Desjardins Group’s earnings took a huge hit in Q2 2022, posting a 49% year-on-year drop, the insurance giant revealed in its latest financial report.
The firm’s surplus earnings before member dividends sank to $477 million between April and June, a whopping $458 million decline from the same period in 2021.
The firm attributed the decrease primarily to a rise in the cost of claims in its property and casualty (P&C) insurance business brought about by a rise in road traffic, which had fallen considerably last year because of the pandemic. In addition, the second quarter of 2022 was marked by severe weather events, such as the derecho that affected Ontario and Québec and windstorms and flooding in certain parts of Canada, unlike the corresponding period last year.
Greater investment in strategic projects, including those related to the company’s security and digital transformation, and an increase in personnel spending also contributed to the drop in surplus earnings.
This dip, however, was partially offset by a spike in operating income. From April to June, Desjardins’s operating income reached $5.132 billion, up 5.4%, or $263 million, year-on-year. Net interest income similarly rose, jumping $144 million to $1.596 billion, representing a 9.9% growth.
The firm also registered an uptick in net premiums to $2.633 billion, up 1.8%, or $46 million, compared to 2021 numbers. Other operating income, meanwhile, reached $903 million, climbing 8.8%, or $73 million, mostly because of strong payment activities at Desjardins’s card services.
“This quarter was marked by a sustained increase in our operating income, as well as growth in our business sectors and in our assets, which have surpassed the $400 billion mark for the first time,” said Guy Cormier, president and chief executive officer at Desjardins Group.
“Desjardins has a strong financial foundation that allows us to invest massively in strategic projects such as security and our digital shift. It also lets us develop innovative solutions to meet the needs of our members and clients, like our virtual assistant using natural language processing in Québec French, which received the public's favourite award at the Octas 2022.”
