Desjardins Group president and CEO Monique Leroux.MATHIEU BELANGER
Desjardins Group is on track with its ambitious strategy to expand outside its home province of Quebec over the next three to five years, helped by its solid financial position and strong insurance operations, according to Monique Leroux, chief executive officer of the co-operative financial services group.
Desjardins, which has more than $250-billion in assets, said last year, shortly after striking a $1.35-billion deal to acquire State Farm Life Insurance Co.'s Canadian arm, that it wants to raise its revenue share from outside Quebec to 40 per cent from 35 per cent.
But Quebec-based rivals National Bank of Canada and Laurentian Bank of Canada have similar plans, raising the prospect of intense competition at a time when the Big Five banks are hardly keen to surrender any market share.
Ms. Leroux, who is nearing the end of her second four-year term as CEO, said Desjardins is progressing with its expansion into small business lending and credit card services, as well as its partnerships with credit unions and co-operatives.
"But the big impact in positioning Desjardins across the country is coming, and will continue to come, from our insurance activities," she said.
Desjardins is Canada's second-largest property and casualty insurer, a position that has been reinforced with the State Farm deal, smaller acquisitions and white-label arrangements with the likes of Canadian Imperial Bank of Commerce and Bank of Nova Scotia.
"When I look forward, I think that there is a potential for growth," she said, adding that the co-operative's expansion target outside Quebec will likely be reached in closer to five years than three, though.
Ms. Leroux believes Desjardins' strength in insurance, along with products related to insurance and credit card services, are key factors as it seeks to differentiate itself in a crowded field.
She also pointed to Desjardins' strong financial position as a competitive advantage, particularly as it increases its reach into technology to meet rising consumer expectations and potential competitive threats from smaller financial technology firms.
"It's not just a question of size," she said. "It's also a question of culture and agility. I think we have sufficient resources to do a lot. Of course, we're not the same size as Apple or Google, but other Canadian banks are not the same size anyway."
Desjardins has chosen to expand its operations outside Quebec at a challenging time for the Canadian economy, of course: Unemployment has risen as commodity prices have collapsed, levels of consumer indebtedness are exploring record highs, and the housing market looks increasingly precarious.
At the same time, the Bank of Canada cut its key interest rate twice last year, and could reduce it further in the months ahead, creating headwinds for financial firms that make loans.
In a speech to the Canadian Club of Montreal on Monday, Ms. Leroux argued that Canada must position itself to take advantage of a shift toward a so-called green economy, creating long-term jobs in the area of clean technology, for example.
But in an interview, she also acknowledged that a challenging economy can make expansion easier.
"If you have an organization like Desjardins, with a relatively strong financial position, if the economy is soft or weak, there could be an opportunity to make interesting transactions and partnerships," she said.
"Sometimes, when the economy is booming, prices will move accordingly. The general principle is to buy low and sell high."
David Berman