COVID hammers Desjardins Group earnings
Desjardins Group released its second quarter earnings figures August 11, showing a significant decline in surplus earnings during the quarter and for the six months ended June 30, 2020.
The group recorded surplus earnings before member dividends of $529-million, down $163-million or 23.6 per cent from earnings reported in the second quarter of 2019. For the six months ended June 30, the first fiscal half of 2020, Desjardins recorded surplus earnings before member dividends of $814-million, down $279-million or 25.5 per cent.
Desjardins says the decrease in surplus earnings was due in part to higher claims experience in property and casualty insurance, thanks to the catastrophic hailstorm in Alberta during the second quarter of 2020. (No catastrophe occurred during the same period in 2019.) The company also says it refunded auto insurance premiums worth $155-million to members and clients during the period. Losses were partially offset by sustained growth in operations and higher premium income brought in by the company’s property and casualty insurance segment.
Credit losses increased
For the quarter, the provision for credit losses was also increased by $282-million. For the six months ending June 30, credit losses increased $497-million. The increase in the provision for credit losses occurred mainly in response to the deteriorating economic outlook.
Operating income in the second quarter was $4.276-billion, up $49-million or 1.2 per cent. Operating income for the six months ending June 30 was $8.921-billion, up $382-million or 4.5 per cent. The company’s total capital ratio reached 22.4 per cent during the quarter, compared to 21.6 per cent as of Dec. 31, 2019 and 17.8 per cent as of June 30, 2019.
As of June 30, 2020, the group had total assets of $349.9-billion, up $36.9-billion or 11.8 per cent since Dec. 31, 2019.