FORWARD-LOOKING STATEMENTS
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Transcript of FORWARD-LOOKING STATEMENTS
Scotia Capital FINANCIALS SUMMIT CONFERENCE 2008
Réjean Robitaille, President & CEO
Toronto – September 9, 2008
Symbol: LB, TSXPage 2
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, including 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 specific in nature. It is therefore possible that the forecasts, projections and other forward-looking statements will not be achieved or will prove 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 appreciably 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 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 MEASURES The 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 so that they can better understand financial results and analyze the Bank’s growth and profitability potential more effectively.
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]
Symbol: LB, TSXPage 3
KEY STRENGTHS
1. Solid financial situation and lower risk profile
2. Efficient management approach
3. Improving results
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SOLID FINANCIAL SITUATION AND LOWER RISK PROFILE
Strong balance sheet
Personal deposits represent more than 80% of total deposits
High level of liquidity
$4.5 billion in cash, deposits, securities accounts and repos
Strong capital ratios(as at July 31, 2008)
Tier 1 capital ratio: 10.1%
Total capital ratio: 12.1%
Funding sources to support lending activities
(July 31, 2008)
Pers. notice and demand
deposits11%
Bus., banks and other deposits
14%
Securitization12%
Share. equity6%
Sub. debentures
1%
Pers. term deposits
56%
Symbol: LB, TSXPage 5
SOLID FINANCIAL SITUATION AND LOWER RISK PROFILE
Minimal exposure to ABCP
No direct exposure to U.S. mortgage market nor subprime market
Predominant retail loan book
High proportion of insured mortgages
Diversified geographicallyQuebec
59%
Rest of Canada
41%
Loan portfolios(July 31, 2008)
Geographic distribution of loans(October 31, 2007)
Commercial mortgages, commercial loans and
BAs19%
Personal loans38%
Residential mortgages
43%
Symbol: LB, TSXPage 6
SOLID FINANCIAL SITUATION AND LOWER RISK PROFILE
Evolution of gross and net impaired loans
227
185
127 121131
104 103
922
-13 -9
5
-11 -13-50
0
50
100
150
200
250
2002 2003 2004 2005 2006 2007 9 months2008
In m
illio
ns
of
$
Gross impaired loans Net impaired loans
Symbol: LB, TSXPage 7
EFFICIENT MANAGEMENT APPROACH
Growth engines focus with strong and distinctive positioning :
Retail & SME Quebec
B2B Trust
Real Estate Financing
All decisions and actions guided by our 3 priorities:
Profitability increase
Efficiency improvement
Human capital development
Symbol: LB, TSXPage 8
EFFICIENT MANAGEMENT APPROACH
Growth engines focus with strong and distinctive positioning :
Retail & SME Quebec
B2B Trust
Real Estate Financing
All decisions and actions guided by our 3 priorities:
Profitability increase
Efficiency improvement
Human capital development
Strong execution is key
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IMPROVING RESULTS
Portfolio growthLast 12 months as at July 31, 2008 (consolidated)
Strong growth in all portfolios
+ 9%+ $1,287
+ 17%+ $389
+ 10%+ $476
+ 5%+ $626
- 4 %- $240
+ 12%+ $1,696
+ 11%+ $830
-500
0
500
1000
1500
2000
Total loans andBAs
Residentialmortgages
Personal loans Commercialmortgages,
commercial loansand BAs
Total deposits
In m
illi
on
s o
f $
Excluding securitization
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IMPROVING RESULTS
Q3 2008 financial highlights
(1) The third quarter of 2008 included two significant items: a) net gain on the sale of securities of $7.6 million, or $7.4 million net of income taxes, resulting from the gain on the sale of the Montreal exchange shares of $12.9 million, partially offset by losses on other securities of $5.3 million; b) increase in the general provision for loan losses of $8.0 million, or $5.5 million net of income taxes.
In millions of $ Q3 2008 Q3 2007except per share amounts Q3 08 vs
Q3 07
Net interest income 103.4 101.8 2%Other income 67.7 49.3 37%Total revenue 171.1 151.0 13%
Provisions for credit losses 18.5 10.0 85%Non-interest expenses 113.5 108.4 5%Income taxes 8.1 9.5 -15%Net income from continuing operations 30.9 23.2 33%
Preferred shares dividends 3.0 3.0 -1%
Net income available to common shareholders 28.0 20.2 39%
Diluted EPS $1.17 $0.85 38%Return on equity 13.4% 10.5%
Efficiency ratio 66.4% 71.8%Effective tax rate 20.8% 29.1%
Significant items (1)
Net gain on sale of securities 7.4Increase in general provision -5.5
Excluding significant itemsNet income available to common shareholders 26.0 20.2 29%Diluted EPS $1.09 $0.85 28%Return on equity 12.4% 10.5%
Efficiency ratio 69.4% 71.8%Effective tax rate 26.6% 29.1%
Variation
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IMPROVING RESULTS
Business segments performance 3rd quarter 2008
(1) The business segment Other includes approximately 650 employees working in Treasury, Credit, Finance, Administration and Strategic Development, Corporate Affairs and Human Resources.
(2) Percentage of net income contribution from the four business segments, excluding the segment Other.
N.A.: non applicable.
Retail &SME Quebec
Real Estate & Commercial
B2B Trust LBS Other (1) TOTAL
Total revenue
(growth Q3 2008 versus Q3 2007)
$107.5 M
+ 7%
$18.3 M
+ 19%
$24.7 M
+ 4%
$9.9 M
+ 16%
$10.7 M
N.A.
$171.1 M
+ 13%
Net income
(growth Q3 2008 versus Q3 2007)
$11.6 M
+ 11%
$7.7 M
+ 42%
$9.2 M
+ 14%
$1.1 M
+ 91%
$1.3 M
N.A.
$30.9 M
+ 33%
Total net income contribution (2)
39% 26% 31% 4% N.A. 100%
Symbol: LB, TSXPage 12
IMPROVING RESULTS
473 510 540 584 623
377 390 411 427 439
0100200300400500600700
2004 2005 2006 2007 LTM2008
Total revenue Non-interest expenses
4065 70
95 1051.33
2.262.48
3.483.92
0
20
40
60
80
100
120
2004 2005 2006 2007 LTM2008
0.0
1.0
2.0
3.0
4.0
Net income Diluted EPS
13.4%
10.9%8.2%7.8%
4.6%
3.4%
12.4%
9.4%7.5%
6.4%
0.0%2.0%4.0%6.0%8.0%
10.0%12.0%14.0%
2004 2005 2006 2007 Q32008
GAAP Core activities only
69.7%
73.2%
76.1%76.4%
79.6%
68.0%
70.0%
72.0%
74.0%
76.0%
78.0%
80.0%
2004 2005 2006 2007 9months
2008
Total revenue & non-int. exp. ($ M)
Net income ($ M) & EPS ($)
Return on equity (ROE)
Efficiency ratio
Performance indicators
In m
illio
ns
of
$
In $
Delivering good results on a sustainable basis
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IMPROVING RESULTS
1.64%
1.99%
2.14%
2.31%2.23%
1.86%1.73%
1.58%1.49% 1.52%
1.00%
1.20%
1.40%
1.60%
1.80%
2.00%
2.20%
2.40%
2004 2005 2006 2007 9 monthsended July 31,
2008
Laurentian Bank Average 6 large Canadian banks
Evolution of net interest margin
Symbol: LB, TSXPage 14
IMPROVING RESULTS
0.29 0.29 0.29 0.29
0.32 0.32 0.32
0.34
0.26
0.27
0.28
0.29
0.30
0.31
0.32
0.33
0.34
0.35
Q12007
Q22007
Q32007
Q42007
Q12008
Q22008
Q32008
Q42008
Dec
lare
d d
ivid
end
in
$ Last week, the Bank increased its quarterly dividend by 6%
Solid financial condition
Continued improvement in earnings
Management and board of directors’ confidence in the Bank’s future
Dividend increase
Symbol: LB, TSXPage 15
IMPROVING RESULTS
DBRS recently upgraded all Laurentian Bank’s credit ratings.
Standard & Poor’s revised the Bank’s outlook from “stable” to “positive”.
Credit ratings
New DBRS rating Old DBRS rating
Short-Term Instruments R-1 (low) R-2 (high)
Deposits & Senior Debt BBB (high) BBB
Subordinated Debt BBB BBB (low)
Cumulative Preferred Shares Pfd-3 (high) Pfd-3
Non-Cumulative Preferred Shares Pfd-3 (high) Pfd-3
Symbol: LB, TSXPage 16
2008 OBJECTIVES
N.B. The objectives above are solely intended to provide the reader with information about how management measures its performance. It is not intended to disclose the Bank's expectations for future financial results.
2008OBJECTIVES
9 MONTHS ENDEDJULY 31, 2008
Return on equity 9.5% to 10.5% 10.9%
Diluted net income per share $3.30 to $3.60 $2.78
Total revenue + 5% ($615 M) + 9% ($477.7 M)
Efficiency ratio 74% to 72% 69.7%
Tier 1 capital ratio Minimum of 9.5% 10.1%
Symbol: LB, TSXPage 17
2008 OBJECTIVES
N.B. The objectives above are solely intended to provide the reader with information about how management measures its performance. It is not intended to disclose the Bank's expectations for future financial results.
2008OBJECTIVES
9 MONTHS ENDEDJULY 31, 2008
Return on equity 9.5% to 10.5% 10.9%
Diluted net income per share $3.30 to $3.60 $2.78
Total revenue + 5% ($615 M) + 9% ($477.7 M)
Efficiency ratio 74% to 72% 69.7%
Tier 1 capital ratio Minimum of 9.5% 10.1%
Long-term objective: sustainable double-digit return
Symbol: LB, TSXPage 18
DEVELOPMENT STRATEGIES
1. Organic growthresulting from particular emphasis on promising sectors that will accelerate profitability growth
Symbol: LB, TSXPage 19
DEVELOPMENT STRATEGIES
1. Organic growthresulting from particular emphasis on promising sectors that will accelerate profitability growth
2. Investments in information technology and infrastructuresto ensure long-term development
Symbol: LB, TSXPage 20
DEVELOPMENT STRATEGIES
1. Organic growthresulting from particular emphasis on promising sectors that will accelerate profitability growth
2. Investments in information technology and infrastructuresto ensure long-term development
3. Improvements and automation of processes and operationsto further simplify clients’ banking experience and reduce administrative tasks
Symbol: LB, TSXPage 21
DEVELOPMENT STRATEGIES
1. Organic growthresulting from particular emphasis on promising sectors that will accelerate profitability growth
2. Investments in information technology and infrastructuresto ensure long-term development
3. Improvements and automation of processes and operationsto further simplify clients’ banking experience and reduce administrative tasks
4. Deployment of our highly customer-focused culture and development of our sales-performance culture
Symbol: LB, TSXPage 22
CONCLUSION
Results are improving quarter after quarter
Strategies and actions are well focused and targeted
Our 3 strategic priorities are well understood and remain at the forefront of all decisions and actions
Symbol: LB, TSXPage 23
CONCLUSION
Results are improving quarter after quarter
Strategies and actions are well focused and targeted
Our 3 strategic priorities are well understood and remain at the forefront of all decisions and actions
Our goal is clear: improve our performance on a sustainable and long-term basis
Symbol: LB, TSXPage 24
QUESTIONS & ANSWERS