The year 2023 has been challenging and cautious for Desjardins Group, marked by a significant doubling of its loan loss reserves. This move comes at a time when many entrepreneurs and credit card holders are finding themselves in difficult financial positions.

Increase in Provisions for Losses

Desjardins saw its provisions for losses increase by 252 million, reaching 529 million in 2023. This increase reflects heightened caution amidst ongoing economic challenges, particularly in vulnerable sectors like catering, accommodation, construction, and real estate. Réal Bellemare, COO at Desjardins, emphasizes that businesses related to discretionary spending are more affected.

Outlook for 2024

Bellemare anticipates continued headwinds for these industries in 2024. Guy Cormier, President and CEO of Desjardins, acknowledges that some sectors are under more pressure, while others are thriving. He also notes that many entrepreneurs had anticipated an economic slowdown and had prepared accordingly.

Mortgage Loans Situation

In terms of mortgage loans, the quality of the loan portfolio has deteriorated, especially among credit card holders. However, homeowners continue to repay their mortgages. Desjardins contacted 70,000 of its members considered more vulnerable with variable rate mortgages to offer advice. Cormier assures that the mortgage portfolio remains solid despite the challenges.

Desjardins Financial Results

In 2023, Desjardins reported a surplus of 2.3 billion, despite complications related to the transition from IFRS 4 to IFRS 17 accounting standards. Alain Leprohon, CFO, explains that these results, although positive, are difficult to compare with the previous year due to accounting noises. Nevertheless, a 10% increase in surplus would be more representative of the cooperative's real performance.

Conclusion

Desjardins' situation reflects the current challenges in the financial market, highlighting the importance of prudent and responsive management in a changing economic environment. For investors and consumers, these developments are a key reminder of the persisting volatility and uncertainty in the financial sector.