Encouraged by strong results coming out of the pandemic, Desjardins Group management is once again on the lookout for growth opportunities through mergers and acquisitions.
Posted at 12:44 p.m.
Updated at 5:57 p.m.
With particular attention to the P&C insurance sector in Canada, where a resumption of the “consolidation phase” slowed down during the pandemic period is expected.
“Yes, we are on the lookout for growth opportunities through acquisitions and partnerships, as we did a few years ago with other financial cooperatives in Canada”, replied Guy Cormier, President and Chief management of Desjardins, to a question of The Press during the 2021 year-end results conference call.
“In particular, we are keenly looking to participate in the consolidation of the property and casualty insurance industry in Canada, following our significant acquisition of the Canadian operations of State Farm in 2015.”
Without revealing any projects underway, Guy Cormier indicated that it is “clear” that Desjardins wants to “stay among the top 3 property and casualty insurance in Canada”. “So this is definitely an area where we would like to make acquisitions,” he added.
Moreover, the strong improvement in the profitability of the damage insurance sector at Desjardins in 2021 – up 92% to 1.19 billion – proved to be a major contribution to the growth of operating surpluses of the entire financial cooperative.
In its 2021 annual results released on Wednesday, the Mouvement Desjardins shows rising surpluses at a rate twice as high as the growth in its operating income.
These surplus earnings before member dividends reached $2.94 billion, up $523 million or 21% from the amount recorded for fiscal 2020.
By comparison, Desjardins’ operating revenue in 2021 grew by 11%, or $2 billion, to reach a record $20.4 billion.
As for the amount of rebates to member-clients of the caisses populaires, Desjardins accounts for it at $387 million in 2021, up $57 million or 17% compared to the previous fiscal year.
In its analysis of the results, Desjardins management attributes the strong growth in surplus earnings to three main factors: lower loss costs (claims) in the Property and Casualty Insurance sector, growth in net interest income and other services to its member-clients, as well as the sharp reduction in its provision for loan losses.
This provision fell from 863 million in the first year of the pandemic in 2020 to only 69 million a year later at the end of the 2021 financial year.
“It would be difficult to go lower than that,” admitted Réal Bellemare, executive vice-president and chief operating officer of Desjardins.
No worries about repayment capacity
Moreover, Desjardins senior management is not afraid of an increase in the number of borrowers in difficulty due to a possible increase in interest rates.
“It is certain that the rise in interest rates and inflation could have an impact, but the most important impact for credit losses is the employment rate,” indicated Mr. Bellemare. .
“Currently, we are in a situation where we are almost at full employment. As long as people are working, the population is able to absorb a slightly higher interest rate. It is able to absorb inflation. »
With The Canadian Press
Desjardins in numbers
(fiscal year ended December 31, 2021)
Operating income: 20.4 billion (+ 11% over one year)
Total surpluses (before rebates): 2.94 billion (+21%)
Member-client dividends: 387 million (+17%)
Surpluses by business sector:
- Financial services for individuals and businesses: 1.46 billion (+11%)
- Wealth management and personal insurance: 463 million (-24%)
- Damage insurance: 1.19 billion (+92%)
Return on equity: 8.9% (+0.6 points)
Total assets: 397 billion (+7%)
Workforce: 53,783 employees (+4852)
Source: Desjardins Group