Laurentian Bank of Canada

Welcome to the Laurentian Bank Quarterly Financial Results Call. Please note that this call is being recorded. I would now like to turn the meeting over to Andrew Trenanke, Vice President, Investor Relations. Please go ahead, Andrew.

Good morning and thank you for joining us. Today's opening remarks will be delivered by Ronia Llewellyn, President and CEO And the review of the first quarter financial results will be presented by Yvon Deschamps, Executive Vice President and Chief Financial Officer. After which, we will invite questions from the phone. Also joining us for the question period are several members of the bank's executive leadership team, Liam Mason, Chief Risk Officer, Eric Faveau, Head of Commercial Banking, Karin Adrel Teslik, Head of Personal Banking, and Kelsey Gunderson, Head of Capital Markets. All documents pertaining to the quarter can be found on our website in the Investor Center. I would like to remind you that during this conference call, forward-looking statements may be made, and it is possible that actual results may differ materially from those projected in such statements. As a complete cautionary note regarding forward-looking statements, please refer to our press release or slide two of the presentation. I would also like to remind listeners that the Bank assesses its performance on a reported and adjusted basis, and considers both to be useful in assessing underlying business performance. Rania and Yvonne will be referring to adjusted results in their remarks unless otherwise noted as reported. I would now like to turn the call over to Rania.

Thank you, Andrew. Bonjour a tous. Good morning and thank you for joining us on what I know is a very busy morning. This quarter kicks off the second year of our three-year strategy, and I am pleased to report that we have continued to make progress, good progress, including the exciting public launch of our reimagined Visa experience, a game changer for Laurentian Bank and its customers. On behalf of the management team, we would like to thank everyone on our one winning team for their efforts over the quarter. The macroeconomic environment remains uncertain. Central banks are trying to dampen inflation in the face of mixed economic indicators, causing significant market volatility. Notwithstanding, our results speak to the strength of our underlying business, our disciplined approach to credit and capital management, and the progress we are making on executing against our plan. This quarter, total revenue for the bank grew by 1% year over year to $260 million. Net income was $54.3 million, and earnings per share were $1.15. Net interest income was up 3% year over year, driven by commercial loan growth. In line with our expectations that we mentioned last quarter, our NIM was stable at 1.77%, despite material rate hikes in Canada and the US since October. As we have previously said, we expect our NIM to gradually rebound once interest rates stabilize, all other things being equal. Our efficiency ratio was 69.4% due to the temporary pressures on our NIM and investments in our key strategic priorities, including the launch of our reimagined visa experience, as well as seasonal elements impacting salaries and benefits. In line with our prudent and disciplined approach to managing risk, TCLs were 16 basis points, a year-over-year increase of five basis points. By dynamically managing our capital, we maintained our CET1 ratio at 9.1%, offsetting the small negative impact from the phase-out of the ECL transitional arrangements. I will now turn to our strategic highlights for the quarter. Last year, we identified three priority areas for 2023 to stimulate growth. First, deliver excellent customer service. Second, grow deposits. And third, drive efficiencies through simplification. I will begin with customer service. We are focusing on delivering excellent customer service and removing pain points by leveraging data from our Net Promoter Score or NPS program. This concentrated effort will help us to gain a deeper understanding of what drives customer satisfaction and dissatisfaction, allowing us to implement targeted actions. To that end, I'm pleased to share that in addition to inventory financing, our equipment financing specialization is now also rated as world-class, moving up from excellent with a significant improvement in its NPS. This achievement is the result of proactively putting our customers at the center of all our organizational decisions, as well as having the right expertise, right products, and right solutions for our customers. We are now taking these best practices and applying them across the organization, including the rollout of NPS in all retail channels and our contact center. This will provide us with deeper insights into areas we need to address giving us the ability to quickly adjust and implement actions to improve the customer experience. I'm also excited to announce that in February, we launched our newly reimagined visa experience to the public. The progress in our personal banking segment is significant. One year after introducing a mobile app and closing the top five digital pain points for our customers, we have shown that we can truly make size our advantage by thinking customer first, and leveraging partnerships to deliver to market faster. Through our strategic partnership with Brim Financial, customers from across Canada can now sign up for one of our new Visa cards online, be approved within minutes, and start transacting with their virtual card immediately from their digital wallets. In addition to the quick online approval, customers will benefit from one of the most flexible rewards programs on the market, a best-in-class digital platform and tools to help budget and manage spending. This is a significant achievement on our digital transformation journey. Furthermore, in order to continue improving the customer experience, we launched a new mortgage financing center to handle all mortgage acquisition and refinancing solutions for our retail branches. Using existing resources with strong backgrounds in home financing, we are now delivering more targeted solutions for our customers. Turning now to deposits. Coming off a record year in deposit growth, we have continued our focus on maintaining a strong balance sheet and supporting loan growth. Having now closed our customers' top five digital gaps, we are well positioned to further grow deposits by deepening our relationships with existing customers and targeting new ones. To that end, I am pleased to report significant year-over-year growth in deposits of 14%, which outpaced loan growth of 10%. I would like to highlight two key drivers in particular. First, over the last few years, we have been focused on growing strategic partnership deposits, which are a cost-effective funding source and backed by multi-year commitments. This quarter saw a billion-dollar increase sequentially and more than $2.6 billion since last year. Second, as part of repositioning our personal bank, which includes new digital capabilities and a simpler product offering, we are now seeing a positive trend with term deposit growth of almost $400 million quarter over quarter and $700 million since last year. This positions us well as we prepare to launch our digital onboarding solution to market in the next few months. To drive accountability, we have also included deposit growth on our leaders' scorecards across the organization, whether they are customer facing or non-customer facing. In addition, by leveraging the new mortgage financing center that I previously mentioned, we are removing many of the day-to-day mortgage activities out of the branch. This creates additional capacity for our financial advisors to focus on deposit growth and deepening our relationships with existing customers. Our third priority is to drive efficiencies through simplification. We remain committed to reducing our efficiency ratio below 65% over the medium term by further streamlining our internal processes and operations. As we stated in the fourth quarter, this will not be a straight line as we continue to invest in strategic priorities. A few examples of process simplification underway include, first, the launch of an e-statement campaign for retail banking customers focused on visa statements as part of our digital first approach, which is expected to save the bank $500,000 this year and up to $750,000 in annual run rate savings beginning next year. Second, the introduction of robotics process automation into three processes, with another 17 to follow. Once implemented across all 20 processes, we expect this to generate $2 million in annual run rate savings over time. Third, the introduction of process automation in our deposit fulfillment process, reducing turnaround time by 50%. Culture and ESG also remain a significant priority, and I would like to share some highlights from this quarter. First, we launched our newly refreshed corporate donation strategy called Giving Beyond Numbers, which is focused on supporting organizations dedicated to the economic inclusion of newcomers, refugees, and other underrepresented groups. Second, we established a 35% reduction target in our Scope 1 and 2 greenhouse gas emissions by 2030. And third, to support Quebec school bus operators in their transition to electric vehicles, we participated in the financing of zero-emission buses. The bank also signed the parental leave pledge introduced by Women in Capital Markets, which includes commitments to provide paid leave to all parents, including fathers, same-sex partners, and parents adopting a child. as well as fostering a supportive work culture that normalizes and embraces parental leave across all ranks and positions. I am pleased with our progress this quarter, and I'm confident that we are on the right path with our strategic plan. As we continue to deliver on our three priorities for the year, we expect to launch our digital onboarding experience to the market over the next few months, beginning with a focus on day-to-day accounts, This will allow us to continue to deepen customer relationships, acquire new customers, and expand our presence across Canada. The entire bank is focused on working together as one winning team to drive growth. I will now turn the call over to Yvon.