Desjardins loses $476 million in Q4, ends year with small surplus

Quebec's largest credit union operator has reported its worst quarterly loss ever, blaming the global economic slowdown and the collapse of the asset backed commercial paper (ABCP) market for the fall.

Desjardins Group President and CEO Monique Leroux, shown in a 2008 file photo, is confident about the organization's financial future.(Clement Allard/Canadian Press) Desjardins Group suffered a $476-million loss in the fourth quarter, before member dividends. During the same period in 2007, the financial co-operative reported a surplus of $273 million.

"Obviously, [the results] were unsatisfactory," André Chapleau, a Desjardins spokesperson, told CBC News on Wednesday.

"We would have preferred to post better results. But when we exclude the impact of the financial crisis and the famous ABCP issue, Desjardins would have done probably better than the year before."

Chapleau said the surplus would have been $1.2 billion for 2008. However, he said, it slipped to $78 million by year's end after Desjardins absorbed its losses from ABCP, a type of short-term investment that lost its viability as a result of the sub-prime mortgage crisis in the United States.

Revenues for Desjardins for the entire year totalled $8.37 billion, a 13 per cent — or $1.30-billion — drop over 2007.

Member dividends take hit

As a result of the financial losses, members of the Caisse populaire Desjardins credit unions received fewer dividends for 2008. Dividends sank to $215 million last year, a 64 per cent tumble compared with 2007.

"The caisses (credit unions) are encouraged to pour surpluses into their reserves, which would have the effect of reducing the amounts that they could put into dividends for its members," Desjardins president Monique Leroux said Monday.

Despite the numbers, she said the institution is still in very good shape.

When asked if investing in ABCP was a mistake, Leroux suggested that Desjardins was merely another victim of the global financial crisis.

"I think that we need to always look at things moving forward and to learn from the past," she said.

In Quebec, Desjardins is the leading supplier of residential mortgages, farm credit and personal savings accounts, with assets growing 5.7 per cent to $152.3 billion.

With files from The Canadian Press