DBRS Releases Report on Desjardins Group, Caisse centrale Desjardins and Capital Desjardins

DBRS has today released its report on the ratings of Desjardins Group (Desjardins or the Group) and its related entities, Caisse centrale Desjardins (Caisse centrale or CcD) and Capital Desjardins inc. (Capital Desjardins). These ratings are supported by the Group’s leading market positions in the province of Québec and diversified business base, with an emphasis on low-risk retail business lines.

Although diversification outside of Québec has modestly improved with wealth management and other efforts in recent years, key challenges persist due to 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.

Desjardins’ funding profile remains a positive factor in its rating, with a substantial portion of its funding through core retail deposits, which is considered its 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.

Desjardins’ Senior long-term debt rating of AA is composed of an Intrinsic Assessment of AA (low) and a Support Assessment of SA2, resulting in a final rating that is one notch higher. DBRS views Desjardins as systemically important to Québec, and although Desjardins is provincially regulated, the SA2 reflects the expectation of systemic and timely external support by the Federal Government in line with that expected for the large banks.

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The full report providing additional analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.