DBRS Confirms Caisse centrale and Desjardins Group at AA and R-1 (high); Capital Desjardins at AA (low)

DBRS has today confirmed the ratings of Desjardins Group (Desjardins or the Group) and its related entities, Caisse centrale Desjardins (Caisse centrale) and Capital Desjardins Inc. (Capital Desjardins), including the Group’s long-term debt at AA and short-term debt at R-1 (high). The trends remain Stable. The ratings remain supported by the Group’s leading market positions in the province of Québec and its diversified business base, with an emphasis on low-risk retail business lines. Key challenges remain the Group’s concentration in Québec and high cost structure.

The Group continues to maintain strong asset quality metrics reflecting the retail concentration and relative strength of the Canadian and Québec economies. The Group’s funding profile remains a positive factor in its rating, with a substantial portion of its funding through core retail deposits, which are considered the most stable source of funding.

While the individual attributes of Caisse centrale and Capital Desjardins are important to their respective ratings, the strength of the Group as a whole is the most critical factor, as the funding activities of the two rated entities are integral to the Group’s operations.

The Group’s senior long-term debt rating of AA is composed of an intrinsic assessment of AA (low) and a support assessment of SA2, which results in a final rating one notch higher than the intrinsic assessment. DBRS views Desjardins as systemically important to Québec, and although Desjardins is provincially regulated, the SA2 rating reflects the expectation of systemic and timely external support by the federal government in line with that expected for large banks.

Notes:
The applicable methodologies are Rating Canadian Provincial Credit Union Centrals, Credit Unions and Desjardins Group (April 2011) and the Global Methodology for Rating Banks and Banking Organisations (January 2010), which can be found on DBRS’s website at www.dbrs.com.

The sources of information used for this rating include company documents. DBRS considers the quality of information available to it for the purposes of providing this rating of satisfactory quality.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

Lead Analyst: John van Boxmeer
Rating Committee Chair: Brenda Lum
Initial Rating Date: April 20, 1998
Most Recent Rating Update: June 20, 2011