Everyone. For those who don't know me, my name is Raphaël Ambeau, Head of Investor Relations at Laurentian Bank of Canada. On behalf of the entire management team, we're delighted to have you today to present you the details of our revamped strategic plan. The presentation materials are available on our website in our Investor Relations section. Following our presentation, we'll hold a Q&A session. Given that today's presentation includes forward-looking statements, I would like to direct your attention to slide 2 of our presentation regarding forward-looking statements. Without further ado, I will now introduce you our President and CEO, Éric Provost.
Merci beaucoup, tout le monde. Merci de prendre le temps aujourd'hui à ceux sur notre diffusion web de prendre cette période pour être avec nous pour la présentation de notre journée des investisseurs de la Banque Laurentienne 2024. Thank you for taking the time for those of you here as well, in terms of... I know it's been a busy week for all of you, but I'm quite thrilled to be with you this afternoon, be able to talk to you about our path forward. As Raphaël said, I'm Éric Provost, and I'm President, CEO of Laurentian Bank, and joining me on stage today will be Yvan Deschamps, our Chief Financial Officer, to walk you through the different midterms objectives we're gonna give ourself for this plan.
Not solely an opportunity to talk to you about our path forward, but also a great opportunity to take time to give you a perspective of who we are, also the businesses that we operate into, and to give you a perspective of the opportunities we see in all of those businesses going forward. And we're not here today to tell you it's a straight line ahead. It's gonna be definitely an ambitious plan for us to achieve, but our goal is to give you a realistic view of our current state, but most importantly, provide you the opportunity we believe we can execute on as a leadership team.
So, before we talk about the future, just wanna take some time to talk about our past, because this is what we did as an exercise, as a leadership team, to make sure that we actually understand better our roots and define this plan towards what were we and what we do—what we wanna become in the future. And for those who don't know, here in the room, actually, Laurentian Bank was founded 178 years ago on the purpose of serving a portion of the population that at the time didn't find the banking services they needed to help them grow their savings for more difficult times.
Throughout the years, Laurentian Bank has been able actually to to serve those customers, but not solely on the personal bank side, but also on the business side. For sure, in terms of the businesses that we help grow, create jobs, build the economy, we're part of Laurentian Bank's journey. Let's remind ourself, like, through all these years, Laurentian Bank went through deep recessions, economic cycles, and lately, a global pandemic, and through all of these, we've remained strong. And as of today, we are a strong financial institution, and we're gonna demonstrate that, and then I see a lot of potential for us in the future ahead. What are we today? Well, we're a world-class specialty lending platform.
You know, we have a commercial banking platform that specializes into niches, service customers across Canada and the United States. We have a solid deposit base, and we believe there's a lot of headroom to grow for us in the future, and that deposit base is supported by our retail branch network position in Quebec, but also with an advisory and broker network that operates across Canada. We also have a capital market group that supports corporate and government issuers that we rely upon to create revenue and efficiency for us in the future. I believe that through this plan, we're gonna be able to set the right levels in terms of us having our rightful place in the different markets we wanna tackle. I believe right now that these opportunities align with our strategies aren't accurately reflected in our valuation.
I wouldn't be giving you a right perspective of who we are if I don't talk to you about our team... an extraordinary team that I'm very proud to be able to work with on a daily basis, an engaged team that provides effort day after day, servicing our customers, and that is actually what makes a huge difference for this organization. I think we've made very, very strong progress in the last few years, and I really wanna take this opportunity early in the presentation to thank our employees. I wanna thank you for your hard work, your resiliency throughout what I would qualify a challenged 2023 year. Like, you've been the key of us remaining strong and being focused on our customers, so thank you for that.
While we did make some some great cultural progress, and there you can see, like, we were able to reduce our turnover by over 50%. As the engagement survey says, increased our engagement levels from our employee base, but most importantly, and I think this is the big takeaway, Laurentian Bank was able to attract and retain top talent, and this, again, is the foundation for execution of this plan. While we did make some good progress, there's still some room to evolve and keep improving in terms of culture. Like, we need to be proud of our path forward, need to be accountable for our outcomes, determined in our execution capabilities, proactive in our engagement, and keep eye conviction and focus because that's gonna make the difference.
Throughout the 175 years plus this bank has been around, ESG has been core of what we are and will continue to be in the future. Those 3 pillars in the last few years, I'm very proud to say that we've made great progress in our journey, and that we will continue to build upon those throughout the plan, because for our employees, for our customers, and for our shareholders, this is important. And if it's important for them, it is important for us to continue and push further throughout the execution. Now, our ambition, for this plan, what we, aspire to be, well, we really wanna foster prosperity, for all customers through our specialized commercial banking and low-cost banking services to grow savings for middle-class Canadians. This is what we want to be in the future. How we're gonna do that?
Well, it all relates to our value proposition, and we believe that we offer a differentiated approach out there. I did mention our specialized commercial banking, and you're gonna hear me talk a lot about that group and our successes, and it's all related to the customer focus and the ease of doing business we provide. I'm gonna be talking about having a digital-led personal banking with keeping that human experience, but again, tackling low cost to no cost day-to-day banking, efficient platform that would allow middle-class Canadians to actually lower their banking costs. By doing that, we truly believe that we will create an alternative out there versus the big banks.
We intend, through this plan, to acquire net new customers in personal banking to strengthen our core deposit base, and by doing so, enhancing our funding mix and create more profitability for this organization. Through this value proposition, we believe we're gonna build a stronger bank, a more reliable bank, and a more profitable bank. It's all gonna be about execution, and to execute well, we need to focus, and our key focus areas are gonna be aimed towards where we can compete with an edge, and that relates to our specialized niches in commercial banking. We'll need to simplify and decomplexify this organization to make it more efficient, because for too long, right now, we've been all things to all people, and this is what this plan is all about.
We're gonna drive accountability to deliver on outcomes and not focus solely on activities, and we will make sure we'll harness the power of partnership throughout the plan in various ways. To do so, I'm happy to have with me today a great leadership team, a team that is composed of senior leaders that have deep experience in specific field of expertise, as well as transformational leaders that will be needed to walk us through this journey. Before we talk about the 2024 plan, because I anticipate we're gonna have some questions maybe later on, on the difference or sequence versus the 2021 plan, throughout this presentation, we're gonna come back onto what we'd laid out in December 2021.
I think that it's important for us to acknowledge that we made good progress versus this plan, where we said that we would grow commercial banking, that we would reposition personal bank, and that we would focus and align our capital market groups. I can be very proud to say that all these teams made key progresses in each one of those areas. In commercial banking, we were able to grow our assets from $ 14 billion to $ 17 billion in those few years. We closed key pain points in our digital offering in personal banking, and we grew our syndicate position within our capital market groups with corporate and government issuers.
So I can say that throughout this plan, in the first year, when focus was very high, I can say that we can qualify that as success, because in that first year, we almost met all of our financial KPIs. But after that, 2023 occurred, and we started facing strong macroeconomic headwinds. And this is why, in summer 2023, Laurentian Bank decided to undergo a strategic review. And from that exercise, as well as our own internal reflections, and I have to say, my observations after being 11 years in this institution, today, we really wanted to share with you key learnings from those activities. First of all, we need to manage better our personal banking and align it with our revenue stream. We need to make sure that we make the right fundamental investments into our technology. And why is that?
It's because we're a too complex, too manual organization still, and that doesn't allow us to scale key products that would be accretive to this bank, but unfortunately, we're not set up properly to do so. This is with these key learnings that we came up with this revamped strategic plan. We will keep engaging in strategic partnerships to bolster technology and to improve our product offering. We'll invest in process simplification to improve our customer experience. We'll reduce complexity in our cost structure to improve profitability, and we'll make sure that the focus in personal banking will be about increasing the gathering capabilities to strengthen our core banking deposits. But we didn't wait today to actually start the journey. We started 6 months ago, executing on key things. I think that you saw within those months that we made key executive appointments.
We also revisited and started realigning our headcounts towards a future that will make this bank leaner and simpler. Some examples of what we already undertook is the sale of our full retail brokerage sector to Industrielle Alliance. And last week, where we announced some headcount reduction, we decided to exit equity research for capital markets. Also very proud to have hired a new technology leader that is actually starting to hire additional talent in technology, because you're gonna hear me talk a lot about the need of our foundational technology.
And through that hire, and what we're putting in place right now, is strong governance and oversight on our programs to make sure that these deliver the right outcomes, that these generate the right return on investment, and this is where it's gonna make a huge difference for us in the future. So now let's go deeper. Let's talk about our different business activities, starting with personal and commercial banking. Starting with commercial banking. And you're gonna hear me say how proud I am of the progress and what we actually built in the last 10 years. Very proud because when I joined Laurentian Bank 11 years ago, that group was mainly generalist, with $6 billion assets that we grew throughout the years, up to $ 17 billion, where we are today.
As you, you can see in there, we grew that segment, leveraging expertise, specialization approach, that helped us diversify the business mix, diversify our geographic footprint. I think that this is why qualifying that we have, at Laurentian Bank, a world-class specialty lending platform, is not an understatement. This is what I'm gonna be able to explain to you when we deep dive in each one of these groups. I'm gonna be able to walk you through the value added we bring to our customers, and why we believe that commercial banking will be, and will continue to be, a great growth engine for us in the future. Various business sectors, I think, taking the opportunity today to actually walk you through each one of them and give you better perspective and details.
So we'll talk about inventory financing, equipment financing, two wholly owned subsidiary standalone businesses that operates under Laurentian Bank. Our commercial real estate, as well as our commercial SME group. Starting with inventory financing, I think we should be very, very proud of that business, which we acquired in 2017, and operates under the name of Northpoint Commercial Finance. And through this business, we're able to actually service dealers, and the industries we operate right now are on the vast majority in terms of marine, RV, manufactured housing, and trailers. But throughout the years since the acquisition, we've been putting more and more emphasis into diversifying those industry, maximizing the capabilities of that platform.
I'm very proud to say that, and maybe it's not known enough, but Laurentian Bank actually service throughout North America, 6,000 dealers through that platform. And throughout the years, we were able to establish strong relationships that starts at the original equipment manufacturers, that I'll refer to as OEMs. And those relationships have definitely paid off and appreciated, for sure, the type of service that we can provide, because you can see in there that we are rated world-class in terms of our customer service survey, telling us how great a business we have to deal with, the ease of doing business, the strength of our relationships, and this is what, this is what makes us so successful there.
To give you examples or reference points in terms of efficiency, because we're gonna be talking about efficiencies today, this platform went from $ 1 billion to $ 4.2 billion today, so 4 time growth. Through that period, and as of today, we've increased headcount by 25%. So it means that this business provides strong and efficient way of doing business, that where we believe in there, we have capability of keeping on growing and maximizing the potential scale in there. Because we believe that throughout the various industries that do address inventory financing, this platform can supply the right financing needs for those dealers. And in there, like, we haven't competed on price. Like, we've delivered that growth, maintaining our high margins, which I think is a very, very important takeaway. Also, we haven't played on risk.
Like, we've stayed very stable and focused in terms of our risk underwriting and how we manage the portfolio. So very happy about this platform, very happy about its performance, and most of all, very confident in our ability to keep on growing this further through the cycle or business model that we have, starting with the OEMs, delivering on the dealer base. And I'm gonna be talking of equipment finance and point of sales after that, so please remember that model in there, because it's quite important after that, when I'm gonna be talking about growing the ecosystem and maximizing the value chain into our different sectors. If I go into equipment finance, again, a business I don't think we talk enough about. A business where we service 18,000 customers.
A business that is well-diversified, and that provides for those dealers that are selling actually to end users. At the end of the day, we do finance those commercial end users, either through leases or through term loans. This business has been quite successful as well, keeping great efficiency profile, because we don't play on price, we play on value-added proposal. And again, in that business segment, you can see the surveys we're getting from our customers, which rates ourselves year after year in the excellent bucket, which means that we're easy to do business with, means that our account managers, our frontline people, make a difference in the day-to-day service they provide to, those customers. And this is where I think it's important to go back to the model, because there's even more we can do getting those 2 businesses closer.
Because those 6,000 dealers do have opportunities at point of sales, and through our equipment finance arm that is focused on commercial, we could actually go from the manufacturers to the dealers, and after that, to service the end users, which provides opportunity in the overall economics at very different levels that we believe we can keep on maximizing. Our commercial real estate group, again, very successful group for us, $ 9.2 billion in assets right now, and a business model where we actually start from the land financing for most of the time, because we concentrate our efforts into construction, where, again, we don't play on price. We bring value to the chain and make sure that we focus our efforts where we're gonna be able to make a difference for our customers. There's some takeout financings.
If it makes sense for us, we do capture that opportunity, but again, we try to aim deployment of capital where it's gonna deliver the best returns. Where we've shown good success, as well, is in terms of repositioning some loans, because the team has a deep expertise and is able to execute on some of those projects. These financing and that portfolio is 100% Canadian-based, where our financing are all across Canada in the major cities. We believe that through this group, we're very well-positioned if we experience in the next few quarters a niche in interest rates in Canada, because our top-tier developers that we have relationships with are just awaiting that moment so that they can relaunch projects and that we can actually start funding those. This is another group with an excellent survey from our customers.
This is where we are very proud of what we are in terms of how we provide to the market, and this is true value added. Not playing on price, having a very well-structured risk approach, prudent in our underwriting, managing our credit risk the right way, and I think that has shown throughout the years in terms of our portfolio resiliency. Our commercial SME group, well, we actually took the same approach. Smaller in terms of outstanding there. A big portion of that group is actually Quebec-based, but again, we took our people, and we specialized them in various niches. Subsidized daycare is an example of that, where we are right now about 15% over in terms of market in Quebec.
And why is because we are able to offer a differentiated offer, and our people provide, again, the right level of service that makes a difference in the customer experience. So I think it's important to remember that we strongly believe that through our specialized approach, we were able to deliver value for this organization, and this is why you're gonna hear me out in terms of our ability to keep creating that value because this is what we've built in the last 10 years, and this is what we can continue and build to deliver value for our shareholders. Again, important to come back on what we said in 2021, because not too long ago, and for commercial banking, the objectives or the priorities were to continue and grow to our specialized focus, diversify by geography and industry, and keep deepening our customer relationships.
I can tell you proudly that this is what we executed upon. This is what we've delivered. We grew $ 14 billion to $ 17 billion in that time frame, and the team worked real hard to make sure that we executed and made this happen. Why we believe there's a lot of opportunity moving forward is because of the mega trends we see out there in terms of the macroeconomics. For sure, if we just take our commercial real estate practice as an example, well, we all know that there's housing shortage across the country, and our commercial real estate group is mostly focused on multi-residential. Out of the $ 9.2 billion I talked earlier about of portfolio, 55% of that is into multi-residential. 10% is in condos.
So for us, as soon as we start seeing the ease in interest rate and that consumers come back with the right price, tag and price value for our developers, we believe that our team is well-positioned to benefit from that rebound. We also believe that the economy as a whole is maybe more complex these days, and that our specialized approach will be able to service these customer needs in the way they want to be served and to provide that value added that, we can deliver and that we've proven that we can deliver upon. This gives you perspective in terms of, addressable markets, our market share, and you can see in there that, there's plenty of room to grow....
plenty of room to grow organically, plenty of room to grow with partners, which I'm gonna talk a bit more about later on. So what are we gonna do through this plan differently? Well, we're gonna keep on growing organically because, like, we know we can, we've proven it, and we're gonna keep deepening the relationships and make sure that that repeat business and those opportunity we capture. We'll also do it through partnerships. We're gonna maximize the value of the ecosystems around our specialization, and we'll diversify it into adjacent sectors or specialties because we've demonstrated we can do it throughout the 10 years, and we believe there's a lot of those out there that we could tackle through time. First of all, grow organically, like I think I touched on it.
We're good with our customers, and we're getting more of their business and the proportion, and we have demonstrated the ability to compete against the big banks. Because this is what competition is about in those sectors. We compete on a daily basis against the big banks. Where we can make a difference even further is through partnerships, and what I mean by that is that if we take a specific industry we're in, I said we don't play on price, but some partners out there might be interested in terms of those types of assets at a cheaper price point. And through our relationship and our ability to originate those deals, we can actually work on flow-through financing towards these partners and be able to capture a portion of the economics to, again, enhance other income for us.
And there you see white label. I think, again, this is an area that maybe it is not as known, but through our equipment finance group, we do provide white label services, and one of them, as an example, would be Lenovo Group Limited , like, the world's largest PC manufacturer out there, where we do provide white labeling for all their Canadian business, and we've been doing so for more than 10 years now. So it proved the fact that our strength, we can push even further, and Lenovo Group Limited is an example of multiple others that we deal with already.
If we're able to scale, position ourself better on a North American footprint, this is where I believe we can keep expanding and making sure that we deploy our capital efficiently, we keep the right, the right risk profile for our portfolio, and we leverage those partners that have interest into expanding into these asset types. How do we maximize the ecosystem? Well, I think I made my point in terms of how customers appreciate how we do business with them. Well, customers are actually asking us how can they do more business with us. Because they know we deliver on expectation, because they know that we've demonstrated we have the right capability to service them.
It's just a question of how do we invest and focus in the right areas and the right niches to actually take these industries or specialties and actually push it even further? And in there, you have examples, and now, like, I wanna manage expectations in terms of like the products or the new things we're gonna put out there. Like, this is a midterm ambition, but like there's a lot of things that we can tackle, and I did mention one in terms of the 6,000 dealers we serve across North America. Like, they sell to end customers. Are there partners out there that could be interested in these points of sale that we have strong relationships with? I believe so. Would some of them be interested in terms of our OEM footprint and try to maximize those relationships?
And I can go on and on in terms of how we can actually bring value to the organization, and not solely in terms of deploying capital, but what we need is to generate those other income opportunities. And we think that throughout our commercial banking, there's a lot out there that is untapped right now because we haven't been putting the efforts, and the focus, and the investments to actually target those. Diversified in adjacent sectors? Well, I think that you saw what we did in the current ones.
There are others, and again, both the mix of the people we onboard, the specialties, but we need to take the right approach in terms of understanding the risk, how does it fit within Laurentian Bank, and after that, make sure that we execute the same recipe we've been using in other specialty to be successful. So what will success look like for commercial banking in this strategic plan, and how do we actually believe that we're gonna be able to execute towards growth? Well, we're gonna be aiming at a high, single-digit growth. We'll maintain an industry-leading position in our specialization through our NPS and our customer surveys, and we will continue to operate as efficiently as we've done throughout the years. And Yvan's gonna touch on this, but, like-...
I can tell you, commercial banking for this group has been operating very efficiently, and we intend to continue doing so. Now, personal banking, another great group for the bank. But before I talk about the future, I really want to reaffirm, like, this group provides a solid core deposit base, and, and that deposit base is definitely essential for us to keep funding our commercial banking ambition. And, and we believe that throughout the years, there is tremendous headroom for growth for us. And why I'm saying that is, if we just take what we are right now in terms of footprint, we're the third largest, Quebec-based bank in terms of branch footprint, with over 50 branches, over 100 ATMs out there.
And like I said earlier on, that network is actually supported by advisors and brokers through our B2B Bank that operates across Canada. Our retail network branches account for $ 8 billion of our core deposits, out of $ 21 billion, if you do take into consideration our B2B Bank. And I think that, as we demonstrated in commercial banking, the long tenure of our advisors, our approach towards the customer in terms of tailoring the needs, is an advantage that we need to keep on maximizing in this plan. And also, don't forget, like, I did come back to our roots, the fact that we've been around now for 178 years, well, we have deep roots into those communities we are in.
I believe that there is headroom for growth if we provide the right tools, and that we are able to take those best practices that we've realized throughout the years in commercial banking and actually extend them through personal banking. If you allow... Again, for personal banking, I think it's highly important we come back to 2021. Because there as well, we set ourselves some key priorities, which was to create a performance-oriented bank, to focus our products and our services, to introduce a digital-led approach, and also to unify our brand. And there, as well, the team made great progress towards those priorities.
Like, we were able to deploy, implement a new operating model that provides for better sales management, as well, as well as introducing new training skills for our people, that do interact with our customers. We were able, through that time, to actually reduce our approval day to get a mortgage from 8 to 2, which is a significant progress from where we were. We've enhanced or we launched a new Visa offering where we have enhanced features, and we also started digitalizing our, account onboarding. In terms of the digital-first approach, well, the team made great progress in very short time period in terms of closing customer pain points that really we needed to focus on because it made us aside from competition.
And simple things as online password reset or just tap on debit, I have to tell you, like, prior to 2021, we didn't have. So we made progress, but at the end of the day, I think we did too little. We haven't done enough to actually improve our personal banking, and mostly because we've been too focused on our internal processes to actually be solving for the customer issues on a day-to-day basis. I think that we've remained too complex in terms of our product shelf, and for most of those products, we don't have significant scale. And in terms of foundational technology, well, this is where we need to make the right investments.
Because you can close some gaps, but if you close them on things that will not allow you to be more sustainable, and I'm not talking about next year or next 2 years, sustainable through time, at the pace technology is moving, we need to make those investments so that we provide the right customer experience through the right tools. Why I'm confident about our personal banking is because of this: because on a daily basis, we do receive those types of feedback, where our advisors, the people that interact directly with our customers day-to-day, provide great advice, guidance, and they make sure that they deliver to the best of their ability to those customers. And I think this is why we can be so proud of our, our deposit base, so stable in terms of our customers throughout the 2023 challenges we faced.
This is why I believe that if we're able to reduce our manual processes, to simplify this organization, but mostly being able to provide those people with the right tools, we'll be able to acquire net new customers. We will, because there's a great market opportunity out there. Targeting the middle class, 17 million Canadian, to provide the low to no-cost type banking experience on a day-to-day basis is definitely, for us, headroom for growth. But to do so, we know what we need to provide. We need to provide a seamless digital experience, that they can actually self-serve themselves towards those day-to-day banking products. We need to make sure that our customer experience remains or increase in terms of how we tailor that experience between our advisors and our customers.
Strategic partners will be leveraged there to make sure that we deploy the right capabilities, and this will accelerate speed to market for things that we are considering moving forward. This is an important page. This is based on a survey that average Canadian pay about $ 250 dollar a year on banking fees. And on top of that, the unearned interest of their balance in their bank accounts, that can account for about $ 50-$ 100 dollar a year. So when you take those costs and those unearned interests, well, tell you something, like, this makes a difference into an annual budget for those middle-class people. In the current environment, where we have high inflation, price of everything we consume has gone up and put pressure on everyone's budget.
We think that if Laurentian Bank comes out with an offering that will help lower these costs or eliminate these costs, this is gonna be a true value proposition that will make us acquire net new customers. If we offer that simple way, I think that we can become their bank of choice for the future. So our approach going forward is really going to be to simplify and make sure that we provide with the self-serve type products I just described. We will work on the complexity of the organization, make sure that we reduce the product shelf so that we tackle day-to-day simple product needs for the middle-class customers. Again, it's all gonna be about accelerating that foundation technology need that we absolutely need to have for this plan.
So in the near term, our goal is to be able to launch that day-to-day banking that will allow customer that access to a lower-cost type banking product. After that, really into our reduced product shelf, to expand those digital capabilities so that our customers of the future, again, can self-serve and make sure that they benefit also from that human touch. And in the midterm, can we expand towards more creative and, again, value-added type products? I believe we can, and it's all going about finding and implementing the right technology stack, which at the moment is way too complex. Simplify our bank, definitely optimizing our portfolio in the aligned target segments, so middle class. Reimagine our physical footprint, our branches. And what I mean by that is not exiting our footprint, not at all.
Like, our goal is to optimize those footprint because right now, and as you might know or recall, since 2018, Laurentian Bank provide advice-only services in the branches. We are transactionless, but we still have those branch footprint that have a vault, have a counter, that are way too big for the needs of our customers and our advisors to provide the right level of service. So we believe that through this optimization, we'll be able to create cost savings that will help, again, improve profitability throughout this plan. We'll improve our operation and systems to make sure that the customer experience is enhanced, and this, as we demonstrated in commercial banking, will make the difference. Leverage our partnerships to deploy new capabilities. Speed to market is, again, at the core of the personal banking implementation. How we're gonna measure success?
Well, again, for us, it's all about the customer and how they rate us, because this is how we can create momentum. This is how we believe we can create net new customer growth... our day-to-day retail product availability through digitalized approach, and making sure that we keep a strong focus on core deposit gathering. And this is what it's about: day-to-day banking product to increase core deposit gathering, because it's gonna help in terms of our funding mix, it's gonna improve our cost of fund overall, and it's gonna help us fuel our commercial business and create more profitability for the organization. Efficiency will be on top of mind for everything we do in personal banking, to make sure that we create a more efficient personal bank.
And now our capital markets, another important group of ours, and in terms of activities, for us, it is also a group that, since 2021, has worked real, real hard in terms of the priorities we gave ourself at the time, which was to act as an alternative in terms of the big banks, to make sure that their capabilities were extended or aligned more towards our commercial customers, and that we're able also to offer some ESG capability throughout that journey. And in there as well, the team has worked hard and delivered on those aspects. We've improved level of service and made sure that we grow our syndicate positions through corporate and government issuance.
We've aligned products, just like foreign exchange, for example, aligning that service towards our commercial customers that actually do some cross-border activities, and we did launch some ESG products that had good ramp-up into the the capital market group. We'll continue to do that in the future, but different ways in terms of focus. For us, capital market is gonna be about enhancing and making sure that we play where we can win and where we can have scale, and doing so efficiently. We strongly believe our fixed income group has done so throughout the years, and will continue to do so for us in the future years. FX, I did mention, and we believe that this provide value added to our commercial customers.
Simplification is key here, because we already started revisiting, as I explained at the beginning, by exiting our full brokerage service to Industrielle Alliance, and also exiting our equity research group last week. Throughout the bank, we'll continue to evaluate, make sure we position ourselves to take the right decision to make this bank simpler. The measure of success for capital market will be to grow in fixed income and our FX specialization, maintain connectivity, and make sure that where we do believe we can win, we put some emphasis. Otherwise, we need to rethink how we do things, or take courageous decision and actually exit the areas where we don't believe we can bring skill, and we will continue to focus on our ESG offering in that group. All right, two key enablers for us to talk about, which is technology and operations.
And I think I said technology enough that you will believe this is quite important for us. Two-prong focus on technology: simplifying, which I did say, in terms of the complexity of the technology stack we need to address. And we've started addressing that. We need to go faster, we need to go further, and make sure that we go into the right programs to reduce those manual processes. But most importantly, to make sure that we transform, and again, related to increased capabilities, better capabilities, and making sure that we execute on those programs. Execute to bring outcome and the right return on investment. And we've already started in terms of, like I said, appointing a new CIO that is onboarding new talent, but the most important is the implementation of the new governance program.
Having oversight over the projects that are underway and that we are about to launch, and make sure that we have the right assessment. And this is why we took time to come to market with this Investor Day, because we wanted to take time to reflect on what will make a difference to the profitability profile of this institution. How do we spend the money in technology to make sure that we make the moves that will enhance that product offering? And the path ahead is definitely to modernize and to simplify, again, partnership for speed to market and capabilities, and making sure that we rationalize our portfolio. Talking about operation will be all about how we work, where we work, and actually how we organize that work around our customers.
This is, as an example, why we announced today that we'd be reducing our Toronto corporate footprint by two-thirds. We realize that hybrid, hybrid model, for us, works that our facilities here weren't used at more than 20%, and those cost savings represent $ 5 million on a yearly basis. Doing that reduction doesn't change anything in terms of our employees' ability to actually come here downtown, because we're maintaining a footprint. It will allow them, allow them as well to leverage our Burlington offices, where equipment financing and inventory financing group are already operating from. Just gonna enhance or create even more flexibility for our Ontario employees, but at the same time, make sure that we take steps to reduce our cost structure.
And now, I'm very happy to invite Yvan Deschamps, our Chief Financial Officer, to walk us through the financial objectives for this plan. Yvan?
Merci, Éric. Bonjour à tous. Très heureux de vous avoir avec nous cet après-midi. Thank you, everybody, to be here with us. Really proud to be here to present the financial path forward of the bank. As Éric mentioned, we made good progress over the last few years. We're gonna continue making progress, and one thing that we will do is improve profitability of the bank. How we're gonna do that, we're gonna start from a strong financial base, and the financial base of that bank is composed of 3 key elements. The first one is capital. Capital is really strong right now. If you look at that slide, if you look on the left side, you see that we have a strong buffer versus the regulatory minimum.
So our CET1 stands at 10.4% versus a regulatory minimum of 7%, which is a great buffer in terms of being able to take on any economic turmoil. We're asked very often: How does your capital compare to the other banks? The other big banks usually disclose their capital under the advanced approach, versus the smaller banks under the standardized approach. Since the end of 2023, the big banks also disclose their capital under the standardized approach. So when you look at apples and apples, on the right side of this, you see that if you look at the yellow bars, we do compare favorably in terms of capital versus the rest of the industry. So that will allow us, you know, to build in terms of growth from the strong base of capital that we have.
The second element of the strong financial base we have is the diversified funding that we have in place. We have a good and strong liquidity position that we can start with, and we can also fund the growth of the bank using the strong liquidity that we have in place. You can see at the bottom of this chart, the very solid liquidity position that we have, but also the diversification, the various things that we can do to fund the bank. So really strong and diversified and continued to diversified over the last few years. If you look at the LCR ratio at the top of that chart, you see that over the last 12-18 months, seeing the macroeconomic uncertainty coming and increasing, we've been building a liquidity war chest.
And that liquidity war chest is gonna help us, again, to fund the growth going forward of that bank, and really is a great position to start with as well. We did complete, over the last few years, a few good things. We did stabilize the retail deposit erosion that we had in the past. We reduced by about 20% the wholesale funding of this bank, which is by itself a buffer because we can tap into that funding if need be, going forward. And we did improve securitization funding at the bank. What we intend to do going forward is that, as Éric mentioned, we will strengthen our digital deposit capability at the bank. So that will strengthen our deposit gathering to fund the commercial growth that we envision.
The second thing is that we discuss a lot about partnerships, so we wanna have partners that will support the growth that we're gonna have from a commercial perspective as well. And finally, talking about securitization, which is something we've been focusing a lot because it's long-term, cost efficient, and it's pretty much, fits the maturity of your loans as well. We intend to build and have a new securitization conduits for Alt-A, which is also a specialty of this bank. The third portion of the strong financial base is really the credit. This bank has, is, and will sustain a great credit position, very strong in the past. If you look over the last 15 years, we ran at about half of the losses of the rest of the industry. And why is that?
Because we have strong underwriting methods and criteria, but also, if you look at the metrics, very impressive. 95% of the loan book is securitized and collateralized. About 60% of the residential portfolio is insured, and the remaining portion has an LTV of 50%. Very strong, very secure portfolio in the residential mortgages. Commercial real estate, two-thirds of it is in multi-residential, residential, so very good place to be. Very limited office exposure with 2% of the commercial book, and the LTV of the uninsured portion of the commercial real estate stands at 62%. More than 25% of our commercial real estate book is insured as well. So very strong commercial real estate to weather the uncertainty that we have currently in the economy.
And finally, we've been discussing many times that over the last few quarters, inventory financing, great asset, very strong from a credit perspective, with a lot of levels of protection as well. So let me take a look here, or let us take a look at the recent performance. As Eric mentioned, from a financial perspective, we started strong in 2022. Then macroeconomic and some various events during 2023 slowed down the financial results. So we intend to build from this point, and let's take a look at what we've done versus the rest of the industry in terms of growth, of the revenue growth, of the expenses, and efficiency ratio. Let's start by the middle graph. You can see that we've managed our expenses growth to be lower than the rest of the industry.
But if you look at the revenue growth, unfortunately, we've been below the rest of the industry as well. So we need to invest further to manage the cost and be more efficient. That's something I'm gonna discuss a lot. And you're gonna see on the last graph at the bottom, that we sustained, as of today, too high—we're way too high in terms of efficiency ratio, which is definitely one key focus that we're gonna have in this plan. But let me double down in terms of efficiency. It's the first time that we disclose the efficiency of our different businesses. So if you look at commercial banking, we grew that business, and pretty much over the last 10 years, we tripled the business, and we did that while being extremely efficient from that growth.
We maintain our efficiency ratio, despite the fact that we've been growing it very rapidly. Personal banking, on the other side, unfortunately, we've been somewhat inefficient. We need to invest in technology and processes. We need to be better on the digital side. So those are key points, and as you can see, and you're gonna hear me that in the next few slide, we need to continue growing commercial banking because it's highly efficient. And personal banking is not a question about growth or volume, it's a question about being more efficient. So if I recap, technically, we start from a 6% ROE. We have an objective to grow that in the double digit, and obviously it comes from revenue increase, mainly based out of the commercial growth. That's gonna be the growth driver of the bank.
We're gonna do that with the new capabilities on the deposit. It's gonna fund that growth. That we're—what we're gonna do on the retail side, digital side. And from an expense perspective, as I just mentioned, the key focus is gonna be really the efficiency. But to get to that efficiency, we need to start by investing. We need to stop playing the short game. We need to be able to invest and really transform the business to be able to generate the efficiency in a sustainable way going forward. Let me double down in a bit more details, but that recaps pretty much what I've discussed at this point, right? So we have a strong base, strong liquidity, strong funding, and strong capital position. We have enablers that we need, and technology, Éric discussed about that, is gonna be something key. We will accelerate the investments in technology.
We need to be more digital. We need to review our processes because we want to be way more efficient. We can do that partly, but we're gonna add partners to this so that we can go faster and we can do better. If you go by activity, the key objective of commercial banking is growth. It's a highly efficient business. We have niches, we have specialties, we win, and our customers love us. We need to continue growing the commercial bank. That's the growth factor of the bank. Personal banking, it's all about efficiency. We need to be better, and by reviewing the efficient, not the efficiency, but the processes and investing in technology, we intend to make that business more profitable. We're gonna enhance, as I discussed before, the deposit capabilities, which is gonna support the growth of the business.
And finally, in the capital markets, we're gonna have focused growth where we can win again. We don't want to be everything to everybody. We want to focus where we can win. So target metrics, along with that, on the commercial banking, loan growth, high single-digit. This is pretty much what we've done over the last many years. Very credible objective. We want to maintain the good efficiency ratio that we have through that growth. Personal banking, retail deposits, gonna be a key element of our strategy. We wanna have high single-digit growth in the midterm for personal, for retail specifically, but the key, key factor is gonna be the efficiency ratio. We want to have a double-digit reduction in terms of the expense level of that business. Capital markets, focused growth, but we also through that, are gonna improve the efficiency of that business.
So all that leads to financial targets for the midterm. Adjusted EPS, double-digit growth. ROE, we want to achieve the double digit. Efficiency ratio, we want to get to 60% or lower. We're too high right now, and obviously all those metrics brings us to be positive from an operating leverage perspective. How are we gonna do that? Through the growth drivers that are very credible. Loan growth and deposit growth in the mid-single digit overall for the bank. Grow the NIM that today is at 1.8%-2% or above, and we're gonna achieve that by changing and continuing to evolve the bank mix towards commercial being at 55% or higher. So thank you very much. I'll let Éric conclude and add some closing remarks.
Yes. All right, thank you, Yvan. Before I conclude, I just wanna make sure that I take this opportunity and this time to actually thank again our employees for their hard work and their commitment to this organization. Thank our customers for their loyalty and their resiliency throughout the challenging time we went through. But I want to reassure you that definitely this bank is strong, this bank is well positioned for the future, and we will continue to service you, and our goal is to service you to a higher level, more efficiently and on a sustainable basis going forward. I wanna thank our shareholders for their patience, and hopefully, this plan provides some highlights of how we intend to position this bank stronger and more profitable for future.
If I summarize what our midterm objectives are, is definitely to continue and and leverage commercial banking as a growth engine. I think we made the demonstration that through our efficiency and our approach toward customers, this is the right path forward. We want to make sure that our focus in personal banking is to strengthen our core deposit capabilities, and that's gonna help our funding mix and improve profitability for the future. In capital market, we will keep acting as a key enabler for us, for those corporate and government issuers we have there, and position themselves where they can win. We have a great plan ahead of us. The thing is, and the key focus is gonna be on execution.
To execute, this is what we're gonna target in terms of making sure that we work through our existing ecosystem, enhance them, and keep expanding in terms of business mix for everything that concerns commercial banking. The funding aspect of all this is very important. As Yvan mentioned, we will keep on focusing on gathering core deposits to fund and fuel our commercial growth. Technology, we mentioned, in terms of getting the right capabilities out there, but on a foundational basis, to really position this bank for years and years to come, and be able to actually offer self-service at low cost to no cost to middle-class customers for their day-to-day banking. Also, in terms of profitability, what we need to focus on is profitable growth versus volume only.
I think that with this plan and this focus, my leadership team will be able to execute and deliver upon our key metrics. Everything out there is rooted in our belief that we can help middle-class family to actually thrive financially. And if we do so, we're gonna be able to, help them keep more money in their bank accounts. And I think that's gonna be a differentiator, and that's gonna help us acquire net new customers in retail. In terms of, our employees, our customers, and our shareholders out there, I know your expectations are high, and as leader of this organization, I can tell you that my expectation are high as well. And it is my commitment to you that we will deliver on this plan.
We will execute strongly on this plan, and I strongly believe that this plan is the right plan at the right time for Laurentian Bank. Again, my name is Éric Provost. Thank you for taking the time this afternoon, and now I think it's time to move for Q&A. Thank you.
Thank you very much, Eric and Yvan. We're now, we're gonna hold a Q&A session. For the people in person, just please raise your hand. Someone can hand out a mic. I would kindly request that you state your name and your organization. And for those online, you can actually ask the question online, and I'll relay them to Eric and Yvan.
Okay, thank you. It's... Okay, it's Sohrab Movahedi, BMO Capital Markets. Appreciate the details you've shared with us. Maybe 2 broad questions here, Eric. When you think about this plan that you've laid, you and the team have laid in front of us, what's the most ambitious part of this, would you say? What's the... Where, where can you go wrong?
I think, Sohrab, that's a great question. For us, and this is why, at the beginning, I said this is not a straight line forward, it's definitely the technology stack complexity we have right now, and make sure we put the right fundamental to actually deploy the capabilities we want to gather those core deposits. So that self-serve type is really the main focus for us in the near term to be able to deploy this.
Okay, and so when I think about the deposit plan and, you know, the importance of the personal bank as a deposit gathering, I suppose, engine for you, is the plan for those branches and the footprint to be solely focused on deposit gathering? Or are you still trying to sell mortgages and credit cards and other financial products at those centers as well?
Yeah, it's a great question, Sohrab. I think that as Yvan described, like, our goal is to move the mix of the bank towards a more 55% commercial, but 45% of it will still remain loan products that we have and that we will continue to offer to our customer base in the personal banking.
Okay, and one last question. I think several times you mentioned, you know, the aspiration of having a self-service at low cost to no cost. How do Laurentian Bank shareholders benefit from a low-cost to no-cost offering?
Well, Sohrab, I think that, in terms of the, the funding mix of the bank, like, this allows us to, to grow that, that core deposit base at an efficient cost for us and provide a diversification of our, of our mix that, in our assumptions, will improve overall profitability because of our ability to take that funding and deploy it in the right sectors that are gonna bring the right margins.
Okay, I mean, like, just to play a bit of devil's advocate, you could raise those deposits maybe cheaper somewhere else from an efficiency ratio perspective.
Well, again, yeah, Sohrab, it's a great point. I think that it's all about the mix, and I think Yvan walk us through the how diversified our funding mix is. Like, this plan does not solely rely on core deposit increase. Like, it is about enhancing the overall mix, and that is one source out of many others that we believe will enhance the overall cost of funds throughout the plan and will create and generate that profitability further.
If I may add also, Sohrab, we want to improve the digital capabilities that we have from a deposit perspective. As we do that, it's also gonna be way more efficient from a process perspective, and the back office treatment of all that stuff is gonna be also very more efficient. So maybe the revenue will get hit, but you're gonna recover from a cost side, in addition to what Ehab described, being able to redeploy that in potentially a creative business.
Okay. Thank you for taking the question.
Thank you.
Thank you, sir.
Thank you, Sohrab. Another question in the room.
Hi, Nigel D'Souza, Veritas Investment Research. So first, a question on capital. You know, when I think about standardized versus AIRB, under standardized, you know, commercial component of it, that tends to be a bit more capital intensive, and you've paused your AIRB transition. I'm trying to reconcile the focus on growing commercial lending or loans, with pausing AIRB, given that there would be a substantial capital benefit of having your commercial credit exposures under the AIRB framework. So why not do that in parallel and get both the benefit of loan growth and less capital-intensive, exposures?
Yeah. Thank you, Nigel, and this is a great question. Actually, we talked a lot about the actions we took this morning, and pausing AIRB for us means pausing. Doesn't mean we will not pursue AIRB in the future. It means that right now, this bank needs to really focus our investment into what will create the foundation for future. And AIRB is all about data management, and for sure, technology will enhance our management towards being a better and stronger place to actually complete an AIRB journey. So you're right about deploying capital, but for sure, I think I explained also the opportunity, without deploying capital, to work through our ecosystems to actually be able to generate other income out of our commercial activities.
If I could just put a finer point on that. You know, AIRB is a multi-year process. I believe the regulator will wanna see a few years of a parallel run under AIRB before you could successfully transition. So with that in mind, should we just interpret it as, you know, the cost, the investments required to run that parallel system is just too intensive while you're investing in other areas to improve the bank?
I don't think it's about cost. I think it's about resources, expertise internally to be able to tackle the right projects to deliver on the outcome. And I think, like, this is where, in terms of execution, sometimes in the past, we weren't able to deliver properly on some projects. And this is where we need to focus right now on delivering upon what we set ourself to, which is improving capabilities for our personal banking customers, again, to strengthen deposit gathering. And after that, might be a project that we will undergo, but running both in parallels right now, I don't think this bank, this bank, this bank is, it, it's not to our benefit. It's gonna be more beneficial do it in the future.
Okay, then, and then on deposits, to your point, you know, on the digital side, you already have other, banks in the space that are entirely digitally focused. You have subs that have brands that are more digitally focused, like Simplii or Tangerine. So how do you differentiate yourself on the digital side to the younger demographic? And then on deposits, conceptually, I think depositors generally want safety and stability, and the larger banks are viewed as safer. So how do you win deposits without competing on price, which is what a lot of the smaller banks have to do? And on stability, you know, depositors probably don't wanna see a bank, you know, being taken over by another bank or, or sold.
Does that mean that any sale of Laurentian is completely off the table, and Laurentian is here to stay for the long term, and you have that stability you can offer for your clients?
Thank you for that, Nigel. My goal as a leader is to build a stronger and sustainable and more profitable bank. So this is what me and the leadership team will be working towards in that midterm horizon that we're setting ourself for. In terms of the deposits, like, I think the studies we showed demonstrate that this group of middle-class customers are the ones that will be seeking out the most opportunities in terms of reducing their costs, and that have the more openness in terms of considering changing banks. And we believe that by going after those with a low-cost to no-cost day-to-day offering, will allow us to gain our fair share.
And again, as Yvan highlighted, like, we're not talking about doubling our, our retail customers in, in that midterm plan. Like, it's just to make sure that we have a sustained, middle, single-digit growth, and we believe that, that this is achievable, again, bringing the right product suite out there and simplifying the bank.
Okay. That's it for me. Thanks.
Thank you.
Thank you, Nigel. Another question in the room.
Manny.
Hi, it's Meny Grauman from Scotiabank. If I had to distill your plan, it would be that you're basically signaling it's business as usual on the commercial side, and really where the change that you're highlighting or signaling is really on the personal side. So first, I want to just check if I'm interpreting that correctly, or would you push back on that simplified, sort of characterization of the plan between those 2 business lines?
Definitely a mix there, Meny, because, like, we did say that commercial banking will continue to be the growth engine. I think that we're gonna push that even further in terms of deployment. I think what's different in this plan is the focus we're gonna provide in terms of managing and expanding how we exploit the ecosystems we deal with. Because we believe there's a lot of untapped opportunities within those ecosystems, and I have to say, throughout the last plan, there weren't a lot of focus into maximizing those. So I think that this is a big differentiator versus the last plan in terms of commercial banking. In terms of the bank overall, the goal is to simplify.
I think that, like I said, closing digital pain points made us make progress, or at least, gave us a right to play in personal banking, because, like, we were very behind. So the team did a great job there, but we're still too complex. Like, we still have two origination channels for mortgages, and as an example. Like, right now, with our digital offering for deposits, like, we have 3 channels for deposit gathering: through our B2B Bank, to our branch network, and now digitally.
So, this plan will be to tackle and simplify, and we've already started, and I think that's the message in terms of we went through a full assessment of our product shelf, and this plan is about executing on simplifying, but making sure that we come back with a product shelf that will be meaningful, self-serve to our personal bank. So from that standpoint, this is, I believe, a differentiator.
Got it. And then on the personal side, when I hear you talking about it, it definitely sounds like what you're pitching is a digital bank. Now, that business model, I think, is quite proven already now in Canada and globally, but it is a branch-less concept, I think, everywhere. What you're highlighting is a digital concept, but you're still holding on to your branches, and so the question is: Why not go branch-less, especially if the focus is on efficiency? Wouldn't that be a clear way to drive down efficiency? And isn't the model really geared towards a branch-less model effectively? So is it practical considerations that don't allow you to close your branches, or... I'm just curious why this hybrid model? Why not just go all the way and just make a fully digital personal bank?
Yeah, that's a great question. And really, the easy answer is because we believe it's a strength. We believe that our current footprint is a strength in terms of being able to provide for that human interaction, and I think we demonstrated that through how we approach commercial banking and the value it brings to the customers. And our retail customers are telling us the same, how they appreciate that opportunity to get guidance and get some advice from a human. I just think that optimizing, as we described, is gonna be to make that footprint in terms of foot square smaller. Like I think it's not adapted to the type of service we're providing right now. These branches are still too big for the advice-only type we provide in those branches.
But definitely, within this plan, like, our goal is to maintain that human touch. But you're totally right, in terms of building that digital bank, maximizing the strength we have in the communities in our Québec branches, but also after that, that opens the door to address other areas in the Canadian marketplace. And we believe that the middle class will be appealed by another alternative versus the big banks.
Thank you.
Thank you.
Before moving to the next question, I'll move to a question online, Yvan Eric. Lemar Persaud from, Cormark, his question: just finding it a bit tough to really understand what was wrong with the old strategy. Should we think about this as the evolution of the old strategy? What was wrong with the previous one? Was it really the speed of execution? Is it more the advancement of technology?
Well, thank you, Lemar, for that, and for spending time with us on the web. I think this is why we took the time to come back on 2021 plan. First of all, because it's not so long ago, and I think that it was necessary for us to acknowledge the fact that we delivered in some areas of that plan, and that we believe that some things in the plan are actually very relevant for this revamped plan. So it's not that it was wrong, it's just that right now there are some areas that we need to accelerate further, and go, I'm gonna say faster into implementing those digital capabilities, but again, on a foundational base instead of just closing some customer pain points in the technology stack.
And if I can add one word that is very important from this presentation is focus, right? So that's one thing that we see as different from... an evolution of the last plan as well, is not trying to do everything for everyone, right? So we need to focus because the evolution of the profitability of the bank is gonna be the first priority of the bank. And as I mentioned in my speech, it's not about, you know, volumes. What we want is to increase profitability, and you can do that by being focused on what you do, where you can make money and you can win.
Thank you. Next question in the room.
Thanks. Steve Boland at Raymond James. Just following up on that theme, when you talk about too many products, too many, you know, complexity in the personal banking, was that something that just didn't get done quick enough under the old plan, or were there actually products that were added under the old plan to become, you know, everything to everybody, and that's being reversed? I'm just trying to see, is this just legacy, you know, products and systems that never got addressed under the old plan?
Well, I wouldn't refer to the old plan, and thank you for the question. I would refer to the state we are in versus historical decisions, and I did said it, say it during the presentation. I think that for too long we tried to copy the big bank model that is offering everything to everyone, and I think that where it created some very high pressure is that for a bank of our size, like, you need to take the resources and the people, and to align them into so many areas makes us average too many ways.
And this is why we demonstrated the fact that when we are focused and we provide the right fundamental systems, just like in inventory financing, in our equipment financing arm, and after that, we focus on the customer and what they really want as an outcome, we can be successful. So like I mentioned, like we still have too many distribution channels for the size of our bank, and this is what we need to execute and simplify.
Okay, thanks. I'll just do one more. In terms of the, I guess it was the equipment financing that you're moving into new verticals, so construction, I think, you know, power sports, things like that. I mean, those are, I wouldn't say saturated, but there's a lot of funders out there in, in some of those verticals, especially yellow iron and construction. But you, you still believe that you can get the same covenants from the OEM, from the dealer, the, the same guarantees. Like, why would, why would a dealer or an OEM that has maybe multiple channels or multiple funders wanna give you that extra protection? I mean, I'm just curious about that.
Yeah, and it is a great question, and I think this is the value we bring forward. And again, in the current industry, we compete on a day-to-day basis. The OEM we go after have that optionality. We haven't grown in the sector because competition didn't exist. We grow in that sector because we demonstrate to those dealer base that we bring the right value proposition to the table. And after that, throughout our networking, we're able to pitch to those OEMs that go, coming through us will service better their distribution network, and this is what is appealing to them. Because when those dealers want to order those assets to put them on the floor, the OEMs want them to move smoothly. And the platform actually allows us to do that. So we compete on a daily basis.
We've grown that business by competing against big banks and OEMs that have access to funding, and we believe that we can just expand and continue to maximize that model.
Thank you, Eric. Moving to another question online from Gabriel Dechaine, from National Bank Financial. Twofold: When do we start to see progress on your objectives? Will there be a step back before step forward? And second, to build out on the digital capabilities, expand the inventory finance business into new verticals, what sort of additional spending is required, and how will that show up in your cost inflation in coming years?
Yeah, thank you for that, Gabriel, and for attending as well on our webcast. Listen, I said from the beginning, like, this is not a straight path forward. So, some things to consider. We did mention that our commercial real estate business, as well as inventory financing right now, is still facing some headwinds in terms of the overall macroeconomic conditions. And these portfolios have been challenged in terms of growth, just because of right now the expectation of easing of interest rate is not coming as fast as we thought.
As soon as we start seeing that, we believe we're gonna be able, and we are well positioned to benefit from that, that rebound, and those assets will start growing back again and will contribute to profitability. In terms of our investment, well, in our specialized businesses, we have good technology in place. We have technology that can keep evolving, but, like, those businesses are standalone. So in terms of investment, they are required to keep the edge, to make sure that we keep evolving at the right pace. But I feel we're in a good position to continue and sustain the investment we've been making, actually, on a yearly basis on the needs.
We need to close some gaps, but from that standpoint, I think that we're well positioned to manage efficiently our commercial banking the way we've done in the last years. So the main investments are aimed towards fundamental needs into our personal banking.
Other question in the room? Yes.
Hi, Paul Holden, CIBC. So first question is regarding the foundational investments you wanna make in the technology stack. Sounds like that's very important and critical to your deposit growth strategy. So question is: How long will it take to make those investments, and can you start to accelerate growth in deposits before those investments are complete?
Yeah, great question, Paul, and, and again, like, relates to core deposits in terms of day-to-day banking, because we demonstrated that we were able, actually, to maintain and grow deposits in different areas through the different channels that we have at the bank. So for us, in terms of addressing your question on technology, we have a new CIO that is designing the path forward. And I think it's gonna take a couple of years in this midterm plan to actually achieve the goal where we want to get in terms of the right foundation and the right capabilities.
In terms of the pace we're gonna be able to accelerate deposits, like on a day-to-day basis, our teams are working with current capabilities to continue and attract customers, and we have campaigns that we run to gather deposits, and we will continue to do that, even though we don't have, right now, those capabilities. Like, the focus on personal banking is to definitely keep on gathering deposits and acquiring net new customers, but with the capabilities we have at the moment.
One point I would add, Paul, is that we start with the luxury of having a very high liquidity right now, so we don't have pressure on raising deposits, so that will allow us some time to put in place the technology as we strengthen that. But right now, we're cash rich, so we have a good position to do all that, all those changes.
Then I want to ask a question on your commercial growth objectives as well, and I understand the current industry or economic headwinds, but putting that aside, if you thought about your market share, where it sits in each of your sort of critical product groups, and potential growth going forward, what would you say your real growth limiter is going forward? Is it gonna be the funding? Is it gonna be capital? Is it gonna be competition, or is it you're gonna have a capability to grow as fast as you want at some point in the future?
Well, it's a great question there as well. I think that it comes back to my conclusion in terms of focusing on profitable growth, on what we wanna keep on our book that's gonna be accretive, it's gonna enhance and bring more profitability to the organization without impairing the growth of our platform. Meaning that through those partnerships, we can enhance the funding structure to make sure that we keep on growing, we benefit from it, so we don't slow down the platforms in any ways, but we can go deeper into the risk profile or allow for opportunities in actually better credit that other funders might be interested in our capabilities in terms of the operation to generate for them those assets. And we believe there's a play for us to generate other income doing so.
Other question in the room? Yes.
Thank you. Richard Huang, TD Securities. So, also focusing on technology, you mentioned that you need to invest for efficiency. So just curious, what areas would you say you have been underinvesting over the years? And maybe this is also tied that on personal banking, what are some of the key technology gaps you are most concerned right now?
That's a great question, and thank you for that. For us, it's really to address the manual processes, and there are too many in this bank. I think you saw when we're discussing in terms of reducing the approval days for mortgages. So we were 8 days, now we're 2 days. We're still too high versus the industry. Like, there's way faster approvers out there, and this is what it means in terms for us, limited scalability in some of the products because of the fact that we're too manual. What it means is that when we wanna scale, actually, we increase expenses, and by doing so, it creates what it did create in terms of our efficiency ratio in personal banking.
You saw the graph Yvan showed, like, this is what we've experienced. So a steady, efficient commercial banking group while we were trying to increase or grow in some areas, and actually we've done so in a way that was less efficient. So the technology gaps we need to close need to address those manual processes, reduce complexity, reduce distribution channels, so that we keep offering relevant products, but in a, in a way- in a much better way for us to actually generate that profitability in the future.
Thank you. And then maybe another question regarding the current restructuring effort. Understanding that you are setting up the bank for success for long-term growth, just curious your thoughts, how much are you prepared to allow this year's performance being impacted? In your mind, do you have an implicit floor for earnings that you would like to maintain this year?
Take this one.
In fact, what you've seen this morning is our way of improving. We're in fact want to improve the profitability of the bank short term by doing some restructuring. Those restructuring are efficiencies that we can gain rapidly. The second one is we just mentioned we need to invest as well. So going forward, in terms of restructuring, we're gonna continue looking at every part of the bank where we can make that more efficient. We will continue to review that. We will move and have potentially other restructuring costs where it does make sense and bring long-term benefits to the bank, but definitely not to the size that you've seen this morning.
Yeah. Thank you, and maybe one last question from me. You recently reduced your capital markets operations, so just wondering, what's the earning contribution from this business today, and where do you see this going forward?
We don't disclose by segment the profitability of the business, but there's two things in what you've seen on one of my slides, is we want it to be focused growth. And what we mean by focused growth is some areas of capital markets were really strong and really delivering solutions that really help customers, and we're making good money on that. In some other areas, we were too weak or too small, and we didn't have the size or the capabilities to do that. So that's why we started restructuring by letting go the full service brokerage assets. We were way too small, we were not efficient in those. Same thing in terms of research, we were not efficient as well.
So we want to be focused on the growth where we can win, where we're strong, but we wanna make sure that we don't do everything for anybody, right? So it's really... And the bases that you've seen on the slides is where we're the strongest in capital markets is FX and fixed income. So those are our key bases, and the rest of it, we need to make stronger or do different moves as we've done over the last few months.
I will now move to another question online from, a follow-up question from Lemar Persaud. Just on the personal banking side, how do you plan to attract these clients to Laurentian? There are already other some competitive low-fee digital options or standalone financial institution or digital offerings from the large banks that already have this strategy. What is your competitive advantage?
Yeah, thank you, Lemar, for that. Actually, I think it's gonna be about the self-serve capabilities we wanna bring forward. That's gonna make a difference and a different way for Laurentian Bank to position the product. Again, like, we believe that we can create an alternative versus the big banks, and that we can compete, as we demonstrated in other areas, into ways if we are efficient and we deploy the right efforts, campaigns, we'll be able to attract our fair share of customers. And this is what this plan is about, is to make sure that we grow but realistically back our customer base, and we're gonna be starting where the bank is known.
We're gonna be going back to our, our branches, areas where we had success, we still have success, that we've strived for, for the last years, and we believe that that's gonna be a key to success for us in, in, in that particular segment.
Thank you, Eric. I see another question in the room.
Can I go now?
Yes, sir.
Hi. Can you hear me? Okay, great. Thank you.
Okay.
It's Darko from RBC, and I apologize in advance for the nature of my questions. They are relatively basic, and maybe I missed it. When are you coming out with this product? This deposit to-
It's gonna be in the near term, Darko, but again, we don't have a specific date to announce today, so we'll be coming back in next few quarters to give you more details about that.
Okay. The next basic question I have is: when you say middle class, do you mean middle class Quebec or middle class Canada?
We mean middle class Canada, but we are gonna be targeting segments at the beginning where we believe we have a better chance of acquiring those net new customers. And yes, of course, going back to our roots, for us as a bank that is well known in Quebec, we believe that with the right product, we're gonna get good traction there.
Okay, and what makes Laurentian Bank uniquely situated to serve the middle class?
Excuse me, I didn't get that.
What, what makes you unique and well-placed to serve the middle class?
Well, I think it goes back to our roots, why we were funded-
Okay
... to serve that middle class, that we've been doing so for the last 175 years. And this is why, as a leadership team, we took time to reflect on that foundation and our roots, and we wanna continue and build out of that.
Similar question, you suffered from a systems outage last year, and I'm not in Quebec, you know, I live here in Toronto, so it. Do you think your brand has recovered from that? Is it still top of mind in Quebec and in and around where your roots are from? And do you think that the take-up of this product will be hindered by that memory?
Actually, Darko, that's a great question, where I would answer that we've been able to sustain our customer base, that we've maintained strong deposits even though that outage, and again, I wanna thank our customers for their patience throughout that particular event. But I think that in the last eight months, we demonstrated the stability of this bank, how strong we are in terms of capital and in terms of liquidity, as we walked you through today. And I think that if we come back to the market with the right offering and the right technology, our customers and future customers will definitely acknowledge the fact that this bank is a real alternative for them.
Okay, so there's been no testing of the marketplace? Has there been any kind of surveys or is there anything you can point to with any concrete evidence that your brand and your reputation in Quebec is not?
Well, well, our brand is well known for sure.
Well known.
In terms of rebuilding the trust, like, this is a day-to-day exercise we've been doing since I was appointed, and it's still part of the efforts we're doing consistently with our advisor. But I think the best testimonial there is really the fact that we haven't seen customer attrition. We haven't seen a deposit base reduction there. So it tells you a lot in terms of our ability to service those customers, and I think our customers, through our messaging, understood this was an IT planned upgrade that actually didn't go well, that we were there to service them, and that we took the right actions to stabilize. And right now, I think that it's a testimonial that we are in a different place.
Okay. I've only got a couple more, I promise.
Sure.
I don't mean to hog.
Yeah, we have all afternoon.
Just stepping back for a moment, from that, in the beginning of your presentation, you had mentioned that you went through another strategic review, and this plan sort of came out of that strategic review. If I recall correctly, there may have been an unsolicited bid for Laurentian Bank or possibly for pieces of your business. So would you consider possibly selling off some businesses? For example, you mentioned today twice, or I thought I heard you say it twice, maybe you only said it once, that you own two wholly-owned subsidiaries that work separately, and are not really integrated into the bank. Would you consider selling those?
Darko, it's a great question, and I can tell you that, since we've acquired, as an example, NCF, there is not a single year after 2018 that we didn't get a call. Because this is a great platform of ours, but the plan we're laying out today is definitely to keep maximizing the output of those specialty that we have in commercial banking, including Northpoint, which I think we demonstrated the scalability we have there and the strength it brings to the overall organization. So for us, this plan means maximizing those specialty and keep growing it organically and through partnerships.
My last question is if all goes according to plan, and you do have high growth in commercial, let's say rates come down and sort of. Can you just, I'm not entirely sure that I understood from your presentation where we should expect the capital ratio to go and where you expect to keep it to achieve the ROE objective. Can you, Yvan, maybe can you just walk me through how I should think about. I understand it's a strong level of capital, but where ultimately do you wanna run this bank?
Currently, in the current environment, we mentioned we wanna stay above 10%. We believe that that's safe, that's a safe place to be, but it also give us the firepower for the growth that we're talking about. We'll see the situation evolve, but at this point, we want to manage around 10%.
Okay. Thank you for entertaining my, my questions.
Thank you.
Thank you, Darko. Follow-up question in the room.
It's Manny again from Scotiabank. Just a question about the branding of this relaunched personal bank. Is the idea that you have to launch it under the Laurentian Bank brand, or is there a new brand that is being contemplated to launch this under?
Thank you for the question, Manny. In terms of the plan we're discussing right now, like, we're operating under Laurentian Bank, and we believe that this brand is a strong brand for us. So yeah, I would answer it this way.
Then just in terms of the geographic mix of the commercial business, 25%, 75% Can- 25% U.S., 75% Canada. The plan that you're outlining, does it materially change that geographic mix at all?
Not materially, but again, it's gonna be depending on the opportunities that we seek in terms of the diversifying of industries and how quickly. Let's say, for example, in Canada, we see a ease that could actually help our commercial real estate business grow or rebuild momentum. And as you know, this is 100% Canada-based operation. So, so it will depend both on the macroeconomics of both countries, but we don't expect a big material shift in terms of that mix, but it could fluctuate towards a higher percentage in the U.S. or a diminution, depending on how we succeed in those different groups.
Thank you.
Thank you.
I don't see any other question in the room or online. So this concludes our Laurentian Bank Investor Day 2024. We thank you for your attendance, your interest, and have a good rest of the day. Thank you.
Thank you, everyone.
Thank you.
Thank you.