Speech by Mr. Alban D'Amours, President and Chief Executive Officer of Desjardins Group, on the occasion of the 2008 Desjardins Group Annual General Meeting

Centre des congrès de Québec, March 28, 2008
(Actual speech may differ from this text)

2007 Desjardins Group Highlights

Dear Delegates,
Distinguished Guests,
Ladies and
Gentlemen,

It is with a great deal of pride and satisfaction that I am presenting to you this afternoon some of the highlights of Desjardins Group for 2007. Tomorrow we will have the opportunity to look into the results obtained both for the caisse network and the main components of the Group in a little more detail. My talk tomorrow morning will also be an opportunity for me to take a more general look at our collective achievements for the last eight years.

Financial stability that grows stronger in a difficult market environment

Despite major turbulence on financial markets in 2007, Desjardins Group achieved financial results that showed strong progress over the previous year. At $1.1 billion, surplus earnings were 11.4% higher than for 2006. With respect to capital equity, the return was 12.3% compared with 12.1% one year earlier. Desjardins Group also showed, as at December 31, 2007, a tier one capital ratio of 14.17% and a total capital ratio of 13.59%.

What is remarkable is that Desjardins achieved these results despite a devaluation of about 16% or $273 million, which is equivalent to $186 million after tax, related to asset-backed commercial paper—the non-bank ABCP. If it had not been for that devaluation, whose effect on our results was mitigated by non-recurring gains achieved on the fourth quarter of 2007, combined surplus earnings before member dividends would have been 1 billion 186 million dollars for an increase of 20% over 2006, and the return on equity would have reached 13.3%.

The excellent financial results for 2007 are due to sustained efforts by both the caisse network and the Desjardins Group components. The performance of the Personal and Commercial segment significantly increased with surplus earnings before member dividends reaching $794 million compared with $752 million in 2006. This was possible thanks to increased revenues and tight controls over operating expenses. Also, we should note the increasing profitability of the caisse network, the great success of mutual fund sales, strong progress in investment and commercial credit and the solid performance once again achieved in the residential mortgage sector.

The Personal and Commercial segment also benefited from excellent performance by Caisse centrale Desjardins, whose contribution for 2007 was $112 million, or 17% more than at the end of 2006.

Our insurance companies also made a solid contribution to our combined results. In personal insurance, there was a strong increase in the net earnings of Desjardins Financial Security, which reached $217 million, up by 43% over 2006. Desjardins Financial Security achieved a return on equity of 27.5%, one of the best results in the industry.

Desjardins General Insurance Group also had a very good year in 2007, contributing $126 million to Desjardins Group results for an 18% increase over 2006. Desjardins General Insurance Group return on equity was 26.7%, which positions that company as one of the leaders in Canada in terms of profitability in its field.

With a sixth consecutive year of sales growth, Desjardins Securities showed net earnings of $0.6 million in 2007 compared to a net loss of $6.1 million one year earlier. Return to profitability for our securities subsidiary, which is continuing its development efforts, was therefore achieved as planned in 2007.

Net earnings for Desjardins Asset Management were slightly down at $16 million, which is mainly owing to a dilution gain, accounted for in 2006, affecting its interest in a company subject to significant influence. If it had not been for that event, Desjardins asset management would have had net earnings slightly up in 2007.

With respect to Desjardins Group Investment Funds, managed by Desjardins Venture Capital, fluctuations in value, mainly attributable to market developments in a difficult economic environment for manufacturing companies, led to a cumulative loss of $3 million for 2007, compared to net earnings of $2 million for 2006.

The excellent financial performance of Desjardins Group made it possible to post a provision for member dividends of a record amount of $592 million, an increase of nearly 23% over 2006. In 2007, Desjardins also was very active in support to individuals, organizations and institutions, with no less than $72 million distributed in scholarships, sponsorships and donations, which constitutes another record.

I could not hope for a better year to crown the last of my years as president of Desjardins Group. 2007 enabled us to reach new summits, in terms of surplus earnings, member dividends and contributions to the community.

It is even more worthy of mention since we achieved this performance in particularly difficult circumstances due to the liquidity crunch affecting financial markets and in particular the non-bank ABCP. I see both our results and our crisis management, which was guided by prudence, discipline, and which is based on general solidarity, as signs of the maturity and resilience of our Group—qualities that can only inspire the greatest confidence for the future.

Support for which I am grateful to you all

Also I would like to take the opportunity to thank you, elected officers and general managers of the caisses, managers and employees everywhere in the network, who are such valuable collaborators. I would like to express my gratitude not only for the excellent year in 2007, but for everything we have accomplished together in the last eight years and which makes it possible for Desjardins today to benefit from such remarkable financial and cooperative health. Thank you for your efforts, your tenacity, and thank you for believing in Desjardins and in the strength of solidarity.

I would particularly like to thank the members of the Councils of Representatives, whom I visited each year as I promised to do and whom I also saw more frequently, as the assembly of representatives was called upon to play a more central role in our decision-making process. Together, we led our Group through a decisive shift. We opened a new path for dialogue going from the caisses up to the Board of Directors and the President of Desjardins Group. I am convinced that together, we have strengthened Desjardins Group and nurtured the strength that it represents for all of our communities with renewed solidarity.

I would also like to particularly thank all members of the Board of Directors, who throughout the past eight years, have enabled me to feel solidly supported and who have made the accomplishment of my mandate a task that was not only achievable, but also extremely stimulating and satisfying. I know that Desjardins Group has gotten where it is today because you, the members of the Board, have been such wise guides and that you have always brought to the table the reality, concerns, expectations and projects of the people and communities that you represent.

Finally I would like to thank Mr. Pierre Grenon, of the Richelieu-Yamaska Council of Representatives, who today is leaving the Board of Directors, and I wish to welcome Mr. Denis Duguay, who is replacing him.

To each and every one of you, I wish you very enjoyable 2008 Annual General Meetings.