordance with Canadian generally accepted accounting principles. 8 DIVERSIFIED SURPLUS EARNINGS AND INCOME SURPLUS EARNINGS BY SEGMENT –9M 2017 OPERATING INCOME DISTRIBUTION –9M 2017 Other banking Net interest Property and activities income Casualty Personal 7% 28% Insurance Services and ($398M; 23%) Business and Brokerage and Institutional investment Services and fund services Net premiums Wealth Other 7% Life & Health Management category 28% and Life and ($871M; 51%) Net premiums Health Property and Insurance Other income Casualty ($453M; 26%) 5% Insurance 25% Source: Desjardins Group’s Financial Reports FINANCIAL RESULTS 8 9 SURPLUS EARNINGS BY SEGMENT . Growth in credit card and point‐of‐ Personal Services and Business and sale financing activities Institutional Services and Other category (M$) . Increase in caisse network sales of 1,096 various products and in income 1,002 1,015 929 from capital markets 871 802 . Growth in the loan portfolio but pressure continues on interest margins . Increase in non‐interest expense due to business growth, offset by 2013 2014 2015 2016 9M 2016 9M 2017 productivity efforts Source: Desjardins Group’s Financial Reports FINANCIAL RESULTS 9 10 SURPLUS EARNINGS BY SEGMENT Wealth Management and Life and Health Insurance (M$) . Good performance of investments and higher income from growth in assets 503 461 453 under management 389 411 347 . Reduction in actuarial liabilities, including the effect of a decrease in the fair value of matched investments 2013 2014 2015 2016 9M 2016 9M 2017 Property and Casualty Insurance (M$) . Excluding the gain realized on the sale of Western Financial Group Inc. and 398 Western Life Assurance Company, 360 adjusted surplus earnings are $181M(1) 296 212 . More favourable claims experience for 180 the current year (more major events 114 and disasters for the same period of 2013 2014 2015 2016 9M 2016 9M 2017 2016) Source: Desjardins Group’s Financial Reports 1. For reconciliation of adjusted surplus earnings, refer to the Q3 2017 Desjardins Group’s MD&A FINANCIAL RESULTS 10 11 STRONG BALANCE SHEET LOANS AND ACCEPTANCES ($B) DEPOSITS ($B) 5% 7% 166.5 174.6 171.9 160.3 160.5 156.6 1.8 1% 39.8 23% 1.5 1.5 36.8 37.6 70.5 41% 23.4 13% 63.8 62.8 21.2 22.2 106.7 111.4 64% 102.3 91.2 96.3 99.5 58% 2015 2016 Q3 2017 2015 2016 Q3 2017 Residential mortgages Other personal loans Business and government Individuals Business and government Deposit‐taking institutions TOTAL ASSETS ($B) EQUITY ($B) Q3 2017 276.3 Q3 2017 24.7 2016 258.4 2016 23.3 2015 248.1 2015 21.7 Source: Desjardins Group’s Financial Reports BALANCE SHEET QUALITY 11 12 DIVERSIFIED RESIDENTIAL MORTGAGE PORTFOLIO BY PRODUCT TYPE BY PROPERTY TYPE 2% Insured 8% 33% 34% 15% Total Total of of $111B $111B 13% $105B 62% 6% 27% Average LTV of 56.2% Insured mortgages Single‐family Conventional term mortgages Multi‐properties (4 or less) Multi‐properties (5 or more) Heloc (lines of credit) Condominiums Heloc (term mortgages) Secondary houses BALANCE SHEET QUALITY 12 13 WELL-BALANCED BUSINESS AND GOVERNMENT LOAN PORTFOLIO INDUSTRY DISTRIBUTION . 17% WERE GUARANTEED AT Q3 2017 Mining, oil and gas 1% Other Utilities . HIGH QUALITY OF TOP SECTORS 5% 1% o Real estate: $8.1B Professional services Real estate 2% 20% o Agriculture: $7.7B, most loans are Finance and guaranteed and covered by income insurance 2% protection programs Arts and Agriculture entertainment 20% o Public agencies: $3.0B (governmental 2% Company agencies and school boards) management 2% . OTHER INDUSTRIES WELL‐DIVERSIFIED Other services Public agency 2% loans o Retail trade: $2.8B Wholesale trade 8% 3% Accommodation Retail trade o Manufacturing: $2.6B 3% Transportation Health care 7% 4% Construction 6% Manufacturing o Health care: $2.5B 7% 5% o Construction: $2.1B Source: Desjardins Group’s Financial Reports BALANCE SHEET QUALITY 13 14 SUPERIOR ASSET QUALITY GROSS IMPAIRED LOANS AS A % OF GROSS LOANS COMPARED TO PEERS BY BORROWER CATEGORY (Q3 2017 for banks and Desjardins) 3.12 1.30 0.61 0.46 2.38 Business and 1.20 government 0.43 0.70 1.77 1.59 0.80 0.80 0.41 0.40 1.39 0.73 0.35 1.06 Consumer, 0.36 0.63 0.33 credit card and 0.81 0.71 0.75 0.59 0.62 other 0.58 0.64 0.68 0.34 0.34 0.32 0.53 personal loans 0.27 0.13 Residential 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3 2017 mortgages Desjardins 0.32 Canadian Banks (average) Desjardins Canadian Banks (average) US Banks (average)(1) Source: Banks and Desjardins Group’s Financial Reports and Bloomberg Note: Since 2010, financial statements are prepared in accordance with IFRS.