AN ACTIVE AND INVOLVED GROUP. In this time of pandemic-induced crisis, Desjardins is stepping up and giving its members and clients, the support they need. The cooperative group is working to get the economy and society back on track while also respecting public health measures meant to stop the spread of COVID-19.
Desjardins stronger than ever to support its members and clients
Lévis, August 11, 2020 - For the second quarter ended June 30, 2020, Desjardins Group, Canada's leading financial cooperative group, recorded surplus earnings before member dividends of $529 million, down $163 million or 23.6% from the corresponding quarter of 2019. The financial impacts of the COVID-19 pandemic continued to affect results in the second quarter of 2020. The provision for credit losses was increased by
$282 million, mainly in response to the continually deteriorating economic environment and its potential impacts on certain members and clients. However, the provisions set aside for travel insurance in the first quarter were revised based on current and expected claim application volumes. Another reason for the decrease in surplus earnings was a higher claims experience in property and casualty insurance due to the catastrophic hailstorm in Alberta during the second quarter of 2020, as well as the less favourable claims experience in previous years.
It should also be noted that the decrease in auto insurance claims for the current year, which resulted from changes in driving habits, led to $155 million in refunds of auto insurance premiums to members and clients as a relief measure to support them during the pandemic.
The amount returned to members and the community in the second quarter of 2020 totalled $106 million, including an $80 million provision for member dividends, $14 million in sponsorships, donations and scholarships, and $12 million in Desjardins Member Advantages. In the second quarter of 2020, Desjardins also announced $13 million in commitments related to the GoodSpark Fund to support the regions on social and economic fronts.
Despite the impacts of the COVID-19 pandemic on its financial results for the second quarter of 2020, Desjardins Group is still a financial institution with a very solid foundation that can withstand an economic slowdown while also supporting its members and clients.
At the end of the first half of fiscal 2020, Desjardins Group recorded surplus earnings before member dividends of $814 million, down $279 million or 25.5% from the same period in 2019. The negative financial consequences of the COVID-19 pandemic adversely affected surplus earnings for the first half of the year. These consequences include a $497 million increase in the provision for credit losses, mainly in response to the significant deterioration in the economic outlook, the rise in travel insurance provisions following the Canadian government's announcement of travel restrictions and an uptick in credit balance insurance provisions. The decrease in surplus earnings was partially offset by sustained growth in caisse network operations and the solid performance posted by the Property and Casualty Insurance segment, which reported higher premium income.
"The second-quarter results are proof of Desjardins Group's exceptional financial stability. This stability has allowed it to actively support its members and clients, as well as their communities since the very beginning of the pandemic, and to continue initiatives aimed at restarting the economy. This support includes relief measures, especially auto insurance premium refunds, and the GoodSpark Fund" said Desjardins President and CEO, Guy Cormier. "I was also proud to learn the results of The Banker study that ranked Desjardins as Canada's best-performing financial institution in 2019, and the one that would be in the best position to meet the challenges posed by the pandemic in 2020."
COVID-19: Desjardins Group continues to support its members and clients
On March 11, 2020, the World Health Organization declared a COVID-19 pandemic. On March 13, 2020, the Québec government declared a public health emergency throughout the province. Since then, the state of public health emergency has been repeatedly extended. Meanwhile, the Canadian government introduced various protection measures during the first 6 months of 2020.
On March 16, Desjardins became one of the first financial institutions to implement relief measures to help support members and clients who might temporarily have trouble meeting their financial obligations.
Since March Desjardins has introduced a number of relief and protection measures. These include raising the contactless payment limit from $100 to $250, refunding members charged for exceeding their plan's monthly transaction limit, temporarily reducing the annual interest rate to 10.9% for credit card holders who obtained a payment deferral on a Desjardins financing product, offering personal members and clients a loan of last resort of up to $3,000 at a special interest rate of 4.97%, and granting refunds to Desjardins Insurance auto insurance clients who are under lockdown. Desjardins Group has also introduced new measures for youth, seniors and community organizations. It has encouraged members and clients to sign up to receive their government benefits by direct deposit instead of cheque.
On June 29, Desjardins announced a second wave of premium refunds totalling more than $100 million to its
2.1 million auto insurance clients. This represents between 25% and 40% of the insurance premium paid for one month. In combination with the first wave of premium refunds, this has allowed Desjardins to return more than $155 million to auto insurance clients across Canada.
By June 30, 2020, Desjardins Group had received 125,000 requests for payment deferrals on credit cards, Accord D financing and automobile loans. As for loans and lines of credit, a total of 149,000 applications were also received, including 117,000 relating to mortgage loans. As for business members and clients, a total of more than 28,000 requests were received.
In addition to these measures, Desjardins set up partnerships with the Québec and federal governments to offer solutions to members and clients. The cooperative group will continue to offer them support so they can get back to business.
Support for economic and social recovery
On April 29, Desjardins announced its initial strategies to help get the economy back on track and support regional development. This consists of five initiatives to promote innovation and entrepreneurship to help businesses and community organizations get back to work. First, this included the $150 million GoodSpark Fund, second, the Momentum Fund for businesses, third, a partnership with La Ruche Québec to encourage consumers to buy local, fourth, a partnership with École d'Entrepreneurship de Beauce and SPB/Skillable to launch a learning path aimed at helping businesses bounce back, and fifth, the < post > COVID Challenge.
On June 3, three exciting projects - PingLit, Portail Résidence and EnLigne - won the < post > COVID Challenge, a virtual competition organized by Bonjour Startup Montréal, Google Canada and Desjardins. The Challenge's goal is to find innovative solutions to societal issues caused by COVID-19. Each winning team received prizes worth more than $100,000.
Since July 20, more than 700 service centres across Québec and Ontario have been open so they can meet the needs of our members and clients. However, some service centres must remain closed for reasons of security or social distancing.
Giving back to the community
During this pandemic, Desjardins has been more involved than ever in people's lives and continues to support initiatives in line with its values, such as diversity and inclusion.
- Desjardins stands with Black Lives Matter. Three organizations will share a total contribution of $60,000 following a dialogue on Desjardins's Facebook page, which helped us target organizations that promote integrity, respect and equality.
- Desjardins also joined the Stop Hate for Profit campaign, suspending its posting and advertising on Facebook and Instagram for the month of July to oppose hate speech and to advocate for change.
- Desjardins also joined BlackNorth Initiative to fight anti-Black racism and took part in the first virtual BlackNorth Initiative Summit. Desjardins has committed to achieving certain targets by 2025, including dedicating 3% of its donations and sponsorships to projects in the Black community.
Desjardins is constantly innovating to meet the needs of its members and clients. In an environment where the pandemic is still with us, we must continue to follow public health guidelines to slow the spread of COVID-19:
- Desjardins SocieTerra Funds and Portfolios are now 100% oil production and pipeline-free in response to our members, who want a low-carbon economy.
- The holding company Purplebricks Group plc was acquired by Desjardins, returning it to Canadian ownership. This company and its subsidiaries mainly operate 2 brands: DuProprio and Purplebricks Canada. The deal will allow Desjardins to support its members and clients throughout the process of buying or selling a home.
- More than 95% of transactions can be completed without having to go to a point of service, whether in one of our 1,689 ATMs, online through AccèsD, or by telephone or mobile app.
Before the pandemic, nearly 92% of interactions with Desjardins were already done online and virtually. Now this figure is closer to 94%.
In July, 39,000 out of 48,000 employees were still working from home. On August 5, Desjardins decided to extend teleworking for those whose tasks allow it until December 31, 2020 to limit the spread of COVID-19.