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rapport-annuel-2008 Powered By Docstoc
					2008 annual report

to ShaPe
ouR DeStiny
to shape
our destiny
For over a hundred years, cooperation has been the heart and soul                                                               head oFFiCe
of Desjardins, the largest cooperative financial group in Canada,
and serving members has been its driving force. Resolutely looking                                                              Fédération des caisses Desjardins du Québec
                                                                                                                                100, rue des Commandeurs
towards the future, Desjardins is changing. It changes through
                                                                                                                                Lévis (Québec) G6V 7N5
active cooperation, maintenance of its values and drawing on                                                                    Canada
every talent, to further its development.                                                                                       Telephone: 418-835-8444
                                                                                                                                Fax: 418-833-5873
Each day, its cooperative nature is demonstrated through the caisse
model and is expressed through democratic governance, accessibility
and openness to all people, regardless of their financial means, and                                                            Version FranÇaise
by sharing its surplus earnings with its members and the community,
as financial circumstances allow.                                                                                               On peut obtenir la version française de ce
                                                                                                                                Rapport annuel sur demande.

As always, the fundamental strength of Desjardins is found in the richness                                                      This annual report was produced by the
of its human capital: more than 5.8 million members, 6,299 elected                                                              Institutional Affairs Administrative Division of
officers and 42,000 employees. Its cooperative business model has                                                               Desjardins Group (Communications and Public
                                                                                                                                Affairs Division) and the Financial Executive
enabled Desjardins to generate financial wealth that provides leverage                                                          Division of Desjardins Group (Control, Planning
for furthering its development and influence. It is this same vital strength                                                    and Financial Performance Management
that allows the organization to make further headway towards meeting                                                            Division; Disclosure and Accounting
                                                                                                                                Standardization Executive Department).
the challenges of tomorrow.

As the real driving force behind Desjardins Group, the caisses, bolstered
by their subsidiaries, are active participants in the organization’s growth
and advancement. To strengthen the entrepreneurial capacity of the
cooperative network, elected officers and general managers must directly
contribute to the development of Desjardins Group as a whole. Thus,
for the 2010-2012 Strategic Plan, caisse general managers represent
more than 50% of all participants on the task forces created to propose
ways to deal with Desjardins Group’s greatest issues and challenges.

This is where cooperation is at its best. This is where the ever growing
collective strength of Desjardins Group drives itself to reach greater
heights and to make Desjardins the most admired financial institution
in Canada; as well as the most respected in terms of its mission, its
cooperative values and the close ties that exist between its caisses
and their communities.

                               This report was printed on paper containing 100% post-consumer fibers certified FSC (Forest
                               Stewardship Council), processed chlorine free and manufactured using biogas energy. Paper        Graphic design: lg2boutique
                               made with FSC certified fiber and bearing the FSC logo is your guarantee that it has come from
                                                                                                                                Production: lg2fabrique
                               responsibly managed forests that maintain the highest environmental and social standards
                               according to the Forest Stewardship Council.                                                     Photos: Éventus
                                                                                                                                Printing: J.B. Deschamps
Committed to sustainable development, Desjardins Group favours the use of paper that is manufactured
in Canada in accordance with recognized environmental standards.                                                                PRINTED IN CANADA

MoBiliZinG all of
                                                                                01 Annie P. BélAnger
                                                                                President, Caisse populaire Desjardins
                                                                                Mer et montagnes (Grande-Vallée)
                                                                                02 AlAin leProhon

DeSJaRDinS to WoRK foR                                                          Vice-President (VP), Finance, Control and
                                                                                Compliance, Caisse centrale Desjardins
                                                                                03 JeAn-FrAnçois lessArd

ouR MeMBeRS anD clientS
                                                                                Financial Planner, Caisse populaire
                                                                                Desjardins de Québec
                                                                                04 YAnick gAgné
                                                                                VP, Canadian Business Strategies, Fédération
                                                                                des caisses Desjardins du Québec
01                                                          03                  05 clAude ouellet
                                                                                President, Caisse Desjardins
                                                                                de Dolbeau-Mistassini
                                                                                06 huBert M. MAkwAndA
                                                                                Advisor, Human Resources Planning and
                                                                                Development, Desjardins Group
                                                                                07 Michel truchon
                                                                                General Manager (GM), Caisses Desjardins
                                      05                                        des Rivières (Forestville)
                                                                                08 Anne lAngevin
                                                                                GM, Caisse d’économie Desjardins
           04                                                                   du personnel municipal (Québec City)
                                                                      07        09 virginie JoBin
                                                                                Advisor, Québec-Portneuf Desjardins
                                                                                Business Centre
                                                           09                   10 nAtAlie corsi
 08                                                                             GM, Caisse Desjardins de Coniston Inc.
                                                                                (Coniston, Ontario)
                                                                                11 JosiAne MoisAn
                                                                                Senior Director, Strategic Recruitment
                                                                                and Executive Succession Management,
                                                                                Desjardins Group
                     10                                                         12 sYlvie cAMPBell
                                                                           12   GM, Caisse populaire Desjardins de Farnham
                                11                                              13 norMAnd Bergeron
                                                                                Regional Manager – Sales and Business
                                                                                Development, Merchant Accounts Québec,
13                                                                              Desjardins Card Services
                                                                                14 guY corMier
                               14                                               GM, Caisse populaire Desjardins d’Outremont
                                                      15                        15 sooFun lee
                                                                                Personal Finance Advisor, Caisse Desjardins
                                                                                du Quartier Chinois
                                                                                16 christiAne Bouillé
                                                     17                         Officer, Caisse populaire Desjardins
                                                                                de Montmagny
                 16                                                   18        17 Brigitte duPuis
                                                                                VP, Resource Regions and Cooperatives,
                                                                                Desjardins Venture Capital
                                                                                18 grégoire léger
                                                                                Fixed-Income Securities Trader,
                                                                                Desjardins Securities
                                                                                19 nAthAlie treMBlAY
                                                                                Health Insurance Products Manager,
                                                                           22   Desjardins Financial Security
19              20                                                              20 JAcintA AMâncio
                                                                                GM, Caisse d’économie des Portugais
                                                                                de Montréal
                                                                                21 chAntAl st-AMAnd
                                                                                GM, Caisse d’économie de la Sûreté
                                                21                              du Québec
      23                                                                        22 JocelYn gilBert
                                                                                GM, Caisse Desjardins des Chutes
                                                                                23 lorrAin BArrette
                                                                                President, Caisse Desjardins
                                                                 26             de Rouyn-Noranda
                                                                                24 Michel verreAult
                                                                                Senior Vice-President, Distribution,
                                                                                Desjardins General Insurance Group
                          24                                                    25 Joé BélAnger
                                                                                GM, Caisse Desjardins Thérèse-De Blainville
                                                                                26 MAriAno A. de cArolis
                                                                                GM, Caisse populaire Desjardins
                                                                                Canadienne Italienne

tHe eXtent of tHe
Desjardins stands out from other financial institutions through
its cooperative difference, which places members above all else.
thanks to the dedication of its elected officers and its employees,
the complete range of products and services it offers, its unparalleled
physical and virtual accessibility, its diversity of locations across the
country and abroad, as well as its financial stability, Desjardins group
today has become a major player in the financial services industry.
More than 100 years after the founding of the first caisse, Desjardins
is now the number one financial institution in Québec and the
largest cooperative financial group in canada. it just goes to show
that, more than ever, the cooperative formula brings success while
acting as a measure of our achievements.

•	 Assets	of	$152.3	billion

•	 	 pproximately	5.8	million	members,	including	nearly	
   400,000	businesses

•	 	 ,299	elected	officers	in	Québec	and	Ontario

•	 Approximately	42,000	dedicated	employees	nationwide

•	 	 ,396	points	of	service	in	Québec	and	Ontario:	513	caisses	
   and	883	service	centres

•	 	 13	points	of	service	in	Manitoba	and	New	Brunswick:	36	affiliated	
   caisses	and	77	service	centres

•	 48	business	centres	in	Québec	and	three	in	Ontario

•	 32	Desjardins	Credit	Union	points	of	service	in	Ontario

•	 	 pproximately	20	subsidiary	companies	offering	a	full	range	
   of	financial	services,	with	many	of	them	active	in	several	
   Canadian	provinces

•	 	 hree	Desjardins	Bank	branches	in	Florida	and	a	branch		
   of	Caisse	centrale	Desjardins	in	the	United	States

•	 	 	state-of-the-art,	high-tech	virtual	network	of	ATMs	and		
   online	services

PRouD to Be tHe laRGeSt
cooPeRatiVe financial
GRouP in canaDa
Backed by the trust of its 5.8 million members, both individuals                 taBle of contentS
and businesses, as well as clients from across the country, Desjardins
group is the largest cooperative financial group in canada and                   organization chart                         4
the eighth-largest in the world. Desjardins is also the top financial
                                                                                 Business Sectors                           5
institution in Québec, sixth-largest in canada, eighteenth in
north america and one of the top 100 in the world. What’s more,                  financial Highlights                       6
Desjardins group is listed among canada’s 50 Best employers for                  Message from the chair of the Board,
2009 by the prestigious Report on Business magazine ranking.                     President and ceo                          8

                                                                                 Board of Directors                        12
The proximity between the caisses and their members, the commitment
of the elected officers and the expertise of the staff in all the components     our Human capital                         14
enables Desjardins Group to offer an extensive range of financial products
                                                                                 Councils of Representatives               15
and services adapted to the needs of its members and clients. In addition,
                                                                                 Best Employer in Canada                   16
because the notion of “money working for people” is so inherent to its
cooperative nature, Desjardins is more closely involved in the community         Highlights                                18
than any other financial institution and thereby actively contributes
                                                                                 The Caisses’ Proximity to Members
to improving the economic and social well-being of people and the                and their Communities Gives
communities in which they live.                                                  Desjardins its Unique Strength            18
                                                                                   Consumer Market                         18
An emblematic figure in the financial sector in Québec, Desjardins Group           Business Market                         20
maintains its unique presence in the province through its caisses, business        Venture Capital                         21
centres, subsidiary distribution networks and virtual access networks.             Life and Health Insurance               22
Elsewhere in Canada, Desjardins is associated with the caisses populaires          General Insurance                       23

in Ontario, Manitoba and New Brunswick, as well as with Desjardins Credit          Securities                              24
                                                                                   Asset Management                        24
Union in Ontario. Several subsidiaries are also active in all the Canadian
                                                                                   Continued Expansion across Canada       25
provinces. In the United States, members and clients can count on the
                                                                                   Making the Advantages of our
services offered by Desjardins Bank and Caisse centrale Desjardins to              Cooperative Difference More Concrete    26
help facilitate their business development or travel in the United States.         Moving Forward on the Road
Worldwide, Desjardins has been a leader in international cooperation for           to Excellence                           28

nearly forty years. Desjardins supports the creation and development of          a Gift that will Stand the
collectively owned financial institutions, helping nearly six million families   test of time: Québec city’s
in over twenty developing or emerging countries.                                 Promenade Desjardins                      30

                                                                                 Management’s Discussion
Driven by the values of integrity and rigour, solidarity and commitment,         and analysis                              31
Desjardins Group believes even more strongly than ever in its distinctive
                                                                                 Additional Information                   100
strengths, in cooperation, in its engaged and committed human capital,
                                                                                 Glossary                                 112
as well as in the proximity of the caisses to their members and of the
subsidiaries to their clients, as being unique and promising tools for           combined financial Statements
the development and greater well-being of its individual and business            of Desjardins Group                      115

members and clients.                                                             caisses and federations of
                                                                                 Manitoba and new Brunswick               172

                                                                                 corporate Governance                     173

                                                                                 the Social and cooperative impact
                                                                                 of Desjardins Group                      187

                        AN	ExTENSIVE	NETWORk	OF	CAISSES	AND	
                                                                      5,742,252 MEMBERS                                                                                                                 53,025 DCU MEMBERS                    234,613 MEMBERS
                                                                                                                                                                                                        and 12,303 CLIENTS                    in New Brunswick
                                                                      in Québec and Ontario                                                                                                             in Ontario                            and Manitoba

                                                                     513 CAISSES POPULAIRES AND CAISSES D’ÉCONOMIE                                                                                                                            36 CAISSES
                                                                                                                                                                                                               Desjardins                     in New Brunswick
                                                                     in Québec and Ontario                                                                                                                     Credit Union
                                                                                                                                                                                                                                              and Manitoba

                            Desjardins                                                                                                                                                                                                                  New Brunswick
                                                                                                                                                                                     Ontario                                                            and Manitoba
                            Financial Services                                                                                                                                       federation
                            Firm                                                                                                                                                                                                                        federations

                            Trust                                                                                              DES CAISSES
oRG a n iZation cHaRt

                                                                                                                               DU QUÉBEC
                                                                                  Caisse centrale                                                                               Développement                                          Société
                            Fonds de sécurité                                     Desjardins                                                                                                                         Fondation         historique
                                                                                                                                                                                international                        Desjardins        Alphonse-
                                                                                                                                                                                Desjardins                                             Desjardins
                                                                                  Caisse centrale
                                                                                  U.S. Branch

                                      Desjardins                                                                               Desjardins
                                      Securities                                  Desjardins                                                                                    Desjardins                              Desjardins
                                                                                                                               General Insurance
                                                                                  Venture Capital                                                                               Financial Security                      Asset Management

                         Gestion            Desjardins        Desjardins       LP and Desjardins Capital régional                                                            Desjardins
                                                                               regional                             The Personal       Certas Direct,   Desjardins                                                   Desjardins
                         Valeurs            Securities        Securities                         et coopératif                                                               Financial
                                                                               development                          Insurance          Insurance        General                               Sigma Assistel         Global Asset      Fiera Capital*
                         mobilières         international     Financial                          Desjardins(1)                                                               Security
                                                                               funds                                Company*           Company*         Insurance*                                                   Management
                         Desjardins                           Services                                                                                                       Investments

                                                                                                                    The Personal       Desjardins       Certas                                                       DGAM              Desjardins
                                  Desjardins         Market                                                                            General          Home and Auto
                                  Securities /                                                                      General                                                                                          Holding           Property
                                                     Perspectives                                                   Insurance*         Insurance        Insurance
                                  Bodiam                                                                                                                                                                             Company           Management
                                                                                                                                       Services*        Company*
De sj ar D i n s

                        (1)	 Venture	capital,	public	fund	managed	by	Desjardins	Venture	Capital.                                                    	                                                                          ____	     Ownership	link
                                                                                                                                                    	                                                                          ____	     Auxiliary	members
                        As	at	December	31,	2008	                                                                                                    	                                                                             *	     Shared	ownership
                        Note:	Chart	does	not	reflect	the	legal	ownership	structure.

                        otHeR infoRMation
                        as at December 31, 2008

                                                                                                                                                                                  2008                                                  2007
                                                                                                                                                                                            Manitoba                                                      Manitoba
                                                                                                                                                                     Desjardins              and New                     Desjardins                        and New
                                                                                                                                                                         Group(1)           Brunswick(2)                     Group(1)                     Brunswick(2)
                            Number	of	employees(3)	                                                          	           		        	                    		      	 41,921                       1,436	 	              	 40,345	 	                    	      1,425
                            Number	of	members	                                                               	           		        	                             5,795,277	
                                                                                                                                                                                             234,613	 	               5,796,312	 	                       239,116
                            Number	of	elected	officers	                                                      	           		        	                    		      	    6,299                       355	 	              	    6,545	 	                  	        380
                            Number	of	member	caisses	                                                        	           		        	                    		      	      513                        36	 	              	      536	 	                  	         39
                            Number	of	service	centres	                                                       	           		        	                    		      	      915                        77	 	              	      919	 	                  	         75
                            Number	of	automated	teller	machines	                                             	           		        	                    		      	    2,764                       142	 	              	    2,769	 	                  	        141

                        (1)	 Including	Desjardins	Credit	Union	(DCU)	data.	DCU	service	centres	are	included	in	the	Number	of	service	centres	line.
                        (2)	 Federations	and	caisses	of	Manitoba	and	New	Brunswick.
                        (3)	 Includes	employees	working	for	subsidiaries	that	operate	outside	Québec.
                        (4)	 Total	members	in	all	caisses	in	Québec	and	Ontario,	in	addition	to	DCU	members.

ACTIVE	ACROSS	ALL	                                                                                          GeneRal inSuRance
                                                                                                            Seventh-largest	general	(property	and	casualty)	insurer	of	individuals	in	

BUSINESS	SECTORS                                                                                            Canada	through	the	Desjardins	General	Insurance	Group	(DGIG)	subsidiary	
                                                                                                            n	The	leading	direct	insurance	provider,	with	one	million	insured	in	Québec	
                                                                                                            n	Second-largest	in	the	Canadian	group	insurance	market,	under	DGIG’s	

financial inteRMeDiation                                                                                    The	Personal	banner	n	Establishments	in	several	cities	(Lévis,	Québec	City,	
                                                                                                            Montréal,	Ottawa,	Mississauga	and	Calgary)	and	agents	present	throughout	
This	sector	consists	of	the	Québec	and	Ontario	caisses,	the	network	of	                                     the	Desjardins	caisse	network,	across	Québec.
affiliated	caisses	populaires	in	Ontario,	Desjardins	Credit	Union,	the	Fédération	
des	caisses	Desjardins	du	Québec	and	its	business	units	(Desjardins	Card	                         
Services,	Financial	Services,	Financing	Services	and	Desjardins	Payroll	and	                      
Human	Resources	Services),	as	well	as	Caisse	centrale	Desjardins,	Fonds	                          
de	sécurité	Desjardins	and	Capital	Desjardins	n	Leading	market	shares	
in	Québec	in	savings	activities,	residential	mortgage	credit,	business	financing	                           SecuRitieS
and	consumer	credit	n	Pioneer	and	leader	in	online	services	in	Québec	n	
The	most	visited	financial	Web	site	in	Québec	and	one	of	the	most	visited	                                  Full-service	securities	brokerage	with	advisory	services	(Desjardins	
in	Canada	n	Largest	credit	card	issuer	in	Québec	(VISA	Desjardins).                                         Securities)	and	online	brokerage	without	advisory	services	(Disnat	division)	
                                                                                                            n	Brokerage	services	for	businesses	and	institutions	n	48	full-service                                                                                          brokerage	points	of	service	in	Québec	and	Ontario	n	Nearly	$16	billion	
                                                                                                            under	administration.

                                                                                                                                                                                                                      BuSin eS S Se ct oRS
inVeStMent funDS anD SPecialiZeD
SaVinGS PRoDuctS                                                                                  
One	of	the	largest	manufacturers	of	investment	funds	and	other	                                   
specialized	savings	products	in	Québec	n	Desjardins	Funds	n	Northwest	                            
Mutual	Funds	n	Desjardins	Private	Management.
                                                                                                            aSSet ManaGeMent                                                                                      Manages	more	than	$38	billion	in	assets	coming	primarily	from	the                                                                         equity	of	the	insurance	subsidiaries	and	from	management	authorization	
                                                                                                            assignments	entrusted	by	other	Desjardins	components	n	Real	estate	and	
                                                                                                            securities	investment	management,	mortgage	and	institutional	financing	
tRuSt SeRViceS                                                                                              n	Development	of	investment	and	savings	products	n	21%	shareholder	

A	multi-disciplinary	approach	to	consumer	trust	services	n	Testamentary	                                    in	Fiera	Capital	Management	Inc.,	a	firm	specialized	in	institutional	fund	
services	n	Estate	liquidation	n	Trust	administration	n	Administration	in	case	                              management	n	Offices	in	Québec	City,	Montréal,	Toronto	and	Vancouver.
of	incapacity	n	Leader	in	securities	administration	and	custody	in	Québec.
                                                                                                            VentuRe caPital
life anD HealtH inSuRance                                                                                   Desjardins	Venture	Capital	is	Desjardins	Group’s	venture	capital	manager	

                                                                                                                                                                                                                      De sj ar D i n s
Top	life	and	health	insurer	in	Québec	and	fifth	in	Canada	for	total	direct	                                 n	Manages	assets	for	seven	Desjardins	private	funds	(Desjardins	Venture	

premiums	underwritten	through	the	Desjardins	Financial	Security	subsidiary	                                 Capital,	L.P.	and	six	Desjardins	regional	investment	funds),	Capital	régional	
n	Over	five	million	clients	(individuals,	groups	and	businesses)	n	Extensive	                               et	coopératif	Desjardins	and	Desjardins	–	Innovatech	S.E.C.	n	24	business	
range	of	life	and	health	insurance	and	retirement	savings	products,	distributed	                            locations	throughout	Québec	n	Partner	of	313	businesses,	including	
through	a	variety	of	channels,	including,	in	Québec,	the	Desjardins	caisses	                                cooperatives,	thereby	helping	to	protect	some	34,000	jobs.
and	the	SFL	Partner	of	Desjardins	Financial	Security	financial	centres,	and	
in	the	other	Canadian	provinces,	the	Desjardins	Financial	Security	Independent	                   
Network	and	Desjardins	Financial	Security	Investments	financial	centres	n	
Offices	across	the	country	(Vancouver,	Calgary,	Winnipeg,	Toronto,	Ottawa,	
Montréal,	Québec	City,	Lévis,	Halifax	and	St.	John’s).

   For	the	purposes	of	financial	disclosure,	in	the	financial	review	of	this	document,	as	when	we	disclose	our	quarterly	results,	the	business	segments	are	classified	differently:	“Personal	and	Commercial”,	
   “Life	and	Health	Insurance”,	“General	Insurance”	and	“Securities	Brokerage,	Asset	Management,	Venture	Capital	and	Other”.

                           THE	STRENGTH	OF	THE	
                           COOPERATIVE	BUSINESS	MODEL
                           While	every	country	around	the	world	has	been	affected	by	today’s	
                           unprecedented	financial	crisis,	they	are	also	all	part	of	the	solution.	
                           We	are	currently	witnessing	a	level	of	concerted	global	action	and	
                           cooperation	that	has	not	been	seen	in	a	very	long	time,	indicating	
                           that	the	Desjardins	Group	cooperative	business	model	is	the	way	
                           of	the	future.	

                           While	Desjardins	was	not	spared	the	effects	of	this	past	year’s	financial	
                           storm,	it	has	weathered	the	situation	quite	well	in	terms	of	its	basic	                                         RETURNED TO ThE COMMUNITY
                                                                                                                                                        (in	millions	of	$)
                           activities.	The	caisses,	which	make	up	the	very	foundation	of	Desjardins	
                           Group,	have	once	again	recorded	excellent	operating	results,	as	did	our	
                           main	subsidiaries.	Had	it	not	been	for	specific	items	primarily	tied	to	
fin a n cial HiGHl iGHtS

                           the	financial	crisis	and	asset-backed	commercial	paper	(ABCP),	Desjardins	

                           would	have	posted	surplus	earnings	before	member	dividends	of	                                          1,000

                           approximately	$1.2	billion	in	2008—slightly	higher	than	in	2007.

                           Desjardins	remains	one	of	the	highest	capitalized	financial	institutions	                                600

                           in	Canada.	Its	Tier	1	capital	ratio	was	13.39%	as	at	December	31,	2008,	

                           compared	with	14.17%	as	at	the	same	date	in	2007;	this	rate	exceeds	
                           Desjardins	Group’s	capitalization	objective	and	stands	as	one	of	the	best	


                           in	the	industry.	Its	total	capital	ratio	was	12.85%,	compared	with	13.59%	
                           as	at	December	31,	2007.	Furthermore,	Caisse	centrale	Desjardins	



                           has	an	excellent	credit	rating	and	Desjardins	is	also	holding	its	own		
                           at	the	head	of	the	class	among	Canadian	financial	institutions.
                                                                                                                                             Surplus earnings after income taxes
                                                                                                                                             and before member dividends

                                                                                                                                             Portion of surplus earnings returned to the
                                                                                                                                             community as member dividends, sponsorships,
                                                                                                                                             donations and scholarships
De sj ar D i n s

                                     SURPLUS EARNINGS BEFORE                             PROVISION FOR                                               TOTAL ASSETS OF
                                        MEMBER DIVIDENDS                                MEMBER DIVIDENDS                                            DESJARDINS GROUP

                                                                        20         95                 96              97            180                                                      16
                           1,200     12.1            12.3        0.8    18
                                                                             600                                             100            9.4                 11.6          5.7
                                                                        16                                                                                                                   14
                           1,000                                             500                                                    140
                                                                        14                                                                                                                   12
                               800                                      12   400
                                                                                                                             60     100                                                      10
                               600                                      10   300



                                                                        8                                                                                                                    8
                               400                                           200                                                     60
                                                                        6                                                                                                                    6



                                                                        4                                                            40
                               200                                           100                                             20
                                                                                                                                     20                                                      4
                                0                                       0     0                                              0        0                                                      2









                                      In millions of $                             In millions of $                                          In billions of $

                                                                                   Percentage of caisses paying out
                                      Return on equity (%)                                                                                   Growth (%)
                                                                                   member dividends

as at december 31
(in millions of $ and as a %)

                                                                                            2008-07                  2008             2007(2)          2006(2)
  Total assets                                                                                        5.7 %     $ 152,298         $ 144,059        $ 129,140
  Liquid assets                                                                                      (7.1)         30,711            33,059           28,377
  Loans                                                                                               9.5         104,462            95,403           88,646
  Deposits and subordinated debentures                                                                5.8         102,184            96,624           89,510
  Equity                                                                                              6.4           9,873             9,282            8,553
  Assets under administration                                                                        (4.3)        201,647           210,683          224,280
  Assets under management                                                                           (24.1)         29,292            38,569           36,049
  Tier 1 capital ratio (as per BIS standards)                                                          —            13.39 %           14.17 %          14.18 %

(1) Excluding caisses and federations in Manitoba and New Brunswick.
(2) Data restated to reflect the presentation adopted in 2008.

                                                                                                                                                                     FIN A N CIAL HIGHL IGHTS
Years ended december 31
(in millions of $ and as a %)

                                                                                            2008-07                  2008             2007(2)          2006(2)
  Total income                                                                                      (13.4) %    $      8,373      $   9,671        $    9,419
  Provisions for credit losses                                                                       23.4                243            197               139
  Non-interest expense                                                                                2.1              4,800          4,702             4,534
  Surplus earnings after income taxes and before member dividends                                   (92.9)                78          1,101               988
  Provision for member dividends                                                                    (63.7)               215            592               483
  Return on equity                                                                                     —                  0.8 %        12.3 %            12.1 %

(1) Excluding caisses and federations in Manitoba and New Brunswick.
(2) Data restated to reflect the presentation adopted in 2008.


                                                                                                                                                                     de sj ar d i n s
The financial solidity of Desjardins Group as reflected in the excellent credit ratings of Caisse centrale Desjardins.

                                                                                                                                                Senior medium
                                                                                                                 Short term                      and long term
  Standard and Poor’s                                                                                                   A-1+                             AA-
  Moody’s                                                                                                                 P-1                            Aa1
  Dominion Bond Rating Service                                                                                      R-1 (high)                            AA

                                                                                                                                                 To me, Alphonse Desjardins was the greatest entrepreneur, the greatest
                                                                                                                                                 financier and the greatest cooperator in the entire history of Canada.
                                                                                                                                                 His model for a caisse that is close to the people is still relevant today.
                                                                                                                                                 Attention to members’ needs, mastery of finance, innovation, service
                                                                                                                                                 to the community and the cooperative values he put forth are still
                                                                                                                                                 at the heart of the success of our caisses and of Desjardins Group.
Me S S a G e fRoM t H e cHaiR of tHe BoaR D, PR eSi Dent anD c eo

                                                                                                                                                 “There’s nothing more deserving […] of our attention, than to give
                                                                                                                                                 the caisses a great and wonderful reputation […] in doing so, we
                                                                                                                                                 will win a clientele that, in the future, will promote their long-term
                                                                                                                                                 prosperity.” Alphonse Desjardins had a great deal of foresight.

                                                                                                                                                 GloBal cRiSiS of confiDence
                                                                                                                                                 The year 2008 was marked by a worldwide economic and financial crisis.
                                                                                                                                                 The scope of the crisis in fact had a lot to do with confidence. From the
                                                                                                                                                 real estate collapse in the United States to the recession we are experiencing
                                                                                                                                                 today in the world’s major economies, we have seen a general demise
                                                                                                                                                 in consumer and investor confidence with respect to the economy and
                                                                                                                                                 market operations. Recovery depends unmistakably on our ability to rebuild
                                                                                                                                                 that confidence, both at home in our domestic markets and on an
                                                                                                                                                 international scale.

                                                                                                                                                 Within Desjardins Group, what comforts us is the conviction that the
                                                                                                                                                 relationship of trust we maintain with our members and clients is based
                                                                                                                                                 on our expertise and our accessibility. This trust is also dependent on our
                                                                                                                                                 financial solidity and credibility. Trust cannot be bought—it is built, day
                                                                                                                                                 by day, as a result of our capacity to align our actions with our words
                                                                                                                                                 and our promises.

                                                                                                                                                 a YeaR of MaJoR financial cHallenGeS
                                                                                                                                                 Financially, 2008 was characterized by major crisis-related challenges that
                                                                                                                                                 affected all financial markets worldwide. Combined surplus earnings before
                                                                          MoniQue f. leRoux
                                                                          chair of the Board, president and ceo,                                 member dividends totalled $78 million, compared to $1.1 billion in 2007.
                                                                          Desjardins group                                                       If it hadn’t been for the specific items resulting from asset-backed commercial
                                                                                                                                                 paper (ABCP) and a decline in investment value resulting from the worldwide
                                                                                                                                                 financial crisis, Desjardins Group would have posted surplus earnings
                                                                                                                                                 before member dividends of approximately $1.2 billion, which is in line
                                                                                                                                                 with the objectives we had set for ourselves.

                                                                    LIVE DESjARDINS WITH
                                                                                                                                                 Two main factors account for the decrease observed. First, the direct and
De sj ar D i n s

                                                                                                                                                 indirect impact of ABCP and guaranteed-capital structured products, which
                                                                                                                                                 amounted to $831 million. The sharp decline in investment performance

                                                                    TRUST AND CONFIDENCE                                                         and the high volume of asset write-offs led to a further $341 million in losses.

                                                                                                                                                 Naturally, I am not satisfied with our 2008 results, despite the fact that
                                                                                                                                                 they must be viewed in the context of an unprecedented global financial
                                                                    At the end of March 2008, I began my mandate
                                                                                                                                                 crisis. Desjardins Group, like other financial institutions around the world,
                                                                    as President, ready to promote the values of trust                           was not spared the effects of the crisis, and we must learn from this. That
                                                                    and confidence in furthering the development                                 is why, in 2008, I asked our internal auditor and several external experts
                                                                    of Desjardins Group.                                                         to perform a thorough analysis of our risk management and investment
                                                                                                                                                 practices. Our members and clients can rest assured the action plan drawn
                                                                                                                                                 up following this process is currently being implemented, with Management
                                                                    At the time, I encouraged the vital forces behind our institution to “live   and the Board of Directors closely monitoring its progression.
                                                                    Desjardins with trust and confidence.” I stressed the word “live” because
                                                                    Desjardins is part of a movement in which democracy is so intensely alive.
                                                                    I spoke of “trust and confidence” because Desjardins, as a cooperative
                                                                    financial group, must inspire trust, and because our success is gained
                                                                    through our officers’ and employees’ confidence in the future. But the
                                                                    future is always a work in progress, built with pride in our roots and
                                                                    in our history.

Solid financial foundationS                                                      Sustained business development

While ABCP and the effects of the financial crisis adversely affected            The year 2008 was also extremely productive on the business development
our results in 2008, our various basic activities remain sound and profitable.   front. Despite the upheavals affecting the financial markets and the increasingly
The cooperative network, the business units, the insurance subsidiaries          fierce competition, consumer savings and investment recruitment showed
and Caisse centrale Desjardins all posted very good operating results.           encouraging results, thanks to constant efforts by the caisses. This allowed
The caisses saw their surplus earnings grow by nearly 11% in 2008                us to maintain our market share in this segment in Québec. The progress

                                                                                                                                                                      ME S S a g E fRoM t H E cHaiR of tHE BoaRd, pR ESi dEnt and c Eo
compared to the previous year.                                                   made in 2008 also helped us corner new market share in residential
                                                                                 mortgage loans, commercial, industrial and farm credit, as well as
                                                                                 card-based payment and financing.
Desjardins Group also remains a very solid and well-capitalized institution.
Our capitalization is still one of the best in the Canadian financial sector,
with a Tier 1 capital ratio of 13.39% and a total capital ratio of 12.85%        Insurance premium volumes continued to grow for both life and health
as at December 31, 2008. Caisse centrale Desjardins has excellent credit         insurance and general insurance, both in Québec and in the rest of Canada.
ratings and Desjardins remains one of the leading financial institutions         The efforts made in this respect, in particular a broad advertising campaign,
in Canada in this regard.                                                        contributed to a significant increase in brand awareness for Desjardins
                                                                                 and its insurance subsidiaries in Ontario.
Aware of the growing importance of capital in the current market
environment, we have taken steps to strengthen the capitalization of the         The concerted efforts of the caisses and components toward developing
caisses. We have therefore opted for a balanced and responsible approach         the Greater Montréal market also continued throughout last year. Visibility,
with respect to the distribution of the 2008 surplus earnings, an approach       brand awareness and business development of Desjardins in the Greater
that takes into account both the expectations of our members and our             Montréal Area all increased in 2008.
communities, and the capitalization needs of Desjardins Group.
                                                                                 MaRKEt SHaRES in QuÉBEc –
                                                                                 an incREaSinglY doMinant pRESEncE
a YEaR of notEWoRtHY acHiEVEMEntS
Ever growing member and client satisfaction                                        Product                                    Market share        (versus 2007)
With its 6,299 elected officers and 42,000 employees, Desjardins Group             Residential mortgages                               39.3   %          + 0.2    %
continued to serve its members and clients consistently and professionally         Farm loans                                          46.9   %          + 0.4    %
in 2008, with an eye on continuous improvement.                                    Commercial and industrial loans                     25.0   %          + 1.2    %
                                                                                   Personal savings                                    43.9   %         stable
The overall average satisfaction index among individual members                    Investment funds                                    16.5   %          + 0.3    %
with respect to services received, which measures seven aspects of our             Securities brokerage                                14.1   %          + 0.8    %
service offering, rose again by one percentage point. Business member              General insurance (individuals)                     20.3   %         stable
satisfaction also showed an ongoing increase in 2008, thus crowning                Life and health insurance                           18.0   %         stable
all the efforts and advances made to optimize service delivery in the
Desjardins business centres.
                                                                                 ongoing work with respect to Basel ii
Service quality and client satisfaction were also among the criteria             Desjardins Group also continued working very hard last year on being
considered in the audit of our AccèsD call centres, which obtained               recognized for using the advanced methods defined by the Basel II Accord.
COPC (Customer Operations Performance Center) certification for                  Our application for certification by the Autorité des marchés financiers
the fourth consecutive year in 2008.                                             (AMF) was filed as planned in January 2009. The new approaches developed

                                                                                                                                                                      de sj ar d i n s
                                                                                 will enable us to optimize our risk management and also to better match
desjardins, Best Employer                                                        regulatory capital requirements with the risks incurred.
On our very first foray into this initiative, Desjardins Group made it to the
list of top 50 Best Employers in Canada, as established by the HR consulting     a positive social and cooperative impact
firm, Hewitt Associates. This recognition gives Desjardins a competitive edge    Social responsibility has always been intrinsic to Desjardins Group’s activities.
in a market where attracting and retaining talent is of key strategic value.     Because we are a cooperative, our priority is to contribute to improving
The responses obtained from over 15,000 of our employees (of the 20,000          the social and economic well-being of the people and communities we
who received a survey), as well as the considerable feedback we received,        serve. Thus, over the years, Desjardins Group has adopted high standards,
constitute a mine of information that we will draw on in the future.             not only in matters of governance but also in terms of human resources,
                                                                                 investment, commitments to the community, the environment, health
                                                                                 and safety in the workplace, and human rights.

                                                                   In 2008, Desjardins Group took this one step further by adhering more                                    2009 Will Be a YeaR of cHanGe
                                                                   formally to Global Reporting Initiative (GRI) indicators, an approach that
                                                                   will allow the organization to compare its social responsibility achievements                            five main convictions central to my mandate
                                                                   for 2009 with other players in its sector of activity, while taking its cooperative                      Despite a difficult economic climate requiring great discipline and vigilance
                                                                   nature into consideration.(1)                                                                            on our part, our ability to move Desjardins Group forward is still based on
                                                                                                                                                                            our ability to see things from a long-term perspective. Five major convictions
Me S S a G e fRoM t H ecHaiR of tHe BoaR D, PR eSi Dent anD c eo

                                                                   Desjardins Group also continued to affirm its leadership in terms of                                     motivate me in this regard, which I describe as “generators of change.”
                                                                   sustainable development in 2008. As part of our commitments under the                                    When I was elected President, I was determined to use those convictions
                                                                   Changing the world, one step at a time institutional campaign, we made                                   as the focus for our achievements in the coming years.
                                                                   noteworthy advances with regard to environmentally friendly transportation,
                                                                   the energy efficiency of the buildings we own, and raising awareness                                     My first and fundamental conviction is that the caisses are the driving
                                                                   among our various stakeholders about sustainable development issues.                                     force of Desjardins Group. We have everything to gain at Desjardins
                                                                                                                                                                            from strengthening caisse entrepreneurship through the direct contribution
                                                                   a participatory approach                                                                                 of the officers and general managers to the life and growth of our
                                                                   In keeping with my commitments, in 2008 we set up new communication                                      organization. Our work and operating methods will enable us to fully
                                                                   mechanisms with caisse elected officers and general managers, both with                                  draw on all the experience, business sense and knowledge of our officers
                                                                   respect to reflection and planning activities as well as in the follow-up                                and general managers.
                                                                   of day-to-day operations. Several telephone and online communications,
                                                                   in addition to our various meetings and other specific initiatives, enabled                              My second conviction is that the FCDQ and the subsidiaries are there to
                                                                   us to increase the participation of caisse officers and general managers,                                work for the caisses and their members. Considering the development and
                                                                   along with Desjardins Group Management and its various decision-making                                   growing maturity of the network and the caisses, the role of the FCDQ
                                                                   bodies, in discussions on Desjardins-related issues and orientations.                                    needs to change as well, so as to play a greater role in Desjardins-wide
                                                                                                                                                                            orientation and integration.
                                                                   In November, we also organized a Rendez-vous of young leaders who
                                                                   act as either Desjardins officers or managers or who represent various                                   My third conviction is that the growth and strategic development of
                                                                   youth-oriented organizations. Their discussions and the results of an online                             Desjardins Group comes through the caisses, supported by the subsidiaries.
                                                                   survey of young people gave us valuable feedback for our reflections on                                  Greater caisse involvement in Desjardins Group’s strategic reflection
                                                                   policies toward young people.                                                                            process will help us move ahead under the sign of profitable growth,
                                                                                                                                                                            marrying organic growth and external growth. This will allow us to
                                                                                                                                                                            strengthen our position as a leader in Québec and develop our activities
                                                                                                                                                                            in Ontario and elsewhere in Canada.

                                                                        tHe incReDiBle foRce of DeSJaRDinS GRouP’S HuMan caPital
                                                                        All of our accomplishments in 2008, as well as all the challenges we had to meet, required an enormous amount of care and effort by Desjardins
                                                                        Group, and greater than usual attention towards our members.
                                                                        To the officers, general managers, management staff and employees of Desjardins Group caisses and components, I am especially grateful for the
De sj ar D i n s

                                                                        support you provided and the enormous collective effort you made in 2008. It is thanks to you, your engagement, your motivation and the way you
                                                                        embody the values of cooperation that Desjardins was recognized as one of Canada’s Best Employers.
                                                                        I would like to thank Alban D’Amours, who ended his eight-year term as President of Desjardins Group at the start of 2008. Under his leadership,
                                                                        Desjardins Group grew into its own as an integrated cooperative financial group.
                                                                        Thanks also to the members of the councils of representatives, who look out for the interests of the members of your caisses, while participating
                                                                        in the long-term development of Desjardins Group. Throughout the various meetings and discussions we have held, I have appreciated your frankness
                                                                        and your constructive spirit.
                                                                        I would like to extend my most heartfelt thanks to the members of the FCDQ Board of Directors, as well as the FCDQ and Desjardins Group Executive
                                                                        Committee and Management Committees, for making yourselves so available in a year in which we were implementing new ways of working
                                                                        together, while at the same time rigorously monitoring and managing the fallout from the worst financial market crisis the world has seen in decades.
                                                                        If not for your unwavering support, I would have been very alone in facing these challenges.
                                                                        I would like to thank Pierre Grenon, who left the Board in 2008, and welcome Denis Duguay, who replaced him.
                                                                        A special thank-you goes out to jude Martineau, who retired after 14 years at the head of Desjardins General Insurance Group (DGIG). The company
                                                                        saw substantial growth under Mr. Martineau’s direction. I am certain that DGIG’s new President and Chief Operating Officer, Sylvie Paquette, will ensure
                                                                        the dynamic and successful development of this subsidiary in the years to come, thanks to her thorough knowledge of the business.
                                                                        To Bruno Morin, I would like to express my utmost gratitude for having agreed to take on the leadership of Caisse centrale Desjardins in 2008
                                                                        and for having successfully assumed this responsibility in a particularly difficult time for the markets.
                                                                        I am more convinced than ever that together, we, the men and women of Desjardins Group, have the power to make this organization the most
                                                                        admired financial institution in Canada and the most respected for its mission, its cooperative values, the close ties between its caisses and their
                                                                        communities, and its achievements in all respects.

                                                                   (1) See the section entitled “The Social and Cooperative Impact of Desjardins Group” on pages 187 to 196 at the end of this Annual Report.

My fourth conviction is that our human capital is our greatest asset and      With the building block on collaboration, participation and connection
our strength for the future. To ensure the success and continuity of          with the network, we will set up the mechanisms by which our network
Desjardins Group, we will work very hard, not only to be a Best Employer      resources—those best placed to understand the needs of our members—
for our management staff and employees but also to ensure that our            will be able to take an even more active role in actions carried out on a
methods of governance, our democratic management processes and                Desjardins-wide scale. It is under the theme of Cooperate to Better Contribute
our operating procedures provide us with true leverage for engaging           that work relating to this fourth building block will be undertaken.
and mobilizing our officers and general managers.

                                                                                                                                                                   ME S S A g E FROM T h E ChAIR OF ThE bOARD, PR ESI DENT AND C EO
                                                                              The final building block involves mobilizing all of Desjardins Group’s human
My fifth and final conviction is that our cooperative values form the         capital, culture and values to support the implementation of changes
basis of our ambitions and must always remain central to our actions.         within Desjardins by guiding and supporting the individuals whose roles
These cooperative values must shape the way we work together                  and responsibilities will be changing. Relying on a culture of participation,
to build our future.                                                          service and performance, and under the theme of Cooperate to Be Our Best,
                                                                              we will thus enable Desjardins Group to benefit more from the intelligence
To prepare for the changes needed to fully bring these convictions to life,   and collective experience of our human capital, while respecting our
in the last quarter of 2008, we drew up a Desjardins Group Development        cooperative values.
Plan. The cooperative network and all the components are involved
in defining and implementing this plan which, through its five building       COOPERATINg TO ShAPE OuR DESTINy
blocks, will offer us an outlook on our future and define the means
by which we will achieve our ambitions.                                       What has always set Desjardins apart is its incredible ability to engage
                                                                              elected officers, management staff and employees, as well as its constant
                                                                              concern for maintaining a strong connection with its members. That’s
A DEVELOPMENT PLAN FOR DESJARDINS                                             how member trust and confidence has enabled Desjardins to build solid
The five building blocks launched under the Desjardins Group Development      financial capital over the years.
Plan will bring about changes in 2009 and for the coming years. The
first building block, relating to Desjardins Group’s strategic growth and     With the economic and financial crisis persisting, the future of Desjardins
development, was launched as a priority, with a view to the adoption of       lies in great caution and increased vigilance in the face of the challenges
Desjardins Group’s 2010-2012 Strategic Plan. The definition of this Plan      coming in the short term and possible new market disturbances. The
is an ongoing process, fuelled by the recommendations of various task         future of Desjardins also lies in a shared confidence in our abilities and in
forces made up of representatives from all the Desjardins components.         the strength of our solidarity. The future of Desjardins also lies, more than
                                                                              ever, in the values of cooperation. Cooperate to Shape Our Destiny is what,
Our business development (savings recruitment; the business sector;           with all our will and all our might, we will endeavour to accomplish in the
relations with young people and cultural communities; growth in the           years to come.
non-urban regions, Greater Montréal and throughout Canada), the
productivity and efficiency of our organization, the engagement and           In 1912, Alphonse Desjardins wrote that: “Two qualities triumph
management of talent as well as social responsibility and sustainable         over all: Knowledge of what needs to be done and vigorous and
development are among the growth issues and challenges facing Desjardins,     self-determined perseverance based on the conviction that we
and the specific focus of our attention and our work. The results of this     are on the right track.”
building block will also be used to optimize Desjardins Group’s financial
performance. Cooperate to Grow is the theme we have chosen for                Our mission is clear and our values are strong. In carrying out our mission,
this first project.                                                           we enable the members and communities served by Desjardins to live
                                                                              better, to feel supported and protected, to know that they are not alone
The building block on the changing role of the FCDQ, as well as the           as they carry out their plans and projects, throughout all the stages of

                                                                                                                                                                   de sj ar d i n s
one devoted to optimizing FCDQ and subsidiary performance, will lead to       their lives. Our mission is what gives our day-to-day work its full meaning.
various initiatives in 2009, including the adoption of a new organizational   It embodies the human and social aspects of our activities, which has never
structure. While assuring effective and efficient support to the caisses,     been more relevant.
the aim will be to re-focus the FCDQ’s role as a hub of orientation and
support for Desjardins Group, to increase the productivity and cohesiveness   With our widespread accessibility based on caisses that are firmly rooted
of our organization and to optimize its overall performance. Cooperate        in all regions, with our ability to adapt to all kinds of needs, with our constant
to Inspire and Cooperate to Perform are the themes associated with these      desire to inform and educate people about cooperation and finance, with
second and third building blocks.                                             the active support we give to community development and, above all,
                                                                              with the exceptional commitment of thousands of officers elected by our
                                                                              members, we can be fully confident in our ability to continue to contribute
                                                                              to the growth of Desjardins Group.

                                                                              Monique F. Leroux, FCA, FCMA
                                                                              Chair of the Board, President and CEO,
                                                                              Desjardins Group

                                                                    16               14
                                                                                10             15
                                          08              02

                                                                               20              11
                                07                                        04
                                                19             09   23

                           12                                                  01
Boa RD of DiRectoRS


De sj ar D i n s
                                                                                                                                                              13    14

                                                                                                                                                                    OUR HUMAN CAPITAL IS OUR
                                                                                                                                                                    GREATEST ASSET AND THE
01 monique F. leroux*
Desjardins Group President
and Chief Executive Officer,
                                                     09 JACqueS BAril**
                                                     President of the Est de Montréal
                                                     Council of Representatives
                                                                                                           17 DAniel lAFonTAine
                                                                                                           Caisse General Manager,
                                                                                                           Member of the Centre-du-Québec
                                                                                                                                                                    STRENGTH OF OUR FUTURE
Chair of the Board                                   End of term: 2011                                     Council of Representatives
End of term: 2012                                                                                          End of term: 2011
                                                     10 THomAS BlAiS**
02 Pierre TArDiF*/**                                 President of the Caisses populaires de l’Ontario      18 AnDrÉe lAForTune**
                                                                                                                                                                    Desjardins Group is the largest financial institution in Québec and the leading cooperative financial group in
President of the Rive-Sud de Montréal                Council of Representatives                            President of the Ouest de Montréal                       Canada because of its human capital—the 6,299 officers and 42,000 employees among its ranks. To ensure
Council of Representatives,                          End of term: 2011                                     Council of Representatives                               Desjardins Group’s success and longevity, we aim to be not only a Best Employer for our managers and
Vice-Chair of the Board                                                                                    End of term: 2010
End of term: 2009                                    11 lAurier BouDreAulT                                                                                          employees, but also a Group that earns the engagement of our officers and general managers.
                                                     Caisse General Manager,                               19 mArCel lAuZon**
03 ClÉmenT SAmSon*/**                                Member of the Québec-Ouest–Rive-Sud                   President of the Laval–Laurentides
President of the Québec-Ouest–Rive-Sud               Council of Representatives                            Council of Representatives
Council of Representatives,                          End of term: 2010                                     End of term: 2009
Board Secretary
End of term: 2010                                    12 SerGeS CHAmBerlAnD**                               20 Pierre leBlAnC**
                                                                                                                                                                   “We are, all together, as officers and employees of both the caisse
04 louiSe CHArBonneAu*
                                                     President of the Saguenay–Lac-Saint-Jean–
                                                                                                           President of the Mauricie
                                                                                                           Council of Representatives                               network and the components, the builders of our future.”
Caisse General Manager,                              Council of Representatives                            End of term: 2011
Member of the Est de Montréal                        End of term: 2011                                                                                                                                                                              – MONIQUE F. LEROUx
Council of Representatives                                                                                 21 miCHel roy**
End of term: 2009                                    13 DeniS DuGuAy**                                     President of the Kamouraska–Chaudière-Appalaches
                                                     President of the Richelieu-Yamaska                    Council of Representatives
05 AnDrÉ GAGnÉ*/**                                   Council of Representatives                            End of term: 2011
President of the Québec-Est                          End of term: 2011
Council of Representatives                                                                                 22 SylVie ST-Pierre BABin**
End of term: 2010                                    14 AlAin DumAS                                        President of the Abitibi-Témiscamingue–
                                                     Caisse General Manager,                               Nord et Ouest du Québec
06 DAniel merCier*/**                                Member of the Mauricie                                Council of Representatives
President of the Centre-du-Québec                    Council of Representatives                            End of term: 2011
Council of Representatives                           End of term: 2010
End of term: 2009                                                                                          23 SerGe TourAnGeAu**
                                                     15 normAn GrAnT**                                     President of the Group Caisses
07 DeniS PArÉ*/**                                    President of the Bas-Saint-Laurent                    Council of Representatives
President of the Estrie                              et Gaspésie–Îles-de-la-Madeleine                      End of term: 2009
Council of Representatives                           Council of Representatives
End of term: 2009                                    End of term: 2010                                     24 BenoÎT TurCoTTe**
                                                                                                           Vice-President of the Abitibi-Témiscamingue–
08 Dominique ArSenAulT**                             16 AnDrÉ lACHAPelle**                                 Nord et Ouest du Québec                                               2,136 PARTICIPANTS ATTENDED THE DESJARDINS        MORE THAN 180 PEOPLE WERE PART OF THE
Vice-President of the Bas-Saint-Laurent              President of the Lanaudière                           Council of Representatives,                                           ANNUAL GENERAL MEETINGS IN QUÉBEC CITY            TASk FORCES THAT MET IN BROMONT ON
et Gaspésie–Îles-de-la-Madeleine                     Council of Representatives                            Managing Director                                                     ON MARCH 28 AND 29, 2008.                         SEPTEMBER 19, 2008.
Council of Representatives                           End of term: 2010                                     End of term: 2011
Managing Director
End of term: 2010
                                                                                                           * Member of the Executive Committee
                                                                                                           ** Unrelated director

                                                                                                                                                                                                                      1,100 CAISSE PRESIDENTS AND GENERAL
                                                                                                                                                                                                                      MANAGERS ATTENDED THE RENDEZ-VOUS
                                                                                                                                                                                                                      MEETINGS IN QUÉBEC CITY ON
                                                                                                                                                                                                                      NOVEMBER 28 AND 29, 2008.

                                                                                                                                                                         ACTIVE PARTICIPATION BY ALL IN THE
                                                                                                                                                                         DESJARDINS GROUP DEVELOPMENT PLAN.
    The members of the Board of Directors of the Fédération des caisses Desjardins du Québec are also directors of Caisse centrale Desjardins,                           MEMBERS OF THE COLLABORATION,
                                                                                                                                                                         PARTICIPATION AND CONNECTION WITH THE
    Desjardins Venture Capital, Capital Desjardins inc. and Desjardins Trust. The Board of Directors is made up of 22 members who are elected
                                                                                                                                                                         NETWORK BUILDING BLOCk TASk FORCE.    01
    by the Regional General Meeting, Group Caisses General Meeting or the Assembly of Representatives of the FCDQ. The following are
    members of the Board: the 17 presidents of the councils of representatives, the four caisse general managers elected by the Assembly
    of Representatives and the President and Chief Executive Officer of Desjardins Group. For the Bas-Saint-Laurent et Gaspésie–Îles-de-la-Madeleine
    and Abitibi-Témiscamingue–Nord et Ouest du Québec regions, the vice-president of the council of representatives sits on the board as                                                                                                YOUNG LEADERS’ MEETING – “CHALLENGES
    a managing director.                                                                                                                                                                                                                FOR 2012” – LAVAL, NOVEMBER 6 AND 7,
 01                                                                  WESTERN REGION                                                                                    06   CENTRAL REGION
                                                                     01 riVe-SuD De monTrÉAl CounCil oF rePreSenTATiVeS                                                     06 CenTre-Du-quÉBeC CounCil oF rePreSenTATiVeS
                                                                     Alain Boutin, General Manager (GM), Caisse populaire Desjardins Pierre-Boucher,                        Pierre Baril, GM, Caisse populaire Desjardins de Lévrard, Marc-André Joyal, President,
                                                                     Lorne Bouchard, GM, Caisse Desjardins Charles-LeMoyne, Pierre Tardif, President                        Caisse populaire Desjardins de l’Est de Drummond, Daniel Mercier, President of the
                                                                     of the Council of Representatives and President, Caisse Desjardins de Longueuil,                       Council of Representatives and President, Caisse populaire Desjardins de Victoriaville,
                                                                     Yvan Poulin, Vice-President (VP), Caisse Desjardins des Berges de Roussillon,                          Serge Cousineau, GM, Caisse Desjardins de Drummondville, Jean Pinard, Officer,
                                                                     André Ménard,Officer, Caisse populaire Desjardins Beauharnois, Isabelle Bourgeois,                     Caisse Desjardins Godefroy, Martin Lemay, GM, Caisse Desjardins du Sud de Lotbinière,
                                                                     President, Caisse Desjardins des Grandes-Seigneuries, Rollande Girard-Di Lalla,                        Pierre Levasseur, President, Caisse populaire Desjardins du Bas-Saint-François, Paul
                                                                     President, Caisse Desjardins Grande-Allée de Saint-Hubert, Martin Bergeron,                            Lafrance, Officer, Caisse Desjardins de Drummondville, Daniel Lafontaine, GM,
                                                                     Officer, Caisse Desjardins de Boucherville, Yves Léveillé, GM, Caisse Desjardins                       Caisse Desjardins de Nicolet, Guy Morin, VP, Caisse populaire Desjardins de l’Est de
                                                                     du Haut-Saint-Laurent, Lorraine Simoneau, GM, Caisse populaire Châteauguay,                            Drummond, André Grenier, President, Caisse Desjardins de L’Érable, Diane Tétreault,
                                                                     René Ouellet, GM, Caisse Desjardins de Varennes, Gilles Sicotte, President, Caisse                     VP, Caisse populaire Desjardins de Gentilly, Benoit Bélanger, GM, Caisse populaire
                                                                     Desjardins de Saint-Pierre-Apôtre, Robert Bourguignon, President, Caisse Desjardins                    Desjardins du Sud des Bois-Francs, Éric Béchard, Officer, Caisse populaire Desjardins
                                                                     du Mont-Saint-Bruno, René Rougeau, President, Caisse Desjardins des Moissons,                          de Grantham-Wickham Not Pictured: Laurent Soucy, President, Caisse Desjardins
                                                                     Yvon Vinet, VP of the Council of Representatives and President, Caisse Desjardins                      de Daveluyville
                                                                     de Salaberry-de-Valleyfield
                02                                                                                                                                                07        07 mAuriCie CounCil oF rePreSenTATiVeS
                                                                     02 lAVAl–lAurenTiDeS CounCil oF rePreSenTATiVeS                                                        Isabelle Garceau, GM, Caisse populaire de Maskinongé, Yves Ricard, Board Secretary,
                                                                     Pierre Durocher, GM, Caisse populaire Desjardins des Pays-d’en-Haut, Alain Grégoire,                   Caisse populaire Desjardins Cité de Shawinigan, Pierre Leblanc, President of the Council
                                                                     VP, Caisse Desjardins Thérèse-De Blainville, Marcel Lauzon, President of the Council                   of Representatives and President, Caisse Desjardins du Sud Des Chenaux, Paul Jordan,
                                                                     of Representatives and President, Caisse populaire Desjardins de Saint-Jérôme, André                   GM, Caisse Desjardins de Saint-Boniface, René Parent, Officer, Caisse populaire Desjardins
                                                                     Chaput, President, Caisse populaire Desjardins de Mirabel, Pierre L. Lambert, VP of                    de la Moraine, Michel St-Onge, President, Caisse Desjardins du Haut Shawinigan, Alain
                                                                     the Council of Representatives and President, Caisse populaire Desjardins des Mille-Îles,              Dumas, GM, Caisse Populaire de St-Tite, René J. Lemire, VP, Caisse Desjardins de l’Ouest
                                                                     Nancy Wilson, President, Caisse populaire Desjardins de Mont-Tremblant, Jacques                        de la Mauricie, Gilles Baril, GM, Caisse populaire Desjardins de Sainte-Thècle-Saint-
                                                                     Laramée, GM, Caisse populaire Desjardins de Sainte-Agathe-des-Monts, Maurice                           Adelphe, Pierre Bordeleau, President of the Board of Supervision, Caisse Populaire
                                                                     Émond, President, Caisse populaire de Saint-Claude, Sylvain Courcelles, GM, Caisse                     de Saint Severin de Proulxville, Robert Frappier, Officer, Caisse Populaire de St-Alexis-
                                                                     populaire Les Grands Boulevards, Jean-Claude Faucher, President, Caisse Desjardins de                  des-Monts, Carole Chevalier, VP of the Council of Representatives and Officer, Caisse
                                                                     Saint-Antoine-des-Laurentides, Gilles Daviault, President, Caisse populaire Desjardins                 Desjardins Les Estacades, Denis Boudreau, President, Caisse Desjardins Laviolette
                                                                     de l’Envolée, Yvon Dubois, President, Caisse populaire Desjardins de Vimont–Auteuil,                   Not Pictured: Daniel Fleurant, GM, Caisse populaire Desjardins du Passage, Claude
                                                                     Jean Boisvert, President, Caisse Desjardins du Nord de Laval Not Pictured: Richard                     Gervais, Officer, Caisse populaire Desjardins des Cascades
                                                                     Tassé, GM, Caisse Desjardins de Saint-Eustache–Deux-Montagnes, Gilles Aubé, GM,
                                                                     Caisse Desjardins du Marigot de Laval                                                                  08 eSTrie CounCil oF rePreSenTATiVeS
 03                                                                                                                                                                    08
                                                                                                                                                                            Roger Durand, President, Caisse Desjardins du Nord de Sherbrooke, Michel Nadeau,
                                                                     03 oueST De monTrÉAl CounCil oF rePreSenTATiVeS                                                        GM, Caisse Desjardins des Hauts-Boisés, Denis Paré, President of the Council of
                                                                     Gilles Metcalfe, Officer, Caisse populaire Desjardins Sainte-Geneviève de Pierrefonds,                 Representatives and President, Caisse Desjardins de l’Est de Sherbrooke, Lise Perreault,
                                                                     Gabrielle Gosselin, Officer, Caisse Desjardins Cité-du-Nord de Montréal, Gilbert                       Officer, Caisse Desjardins du Mont-Bellevue de Sherbrooke, Robert Lussier, GM, Caisse
                                                                     Thibeault, VP of the Council of Representatives and President, Caisse Desjardins                       Desjardins du Lac des Nations de Sherbrooke, Johanne Rock, GM, Caisse populaire
                                                                     Lachine /Saint-Pierre, Micheline D. Legault, President, Caisse populaire Saint-Joseph-                 Desjardins de East Angus, Roch Sicotte, President, Caisse Populaire de Waterloo, Alain
                                                                     de-Bordeaux, Serge Cloutier, GM, Caisse Desjardins Allard–Saint-Paul, Johanne                          Boucher, GM, Caisse Desjardins des Métaux blancs, Agathe Fillion, VP of the Council
                                                                     Perron, GM, Caisse Desjardins du Quartier-Latin de Montréal, Pierre F. McDuff,                         of Representatives and President, Caisse populaire Desjardins des Verts-Sommets de l’Estrie,
                                                                     Officer, Caisse populaire Desjardins de LaSalle, Andrée Lafortune, President of the
                                                                                                                                                                            Jacques Sansoucy, President, Caisse Desjardins de Granby–Haute-Yamaska, Manon
                                                                     Council of Representatives and President, Caisse populaire Desjardins d’Outremont,
                                                                                                                                                                            Morin, President, Caisse Desjardins de l’Ardoise, René Grimard, President, Caisse
                                                                     Denis Rousseau, Officer, Caisse populaire Desjardins du Centre d’Ahuntsic, Sylvain
                                                                                                                                                                            populaire Desjardins des Horizons, Gabriel Morin, Officer, Caisse Desjardins du
                                                                     Bélisle, GM, Caisse Desjardins de Vaudreuil-Soulanges, Serge Verrier, President,
                                                                                                                                                                            Lac-Memphrémagog, Yvan Laroche, President, Caisse populaire Desjardins de la
                                                                     Caisse Desjardins du Parc Sir-G.-E.-Cartier de Montréal, Bertrand Fortier, President,
                                                                                                                                                                            Région-Ouest-de-Mégantic Not Pictured: Stéphane Benjamin, GM, Caisse populaire
                                                                     Caisse populaire Saint-Stanislas de Montréal, Bernard Circé, GM, Caisse Desjardins
                                                                                                                                                                            Desjardins de Brome-Missisquoi
                                                                     Atwater-Centre, Gilbert Demers, GM, Caisse populaire Desjardins de Saint-Laurent,
                                                                     Moustafa Magar, Officer, Caisse populaire Desjardins de Côte-des-Neiges                                09 riCHelieu-yAmASkA CounCil oF rePreSenTATiVeS
                04                                                                                                                                                09
                                                                     04 eST De monTrÉAl CounCil oF rePreSenTATiVeS
                                                                                                                                                                            Benoît Noël, President, Caisse populaire Desjardins d’Acton Vale, Diane Hébert Dubé,
                                                                     Michel Bélisle, VP, Caisse Desjardins De Lorimier, Camille Montpetit(1), GM,                           President, Caisse Desjardins de la Seigneurie de Ramezay, André Paquette, President,
                                                                     Caisse populaire Desjardins de Villeray, Jacques Baril, President of the Council of                    Caisse populaire Desjardins Sieur-d’Iberville, Raymonde Faucher, Officer, Caisse populaire
                                                                     Representatives, and President, Caisse populaire Desjardins de Pointe-aux-Trembles,                    de St-Antoine-sur-Richelieu, Denis Duguay, President of the Council of Representatives
                                                                     Robert Guerriero, President, Caisse populaire Desjardins Canadienne Italienne,                         and Officer, Caisse populaire Desjardins de Farnham, Alain Durivage, President, Caisse
                                                                     Claudette Lagacé, Board Secretary, Caisse Desjardins de Saint-Léonard, Louise                          Desjardins de la Vallée-des-Forts, Pierre Grenon, President, Caisse Desjardins de
                                                                     Charbonneau, GM, Caisse populaire Desjardins de Saint-Michel, Denis Laferrière,                        Beloeil–Mont-Saint-Hilaire, Jean-Marie Viens, President, Caisse Populaire de St-Charles
                                                                     GM, Caisse populaire Desjardins de Montréal-Nord, Francine Le Grand, President,                        sur le Richelieu, Claude Frenière, GM, Caisse populaire Desjardins de Bedford, Angélina
                                                                     Caisse populaire Desjardins du Sault-au-Récollet, Jean Laporte, President, Caisse                      Lagacé, President, Caisse Populaire de Rougemont, Robert Giasson, GM, Caisse
                                                                     populaire Desjardins de Jean-Talon–Papineau, Denis Risler, President, Caisse populaire                 Desjardins de Saint-Damase and Caisse populaire Desjardins de Saint-Pie-de-Bagot,
                                                                     Desjardins d’Anjou, Pierre Trahan, GM, Caisse Desjardins de Tétreaultville, Daniel                     Jean-Pierre Bessette, GM, Caisse populaire Desjardins de Saint-Jean-sur-Richelieu,
                                                                     Blais, GM, Caisse populaire Desjardins Préfontaine–Hochelaga, Jean-J. Brossard,                        Christian Gagnon, GM, Caisse populaire Desjardins de Cavignac, Jacques
                                                                     President, Caisse populaire Desjardins de Rosemont, Michel Tourangeau, VP of the                       Sylvestre, VP of the Council of Representatives and Officer, Caisse Desjardins
                                                                     Council of Representatives and President, Caisse Desjardins de Mercier-Rosemont,                       de Saint-Hyacinthe, Rémy Lavoie, GM, Caisse Populaire Riviera
 05                                                                  Florent Tanguay, President, Caisse populaire Desjardins de Mont-Rose–Saint-Michel                 10   10 lAnAuDière CounCil oF rePreSenTATiVeS
                                                                     05 ABiTiBi-TÉmiSCAminGue—                                                                              Claude Ladouceur, President, Caisse populaire St-Paul-l’Ermite, Lucie Tremblay,
                                                                     norD eT oueST Du quÉBeC CounCil oF rePreSenTATiVeS                                                     President of the Board of Supervision, Caisse populaire Desjardins de Ste-Julienne, Claire
                                                                     Christiane Carle, GM, Caisse populaire Desjardins de la Haute-Gatineau, Luc Cloutier,                  Sarrazin, Board Secretary, Caisse Desjardins de Joliette, Gabriel Garneau, President,
                                                                     President, Caisse Desjardins d’Amos, Benoît Turcotte, VP of the Council of Representatives             Caisse Desjardins de Charlemagne, Michel Ménard, GM, Caisse populaire Desjardins
                                                                     and President de la Caisse Desjardins de la Vallée de l’Or, Marcelin Grenier, GM, Caisse               de Lavaltrie, Line Lemelin, President, Caisse populaire Desjardins Le Manoir, Alain Raîche,
                                                                     Desjardins de Béarn-Fabre-Lorrainville and Caisse populaire Desjardins de Témiscaming,                 GM, Caisse Desjardins Les Méandres, André Lachapelle, President of the Council of
                                                                     Claude Tremblay, President, Caisse Desjardins de Mont-Laurier, Sylvie St-Pierre-Babin,                 Representatives and President, Caisse Desjardins de la Nouvelle-Acadie, Gaston Robert,
                                                                     President of the Council of Representatives and VP, Caisse Desjardins de Hull, Normand                 President, Caisse populaire Desjardins de Montcalm, Ronald Thériault, GM, Caisse
                                                                     Achim, Officer, Caisse populaire Desjardins de la Basse-Lièvre, Evelyne Brochu-Côté,                   Desjardins de Kildare, Guy Tremblay, GM, Caisse Desjardins de Saint-Donat, André
                                                                     President, Caisse populaire Desjardins du Sud de l’Abitibi-Ouest, Jean-Claude Jalbert,                 Shatskoff, GM, Caisse populaire Desjardins Terrebonne, Robert Bellerose, President,
                                                                     GM, Caisse Desjardins de Hull, Bernard W. Morissette, President, Caisse populaire                      Caisse populaire Desjardins de Saint-Félix-de-Valois, Jean-Robert Laporte, VP of the
                                                                     Desjardins de Gatineau, Guy Bélisle, GM, Caisse populaire Desjardins du Coeur-des-                     Council of Representatives and President, Caisse populaire Desjardins du Christ-Roi (Joliette),
                                                                     vallées, Lorrain Barrette, President, Caisse Desjardins de Rouyn-Noranda, Marcel                       Jean Paul Campagna, President, Caisse populaire Desjardins de Berthier-et-des-Îles
                                                                     Cardinal, Officer, Caisse Desjardins de La Sarre, Claude Castonguay, GM, Caisse
                                                                     populaire Desjardins de l’Est de l’Abitibi and Caisse populaire Desjardins de Lebel-sur-
                                                                     Quévillon, André Racicot, President, Caisse populaire Desjardins d’Aylmer
Composition of councils of representatives as at December 31, 2008
in standard order, from left to right and bottom to top              (1) Deceased in 2008 during his term.
11        EASTERN REGION                                                                                         16   GROUP CAISSES
          11 BAS-SAinT-lAurenT eT GASPÉSie–ÎleS-De-lA-mADeleine                                                       16 CounCil oF rePreSenTATiVeS
          CounCil oF rePreSenTATiVeS                                                                                  Jacques Dextradeur, President, Caisse Desjardins des policiers et policières, Emanuel
          Yvon Cormier, GM, Caisse populaire Desjardins de Fatima, Francis Bérubé, GM,                                Linhares, President, Caisse d’Économie des Portugais de Montréal, Serge Tourangeau,
          Caisse Desjardins du Bic, Dominique Arsenault, VP of the Council of Representatives                         President of the Council of Representatives and Officer, Caisse Desjardins du personnel
          and Officer, Caisse Desjardins de Tracadièche, Lise Saint-Pierre, VP, Caisse Desjardins                     de l’Administration et des Services publics, Michel Laforge, GM, Caisse d’économie
          de Rimouski, Annie P. Bélanger, President, Caisse populaire Desjardins Mer et montagnes,                    Desjardins des employé(e)s du Secteur industriel (Montréal), Léopold Beaulieu,
          Donald Beaulieu, President, Caisse populaire Desjardins du Portage, René Lévesque,                          Senior VP, Caisse d’économie solidaire Desjardins, Réjean Bellemare, President,
          Board Secretary, Caisse populaire Desjardins des Versants du Mont-Comi, Sonia Caron,                        Caisse d’économie Desjardins des Travailleurs unis, Bernard Beauregard, VP of the
          GM, Caisse populaire Desjardins de la Vallée des lacs, Jean-Claude Lévesque,                                Council of Representatives and President, Caisse d’économie des employés de la
          President, Caisse populaire Desjardins de La Haute-Gaspésie, Patrick Côté, President,                       S.T.C.U.M., Chantal St-Amant, GM, Caisse d’économie Desjardins Sûreté du Québec,
          Caisse populaire Desjardins Du Parc and Villeray, Pierre Hudon, GM, Caisse populaire                        Hélène Gariépy, President, Caisse d’économie Desjardins de Sept-Îles, Ronald
          Desjardins du Centre-sud gaspésien, Vincent Dumont, Officer, Caisse populaire                               Pichette, President, Caisse Desjardins du Réseau de la santé, Claude Gagné, GM,
          Desjardins de Rivière-du-Loup, Norman Grant, President of the Council of Representatives                    Caisse d’économie Desjardins de la Vallée de l’Amiante, Anne Langevin, GM,
          and Chair of the Board of Supervision, Caisse populaire Desjardins du Rivage et des                         Caisse d’économie Desjardins du personnel municipal (Québec), Jean-Guy Bureau,
          Monts, Claude Saint-Laurent, Officer, Caisse populaire Desjardins de Matane                                 President, Caisse d’économie Desjardins des Cantons, Réal Guilbert, President,
                                                                                                                      Caisse d’économie Desjardins de l’Éducation Patrice Bergeron, GM, Caisse
          12 kAmourASkA–CHAuDière-APPAlACHeS CounCil
                                                                                                                      Desjardins de la Défense nationale
          oF rePreSenTATiVeS
          Robert Lavoie, President, Caisse Populaire de Kamouraska, Christiane Bouillé, VP of
          the Council of Representatives and Officer, Caisse populaire Desjardins de Montmagny,             17
          Michel Roy, President of the Council of Representatives and President, Caisse Desjardins
          de Beauceville, Marc Couture, GM, Caisse populaire Desjardins de Kennebec, Serge                            CAISSES POPULAIRES DE L’ONTARIO(1)
          Lemay, President, Caisse Desjardins de Thetford Mines, Paulo Pépin, President, Caisse                       17 CounCil oF rePreSenTATiVeS
          Desjardins de Saint-Georges, Denis Bilodeau, GM, Caisse populaire Desjardins de                             Sylvie Cloutier, GM, Caisse populaire Welland limitée, Robert Boucher, VP of
          Beaurivage, Sylvie Leblond, President, Caisse populaire Desjardins de Saint-Bernard,                        the Council of Representatives and President, Caisse populaire Nolin de Sudbury inc.,
          Yves Genest, GM, Caisse populaire Desjardins des Abénakis, Martin Jacques, President,                       Thomas Blais, President of the Council of Representatives and Officer, Caisse populaire
          Caisse Desjardins de Beauce-Centre, Yves Gilbert, GM, Caisse Desjardins des Hauts-                          Trillium inc., Michel Picard, Officer, Caisse populaire Rideau d’Ottawa inc. Carole
          Reliefs, Michel Duval, President, Caisse populaire Desjardins de Saint-Pascal, Bruno                        Kairovicius, President, La Caisse populaire LaSalle inc., Roger Leduc, President,
          Gagnon, GM, Caisse Desjardins de L’Islet Not Pictured: Érik Asselin, President, Caisse                      Caisse populaire Val Caron limitée, Lise Lauzon, GM, Caisse populaire de la Vallée inc.,
          populaire Desjardins de Trois-Saumons, Robert Carrière, President, Caisse Desjardins                        Jacques St-Aubin, President, Caisse populaire de Hawkesbury Ltée, Yvon Toupin,
          des Seigneuries de Bellechasse                                                                              GM, La Caisse populaire de New Liskeard limitée, Denis Vallée, President, Caisse
13                                                                                                                    populaire de Cochrane Limitée, Michel Yelle, Officer, Caisse populaire Pointe-aux-
          13 quÉBeC-eST CounCil oF rePreSenTATiVeS                                                                    Roches–Tecumseh inc., Donat Boulerice, President, Caisse populaire Vision inc.,
          Josyane Douvry, Officer, Caisse populaire Desjardins du Centre-ville de Québec,                             Jean Bisson, GM, Caisse populaire Vermillon inc., Pierre Landry, Officer, Caisse
          Josée Auclair, Officer, Caisse populaire Desjardins de Lac-Saint-Charles, André Gagné,                      populaire de Cornwall inc., Paul Doré, GM, Caisse populaire Nouvel-Horizon inc.
          President of the Council of Representatives and President, Caisse Desjardins des Chutes
          Montmorency, Yves Picard, President, Caisse Populaire de Saint-Rodrigue, Roger                              (1) The officers on the Caisses populaires de l’Ontario Council of Representatives also
          Ricard, Officer, Caisse Desjardins du Plateau Montcalm, Gaston Bédard, GM, Caisse                               make up the Board of Directors of the Fédération des caisses populaires de l’Ontario.
          Desjardins de Limoilou, Mario Simard, VP of the Council of Representatives and President,
          Caisse populaire Desjardins Mont-Sainte-Anne, Hélène Drouin, GM, Caisse Desjardins
          du Plateau Montcalm, Jacques Bérubé, GM, Caisse Desjardins du Vieux-Moulin
          (Beauport), Denis Breton, President, Caisse populaire Desjardins Bellevue de Québec,
          Michel Poulin, President, Caisse Desjardins du Petit-Pré, Charles-Henri Verret, VP,
          Caisse populaire Desjardins de Charlesbourg, Murielle Drapeau, President, Caisse
          Desjardins de Beauport, Julien Paré, GM, Caisse Desjardins de L’Île-d’Orléans
          Not Pictured: André Marceau, GM, Caisse populaire Desjardins de Québec
     14   14 quÉBeC-oueST–riVe-SuD CounCil oF rePreSenTATiVeS
          Hélène Lee-Gosselin, Officer, Caisse populaire Desjardins de l’Université Laval, Claude
          Rochette, GM, Caisse Desjardins de Pont-Rouge–Saint-Basile, Laurier Boudreault, GM,
          Caisse Desjardins des Rivières Chaudière et Etchemin, Clément Samson, President of the
          Council of Representatives and President, Caisse populaire Desjardins de Lévis, Madeleine
          Roy, President, Caisse Desjardins de la Chaudière, Jean Veillette*, GM, Caisse Desjardins
          de la Chaudière, Sylvie Larouche, VP of the Council of Representatives and President,
          Caisse populaire Desjardins de Saint-Augustin-de-Desmaures, Jean-Paul Gaumond,
          Officer, Caisse Desjardins de Bienville, Klara De Pokomandy, Officer, Caisse Desjardins
          de l’Ouest de Portneuf, Réjean Lemieux, GM, Caisse Desjardins de Sillery–Saint-Louis-de-
          France, Pierre Bellavance*, GM, Caisse populaire Desjardins du Vallon, Amélie
          Beauchesne, Officer, Caisse populaire Desjardins du Piémont laurentien, Jean-Guy Noël,
          President, Caisse Desjardins de Donnacona, Teresa Alvarez, President, Caisse populaire
          Desjardins Pointe-Platon de Lotbinière Not Pictured: Jean-Yves Parent, President, Caisse
          populaire Desjardins du Moulin des Mères
15        15 SAGuenAy–lAC-SAinT-JeAn–CHArleVoix eT CôTe-norD
          CounCil oF rePreSenTATiVeS
          Denis Guay, GM, Caisse populaire Desjardins de Chicoutimi, Réjean Perron, President,
          Caisse populaire Desjardins Sieur-de-Roberval, Serges Chamberland, President of the
          Council of Representatives and Officer, Caisse Desjardins d’Arvida-Kénogami, Lise Gagné,
          GM, Caisse populaire Desjardins de Pointe-Bleue, Ghislain Villeneuve, Officer, Caisse
          populaire Desjardins de La Baie, Michel Truchon, GM, Caisse Desjardins des Rivières,
          Danielle Amyot, Officer, Caisse populaire Desjardins de La Malbaie, Raymond Poirier,
          GM, Caisse populaire Desjardins de l’Estuaire (Charlevoix), Germain Perron, President,
          Caisse Desjardins de la Rive-Nord du Saguenay, Régis Tremblay, President, Caisse
          populaire Desjardins d’Alma, Clermont Tremblay, VP of the Council of Representatives
          and President, Caisse populaire Desjardins de Port-Cartier, Camil Maltais, Officer, Caisse
          Desjardins des Cinq-Cantons, André Martel, Officer, Caisse Desjardins de Dolbeau-
          Mistassini, Gemma Brisson, President, Caisse Desjardins du Saguenay–Saint Laurent,
          Jean Brassard, GM, Caisse Desjardins Cap-Martin de Charlevoix
          * No longer members of the council of representatives as of December 16, 2008.
            Replaced by, respectively, Sylvain Gaudreau, GM, Caisse populaire Desjardins de Saint-Agapit–
            Saint-Gilles and Armand Paré, GM, Caisse Desjardins de Wendake
                                                                                                                                                                15    16

A GROUP THAT EARNS                                                                                                                                                    BEST EMPLOYER                                                                    ATTRACTING AND KEEPING EMPLOYEES AND
                                                                                                                                                                                                                                                       CONTRIBUTING TO THEIR DEVELOPMENT

THE ENGAGEMENT                                                                                                                                                        IN CANADA                                                                        Like many other organizations, Desjardins must meet a sizeable challenge
                                                                                                                                                                                                                                                       in the next decade: to maintain enough qualified employees to meet

OF ITS OFFICERS                                                                                                                                                       Ranked among the 50 Best Employers in Canada
                                                                                                                                                                                                                                                       the needs of its members and clients.

                                                                                                                                                                                                                                                       In this sense, Desjardins has undertaken a major revision of both its
                                                                                                                                                                      in 2009, Desjardins considers it quite natural to                                pension plan and group insurance plan. In addition to helping Desjardins
Our challenge: To make every effort to ensure that                                                                                                                    offer its employees a stimulating environment that                               Group stand out from the competition, these plans promote employee
the councils of representatives effectively position                                                                                                                  is conducive to their personal and professional                                  retention and longer careers. Other steps are being undertaken to
Desjardins in the regions and that they implement                                                                                                                                                                                                      facilitate gradual retirement to accommodate employees nearing
                                                                                                                                                                      development. With nearly 42,000 employees,
                                                                                                                                                                                                                                                       retirement age who are interested in different work arrangements.
our strategic vision as an integrated cooperative                                                                                                                     its human capital is no doubt Desjardins Group’s
financial group within their respective region or group.                                                                                                              greatest strength.                                                               Desjardins innovated in 2008 in order to promote participation
                                                                                                                                                                                                                                                       by all officers, managers and employees in Desjardins Group’s
Democratic power is the cornerstone of the Desjardins cooperative                                                                                                     In December 2008, Desjardins was ranked among the 50 Best Employers              development, asking them to contribute in various ways to its
difference. Among the 5.8 million member-owners of the caisses,                                                                                                       on the prestigious list published in the Globe and Mail’s Report on              strategic reflection process.
there are 6,299 people that have taken their commitment to the                                                                                                        Business magazine and in La Presse newspaper. This ranking is based
next level by becoming elected officers. In that capacity, they see                                                                                                   on the results of an engagement survey carried out by Hewitt Associates          Nearly 2,000 officers, caisse general managers and senior executives
to the major orientations of the cooperative and participate in its              ASSEMBLY OF REPRESENTATIVES AT THE LÉVIS                                             among 20,000 Desjardins employees and managers in the spring of 2008.            were invited to take an active part in Desjardins Group’s development
                                                                                 CONVENTION CENTRE ON JUNE 7, 2008.                                                                                                                                    by participating in the main meetings and events held to bring
decision-making process.
                                                                                                                                                                      The survey gave respondents an opportunity to identify what they                 out innovative ideas to further the cooperative’s ambitions.
Member participation extends to several levels. Whether it be                                                                                                         consider to be the strengths and weaknesses of their working
the local caisse level, the regional level (councils of representatives/     Finally, the 17 presidents of the councils of representatives sit on the                 experiences at Desjardins. With a response rate of 75%, Desjardins               OPENING UP TO DIVERSITY
Assembly of Representatives), or the national level (such as the FCDQ        FCDQ Board of Directors, which plays a dual role: one to direct the                      could immediately conclude that engagement is an issue of great
Board of Directors), members are involved in the governance of all                                                                                                                                                                                     Desjardins has created strategies and stepped up its initiatives to obtain
                                                                             FCDQ as a business and the other as the body in charge of Desjardins                     interest to its employees.
of Desjardins Group, through their elected officers.                                                                                                                                                                                                   tangible results with respect to the representation of women, young
                                                                             Group’s strategic management. Five general managers from the caisses,
                                                                                                                                                                                                                                                       people, English speakers and people from cultural communities. Desjardins
                                                                             elected by the Assembly of Representatives, and the President and Chief                  A GREAT SENSE OF PRIDE                                                           is also more and more widely recognized by government bodies as a
To work together on a regional basis, the caisses are grouped under          Executive Officer of Desjardins Group are also members of the Board.
17 councils of representatives, whose boards of directors are composed                                                                                                The major trends culled from this survey are very positive. In fact, 80%         responsible enterprise with outstanding diversity and equity programs.
of the caisses’ elected officers and general managers. The councils                                                                                                   of respondents said they would not hesitate to speak favourably of               In fact, Desjardins Group was a finalist for the Québec government’s
                                                                             Called upon to further push their commitment and play an even more
of representatives each adopt a regional business plan and ensure its                                                                                                 Desjardins and recommend it as an employer to a friend looking for a             2008 Prix Égalité (equality award).
                                                                             determining role the development of Desjardins, the members of the
application, following up on the chosen strategies. They help identify       councils of representatives are now working with the caisse general                      job. More than 70% of respondents said that they would not like to
regional development issues, and are responsible for verifying member                                                                                                 have to leave Desjardins; they also said that their employer encourages          For the past several years, Desjardins has also been a member of the
                                                                             managers on the Collaboration, Participation and Connection with
satisfaction. Each council is responsible for the associative aspect of                                                                                               them to give the best of themselves every day.                                   Canadian advisory committee for Catalyst, the leading non-profit
                                                                             the Network building block, the mandate of which is to review and
activities involving the caisses in its region or group and the Fédération                                                                                                                                                                             membership organization working globally with businesses and the
                                                                             update our mechanisms for collaborating and communicate with the
des caisses Desjardins du Québec (FCDQ). Another important part of                                                                                                    Desjardins Group’s values remain central to its development and are a            professions to build inclusive workplaces and expand opportunities
                                                                             network on operational matters.
their function is to provide a presence in the regions and guarantee                                                                                                  main distinguishing feature for its employees. For example, the measures         for women and business. With offices in the United States, Canada
that the caisses’ concerns are noted and represented.                                                                                                                 taken to promote sustainable development are highly appreciated and              and Europe, and more than 400 pre-eminent corporations as members,
                                                                             In standard order, from left to right and bottom to top                                  recognized by most employees, who also say that they are very sensitive          Catalyst is the trusted resource for research, information, and advice
The 255 officers and managers of the 17 councils of representatives                                                                                                   to the concrete gestures Desjardins has made to open up to diversity. Finally,   about women at work.
                                                                             01 CollABorATion, PArTiCiPATion AnD ConneCTion
make up the Assembly of Representatives, an exclusive forum                  wiTH THe neTwork BuilDinG BloCk TASk ForCe                                               its employees say they are proud that Desjardins is a cooperative movement.
for consultation, establishing orientations and exchanging ideas.            Yvon Vinet, President, Caisse Desjardins de Salaberry-de-Valleyfield, Madeleine Roy,                                                                                      WATCHING OVER THE HEALTH OF
                                                                             President, Caisse populaire Desjardins de Saint-Nicolas, Serge Cloutier, General                                                                                          OUR EMPLOYEES
This is the body that elects Desjardins Group’s President and Chief
                                                                             Manager (GM), Caisse Desjardins Allard—Saint-Paul, Denis Laforest, GM, Caisse
                                                                                                                                                                      MEETING THE CHALLENGES AHEAD
Executive Officer. The councils of representatives are currently actively
                                                                             populaire Desjardins du Centre-ville de Québec, Danielle Lortie, GM, Caisse populaire                                                                                     More than ever, Desjardins Group wants to remain among the leaders
participating in the reflections that will lead to Desjardins Group’s                                                                                                 To successfully meet the challenges of the next few years, Desjardins will
                                                                             Desjardins de l’Ouest de Laval, André Shatskoff, GM, Caisse populaire Desjardins
new Strategic Plan for 2010-2012 and its related projects.                                                                                                            be calling upon strengths that are recognized by its employees and that          in terms of a healthy workplace. To achieve this aim, it has put forth a
                                                                             Terrebonne, Claude Lambert, GM, Caisse Desjardins de Beauce-Centre, Raynald
                                                                             Bisson, Central Region Executive Division, FCDQ, Louise Gaudreault, GM, Caisse           distinguish it from other players on the financial markets. Desjardins is        number of health-promoting initiatives and illness prevention strategies
                                                                             d’économie Desjardins de la Métallurgie et des Produits forestiers Not pictured: Lise    very proud to include among its assets a respectful working atmosphere,          to benefit its employees, families and retirees, a great many of whom
                                                                             Lauzon, GM, Caisse populaire de la Vallée inc.                                           managers who support their employees and encourage their success,                have participated in these programs.
                                                                                                                                                                      opportunities for training and development, employee benefits, pension
                                                                             02 oFFiCer ADViSory CommiTee
                                                                             Emanuel Linhares, President, Caisse d’économie des Portugais de Montréal,                plans and mechanisms to promote employee life/work balance.                      Among its major achievements, Desjardins is particularly proud to have
                                                                             Claire Sarrazin, Director, Caisse Desjardins de Joliette, Aline Bouchard, President,                                                                                      set up rapid intervention services for its employees, thereby becoming
                                                                             Caisse populaire Desjardins de La Malbaie, Francine LeGrand, President, Caisse                                                                                            a leader in terms of employee illness prevention programs.
                                                                             populaire Desjardins du Sault-au-Récollet, Yvon Vinet, President, Caisse Desjardins
                                                                             de Salaberry-de-Valleyfield, Annie P. Bélanger, President, Caisse populaire Desjardins                                                                                    Recognized both internally and externally as a Best Employer due to its
                                                                             Mer et montagnes, Gilles A. Pelletier, President, Caisse populaire Desjardins de
                                                                                                                                                                                                                                                       human approach and distinctive values, Desjardins intends to remain the
                                                                             Rivière-du-Loup, Claude Ouellet, President, Caisse Desjardins de Dolbeau-Mistassini,
                                                                             Lorrain Barrette, President, Caisse Desjardins de Rouyn-Noranda Madeleine Roy,                                                                                            preferred choice for its current employees and for those seeking a job.
                                                                             President, Caisse populaire Desjardins de Saint-Nicolas, Bernard W. Morissette,
                                                                             President, Caisse populaire Desjardins de Gatineau, Réjean Bellemarre, President,
                                                                             Caisse d’économie Desjardins des Travailleurs unis, Michel Blouin, President, Caisse
                                                                             populaire Desjardins du Centre-ville de Québec, Martin Jacques, President, Caisse
   UNDER THE DESJARDINS GROUP DEVELOPMENT                                    Desjardins de Beauce-Centre, Jacques Sylvestre, Secretary, Caisse Desjardins de
   PLAN, AN ADVISORY COMMITTEE MADE UP                                       Saint-Hyacinthe, Yvan Laurin, Vice-President, Cooperation and Quality, FCDQ, Michel
   OF ELECTED OFFICERS WAS MANDATED TO                                       Picard, Vice-President, Caisse populaire Rideau d’Ottawa inc. Not pictured: Amélie
   PROVIDE THE TASk FORCES WITH INFORMATION                                  Beauchesne, Secretary, Caisse populaire Desjardins du Piémont Laurentien, Carole
   ON OFFICERS’ CONCERNS AND INITIATIVES                                     Chevalier, Director, Caisse Desjardins Les Estacades, Gabrielle Gosselin, Director,
   LIkELY TO MOTIVATE AND MOBILIZE THEM.                                     Caisse Desjardins Cité-du-Nord de Montréal, André Jean, President, Caisse Desjardins
                                                                             de Drummondville, Daniel Rousseau, President, Caisse Desjardins de Chomedey,
                                                                             Jacques Sansoucy, President, Caisse Desjardins de Granby—Haute-Yamaska

                                                                                                                                                                  OU R H UMAN CAPITAL
SOOFUN LEE, Personal Finance advisor, LEAH URSULIAK, specialized support Clerk – iT Project Management Office
GIL-OLIVIER RAYNAL, Business Coordinator, asset Management, NATHALIE TREMBLAY, Health insurance Products Manager

                                                                                As such, Desjardins the employer wants to share this recognition
                                                                                with its approximately 42,000 employees, thanks to whom Desjardins is
                                                                                one of the largest employers to appear on the list of the Best Employers

   THE EMPLOYER WITH                                                            in Canada. We would like to thank them for their constant efforts,
                                                                                for their willingness to see Desjardins progress on a national—and even

                                                                                international—level. It’s because of them that Desjardins is one of the
                                                                                country’s best employers!

                                                                                                                                                                  de sj ar d i n s
                                                                                This honour is of great importance for Desjardins, first and foremost
   For Desjardins Group, being among the 50 Best                                because it confirms that our employees are engaged. Second, because
   Employers in Canada is an honour we owe to each                              this enviable position should help us gain national brand awareness,
   of our 42,000 employees. Because cooperative values                          thereby enabling us to meet the challenges of the upcoming labour
                                                                                shortage by providing us with an additional asset for attracting
   are the basis of what makes us different, it is our                          new talent.
   employees who, day after day, through their talent
   and commitment, make the largest cooperative                                 THE HEART OF OUR ORGANIZATION
   financial group one of the best employers in                                 At Desjardins, our employees are the heart of our organization; as such,
   the country.                                                                 they are central to all our activity. They are therefore the ones who will
                                                                                benefit from the direct and concrete advantages of this honour. In fact,
   All of Desjardins is very proud of the results of the employee engagement    today more than ever, Desjardins Group will continue to do everything
   survey carried out in 2008. When it signed up for the first time for         it can to offer them a stimulating workplace where they can grow
   the Best Employers in Canada study, Desjardins Group simply hoped to         professionally, and it will continue to take their opinions to heart
   gain a portrait of engagement levels in its organization and to measure      in its efforts towards continuous improvement.
   itself against the best employers in the country, whether they employ
   400 people or more than 42,000! Gaining access to the prestigious
   50 Best Employers in Canada rating for 2009 was well beyond
   expectations, especially in the context of today’s economic turmoil.

                   The growth and development of desjardins Group rely on the caisses—its driving force—and their
                   direct link with individual and business members throughout the regions and among the groups.
                   each desjardins Group subsidiary works for the caisses, thereby enabling them to offer the best possible
                   range of services. Together, the caisses and subsidiaries contribute to the growth of desjardins
                   by developing new markets, particularly in the Greater Montréal area, in Ontario and elsewhere
                   across Canada.

                   CONSUMER MARKET
                                                                                                 The top mortgage lender in Québec, Desjardins saw its outstandings

                                                                                                 for residential financing jump by $4.1 billion. A review of business practices
                                                                                                 helped strengthen our relationship with borrowers. Outstandings for
                                                                                                 consumer financing increased by $1.5 billion: $704.3 million at the caisses
                   Close proximity to our members and their needs will                           and $747.2 million via credit cards, including the Accord D financing
                   always remain the key to our success. The strength of                         program. Marketing of the Versatile Line of Credit and increasingly
                                                                                                 widespread use of credit cards have created a very favourable context
                   the caisses to act locally with our members, combined
                                                                                                 for future development.
                   with the strength of a Group that also enables us to act
                   globally, still constitutes our greatest strategic advantage.                 Throughout 2008, Desjardins maintained and even strengthened its
                   It is the strong position of the caisses, backed by their                     enviable position in the payment and credit card financing industry.
                                                                                                 Desjardins Card Services in fact saw a 15.08% growth in business volume,
                   subsidiaries, that will enable Desjardins Group to become                     for a total of $49.9 billion – $43.4 billion in Québec and $6.5 billion
                   the main financial wealth manager of consumers and,                           in the rest of the country. Operating results rose by 14% to exceed
                   among other things, to continue to achieve solid                              $180.8 million.
                   operating results.
                                                                                                 Some 2.1 million users carried out 759 million automated transactions
                                                                                                 through AccèsD—an increase of 12.9% over 2007.
                   In 2008, 61% of individual members of Desjardins said they were very
                   satisfied with the services provided by their caisse, up 1% over 2007. This
                   rise was due mainly to increased consideration and forethought shown by
                   Desjardins staff towards members. Results showed a 3-point improvement
de sj ar d i n s

                   in each of these service aspects, which leads to greater member loyalty—
                   very important given today’s economic turmoil.                                                                 Leadership in the Greater
                                                                                                                                  Montréal Area and the cultural
                   Thus, despite the financial turbulence at the end of the year and                                              communities
                   increasingly strong competition, Desjardins still stood out on the consumer
                   market in 2008.                                                                                                 Through its offer of personalized services
                                                                                                                                   in a dozen different languages, the
                   With respect to savings and investment, net sales for the cooperative                                           professionals at Carrefour Desjardins,
                   network totalled $5.7 billion, representing growth of 62.07% over 2005.                                         devoted to developing the downtown
                   Since the start of 2006, Desjardins Group’s investment-savings outstandings                                     Montréal markets, showed sales of
                   rose by $0.3 billion. Capital market fluctuations, however, affected             $85.6 million, which augurs well for the future and brings cumulative
                   results in Q2.                                                                   results to $161.5 million since its 2007 opening. An institutional
                                                                                                    advertising campaign aimed at increasing brand awareness of
                                                                                                    Desjardins and understanding of its cooperative difference among
                                                                                                    cultural communities was carried out in 2008 in the Greater Montréal
                                                                                                    Area, thus complementing the actions of the caisses already present
                                                                                                    in this area and facilitating business development.

                                        Socially responsible investing viewed as a plus
                                        According to a poll carried out by SOM on behalf of Desjardins, 71% of Quebecers say they are attracted by
                                        the notion of socially responsible investing (SRI). Up to 59% of those surveyed would consider investing a portion
                                        of their savings in such products. In fact, 62% of Quebecers say they would feel pride in purchasing shares of
                                        an SRI fund, while 69% place importance on the ability to influence corporate behaviour. Some 64% believe
                                        that financial institutions have a duty to offer SRI funds to their clientele.

FOR OUR MEMBERS                                                                   In accordance with its cooperative values and principles, Desjardins plans
In signing up for a new federal government registered savings vehicle             to consolidate its position as leader in socially responsible investing by
called the tax-free savings account (TFSA), Desjardins worked hard to enable      constantly broadening its offering of this type of products to its members.

                                                                                                                                                                  HIGHL IGHTS
its members to start using this new savings tool as of January 1, 2009
and thus reduce their tax burden.                                                 The strategic partnership signed between Desjardins and Canada’s
                                                                                  provincial credit union centrals to buy 50% of The Ethical Funds Company,
In one of the most recent technological developments, the chip card—              the largest manufacturer of socially responsible funds in the country, led
which offers increased security for Desjardins cardholders—was launched           to the development of the SocieTerra Portfolios, a unique offer not found
in the Saint-Jérôme area in 2008. Rollout in the rest of the province             anywhere else in Canada.
will continue throughout 2009.
                                                                                  These new socially responsible investment portfolios enable Desjardins
Still under the heading of ensuring the security of transactions, Desjardins      members to join together in growing their investments while helping
added a new feature to the AccèsD service known as “Strong Authentication”.       protect the environment, affirming their sense of social responsibility
This measure reduces the risk of fraud and illustrates Desjardins Group’s         and encouraging companies to display better governance.
desire to protect the personal information of its members.
                                                                                  The SocieTerra Portfolios are unique for two reasons. First of all, because
Meanwhile, the AccèsD overhaul carried out in 2008 completely                     they are the only socially responsible funds that are grouped in profile
remodelled the system, creating a better tool for transactions, product           portfolios and second, because they enable their unitholders to “make
acquisitions, decision-making and communication between the caisse and            a difference” with their investments. This is because, thanks to the
its members. Members will now be able to receive notices and targeted             commitment made by the shareholders of The Ethical Funds, SocieTerra
offers via AccèsD.                                                                Portfolios take an approach to the companies making up their funds that
                                                                                  encourages them to constantly improve their social and environmental
Since November 2008, an overdraft protection service enables users to             performance and their governance.

                                                                                                                                                                  de sj ar d i n s
automatically top up their personal chequing account using their VISA
card, for any type of overdraft.                                                  ENVIRONMENTAL SPINOFFS OF THE ECO-FRIENDLY
                                                                                  STATEMENT CHALLENGE
Finally, gaining the loyalty of the youth clientele is essential to the
long-term continuity of Desjardins Group. To help us accomplish this,             In its communications dealing with AccèsD, Desjardins took care to stress
the caisses were asked to adopt a new proactive approach to their                 the positive environmental spinoffs of virtual statements and automation.
relationship with young people aimed at reducing causes of dissatisfaction,       In the end, over 300,000 members signed up for the Desjardins Eco-Friendly
such as the requirement for loan endorsements.                                    Statement Challenge in 2008, and more than 114,000 trees were planted
                                                                                  under the program. This approach, combined with Desjardins Group’s
                                                                                  commitment as an active partner of Earth Day, is yet another way for
                                                                                  it to affirm its leadership in sustainable development.

                   BUSINESS MARKET                                                                                                       Increased visibility among SMEs
                                                                                                                                        In order to fully carry out its economic
                   Through the efficiency of its business centres, which                                                                role, Desjardins plans to strengthen its
                   remain close to members, and the strong contribution                                                                 position among businesses, especially
                                                                                                                                        in the Greater Montréal market. The
                   of its subsidiaries, Desjardins Group intends to become
                                                                                                                                        Desjardins and Co. advertising campaign
                   a leader among SMEs by offering a range of products                                                                  begun in the fall of 2008, particularly
                   and services fully adapted to the needs of all, from                                                                 in the English-language media, was very
                   the smallest business to the most complex enterprise.                                   effective in increasing brand awareness for the business centres,
                                                                                                           bringing attention to the expertise of our account managers and
                   This is how Desjardins supports entrepreneurs and                                       the Desjardins offer to businesses.
                   businesses in their development, making their success
                   a priority.

                   Because of its desire to support businesses in their development projects,           Also noteworthy are our business loans results. In fact, new heights were
                   Desjardins helped present the 2008 Grands Enjeux SECOR/Les Affaires                  reached with $26.9 billion in loans to businesses and governments, creating
                   conference series. Designed especially for entrepreneurs, these meetings             a substantial 11% increase in the overall loan portfolio as compared to 2007,
                   help business owners understand priorities with respect to employee                  achieved mainly in commercial and industrial credit to SMEs. Caisse centrale
                   engagement in a context of the growing labour shortage. They also

                                                                                                        Desjardins also saw impressive growth with loans to large businesses
                   offer entrepreneurs new business models, which are better adapted                    increasing by 37.0%—a remarkable feat in the current economic context
                   to the current trend of global competition.                                          and an illustration of Desjardins Group’s commitment to promote the
                                                                                                        development of Québec businesses as well as those of the rest of Canada,
                   It was also with the intent of offering something more than just financing           and even all of North America.
                   that the new Desjardins and Co. advertising campaign focused on businesses
                   successes through inspiring testimonials by entrepreneurs. Similarly,                The same holds true for business savings, which showed marked growth
                   another eight companies this year were awarded Desjardins Prizes.                    in 2008, ending the year with over $21.5 billion. What that means is that
                                                                                                        more and more people believe in the advantages of entrusting not only
                   The creation of the Fonds coopératif d’aide à la relève agricole (Farm               their financing but also the management of their equity to Desjardins,
                   succession assistance cooperative fund) is a strong example of the                   a financial institution with an overall service offering that meets the most
                   Desjardins difference. Together with Coop Fédérée, Desjardins has created            sophisticated needs of its members.
                   measures to help with farm ownership transfers within the agricultural
                   sector, thus preserving the agricultural heritage of our outlying regions.
                                                                                                        PRIORITIZING THE BUSINESS SERVICES OFFERING
                   And in the area of succession, collaboration between Desjardins Venture
                   Capital and the business centres continues to be highly productive,
                                                                                                        Because the needs of businesses are central to its concerns and because
                   providing entrepreneurs with substantial support when it comes time
                                                                                                        its service offering is as yet unsurpassed, Desjardins remains the institution
                   to pass the torch.
                                                                                                        of choice for businesses.

                   GAINING THE CONFIDENCE OF BUSINESSES                                                 The Mid-Market Business Centre (MMBC), created in 2007, continues
                                                                                                        to grow, confirming that it was an excellent initiative. Its results for 2008
de sj ar d i n s

                   The actions taken by Desjardins have been well received among businesses
                                                                                                        alone were highly enviable, surpassing targets by 23%. Although its offices
                   that place their trust in us, as evidenced by the results of a satisfaction survey
                                                                                                        are located in downtown Montréal, a market in which Desjardins would
                   carried out among our members. In fact, 65% of survey respondents said
                                                                                                        like to increase its presence, the MMBC acts for the benefit of all the caisses,
                   they were very satisfied with the services offered by Desjardins, a one-point
                                                                                                        regardless of geographical location. This is amply demonstrated by the fact
                   increase over 2007. This is quite impressive considering the challenges
                                                                                                        that $39 million in loans was paid out this year on behalf of caisses from
                   faced by businesses in 2008 as a result of the year’s economic difficulties.
                                                                                                        outlying regions.
                   The skill and expertise of the 1,200 account managers who support these
                   companies on a daily basis are clearly part of the equation that gives
                                                                                                        Desjardins remains the uncontested leader among agricultural businesses
                   business owners such a positive opinion of Desjardins.
                                                                                                        and a preferred partner of businesses in the agri-food sector. The $178-million
                                                                                                        increase in financing shows beyond any doubt that Desjardins continues
                                                                                                        to support businesses in this sector, despite the challenges that farms have
                                                                                                        had to face in recent years.

Electronic	services	such	as	point-of-sale	terminals	and	AccèsD	Affaires	are	         Such	results	would	be	impossible	without	close	partnerships.	First	and	
extremely	valued	by	businesses	because	they	make	transactions	increasingly	          foremost,	DVC	is	in	constant	collaboration	with	the	Desjardins	business	
efficient.	Desjardins	is	more	determined	than	ever	to	expand	this	service	           centres,	with	which	it	carried	out	most	of	its	activities.	More	recently,	
offering,	and	has	jumped	at	the	opportunity	to	team	up	with	some	excellent	          DVC	entered	into	a	partnership	with	BioScience	Managers	Limited,	a	firm	
partners	for	the	greater	benefit	of	our	SME	members.	The	recent	agreement	           of	international	managers	specializing	in	biotechnology,	and	entrusted	its	
signed	between	Raymond	Chabot	Human	Resources	and	Desjardins	Payroll	                most	promising	investments	in	the	sector,	as	well	as	the	necessary	funds	
and	Human	Resources	Services	is	an	example	of	that;	companies	will	now	              to	pursue	its	own	growth,	to	the	firm.
be	able	to	find	greater	opportunities	for	strategically	managing	their	
human	capital.	                                                                      As	a	fund	manager,	DVC	oversees	the	activities	of	Capital	régional	et	
                                                                                     coopératif	Desjardins	(CRCD),	which	had	more	than	122,000	shareholders	
BuSineSS MeRGeRS, acQuiSitionS anD                                                   at	the	end	of	2008.	That	same	year	saw	nearly	$73	million	committed	to	
                                                                                     various	projects,	bringing	the	number	of	companies	benefiting	from	DVC’s	
DiVeStituReS unit: a neW WaY to SuPPoRt
                                                                                     strategic	support	to	313,	and	the	number	of	jobs	maintained	or	created	
BuSineSSeS                                                                           by	these	transactions	to	more	than	34,000.
With	many	business	leaders	and	owners	retiring,	the	number	of	business	
sales	or	transfers	will	be	rising.	The	2008	creation	of	the	specialized	Business	    CRCD	did	not	escape	the	economic	upheavals	and	resulting	financial	
Mergers,	Acquisitions	and	Divestitures	Unit	will	enable	Desjardins	to	position	      difficulties	that	negatively	affected	share	value.	However,	new	provisions	
itself	in	this	market	niche	and	add	to	the	service	offering	available	through	       adopted	by	the	ministère	des	Finances	du	Québec	in	the	fall	of	2007	
the	business	centres	and	the	MMBC.                                                   granting	the	subsidiary	an	unlimited	life	span,	among	other	things,	have	
                                                                                     made	it	possible	to	move	toward	an	overall	portfolio	management	method.	
                                                                                     Had	it	not	been	for	that	concession,	the	instability	of	the	North	American	

                                                                                                                                                                          HiGHl iGHtS
                                                                                     economy	may	have	had	an	even	greater	impact	on	CRCD’s	results.

VENTURE	CAPITAL                                                                      Despite	this	drop	in	value,	and	considering	the	50%	tax	credit	that	
                                                                                     the	investment	brings,	shareholders	who	invested	7	years	ago,	i.e.	on	
                                                                                     December	31,	2001,	would	receive	returns	of	9.2%.	In	addition	to	the	
Maintaining	job-generating	businesses	in	outlying	                                   fund’s	unlimited	life	span,	the	50%	tax	credit	return	also	attracted	CRCD	
regions	has	always	been	central	to	the	concerns	of	                                  shareholders;	over	$175	million	was	underwritten	since	December	2007.	
our	subsidiary,	Desjardins	Venture	Capital.	More	than	                               The	incredible	support	of	the	entire	Desjardins	cooperative	network	
                                                                                     was	a	definite	factor	in	this	success.
a	financial	partner,	Desjardins	Venture	Capital	provides	
a	network	and	the	necessary	expertise	to	support	                                    Meanwhile,	in	2008,	the	Québec	government	renewed	its	confidence	
the	growth	and	expansion	of	businesses	as	well	as	                                   in	DVC	by	transferring	the	assets	of	Société	Innovatech	du	sud	du	Québec	
                                                                                     to	Desjardins	–	Innovatech	S.E.C.,	one	of	its	funds	under	management.	
their	merger,	acquisition	or	initial	public	offering	plans.
                                                                                     This	type	of	transaction	enables	DVC	to	be	even	more	available	
                                                                                     to	entrepreneurs	outside	the	urban	centres.
Through	its	activities	in	four	business	sectors,	Desjardins	Venture	Capital	
(DVC)	offers	entrepreneurs	the	kind	of	support	that	creates	substantial	
economic	spinoffs	in	their	respective	areas.	Venture	capital,	development	
capital,	buyout	capital	as	well	as	capital	intended	for	resource	regions	
and	cooperatives	have	had	a	significant	impact	on	the	development	
of	all	regions	across	Québec	in	2008.

                                                                                                                                                                          De sj ar D i n s
                                         Helping SMes pass the torch
                                         Through	Capital	régional	et	coopératif	Desjardins,	Desjardins	Venture	Capital	(DVC)	carried	out	various	investments	
                                         aimed	at	bridging	the	gap	between	two	generations	of	entrepreneurs,	thereby	enabling	business	founders	to	retire	
                                         with	their	assets	secure,	and	helping	the	management	team	pick	up	the	torch.	DVC	drew	up	strategies	to	promote	
                                         the	emergence	of	worker	shareholder	cooperatives,	a	solution	that	allows	employees	to	become	co-owners	of	their	
                                         company,	together	with	their	management	team	and	Desjardins.	Fempro,	a	Drummondville-based	company	where	
                                         its	130	employees	and	officers	did	just	that,	is	a	striking	example	of	the	kind	of	concrete	action	taken	by	DVC	to	bring	
                                         the	cooperative	difference	to	businesses	while	furthering	economic	development	in	the	regions.	This	type	of	transaction	
                                         is	a	glowing	example	of	the	kind	of	concrete	action	that	DVC	can	provide	in	extending	the	cooperative	difference	
                                         throughout	the	business	environment	while	contributing	to	the	economic	development	of	the	outlying	regions.

                                                           on-the-mark strategic orientations and an offer that’s relevant to the canadian market
                                                           Desjardins	Financial	Security	is	continuing	its	progress	throughout	Canada	with	an	offer	adapted	to	the	specific	
                                                           needs	of	a	Canadian	clientele.	For	example,	a	new	disability	insurance	product	was	added	to	its	range	to	meet	the	
                                                           needs	of	a	new	business	partner	outside	Québec.	Distribution	agreements	were	signed	with	twelve	new	strategic	
                                                           partners.	New	financial	centres	were	opened	in	Saskatoon	and	in	the	Toronto	and	Montréal	areas.	DFS	travelled	
                                                           to	fifteen	different	cities	across	Canada	on	a	tour	to	present	the	Helios	guaranteed	investment	fund	contract.	
                                                           There	was	also	an	advertising	campaign	in	Toronto,	Calgary	and	Vancouver	to	support	the	tour.	

                   LIFE	AND	HEALTH	
                                                                                                     The	Vision	family	stood	out	among	products	offered	to	individuals,	thanks	
                                                                                                     to	the	addition	of	new	health	and	savings	insurance	products.	In	an	effort	
                                                                                                     to	further	develop	their	expertise,	sales	reps	became	specialized	in	four	

                   INSURANCE                                                                         distinct	markets:	individuals,	specialized	offer,	emerging	markets	and	current	
                                                                                                     clients	(known	as	the	“in-force”).	The	range	of	services	for	individuals	was	

                                                                                                     thus	adapted	even	further	to	the	needs	of	this	very	important	clientele.
                   Going	beyond	savings	and	investment	services,	
                                                                                                     In	2008,	DFS	saw	growth	of	17.1%	in	its	AssurDirect	administered	
                   Desjardins	Group	also	offers	its	members	and	clients	                             premium	volume.	All	coverage	for	this	offer	was	broadened	to	support	
                   various	means	to	deal	with	life’s	unexpected	events	                              each	client	though	all	life	stages.	Access	to	information	on	
                   and	ways	to	help	them	plan	for	a	financially	secure	                              was	also	improved	through	the	launch	of	online	microsites	on	certain	
                                                                                                     products	and	the	perfecting	of	the	travel	insurance	purchase	simulator.
                   retirement.	For	example,	Desjardins	offers	a	select	
                   combination	of	life	and	health	insurance	options,	                                RetiReMent SaVinGS: noW eVen MoRe SecuRitY
                   to	protect	against	the	financial	impact	of	accident,	
                                                                                                     In	terms	of	individual	retirement	savings,	DFS	added	a	Guaranteed	Lifetime	
                   illness	or	death.
                                                                                                     Withdrawal	Benefit	to	its	Helios	Guaranteed	Investment	Fund	product,	
                                                                                                     providing-age-based	income,	an	annual	protected	value	reset	and	the	
                   In	the	final	phase	of	its	2006-2008	Strategic	Plan,	Desjardins	Financial	         highest	accumulation	bonus	in	Canada.	These	new	tools	will	help	investors	
                   Security	(DFS),	our	life	and	health	insurance	subsidiary,	posted	results	         more	easily	reach	their	retirement	income	objectives.	Another	new	offer	
                   worthy	of	its	energetic	and	efficient	efforts	to	strengthen	its	presence	         was	the	DFS	Transition	account	which,	as	of	January	2009,	can	be	converted	
                   throughout	Canada.                                                                to	a	TFSA.	Investors	can	now	benefit	from	investments	that	offer	satisfactory	
                                                                                                     returns	as	well	as	a	certain	measure	of	medium-	and	long-term	stability.
                   Despite	the	turmoil	on	capital	markets,	DFS	reported	a	9.6%	growth	
                   in	sales	for	insurance	premiums.	Growth	in	insurance	premium	income	
                                                                                                     fleXiBle, effectiVe, efficient
                   outside	Québec	is	continuing,	with	an	increase	of	17%	over	2007.	
De sj ar D i n s

                   In	Québec,	there	was	a	6.4%	increase	in	premium	income.	With	return	
                                                                                                     anD coMPetitiVe offeRS
                   on	equity	at	5.9%,	Desjardins	Financial	Security	continues	to	offer	one	          DFS	has	broadened	its	offer	in	terms	of	flexible	plans,	particularly	through	
                   of	the	best	rates	in	the	industry	anywhere	in	Canada.                             the	development	of	its	TRACE	Lifecycle	Environment	product.	This	group	
                                                                                                     retirement	savings	product	has	evolved	to	remain	abreast	of	the	realities	
                   In	group	insurance,	the	volume	of	administered	premiums	from	groups	              of	the	member,	starting	with	the	member’s	situation	upon	registration,	
                   and	businesses	was	up	by	12.4%,	while	for	the	Canadian	industry	                  then	adapting	to	the	holder’s	age	and	risk	tolerance.	DFS	also	introduced	
                   as	a	whole,	average	growth	was	only	7.3%	in	2007.                                 the	possibility	of	integrating	a	TFSA	into	a	group	retirement	savings	plan.	
                                                                                                     This	provision	is	an	attractive	and	competitive	advantage	for	employers	
                   SPecialiZeD, coMPleMentaRY offeRS                                                 in	recruiting	and	maintaining	talented	employees.

                   The	sustained	increase	in	volume	of	administered	premiums	continued	
                                                                                                     Finally,	a	brand-new	secure	Web	site	was	created	to	provide	solid	
                   for	DFS	products	offered	to	Desjardins	caisse	members.	The	Versatile	Line	
                                                                                                     support	to	employers	in	the	daily	management	of	their	plan.	Accessibility	
                   of	Credit	enabled	DFS	to	continue	rolling	out	loan	insurance	solutions	
                                                                                                     to	transactions	and	reports	is	one	of	the	biggest	resulting	benefits.
                   adapted	to	each	of	the	new	financing	products	offered	by	the	caisses	
                   to	their	individual	members.	It	also	set	up	a	program	combining	assistance	
                   services	for	the	insurance	products	offered	to	all	members.	Meanwhile,	
                   a	new	type	of	overall	life	and	health	insurance	offer	was	introduced	
                   to	the	business	centre	clientele.

GENERAL INSURANCE                                                                IMPROVING E-BUSINESS
                                                                                 New DGIG initiatives were aimed at offering clients continuous improvements
                                                                                 to its Web pages. The changes include a brand-new home page, a new
Protecting our members’ and clients’ assets in case of                           Claim Centre section and improved browsing features. Since January 2008,
disaster is a fundamental contribution to their financial                        in addition to automobile insurance quotes, consumers can now obtain
                                                                                 home insurance quotes online.
security. Our Desjardins General Insurance Group
subsidiary is responsible for developing products and                            TARGETING EFFICIENT MEASURES FOR CLAIMS
services adapted to a wide range of diverse situations.                          AND PROFITABILITY
                                                                                 Despite the major increase in the property insurance loss ratio due to poor
In 2008, Desjardins General Insurance Group (DGIG), our general insurance
                                                                                 weather conditions, DGIG has once again gained a competitive edge
component, suffered a significant drop in profitability. DGIG’s performance
                                                                                 in Québec with its automobile and home insurance. Revised rates,
was affected as never before, on two fronts simultaneously, with a major
                                                                                 fine-tuned underwriting and updated contracts are part of the effective
increase in the property insurance loss ratio due to unusually poor weather
                                                                                 measures put in place.
conditions, and a considerable decrease in investment income due to capital
market turmoil. Both these factors affected the entire industry across Canada.
                                                                                 CONTINUING GROWTH IN GROUP INSURANCE
However, despite unfavourable conditions, DGIG succeeded in coming
                                                                                 Under its The Personal banner, active in group insurance across Canada,
out on top in a number of areas. Among other positive results, we recorded
                                                                                 DGIG signed on nearly a dozen new groups, including HBC staff, the Ontario
growth in all markets despite the continued drop in automobile ratemaking,

                                                                                                                                                                    HIGHL IGHTS
                                                                                 Hospital Association, Magna International and the Union of Solicitor
earnings on insurance operations in spite of the high property insurance
                                                                                 General Employees. The Personal also renewed some forty partnerships
loss ratio, and operating costs among the lowest in the industry even with
                                                                                 throughout the country. And several group caisses celebrated the
significant investments in strategic projects.
                                                                                 20th anniversary of their insurance plan with The Personal.

While staying the course on operational excellence, DGIG continued work
on the projects in its three-year 2006-2008 action plan, numerous activities     STAYING ON TOP OF CLIENT EXPECTATIONS
in partnership with the Desjardins caisses, as well as initiatives aimed at      DGIG also carried out a number of initiatives to increase client loyalty and
driving business growth. Those combined activities helped strengthen             business. One initiative involved making the five-year “Replacement Value”
the foundations of the organization, further developing its competitive          guarantee now available in Québec at a competitive price, meeting the
advantage and building a most promising future.                                  needs of new car owners and lessees. Its Desjardins General Insurance (DGI)
                                                                                 subsidiary also rewards Ontario drivers who use winter tires with a 5%
In addition, DGIG underwent a change of the guard at the end of 2008.            rebate on their automobile insurance.
Mr. Jude Martineau retired after a remarkable 14-year mandate at the head
of this subsidiary. He leaves behind an outstanding legacy for Desjardins
Group and his successor, Ms. Sylvie Paquette, a highly experienced
manager and a member of the management team since 1994.

                                                                                                                                                                    de sj ar d i n s
                                        Desjardins banner in Ontario: A successful breakthrough!
                                        Launched in March 2008 under the Desjardins banner, a vast advertising campaign under the theme “Improved
                                        Insurance” was launched to promote our products in Ontario, the largest insurance market in Canada. This was the
                                        first stage in a long-term commitment by DGIG to carve out a preferred place on the Ontario market. The campaign
                                        concept of improved insurance succeeded in attracting the attention of our potential clientele and contributed
                                        to a 6% increase in premium volume in Ontario.

                   SECURITIES                                                                          ASSET MANAGEMENT
                   Our brokerage subsidiary, Desjardins Securities,                                    The year 2008 was extremely demanding for
                   is among the top-rated brokerage companies in                                       Desjardins Asset Management, our investment
                   Québec and is increasingly asserting its presence on                                experts, as the subsidiary had to deal with the highly
                   the Canadian market. In 2008, Desjardins Securities,                                unstable subprime mortgage market in the U.S.
                   like all companies in the financial services industry,
                   especially in securities, had a very difficult year with                            The decline of Desjardins Asset Management’s assets under management
                                                                                                       from over $50 billion in 2007 to $38.4 billion in 2008 was a clear sign of
                   the extreme volatility on financial and stock markets.                              the difficult financial environment. Real estate investment portfolios, which
                                                                                                       make up 85% of the assets handled by Desjardins Asset Management,
                   The crisis began towards the end of the third quarter in 2007 and                   were the hardest hit by the crisis. Hedge funds also garnered distinctly lower
                   continued throughout 2008, with particularly devastating effects                    returns than expected. In compliance with our risk management protocol,
                   in the third and fourth quarters of that year.                                      substantial disinvestments were made on several funds. The Alternative
                                                                                                       and Perspective Plus guaranteed-capital structured products distributed
                   The TSX stock index lost more than 35% of its value in 2008 compared                by the caisse network were among the products using hedge
                   with the corresponding period in 2007. This loss had a negative effect              fund investments.
                   on income generated by our firm in almost every business sector.

                   For the first time in the last six fiscal years, Desjardins Securities showed       In terms of mortgage investment and institutional financing, Desjardins Asset
                   negative income growth over the previous year.                                      Management remained a force for its partners by achieving $521 million
                                                                                                       in new business, despite the fact that the economic crisis led to restricted
                   On the positive side, thanks to synergies between the caisses and our               financing on markets in general. With respect to institutional financing,
                   investment advisors, more than 20,000 new clients joined Desjardins                 prospecting activities that were carried out in 2008 are expected to pay
                   Securities in 2008, thus increasing its market share among the consumer             off in 2009.
                   clientele in Québec.
                                                                                                       Following the 2007 transfer of the Lévis campus buildings, the real estate
                   Income from sectors devoted to institutional and business markets were              investment portfolio reached its full capacity in 2008 with the transfer
                   hard hit. Business financing, among other sectors, was marked by a severe           of Complexe Desjardins in Montréal to Desjardins Financial Security.
                   slowdown in activities in 2008 for the entire North American market,
                   since capital markets were not open to receiving new issues. In 2008,               In 2009, Desjardins Asset Management plans to manage its real estate
                   for the first time in history, no Canadian company listed new shares                portfolio even more selectively to optimize performance. The company
                   on the stock market for two consecutive quarters.                                   also intends to reassess the implementation of initiatives under its Strategic
                                                                                                       Plan. However, the magnitude of the financial crisis requires that it
                   PRESENT ACROSS CANADA                                                               frequently review its priorities, first and foremost to protect the interests
                                                                                                       of its partners and clients, and of Desjardins and its members.
                   Desjardins Securities continued its efforts to affirm its presence among
                   its clients and on the markets. In Québec and elsewhere in Canada,
                   Desjardins Securities benefited from the support of experienced analysts
                   reputed for their disciplined and professional approach.
de sj ar d i n s

                   For a third consecutive year, institutions and businesses benefited from
                   the complementary financing products of Desjardins Securities and Caisse
                   centrale Desjardins, while the two companies each maintained their own
                   overall offerings to these clienteles in 2008.

                                                             Supporting energy efficiency
                                                             Desjardins Property Management, a subsidiary of Desjardins Asset Management, began developing an energy
                                                             efficiency program in 2008 for Desjardins Group’s buildings. In accordance with its mission and in collaboration
                                                             with the FCDQ and regional executive divisions, Desjardins Property Management plans to help caisses that
                                                             own their building to improve energy efficiency.

                                                                                  It is interesting to note that a large proportion of the business volume
                                                                                  for institutional services also stems from outside the province:

ACROSS CANADA                                                                     n   Desjardins Securities’ Fixed Income Group, which specializes in bond
                                                                                      trading for institutional clients, is constantly increasing its out-of-province
                                                                                      business volume. In 2005, 20% of its business volume came from outside
Nationwide expansion is an important aspect of                                        Québec; in 2008, this figure climbed to 60%. Overall, this business
                                                                                      line has consolidated the 8th-place ranking in Canada that it achieved
Desjardins Group’s growth activities. In 2008, Desjardins                             in 2008.
components outside Québec in some cases grew more                                 n   The subsidiary’s Equity Capital Markets segment specializes in Canadian
than those within, bringing us closer to our objective                                stock market trades; last year, 78.7% of its income was from outside
of seeing 25% of our sales coming from outside                                        the province.
the province.                                                                     n   The Corporate Financing Division is responsible for carrying out merger
                                                                                      and acquisition mandates for and among Canadian companies. More
                                                                                      than 50% of this division’s 2008 income came from outside Québec.
Further to our efforts to create partnerships with credit unions and other
cooperatives outside Québec, 2008 was the first year of the strategic
partnership that lead to the creation of a national mutual fund company,
                                                                                  Caisse centrale Desjardins
Northwest & Ethical Investments L.P., with close to $4 billion in assets          In addition to its regular financing activities among medium-sized and
under management. Despite the current difficulties facing the industry,           large businesses operating across Canada, Caisse centrale Desjardins (CCD)
Northwest & Ethical Investments now distributes its mutual funds through          also has two out-of-province locations to help round out its service offer

                                                                                                                                                                        HIGHL IGHTS
the caisse network and credit unions throughout Canada, which translates          and its business development activities. In fact, CCD is very well represented
into high growth potential for Desjardins.                                        on the Canadian market, with offices in Toronto (open for 20 years now)
                                                                                  as well as a recent addition in Western Canada. This geographic diversity
One of Desjardins Group’s partnership initiatives in the Canadian                 enables CCD to continue to play a determining role among Desjardins
cooperative sector was to reposition its IT services offer to credit unions       Group’s corporate clients who are in expansion mode or have business
across the country. In order to get the most out of its IT platform, Desjardins   ties outside Québec, as well as with various credit unions. This solid
continues to offer technological solutions to credit unions, but is now           presence on Canadian markets also helps increase visibility for Desjardins
proposing that they share the same system as the caisses in Québec and            Group while strengthening its brand image among members and clients
Ontario, thereby minimizing the number of changes and adaptations                 across the country.
required for business models that may differ between the caisses and
credit unions.                                                                    …AND ABROAD
Desjardins and the Canadian credit unions have continued to work                  Internationally, Desjardins successfully directed the work of the strategic
together, with Desjardins offering other products and services to credit          restructuring committee of the International Co-operative Alliance (ICA),
unions across all of Canada, such as credit card products, mutual funds,          an international organization that represents cooperative companies
investment products and other value-added items.                                  operating in all business sectors, as well as their 800 million members.
                                                                                  Following an extensive consultation of its members—one of the most
DESJARDINS COMPONENTS ACROSS CANADA…                                              successful surveys in the ICA’s history in terms of response rates—
                                                                                  the committee’s recommendations were adopted by a strong majority
Desjardins Financial Security                                                     at a special meeting of the ICA in Rome in June 2008. Furthermore,
                                                                                  the European Association of Co-operative Banks (EACB) steering

                                                                                                                                                                        de sj ar d i n s
Desjardins Financial Security (DFS) continues to penetrate the Canadian
                                                                                  committee voted unanimously in favour of accepting Desjardins Group
marketplace thanks, among other things, to an offer that meets the changing
                                                                                  as an associate member starting January 1, 2009. The EACB is a major
needs of its Canadian clientele and to its extensive distribution network.
                                                                                  association of European cooperative banks recognized for its lobbying
In group insurance DFS holds fifth place in Canada and first place in Québec,
                                                                                  efforts on behalf of the cooperative business model and for institutional
with the number of existing clients (the “in-force” market) having gone up
                                                                                  and technical cooperation.
by 6.3% over 2007.

                                                                                  Moreover, for the past 38 years, Desjardins Group has provided support
Desjardins Securities
                                                                                  for the creation and consolidation of financial institutions in numerous
In 2008, Desjardins Securities’ Canada-wide development was assured               developing and emerging countries through its Développement
by nine branches offering services designed specifically for individuals,         international Desjardins (DID) component. For the underprivileged
institutions and businesses in Ontario and British Columbia.                      people of these countries, most of whom live in rural areas, access
                                                                                  to basic and diversified financial services helps them improve living
As a result of this nationwide presence, 40% of the accounts in its               conditions and promotes community development. It is a tangible
discount brokerage division, DisnatDirect, are now held by clients living         gesture in the fight against poverty.
outside Québec.
                                                                                  In 2008, six million families in over 20 countries were able to access
                                                                                  financial products and services through some 2,000 caisses populaires
                                                                                  and credit unions supported by DID. Together, these institutions hold
                                                                                  approximately $1.7 billion in savings and have distributed $2 billion in
                                                                                  credit. In addition to the support provided by Desjardins, DID projects are
                                                                                  also backed by financing from the Canadian International Development
                                                                                  Agency (CIDA), the World Bank, the Bill & Melinda Gates Foundation
                                                                                  and various regional development banks.

                   MAKING THE
                                                                                                    Meanwhile, Fondation Desjardins, funded by the caisses, the Fédération
                                                                                                    des caisses Desjardins du Québec (FCDQ) and Desjardins Group subsidiaries,
                                                                                                    distributes more university scholarships than any other private foundation

                   ADVANTAGES OF                                                                    in Québec. It also awards prizes to cooperative education projects and
                                                                                                    to entrepreneurs that showcase the excellence of Québec and Ontario

                   OUR COOPERATIVE
                                                                                                    businesses. The foundation awards prizes to non-profit organizations that
                                                                                                    display an outstanding contribution to the community in the following
                                                                                                    areas: youth assistance, senior citizen assistance, economic development,

                   DIFFERENCE MORE                                                                  community development, cultural services and sustainable development.
                                                                                                    In 2008, over $660,000 was distributed in the form of more than

                   CONCRETE                                                                         300 scholarships and awards.

                                                                                                    With its Desjardins Venture Capital subsidiary and its Capital régional et
                                                                                                    coopératif Desjardins (CRCD) fund under management, Desjardins Group
                   The strength of cooperation is largely based on the                              is the most accessible institution for venture capital in Québec’s resource
                   vitality of the associative aspect of our activities. Once                       regions. Thus, nearly $73 million in commitments were made in 2008 to
                   again this year, many significant actions were taken                             85 businesses operating in a variety of business sectors. With these recent
                                                                                                    transactions, Desjardins has supported 313 businesses to date, thereby
                   to implement and publicize our cooperative difference.                           helping to maintain or create over 34,000 jobs.
                   This unique feature is all due to our sizeable human
                   capital—made up of members, elected officers and                                 Finally, $215 million was set aside for 2008 caisse member dividends,

                                                                                                    down from $592 million in 2007. This drop is due to a balanced and
                   employees—and is what makes Desjardins the largest
                                                                                                    responsible approach towards the distribution of surplus earnings, which
                   cooperative financial group in Canada.                                           takes into account both member and community expectations as well as
                                                                                                    Desjardins Group’s capitalization needs. Well aware of the even greater
                   GIVING BACK TO MEMBERS AND THE COMMUNITY                                         importance of capital in today’s market conditions, and determined to
                                                                                                    maintain our distinct advantage on that stage, we decided to increase the
                   The economic and social well-being of individuals and the communities            caisses’ capital base in order to protect their long-term solidity, as well as
                   it serves is intrinsic to Desjardins Group’s mission.                            that of Desjardins Group as a whole, and thereby assume full responsibility
                                                                                                    with respect to our future and the generations to come.
                   That being so, Desjardins Group supports cooperative, economic, cultural,
                   educational, charitable, social and athletic projects and organizations every    TOOLS TO IMPROVE THE ASSOCIATIVE ASPECT
                   year, not only through sponsorships, donations and scholarships, but also
                                                                                                    OF OUR ACTIVITIES
                   through individual caisse Community Development Funds. Over the past
                   three years, Desjardins gave back some $216 million to communities in this       Two years after the establishment of the caisse boards of supervision,
                   way. This amount was $80 million in 2008. Desjardins was a major partner         the degree to which elected officers and general managers have fully
                   of about fifteen events associated with Québec City’s 400th anniversary          internalized the role of these boards merits special attention. In the
                   celebrations, providing support that had positive spinoffs both for the          spring of 2009, new activities will be added to those carried out in 2008,
                   communities of the greater Québec City area and for people throughout            including Rendez-vous meetings for board of supervision (Québec) and
                   the province who wished to participate in this historic event. A number          audit committee (Ontario) chairs so that these officers can gather to discuss
                   of nationwide sponsorships also helped Desjardins increase its brand             the importance of and necessity for these bodies, as well as their roles
                   awareness across Canada                                                          and responsibilities.
de sj ar d i n s

                                                                                                    The Governance Policy for the Caisse and its Centres was implemented
                                                                                                    throughout the Desjardins cooperative network in early 2008. It should
                                                                                                    be noted that this policy is of paramount importance for the caisses,
                                                                                                    as it provides for proper participation structures and ensures that members
                                                     Desjardins of tomorrow: young                  and their representatives retain control over the major decisions of their
                                                     people chat with the President                 cooperative. The caisses had one year—until April 2009—to adopt this
                                                                                                    policy and adapt it to their needs.
                                                      As part of Cooperation Week activities,
                                                      the Chair of the Board, President and CEO     In order to continue to better meet the needs of elected officers,
                                                      of Desjardins Group, Monique F. Leroux,       two new training activities were added to the 11 that currently exist:
                                                      held an online chat session with 15- to       “Les fonctions du comité de vérification des caisses populaires de l’Ontario”
                                                      30-year-olds. In all, 188 people signed       (The functions of the Audit Committee of Ontario caisses populaires) and
                                                      into the chat room to talk with Ms. Leroux.   “La conduite d’une assemblée générale annuelle” (Conducting an Annual
                        A total of 262 interventions were compiled and the President answered       General Meeting). As well, 148 training sessions were given throughout
                        122 questions on the cooperative difference, how young people are           the year on the Know-how and Governance program, with 1,557 officers
                        received at Desjardins, as well as major social issues. And no less than    from Québec and Ontario participating. More than 79% of participants
                        11,808 young people between the ages of 15 and 30 participated              said they were very satisfied with these training sessions.
                        in the online survey on what young people expect from Desjardins,
                        with a grand total of 21,124 participants (members and non-members
                        alike). The results of these activities will enable Desjardins Group
                        to improve its Strategic Plan to better serve young people.

                                      Our cooperative values : the root of our actions
                                      A network of cooperatives rooted in all regions, close ties with members, the ability to handle all types of needs,
                                      the desire to inform and educate the public about cooperation and finance, active support for community
                                      development, democratic governance of the cooperative network and Desjardins Group as a whole and, above all,
                                      the outstanding commitment of thousands of elected officers: all these aspects offer a concrete demonstration
                                      of our cooperative difference.

In 2008, the action-based training program on the cooperative difference         Of the 2006-2008 Strategic Planning targets on member satisfaction
was made available to all caisses in Québec and Ontario. To date, more           with regard to the cooperative difference, some were reached while others
than 79 caisses have registered for this program, which has offered more         were exceeded. For the consumer market, our initial target of +7 percentage

                                                                                                                                                                  HIGHL IGHTS
than 2,761 members, officers, management staff and employees the                 points was reached, with the number of members who said they were
opportunity to receive training on or increase their awareness of the            very satisfied rising from 37% in 2005 to 44% in 2008.
cooperative difference and to suggest numerous measures that could
form the basis of a cooperative difference action plan.                          In addition, each year, the questionnaire is also given to a sampling of
                                                                                 Desjardins members who mainly do business with a bank, replacing the
The November 2008 Rendez-vous meetings for young leaders was                     word “caisse” with the word “bank.” Results show that the gap over our
a large-scale event that displayed great innovation its use of new               competition has not stopped growing in favour of Desjardins since 2005,
technologies. The event was part of the 2010-2012 Strategic Planning             standing at +12 percentage points in 2008, versus a mere +1 in 2005.
process, bringing together 75 young leaders from within and outside
Desjardins. The objective was to enable young people to express their            Meanwhile, our business targets were significantly surpassed. In 2005,
needs, expectations and hopes with respect to Desjardins and to identify         we set our strategic planning target at a growth of 5 percentage points.
the challenges that Desjardins needs to meet in order to become the              Since then, that figure has doubled, with our results now up 10 points
financial institution of choice among young people. During the meeting,          from our starting point, the number of members who said they are very
several ideas were proposed, including the representation of young               satisfied having risen from 42% in 2005 to 52% in 2008.
people within democratic bodies, a service offering adapted to their
needs as well as support with respect to career development.                     OPENING THE DOORS TO THE DESJARDINS
                                                                                 GROUP AGM
The Créavenir solidarity product, which provides loans and subsidies to
support projects by young entrepreneurs aged 18 to 35, made significant          Starting in 2009, the caisses, the FCDQ and the subsidiaries will be able
progress in 2008. To date, 17 Créavenir programs have been set up in             to invite a guest to attend the Annual General Meeting of Desjardins Group

                                                                                                                                                                  de sj ar d i n s
eight regions. The number of participating caisses is now 83, and our total      as a way to recognize contributions and provide cooperative education.
investment is $1.7 million.
                                                                                 The Annual General Meeting is a valuable forum for discussion and
PRESERVING THE ESSENCE OF COOPERATION                                            expression, where delegates make decisions, set objectives, develop unity
                                                                                 and are motivated by common targets, orientations and projects.
Société historique Alphonse-Desjardins promotes the Desjardins Group
cooperative difference through its research, conservation, education             That is why the presence of participants from the caisses, the FCDQ and
and communication activities.                                                    the subsidiaries in such major democratic activities as the Desjardins Group
                                                                                 Annual General Meetings represents a powerful tool for education and
In 2008, the historical society highlighted the 150th anniversary of the         awareness on the breadth and scope of the democratic aspect of Desjardins.
birth of Dorimène Desjardins (1858-1932), co-founder of the caisses              Access to these events can also be an effective way to help promote the
populaires, with the publication of a biography from Éditions Dorimène           cooperative difference and turn participants into excellent ambassadors
and through its participation in the “Empreintes d’elles” lecture series         among their peers.
on the history of women, held as part of Québec City’s 400th anniversary
activities. At the Chaudière-Appalaches regional Grands Prix du tourisme
Gala in April, Maison Alphonse-Desjardins was awarded the Grand Prize
in the category of tourist attractions for less than 100,000 visitors.

                   MOVING FORWARD
                                                                                                    November 2008 also saw the organization of the first Web conference
                                                                                                    for caisse presidents, during which Monique F. Leroux, Chair of the Board,
                                                                                                    President and CEO of Desjardins Group, presented our third quarter

                   ON THE ROAD                                                                      financial results.

                   TO EXCELLENCE                                                                    The goal of all these initiatives is the same: to provide Desjardins Group
                                                                                                    employees and elected officers with the tools they need to work more
                                                                                                    efficiently and to communicate better amongst themselves, with a view
                                                                                                    to making full use of Desjardins Group human capital.
                   At Desjardins, everyone has a role to play. The
                   contributions and talents of each and every employee                             2008 AWARDS AND DISTINCTIONS
                   are what allow Desjardins Group to excel in its
                                                                                                    The purpose of the efforts made by Desjardins Group’s human capital—
                   operations and services and to be recognized by                                  its staff and officers—is to continue to provide the best service offering
                   its employees as a Best Employer in Canada.                                      to members and clients. While the goal is not to garner awards, those we
                                                                                                    have received show that their true purpose is being attained. Read on for
                                                                                                    a few of Desjardins Group’s achievements in 2008.
                   Quality of service to members and clients is key for Desjardins Group,           Best Corporate Citizen
                   which intends to become the leader in this area. Desjardins carried out          In 2008, thanks to its excellent environmental and social responsibility
                   several initiatives in 2008, allowing the organization to move towards           practices, Desjardins Group was ranked 20th among the 50 Best Corporate

                   its objective.                                                                   Citizens of Canada in Corporate Knights magazine, a Toronto publication
                                                                                                    that specializes in corporate responsibility. Only 10 Québec-based companies
                   We developed and refined a continuous improvement approach as well as            made the list. Also, for the second year running, Desjardins Group was
                   an auditing procedure, testing them out in three different caisses.              named a finalist in the Large Business category for the Prix de l’entreprise
                                                                                                    citoyenne (Québec corporate citizenship prize) awarded by Korn/Ferry
                   We also carried out several projects throughout Desjardins Group, such           International and L’Actualité magazine. These awards, the only of their kind
                   as the “Quality has a name: Desjardins!” employee engagement contest,            in Québec, honour the efforts made by businesses towards their community
                   the tabling of an annual quality plan, the development of a tool for sharing     and the environmental. Desjardins captured the jury’s attention with
                   winning practices relating to quality and, lastly, the acquisition of external   its “Changing the world, one step at a time” institutional campaign
                   data enabling Desjardins to compare its client satisfaction ratings              developed in collaboration with Équiterre.
                   with others.
                                                                                                    Call centres at the head of the class
                   IMPROVING OPERATIONAL EFFICIENCY                                                 Desjardins AccèsD Services call centres remain the international benchmark
                   Backed by the strength of its human capital, Desjardins Group must ensure        among financial institutions, having been awarded COPC (Customer
                   that it continues to perfect its communications tools in order to maintain       Operations Performance Center) certification for the fourth year running.
                   optimal operational effectiveness. In 2008 we saw the emergence of               This certification assesses more than 200 performance indicators measuring
                   various electronic means to encourage participation by all Desjardins            productivity, quality and client satisfaction and has never been awarded to
                   players in the life of the organization.                                         any other financial institution in North America.

                   In September, the Desjardins Group Intranet project led to the implementation    Dual achievement for
de sj ar d i n s

                   of an infrastructure allowing relevant news and reference materials to           The Web site ranked third among the 25 top Web sites
                   be sent to all Desjardins Group employees via the internal Web sites of          in Québec, according to the SECOR-Commerce online index. Improvements
                   each component.                                                                  in the areas of customization and interaction helped us obtain the points
                                                                                                    we needed to achieve this ranking.
                   Portail D, the internal Web site of the caisses and business centres
                   launched in September 2007, continues to grow and now provides                   Another achievement: the site earned the “Coup de cœur
                   information aimed specifically at employees working in investment                du public” (people’s choice) award after receiving 1,000 of the 7,000 votes
                   and financing as well as business services.                                      from the general public in this new section of the 2008 SECOR-Commerce
                                                                                                    online index.

two Desjardins funds honoured
The	Desjardins	Environment	Fund	and	the	Desjardins	Québec	Balanced	                                              Dorimène Desjardins,
Fund	both	won	prizes	at	the	2008	Lipper	Fund	Awards.	Distributed	in	21	                                          pioneer of excellence
countries	worldwide,	the	Lipper	Fund	Awards	honour	mutual	funds	that	
                                                                                                              In	2008,	Desjardins	Group	celebrated	
stand	out	for	their	solid	and	consistent	returns.	A	subsidiary	of	Reuters,	
                                                                                                              the	150th	birthday	of	its	co-founder,	
Lipper	is	the	world	leader	in	mutual	fund	research	and	analysis.
                                                                                                              Dorimène	Desjardins,	who	opened	
                                                                                                              the	door	to	thousands	of	women	
The	Desjardins	Environment	Fund	won	first	prize	in	the	Canadian	Equity	
                                                                                                              who	followed.	Her	legacy:	more	than	
Funds	category	for	its	performance	over	three	years,	while	the	Desjardins	
                                                                                                              30,000	women	employed	by	Desjardins,	
Québec	Balanced	Fund	was	honoured	in	the	Canadian	Balanced	Funds	
                                                                                   including	1,385	managers,	159	senior	managers,	over	100	caisse	
category	for	its	performance	over	one	year,	as	at	December	31,	2007.
                                                                                   managers	and	Desjardins	Group’s	first	woman	Chair	of	the	Board,	
                                                                                   President	and	CEO.
The	Desjardins	Environment	Fund	differs	from	other	Canadian	equity	
funds	by	its	commitment	to	the	environment—a	commitment	that	is	
expressed	in	the	choice	of	securities	in	its	portfolio,	since	all	companies	
represented	actively	manage	their	environmental	responsibilities.	Each	
company	in	the	portfolio	stands	out	in	its	respective	business	sector	for	      Silver Flèche award for the AccèsD au Cirque
its	proactive	stance	and	responsible	management	measures	with	respect	          du Soleil campaign
to	its	environmental	footprint.
                                                                                The	Cirque	du	Soleil/AccèsD	promotional	campaign	was	awarded	the	silver	
With	a	portfolio	made	up	exclusively	of	shares	and	bonds	from	Québec-           Flèche	at	the	2008	Flèches	awards	gala	held	by	Québec’s	Association	du	

                                                                                                                                                                   HiGHl iGHtS
based	businesses,	the	Desjardins	Québec	Balanced	Fund	is	especially	            marketing	relationnel	(Relationship	Marketing	Association).	With	over	one	
designed	to	promote	the	province’s	economy.                                     million	additional	transactions	carried	out	during	the	six	weeks	of	the	
                                                                                contest,	this	successful	campaign	is	confirmation	of	Desjardins	Group’s	
                                                                                leadership	in	online	solutions.
accessibility rewarded
Desjardins	received	two	2008	Best	Banking	Awards	for	excellence	in	ATM	         Disnat number one among investors
service	and	telephone	transactions	following	the	Customer	Service	Index	
(CSI)	survey	carried	out	by	the	international	market	research	firm	Synovate.	   In	2008,	for	the	second	consecutive	year,	Desjardins	Securities’	online	
The	2008	Best	Banking	Awards	are	based	on	the	cumulative	total	of	the	          brokerage	division,	Disnat,	beat	out	all	other	online	brokers	in	Canada	in	
35,000	CSI	survey	answers	received	during	the	year	ended	August	2008.           the	Trader	Firm	category	of	the	Surviscor	analysis.	According	to	Surviscor,	
                                                                                a	Canadian	firm	that	ranks	companies	offering	online	brokerage	services,	
                                                                                the	sophistication	and	performance	of	DisnatDirect	platforms	have	become	
Meanwhile,	AccèsD’s	Telephone	and	Internet	services	passed	the	2-million-
                                                                                industry	benchmarks.	Surviscor	also	issued	high	praise	for	Disnat	Classic’s	
users	mark	in	May	2008.	Close	to	one	in	three	people	in	Québec	uses	
                                                                                traditional	Web	platform,	noting	in	particular	the	quality	of	Disnat’s	investor	
these	services	to	carry	out	transactions.	According	to	the	last	survey	
                                                                                education	content,	as	well	as	the	release	of	its	new	public	trading	site.
on	Internet	use	in	Québec	conducted	by	NETendances	in	2007,	AccèsD’s	
market	share	was	56%	for	the	province	of	Québec	as	a	whole.	As	for,	the	site	continues	to	stand	out	in	Québec	and	remains,	         Rare honour for Québec real estate
by	far,	the	most	popular	financial	site,	with	close	to	2.3	million	different	   Complexe	Desjardins	in	Montreal,	managed	by	Desjardins	Gestion	
visitors	per	month.                                                             immobilière,	a	subsidiary	of	Desjardins	Asset	Management,	won	the	title	
                                                                                of	The	Office	Building	of	the	Year	(TOBY)	in	the	“Renovated	Building”	
two silver cassies for Desjardins ads                                           category	in	the	annual	Building	Owners	and	Managers	Association	(BOMA)	

                                                                                                                                                                   De sj ar D i n s
                                                                                international	competition.	The	TOBY	prize	is	the	highest	distinction	awarded	
The	effectiveness	of	our	2008	“More	than	a	Bank”	advertising	campaign	
                                                                                in	the	North	American	commercial	real	estate	industry,	rewarding	property	
earned	Desjardins	Group	two	silver	Cassies	in	the	categories	of	Best	
                                                                                managers	who	have	demonstrated	excellence	in	building	management,	
Integrated	Campaign	and	Services—Financial.	The	Cassies	is	a	Canadian	
                                                                                quality	of	operations,	concern	for	the	conservation	of	resources	and	
advertising	awards	show	that	recognizes	proven	effectiveness	based	
                                                                                environmental	consciousness.	The	last	and	only	time	such	an	honour	
on	the	business	results	of	the	advertisers.	It	is	presented	by	the	Institute	
                                                                                was	bestowed	on	a	Québec	building	was	almost	20	years	ago.
of	Communication	Agencies,	the	Association	des	agences	de	Publicité	
du	Québec	and	the	Association	des	professionnels	de	la	communication	
et	du	marketing.	

 The Desjardins name will be associated with Québec City’s 400th anniversary celebrations for many
 years to come, thanks to its gift of the Promenade Desjardins, built at a cost of $1 million in 2008 and
 located on the city’s Parliament Hill. Raised on this pedestrian pathway is a bronze monument of the
 founders of Desjardins Group, Alphonse and Dorimène Desjardins, to underscore the close ties binding
 Desjardins and Québec City. Year after year, hundreds of thousands of visitors from Québec, across
 Canada and all over the world will visit this monument and keep it in their memories.

“Desjardins immortalized these two people in bronze on the noble
 and lively grounds of Parliament Hill, beside other greats who have
 made history, and near Parliament itself, where Alphonse Desjardins
 worked as editor of the debates.”
                                                                            – MoniQue F. LeRoux

                                                 THe BRonZe MonuMenT oF THe FounDeRS oF DeSJARDinS GRouP,
                                                 ALPHonSe AnD DoRiMÈne DeSJARDinS, on THe PRoMenADe
                                                 DeSJARDinS, A GiFT To QuÉBeC CiTY

ManageMent’s                                                                                                                                    taBle of contents

Discussion anD
                                                                                                                                                general review of Desjardins group                              32

                                                                                                                                                Overview                                                        32
                                                                                                                                                Analysis of Financial Results                                   45

analysis of                                                                                                                                     Business segments                                               48

DesjarDins group
                                                                                                                                                Personal and Commercial                                         48
                                                                                                                                                Life and Health Insurance                                       57
                                                                                                                                                General Insurance                                               61
                                                                                                                                                Securities Brokerage, Asset Management,
                                                                                                                                                Venture Capital and Other                                       63

                                                                                                                                                                                                                     Ma n a g e Me n t ’s D iscussion anD analy si s
                                                                                                                                                analysis of the combined
                                                                                                                                                financial statements                                            69

                                                                                                                                                Review of Results                                               69
                                                                                                                                                   Total Income                                                 69
                                                                                                                                                   Claims, Benefits, Annuities and
1.0     general review of Desjardins group                                                                                                         Changes in Insurance Provisions                              73
                                                                                                                                                   Client Retention Expense                                     74
        This section presents a profile of Desjardins Group, its vision and strategy, notable achievements,                                        Non-interest Expense                                         74
        industry description and trends, specific items relating to the fourth quarter and fiscal 2008                                             Accrued Benefit Obligations
        primarily as a result of financial market instability, the strengthening of investment activity and risk                                   for Retirement Plans and
        frameworks, the provision for member dividends, financial and operational synergies, its                                                   Post-employment Benefits                                     76
        Canada-wide development, the Basel II Accord, the monitoring of priority financial objectives,                                             Credit Quality                                               76
        the financial outlook for 2009, the Desjardins cooperative difference, financial governance,                                            Review of Financial Position                                    78
         and the presentation of financial information. It also includes an analysis of financial results.
                                                                                                                                                   Balance Sheet Management                                     78
                                                                                                                                                   Capital Management and Credit Ratings                        84
2.0     Business segments                                                                                                                          Cash Position and Sources of Financing                       88
                                                                                                                                                   Off-balance Sheet Items                                      89
        This section provides information on Desjardins Group’s business segments. It contains                                                     Risk Management                                              91
        a profile of each segment, its strategy, achievements in 2008 and outlook, as well as                                                      Additional Information Related
        a description of the industry and an analysis of the financial results.                                                                    to Exposure to Certain Risks                                 97

                                                                                                                                                additional information                                      100
3.0     analysis of the combined financial statements                                                                                           Regulatory Context                                          100
                                                                                                                                                Factors that may Influence
        This section provides an analysis of the Combined Financial Statements and financial

                                                                                                                                                                                                                     D es ja r Di n s gr o up
                                                                                                                                                Future Results                                              100
        position of Desjardins Group.
                                                                                                                                                Critical Accounting Policies and Estimates                  101
                                                                                                                                                Changes in Accounting Policies                              103
4.0     additional information                                                                                                                  Business Climate                                            105
                                                                                                                                                Five-year Statistical Review                                106
        This section presents the regulatory context, factors that may influence future
                                                                                                                                                Summary of Quarterly Information                            109
        results, critical accounting policies and estimates, changes in accounting policies,
        the business climate, and various statistics, including annual and quarterly statistics                                                 Selected Statistics by Business Segment                     111
        as well as other information.                                                                                                           Glossary of Financial Terms                                 112

  caution concerning forward-looking statements
  This Annual Report may contain forward-looking statements concerning Desjardins Group’s activities and strategies. These forward-looking statements are typically identified by the words “believe”,
  “expect”, “anticipate” and “may”, words and expressions of similar import, and verbs conjugated in the future and conditional tenses. By their very nature, such statements involve assumptions,
  uncertainties and risks, both general and specific; it is therefore possible that these predictions, projections or other forward-looking statements may not materialize or may prove inaccurate because
  of a number of factors. Various material factors could influence the accuracy of the forward-looking statements mentioned in this Annual Report, notably, legislative or regulatory developments,
  changes in the economic environment, including the impact of the currently volatile capital markets, which are causing a liquidity shortage in some markets, particularly the asset-backed commercial
  paper market, fluctuations in interest rates and foreign currencies, monetary and tax policies, consumer spending, demand for credit, individual savings patterns, the unemployment rate, trade
  between Québec and the United States, technological changes, the effects of increased competition in a market open to globalization, the ability to design new products and services and bring them
  to market in a timely fashion, the capacity to gather complete and accurate information from our clients and their counterparties, legal or regulatory procedures, the ability to perform and integrate
  strategic acquisitions and alliances, the effect of possible international conflicts, including terrorism, or natural disasters, the capacity to recruit and maintain key managers and Management’s ability
  to foresee and manage the risks stemming from the preceding factors.
  It is important to note that the above-mentioned list of factors that could potentially influence future results is not exhaustive. Other factors could have an adverse effect on results. Although
  Desjardins Group believes that the expectations expressed in these forward-looking statements are reasonable, it can give no assurance or guarantee that these expectations will prove to be correct.
  Desjardins Group cautions readers against placing undue reliance on forward-looking statements when making decisions.
  Desjardins Group does not undertake to update any forward-looking statements, whether verbal or written, that could be made from time to time by or on behalf of Desjardins Group, except
  as required under applicable securities legislation. The purpose of the forward-looking statements contained in this report is to help members to understand Desjardins Group’s financial position
  as at the dates indicated or for the periods ended on such dates, as well as Desjardins Group’s strategic priorities and objectives, and may not be appropriate for other purposes.
                                                  32     general review of DesjarDins group   1.1 overview

                                                                    reVieW of
                                                                    DesjarDins group
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  1.1      oVerVieW

                                                  The Management’s Discussion and Analysis (MD&A) section of this Annual Report should be read in conjunction
                                                  with Desjardins Group’s Combined Financial Statements. This MD&A is dated February 27, 2009 and is based on
                                                  Desjardins Group’s Combined Financial Statements prepared for the year ended December 31, 2008. Additional
                                                  information about Desjardins Group and its components is available on the Desjardins Web site (
                                                  and on the SEDAR Web site ( under the Capital Desjardins inc. profile.

                                                  A glossary of financial terms is provided on pages 112 to 114 of this MD&A.

                                                       Mission of             To contribute to improving the economic and social well-being of people and communities within the compatible
                                                       DesjarDins             limits of its field of activity:
D es ja r Di n s gr o up

                                                       group                     B
                                                                              •	 	 y	continually	developing	an	integrated	cooperative	network	of	secure	and	profitable	financial	services,	owned	
                                                                                 and administered by the members, as well as a network of complementary financial organizations with competitive
                                                                                 returns, controlled by the members;
                                                                              •	 	 y	educating	people,	particularly	members,	officers	and	employees,	about	democracy,	economics,	solidarity,	
                                                                                 and individual and collective responsibility.
                                                                                             1.1 overview       general review of DesjarDins group               33

profile of DesjarDins group                            Asset Management and Venture Capital. It                 Desjardins Group aims to accomplish
                                                       has also adopted a category labelled “Other”             the following:
Desjardins Group is the largest financial              that comprises the other components of
institution in Québec and the sixth                    Desjardins Group as well as balance sheet                n   Leverage its cooperative difference
largest in Canada in terms of total assets.            and income statement consolidation items                     and make it more visible
It is a cooperative financial group that belongs       attributable to all components.
                                                                                                                n   Rank first in service quality
to its member-owners. When the caisses’
financial position allows it, Desjardins returns                                                                n   Become the number one manager
                                                       Vision anD strategy                                          of financial wealth for individuals
a significant portion of its surplus earnings to
its members in the form of member dividends,           Desjardins Group has adopted a series                    n   Become a leader in services to business,
in accordance with the democratic governance           of strategies in support of its vision:                      particularly SMEs
system and organizational structure that go
                                                                                                                n   Develop all its markets to their full
with being a cooperative.                              “Desjardins is a cooperative financial group
                                                                                                                    potential, particularly in Greater
                                                       that is solidly rooted in the community.
                                                                                                                    Montréal and across Canada
Desjardins Group provides a vast array                 Desjardins aims to be the leading financial

                                                                                                                                                                      Ma n a g e Me n t ’s D iscussion anD analy si s
of financial products and services to its              institution for satisfying the needs of its              n   Generate sufficient and reliable financial
5.8 million members and clients, individuals           members and clients, for profitable business                 performance rooted in profitable business
and businesses alike.                                  development through its accessible, efficient                development and sustained improvement
                                                       and comprehensive service offering, and                      of productivity
Desjardins Group is also the largest cooperative       for its contribution to the development of
financial group in Canada and the largest              the Canadian financial cooperative movement.”            These strategic orientations have been integrated
private employer in Québec. In all, Desjardins                                                                  into the Desjardins Group Development Plan,
Group has nearly 42,000 employees, some                Desjardins Group’s strategic orientations are            drawn up in the second quarter of 2008,
6,300 elected officers, 513 caisses, 915 service       established in its 2006-2008 Strategic Plan,             which is defined on the following page.
centres and 2,764 automated teller machines.           brought up to date in 2009. The purpose
                                                       of these orientations was to allow it to realize         Accordingly, over the next few years,
Desjardins Group is composed of a network              its vision, ensure longevity, achieve its full           Desjardins Group must continue its efforts
of caisses and business centres in Québec              business potential, and make Desjardins                  to define its cooperative difference, strengthen
and Ontario as well as subsidiaries, several           an even more stimulating, distinctive and                its positioning in wealth management and
of which operate across Canada. Desjardins             successful organization.                                 in the business market, reaffirm its presence
is active in four business segments: Personal                                                                   in Greater Montréal, Ontario and elsewhere
and Commercial; Life and Health Insurance;                                                                      in Canada, improve its productivity, its
General Insurance; and Securities Brokerage,                                                                    technology and its business processes, as well
                                                                                                                as ensure the full engagement of its officers
                                                                                                                and employees.

   notaBle                        •	 The	caisse	network	and	the	main	components	turned	in	solid	operating	results.
   acHieVeMents                      A
                                  •	 	 chieved	excellent	loan	portfolio	quality	with	a	stable	ratio	of	gross	impaired	loans	to	total	gross	loans,	in	spite	

                                                                                                                                                                      D es ja r Di n s gr o up
                                     of the prevailing financial crisis.
                                  •	 	 eld	a	dominant	position	in	Québec	with	market	shares	as	at	December	31,	2008,	of	39.3%	in	residential	
                                     mortgage	credit,	46.9%	in	farm	credit	and	43.9%	in	personal	savings.	
                                  •	 	 enewed	the	Capital	Desjardins	borrowing	program	for	a	25-month	term,	which	allows	it	the	option	of	issuing	
                                     $2 billion in debt securities.
                                  •	 Issued	close	to	$1.3	billion	in	debt	securities	on	European	markets	at	the	beginning	of	2008.
                                  •	 	n	January	2009,	Caisse	centrale	Desjardins	successfully	floated	an	issue	of	¤500 million in medium-term notes
                                     on European markets.
                                  •	 Maintained	excellent	capital	ratios,	higher	than	the	ratios	held	by	Canadian	banks,	and	excellent	credit	ratings.
                                  •	 	 iversified	funding	sources	for	Desjardins	Group,	mainly	through	the	securing	of	access	to	the	same	long-term	loan	
                                     guarantees as those offered to the major federally-chartered banks, and through its presence in the securitization
                                     market for mortgage loans guaranteed by the government.
                                  •	 	 esjardins	Group	ranked	one	of	the	50	Best	Employers	in	Canada	and	one	of	the	top	twenty	Best	Corporate	
                                     Citizens in Canada.
                                  •	 Sustained	improvement	in	individual	and	business	member	satisfaction.
                                                  34       general review of DesjarDins group         1.1 overview

                                                  Five “building blocks”, supported by the              The financial industry also includes more than         attention to the soundness of Canadian
                                                  strength of Desjardins Group’s human capital          1,000 savings and loan cooperatives, roughly           financial institutions, which can boast enviable
                                                  and framed by its values, have been identified        half of which belong to Desjardins Group.              stability because they made very cautious
                                                  as part of the Desjardins Group Development                                                                  use of leverage to ensure their expansion.
                                                  Plan and will contribute to fulfilling its vision     Attached to this extensive network of                  That makes them world leaders, according
                                                  of the future as a cooperative financial group.       financial intermediation institutions are              to the World Economic Forum. They display
                                                  These building blocks are as follows:                 a few independent trust or loan companies.             a high level of compliance with the main
                                                                                                        In addition to these institutions, there are           international standards.
                                                  n   Desjardins Group Strategic Growth                 investment fund promoters and pension fund
                                                      and Development                                   managers who handle hundreds of billions               The Canadian financial system has proven
                                                  n   Collaboration, Participation and Connection       of dollars in assets.                                  itself over the decades, and even more so in
                                                      with the Network                                                                                         2008. It does not act on the margins of global
                                                                                                        Furthermore, over 300 insurance companies              economic conditions, but its structure and
                                                  n   The Changing Role of the Fédération des           were in operation in Canada in 2008, about             regulations have protected it from excesses.
                                                      caisses Desjardins du Québec (FCDQ)               100 in life and health insurance and the               Thus, in recent years, the Canadian banks did
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  n   Optimized FCDQ and subsidiary performance         remainder in general insurance. Only a                 not depend on subprime loans for their business
                                                                                                        few companies were active in both areas.               expansion. The governance they showed will
                                                  n   Mobilizing all of Desjardins: Human Capital,
                                                                                                                                                               allow them to preserve their relationship of
                                                      Culture and Values
                                                                                                        The Canadian financial industry therefore              trust with their clients, and to prosper in spite
                                                                                                        features a large number of players. Even so,           of shaky economic conditions in the short term.
                                                  With its Development Plan, Desjardins is
                                                  taking a new approach to defining its main            it presents a high degree of concentration,
                                                                                                        since only a handful of them are very large            Investment operations, particularly ABCP
                                                  orientations for the future. The first stage in
                                                                                                        in size, forming the pillars of the industry.          (asset-backed commercial paper) securities,
                                                  strategic planning under the “Desjardins Group
                                                                                                        This is the case for the six major Canadian            were the primary source of the difficulties
                                                  strategic growth and development” building
                                                                                                        banks, Desjardins Group and a few                      experienced in Canada in 2008. In spite of
                                                  block was initiated in September 2008. This
                                                                                                        insurance companies.                                   substantial write-downs in the value of their
                                                  building block was created with the concerted
                                                                                                                                                               investment portfolios, Canadian financial
                                                  participation of the caisse network and
                                                                                                        Economic and financial conditions were coloured        institutions remained financially sound, compared
                                                  subsidiaries. Desjardins Group’s major
                                                                                                        by uncertainty throughout 2008. Events began           to their counterparts on the international scene.
                                                  development objectives and the challenges
                                                                                                        to gather momentum in mid-September, and               However, their relative strength during a time
                                                  inherent in this project will be discussed at
                                                                                                        no market escaped unscathed. The U.S. real             of great turmoil should not deter them from
                                                  the 20th Congress of Elected Officers to be
                                                                                                        estate crisis, which began in the summer of            pursuing their efforts to improve their control
                                                  held in 2009.
                                                                                                        2007, led to a worldwide financial meltdown.           and risk management processes.
                                                  Furthermore, we identified clear orientations         The spotlight was on major U.S. financial
                                                                                                        institutions as they declared bankruptcy               Canadian financial institutions did not have
                                                  with respect to financial performance, risk
                                                                                                        or appealed to monetary and government                 to deal with the decline in value of the housing
                                                  management and balance sheet management.
                                                                                                        authorities for assistance. Stock market indices       market that confronted their U.S. and European
                                                  They are as follows:
                                                                                                        plummeted, scaring away investors and causing          counterparts during the year. This is mainly
                                                                                                        consumers to lose heart. In spite of rapid,            because they had not weakened the Canadian
                                                  n   Maintaining or improving Desjardins Group’s
                                                                                                        vigorous and concerted action by central               real estate market by lending with no regard
                                                      profitability level in a sustainable manner
                                                                                                        banks and governments in many places around            for risk. Business volumes with individuals
                                                  n   Ensuring profitable new business                  the world, the U.S. recession was unavoidable.         and businesses actually grew in 2008, in spite
D es ja r Di n s gr o up

                                                      development                                       The slowdown quickly spread to the G7                  of the prevailing climate of uncertainty. All
                                                  n   Achieving greater productivity through            countries, as well as to emerging countries            of Canada’s financial institutions continued
                                                      appropriate growth in expenses                    and developing nations.                                to post positive financial results; they may have
                                                      vis-à-vis income                                                                                         been less spectacular than those of previous
                                                                                                        The central banks did not use up their arsenal         years, but that is chiefly because of
                                                  n   Optimizing capital management
                                                                                                        in 2008, even though they made considerable            disappointing stock market performances.
                                                  n   Maintaining Desjardins Group’s credit ratings     use of movements in key rates, particularly
                                                  n   Upholding sound risk management practices         in the United States. For instance, the Federal        Moreover, rating agencies lowered their credit
                                                                                                        Reserve (Fed) is likely to turn to unconventional      rating outlooks from “Stable” to “Negative”,
                                                  n   Securing funding in a context of growth
                                                                                                        quantitative measures to get the economy               part of an overall North American trend
                                                      and development
                                                                                                        and the financial system back on track.                resulting from the crisis currently shaking the
                                                  n   Achieving anticipated synergies and optimal       The repurchase of mortgage- or consumer                financial sector and from economic forecasts.
                                                      liquidity management                              loan-backed securities as well as new credit
                                                                                                        and lending facilities for financial institutions      Like the banking industry, life insurance
                                                  inDustry Description                                  and certain companies were among some of               companies experienced reverses in their
                                                  anD trenDs                                            the measures used in 2008. The central banks           investments. The stock market disruption
                                                                                                        therefore played their role as lender of last resort   had a negative impact on overall results, while
                                                  Canada’s financial industry includes                  and made use of their latitude to reassure all         activities involving clients remained relatively
                                                  20 Canadian banks, 24 foreign bank                    participants in the economic process.                  dynamic. Although the past few years have
                                                  subsidiaries and 29 foreign bank branches.                                                                   been characterized by large-scale mergers and
                                                  Except for seven foreign bank branches,               While there was a great deal of publicity              acquisitions, they did not capture the media’s
                                                  which deal exclusively in loans, the rest             surrounding the difficulties of certain U.S.           attention this year. Risk was probably of greater
                                                  offer a complete range of financial services.         financial institutions and the Fed’s muscular          interest than consolidation of operations in
                                                                                                        action to seal the cracks in a financial system        the turbulent financial environment of 2008.
                                                                                                        in crisis, very little effort was made to draw
                                                                                         1.1 overview      general review of DesjarDins group               35

Similarly, market volatility and the woes of U.S.    The economic and financial outlook was                The global financial crisis in fact reached
insurance companies enhanced the advisory            therefore fairly bleak at the start of 2009.          an unprecedented level during this period,
role of Canadian insurance professionals, who        However, the decisive action taken by monetary        while confidence among the main market
were in greater demand among their clients.          and government authorities will limit the losses      participants crumbled, and access to capital
The year 2009 began in an atmosphere of              for the economy as a whole. The soundness             markets became limited in Canada and Europe.
unpredictability. The challenges of an aging         of Canadian financial institutions cannot protect     The central banks intervened, freeing up
population and the selection of the most             them from every problem, but they will continue       hundreds of billions of dollars for financial
appropriate products for retirees will also          to meet their obligations and thus play a very        institutions in search of liquidity.
continue to be areas of interest.                    important role in the Canadian economy.
                                                                                                           On pages 97 to 99, this Management’s
The general insurance industry was subject           specific iteMs relating to tHe                        Discussion and Analysis discloses additional
to the same environment as the other financial                                                             information regarding exposure to certain
                                                     fourtH Quarter anD fiscal
institutions. The instability of capital markets                                                           risks, based on recommendations resulting
left its mark on investments. Furthermore,
                                                     2008 priMarily as a result of                         from the Financial Stability Forum (FSF).
general insurance companies are starting to          financial MarKet instaBility

                                                                                                                                                                 Ma n a g e Me n t ’s D iscussion anD analy si s
show signs of losing steam after a number                                                                  Below is a summary table of the specific
                                                     The final months of 2008 were characterized
of years of favourable results. Personal property,                                                         items that had a negative impact on Desjardins
                                                     by extreme volatility on global capital markets.
automobile and commercial property insurance                                                               Group’s financial results in 2008. It presents
                                                     The deterioration of stock markets and the
are mostly to blame, notably because of the                                                                combined surplus earnings before member
                                                     considerable instability that resulted had an
upward trend in the loss ratio. The industry                                                               dividends, not including specific items.
                                                     impact on the financial performance of the
is concerned about growth in weather-related
                                                     entire financial sector worldwide, including
claims due to the threat of climate change.                                                                Had it not been for the specific items, combined
                                                     Desjardins Group.
Mergers and acquisitions among SMEs have                                                                   surplus earnings before member dividends
also changed the nature and number of                                                                      would have amounted to $294 million in fourth
products in demand.                                                                                        quarter 2008 and $1,250 million at the end of
                                                                                                           fiscal 2008.

specific iteMs
(in millions of $)

                                                                                                     Year ended                   Fourth quarter
                                                                                                    December 31                 ended December 31
                                                                                              2008            2007              2008             2007
  impact after income taxes on combined surplus earnings (deficit)
  Combined surplus earnings (deficit) before member dividends                             $       78      $    1,101        $     (476)      $      273

  Direct and indirect impact of ABCP and
    guaranteed-capital structured products
      - ABCP                                                                                     400              198             160                91
      - Guaranteed-capital structured products                                                   431               —              431                —

                                                                                                                                                                 D es ja r Di n s gr o up
                                                                                                 831              198             591                91

  Write-offs and negative performance of investments
      - Negative performance of investments                                                      281                —             147                 —
      - Write-offs                                                                                60                —              32                 —

                                                                                                 341                —             179                 —

  Non-recurring gains                                                                             —               (101)             —               (101)

  Total after-tax impact of specific items
    on combined surplus earnings (deficit)                                               $     1,172      $        97      $      770        $       (10)

  Combined surplus earnings before member
   dividends and excluding specific items                                                $    1,250       $    1,198       $      294        $      263
                                                  36      general review of DesjarDins group            1.1 overview

                                                  Direct and indirect impact of aBcp and                  appealed by a group of small investors.              ABCP valuation methodology
                                                  guaranteed-capital structured products                  On August 18, 2008, the Court of Appeal
                                                                                                                                                               Since there is no active market for ABCP
                                                                                                          for Ontario upheld the decision of the Ontario
                                                  commercial paper subject                                                                                     securities, Desjardins Group’s Management
                                                                                                          Superior	Court	of	Justice.	On	September	19,	
                                                  to the Montréal accord                                                                                       estimated the fair value of its holdings and the
                                                                                                          2008, the small investor group’s application
                                                                                                                                                               resulting changes in value by using a valuation
                                                  Desjardins Group holds investments on the               for leave to appeal was denied by the Supreme
                                                                                                                                                               technique. In light of the Pan-Canadian
                                                  non-bank asset-backed commercial paper                  Court of Canada. The Pan-Canadian Committee
                                                                                                                                                               Committee agreement reached on December
                                                  (ABCP) market, although it never issued this            then announced it intended to initiate the final
                                                                                                                                                               24, 2008, Desjardins Group estimated that,
                                                  type of financial product to its clients. It should     steps in implementing its ABCP market
                                                                                                                                                               as of December 31, 2008, the probability
                                                  be noted that, to safeguard its members                 restructuring plan.
                                                                                                                                                               of realization of the restructuring scenario
                                                  and clients, Desjardins Group repurchased
                                                                                                                                                               was	100%.
                                                  in September 2007 and, to a lesser extent in            The ABCP restructuring efforts made since
                                                  2008, ABCP assets in the money market mutual            by the Pan-Canadian Committee resulted in
                                                                                                                                                               The fair value of ABCP restructured in
                                                  funds it managed and in the securities lending          the signing of a final restructuring plan on
                                                                                                                                                               the form of A-1, A-2, B and C notes in MAV 1,
                                                  operations of Desjardins Trust clients for which        December 24, 2008, which was sanctioned in
                                                                                                                                                               i.e. synthetic and hybrid assets, is based on
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  it had not originally assumed the risk.                 January	2009.	The	restructuring	plan	provides	
                                                                                                                                                               a financial model incorporating uncertainties
                                                                                                          for, among others, the replacement of ABCP
                                                                                                                                                               regarding return, credit spreads, the nature
                                                  As at December 31, 2008 and 2007, the                   by new long-term floating rate notes having
                                                                                                                                                               and credit risk of underlying assets, the amounts
                                                  amortized cost and fair value of ABCP held by           a maturity similar to that of the underlying
                                                                                                                                                               and timing of cash inflows, maturity dates and
                                                  Desjardins Group amounted to $2,446 million             assets. The section “Subsequent event –
                                                                                                                                                               the liquidity restrictions of the new notes in
                                                  and $1,436 million, respectively ($2,533 million        ABCP restructuring plan” provides more
                                                                                                                                                               order to provide a fair value for the ABCP
                                                  and $2,126 million in 2007).                            details on the restructuring.
                                                                                                                                                               securities reflecting market conditions as at
                                                                                                                                                               December 31, 2008. Anticipated cash flows
                                                  On August 16, 2007, a group of financial                The key features of the restructuring plan
                                                                                                                                                               from the new notes were discounted using
                                                  institutions and other investors reached an             are as follows:
                                                                                                                                                               the bankers’ acceptance rate plus a premium
                                                  agreement in principle to restructure ABCP
                                                                                                                                                               ranging from 809 to 1,238 basis points over
                                                  following the liquidity crisis that started in          n   Creation of three new trusts, called
                                                                                                                                                               periods ranging from five to eight years.
                                                  August 2007. This agreement, called the                     “Master Asset Vehicles” (MAV):
                                                  Montréal Accord, was designed to restore                    - MAV 1 and MAV 2 are comprised exclusively      The fair value of ABCP comprised exclusively
                                                  a climate of confidence and implement a                       of synthetic asset transactions, being a       of traditional assets was determined using
                                                  solution to the liquidity crisis and provided for             combination of assets pledged as collateral    benchmark indices selected based on the
                                                  a moratorium period with respect to the ABCP                  and credit default swap contracts, or of       underlying assets of each trust. Given that
                                                  securities issued by 23 trusts. A Pan-Canadian                hybrid asset transactions, being a             these assets will be restructured into several
                                                  Committee composed of participants in the                     combination of synthetic and traditional       series of tracking notes that will directly pass
                                                  Montréal Accord, including Desjardins Group,                  assets. They also include the ineligible       through the cash flows generated by the
                                                  was created on September 6, 2007 to oversee                   (subprime) and other assets of these series.   underlying assets, Desjardins Group assumes
                                                  the restructuring process.
                                                                                                              - MAV 3 comprised of exclusively ineligible      that the restructuring will not have a significant
                                                                                                                (subprime) asset and traditional asset         impact on their fair value. As for ABCP
                                                  On December 23, 2007, the Pan-Canadian
                                                                                                                transactions.                                  comprised exclusively of ineligible (subprime)
                                                  Committee announced that an agreement
                                                                                                                                                               assets, given the nature of the underlying
                                                  in principle had been reached regarding                 n   Creation of five classes of notes for MAV 1
                                                                                                                                                               assets and their marked deterioration in the
                                                  a comprehensive restructuring of the ABCP                   and MAV 2 (A-1, A-2, B, C and IA) and of
D es ja r Di n s gr o up

                                                                                                                                                               current economic environment, an impairment
                                                  issued by 20 trusts covered by the Montréal                 two classes of notes for MAV 3 (TA and IA).
                                                                                                                                                               loss	equal	to	99%	of	the	cost	of	these	securities	
                                                  Accord. On March 17, 2008, the Pan-Canadian                 The IA and TA notes are divided into multiple
                                                                                                                                                               was recorded as at December 31, 2008.
                                                  Committee formed to manage the restructuring                series of tracking notes that reflect the cash
                                                  filed a motion in the Ontario Superior Court                flows of the original underlying assets
                                                                                                                                                               Assumptions used are based as much as
                                                  of	Justice	under	the	Companies’ Creditors                   Establishment of funding facilities in support
                                                                                                          n                                                    possible on observable market data such as
                                                  Arrangement Act (Canada) (“CCAA”) to                        of MAV 1 and MAV 2 to fund collateral calls      interest rates, credit spreads and benchmark
                                                  allow noteholders to vote at a meeting on                   that may occur with respect to underlying        indices for similar assets They also reflect, if
                                                  the restructuring of 20 of the trusts covered               credit default swaps                             necessary, any specific features of the plan
                                                  by the Montréal Accord. Under the CCAA,
                                                                                                          n   Establishment of an initial 18-month             and are partially based on assumptions not
                                                  the plan had to be approved by a majority
                                                                                                              moratorium period during which no                supported by observable market prices or rates
                                                  of noteholders as well as by the holders of
                                                                                                              additional collateral calls may be made          for similar assets. Discount rates used take into
                                                  at least 66 2/3	%	of	the	aggregate	principal	
                                                                                                              for the vast majority of underlying credit       account the maturity, the credit rating and the
                                                  amount of the affected ABCP.
                                                                                                              default swaps                                    market and liquidity risk of each note.

                                                  On	April	25,	2008,	about	96%	of	ABCP	                   n   Widening of certain “spread-loss” triggers,
                                                                                                                                                               As at December 31, 2007, Desjardins Group
                                                  noteholders voted in favour of the restructuring            which will apply again at the expiration of
                                                                                                                                                               used different assumptions to value ABCP.
                                                  plan,	and	on	June	5,	2008,	the	Ontario	Superior	            the moratorium period, thereby reducing
                                                                                                                                                               The main difference arises from the fact that
                                                  Court	of	Justice	sanctioned	the	restructuring	plan	         the likelihood of additional collateral calls
                                                                                                                                                               Desjardins	Group	gave	a	probability	of	80%	to	
                                                  including a proposed amendment that should
                                                                                                                                                               the realization of the restructuring scenario and
                                                  allow certain noteholders, in predetermined             Desjardins Group participates in the MAV 1
                                                                                                                                                               a	probability	of	20%	to	the	liquidation	scenario,	
                                                  circumstances, to institute lawsuits for fraud          and MAV 3 trusts.
                                                                                                                                                               which was divided into an orderly liquidation
                                                  against ABCP traders. This judgment was then
                                                                                          1.1 overview    general review of DesjarDins group               37

scenario and a disorderly liquidation scenario.      The above estimated fair value may not be            Desjardins Group’s share in this credit
The fair value used was an average of the            indicative of the ultimate net realizable value      commitment, totalling $1,193 million, ranks
estimated values under the liquidation and           or future fair value. While Management               equal to the other participants in the MFF
restructuring scenarios, weighted according          believes that its valuation technique is             and	matures	in	July	2017	or	earlier	if	all	credit	
to the estimated probability of realization          appropriate in the circumstances, changes            default swap transactions have been settled.
of each scenario. It should be noted that this       in significant assumptions, especially those         This amount represents the $1,066 million
element has an impact only on synthetic and          relating to the determination of the return,         commitment negotiated as part of the
hybrid assets, as only the liquidation scenario      the credit risk spreads for the underlying assets    preliminary agreement in December 2007,
was relevant to determining the fair value of        and the quality of assets given as collateral        along with an amount of $127 million under
traditional and ineligible (subprime) assets,        by the trusts, which are integrated into             the terms of the December 24, 2008 plan.
as previously mentioned.                             the discount rate, could significantly change        Desjardins Group will not receive any fees
                                                     the value ascribed to the replacement notes          for this credit commitment. Any advance made
Impact on income                                     in	the	future.	A	1%	increase	in	the	estimated	       under this funding facility will bear interest at
                                                     discount rate would reduce the estimated fair        a rate based on the bankers’ acceptance rate
A decline in value totalling $502 million, not
                                                     value of the replacement notes portfolio             or the prime rate. All amounts advanced under
including the impact of securities restructured

                                                                                                                                                                 Ma n a g e Me n t ’s D iscussion anD analy si s
                                                     held by Desjardins Group by approximately            the margin funding facility will rank prior to
during the year, was charged to Desjardins
                                                     $64 million, which would reduce Tier 1 capital       amounts payable under the notes issued by
Group’s combined income for the year ended
                                                     by	$44	million	or	0.5%	as	at	December	31,	           MAV 1. Should Desjardins Group fail to honour
December 31, 2008 ($273 million for the year
                                                     2008. For more details on capital, see Note 28       its commitment to provide funds for its share
ended December 31, 2007). Of this amount,
                                                     “Capital Management” to the Combined                 of the margin funding facility, a proportionate
$326 million is due to a decline in value
                                                     Financial Statements.                                share of the MAV 1 notes held by Desjardins
considered to be, in accordance with accounting
                                                                                                          Group will be subordinated to the other notes.
standards, other than temporary for available-
                                                     Certain residual risks and uncertainties remain      Caisse centrale Desjardins, as the MFF signatory
for-sale securities ($202 million for the year
                                                     regarding the value of underlying assets, the        for Desjardins Group, must maintain a credit
ended December 31, 2007). The decline in
                                                     amount andtiming of cash flows, the development      rating equivalent to A (low) with at least two
value recognized for 2008 was due primarily
                                                     of a secondary market and the liquidity of this      of the four credit rating agencies (DBRS, S&P,
to the anticipated lowering of the credit rating
                                                     market for the replacement notes, which could        Fitch and Moody’s), failing which it must provide
from AAA to A for the MAV 1 series A-1 and
                                                     further change the value of Desjardins Group’s       collateral or another form of credit support to
A-2 replacement notes, the widening of credit
                                                     investment in the replacement notes. The prospect    MAV 1 or have another entity with a sufficiently
spreads during 2008 and the deterioration
                                                     of major prolonged slowdown in the North             high credit rating assume its obligations.
of benchmark indices, partially offset by the
                                                     American economy could also have a negative
increased probability of realization of the
                                                     impact on the fair value of the replacement notes.   Under a separate agreement, Desjardins
restructuring scenario.
                                                                                                          Group purchased $400 million protection
                                                     Subsequent event –                                   for its MFF commitments from one of the
A portion of the ABCP held by Desjardins
                                                     ABCP restructuring plan                              MAV 1 participants in exchange for an annual
Group as at December 31, 2008 was still held
                                                                                                          commitment	fee	of	1.2%,	which	is	the	same	
under investment operations associated with          The	restructuring	plan	was	approved	on	January	
                                                                                                          rate as the third-party institutions that have
certain guaranteed-capital structured products.      16, 2009, following the agreement reached
                                                                                                          contributed to the equivalent MFF for MAV 2.
Given the extreme volatility that has prevailed      with all the key stakeholders, including the
                                                                                                          This participation will automatically end upon
on the markets since the third quarter of 2008,      governments of Canada, Québec, Ontario
                                                                                                          the maturity of MAV 1’s MFF.
the decline in value of ABCP securities in the       and Alberta regarding the restructuring of
fourth quarter could not be offset by an             ABCP and the sanction, by the Ontario Superior
                                                                                                          In the event that the MAV 1 margin funding

                                                                                                                                                                 D es ja r Di n s gr o up
equivalent reduction in deposit liabilities and      Court	of	Justice	on	January	12,	2009,	of	the	
                                                                                                          facility and the MAV 2 equivalent facility are
actuarial liabilities as was the case in previous    final	restructuring	plan.	On	January	21,	2009,	
                                                                                                          not sufficient to meet the collateral calls on
quarters. Consequently, the decline in value         the Court-appointed monitor filed the certificate
                                                                                                          the vehicle in question, a senior funding facility
recorded for fiscal 2008 includes a $76 million      required to implement the plan and proceed
                                                                                                          has been put in place to provide access to
loss for the portion of the decline in value of      to closing.
                                                                                                          additional liquidities. The funding facility was
ABCP that is no longer offset. In the
                                                                                                          provided by the governments of Canada, Québec,
restructuring	approved	in	January	2009,	the	         In addition to the assets already pledged
                                                                                                          Alberta and Ontario and by one of the MAV 1
replacement securities were withdrawn from           as collateral by the trusts for credit default
                                                                                                          participants. This Master Asset Vehicle can draw
activities involving guaranteed-capital structured   swaps, the plan stipulates that MAV 1 and
                                                                                                          on an amount of $1,772 million under this
products and are now included in Desjardins          MAV 2 must each have a margin funding
                                                                                                          facility and will pay an annual commitment fee
Group’s regular securities portfolio.                facility (MFF) intended to cover any potential
                                                                                                          of	1.19%	until	December	2016.	This	facility	
                                                     collateral calls from swap counterparties.
                                                                                                          matures one month after the end of the
By excluding the impact of ABCP securities           Desjardins Group has chosen to self-finance
                                                                                                          moratorium on collateral	calls,	namely	in	July	
held as part of investment activities for certain    its share of the margin funding facility, which
                                                                                                          2010, unless an amount has been drawn and
guaranteed-capital structured products, the          explains its participation in MAV 1.
                                                                                                          has not been repaid as at that date, in which
total restructured and non-restructured ABCP
                                                                                                          case all the liquidities available for reimbursement
write-down, financing costs and the shortfall
                                                                                                          in MAV 1 will be used to pay the interest and
in terms of the accrued interest totalled
                                                                                                          principal of the senior funding facility before
$536 million ($400 million after income taxes).
                                                                                                          the MAV 1 margin funding facility and the
The corresponding amount for 2007 is
                                                                                                          notes issued by MAV 1. Advances that can be
$289 million ($198 million after income taxes).
                                                                                                          made under this facility will bear interest at a
                                                                                                          rate based on the bankers’ acceptance rate or
                                                                                                          the prime rate.
                                                  38         general review of DesjarDins group                   1.1 overview

                                                  A negative amount of $98 million ($93 million                     interest for the period from September 1,        The following details on the specific rights
                                                  in 2007) for margin funding facilities was                        2008 to December 31, 2008, which will            of each noteholder were established in
                                                  included in the calculation of the fair value                     also eventually be paid. This net interest has   accordance with the terms and conditions
                                                  of ABCP as at December 31, 2008.                                  been taken into account in the estimate of       of the plan. Under the plan, noteholders
                                                                                                                    the fair value of ABCP as at December 31.        received new notes according to weightings
                                                  During the first quarter of 2009, an amount of                    For the year ended December 31, 2007,            determined based on the various ABCP-issuing
                                                  $80 million, net of Desjardins Group’s estimated                  Desjardins Group recognized, in fair value,      trusts. Consequently, after the restructuring,
                                                  share of the $23 million in restructuring fees                    the contractual interest income on ABCP          Desjardins Group holds new notes of which
                                                  assumed by the Pan-Canadian Committee, was                        holdings as of August 20, 2007.                  the face value has been allocated among
                                                  paid to Desjardins Group as accrued interest for                                                                   the following various vehicles:
                                                  the period from August 20, 2007 to August 31,
                                                  2008. Desjardins Group estimated the accrued

                                                  (in millions of dollars)
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                                                                                                                                                      Face value          Fair value(1)
                                                    MaV 1
                                                     Class A-1                                                                                                                       $      904       $         540
                                                     Class A-2                                                                                                                              816                 460
                                                     Class B                                                                                                                                139                  79
                                                     Class C                                                                                                                                 57                  34
                                                     Class IA – Ineligible (subprime) assets                                                                                                168                  —
                                                     Class IA – Ineligible assets (other)                                                                                                    27                  13

                                                    Total MAV 1                                                                                                                          2,111               1,126

                                                    MaV 3
                                                     Class IA – Ineligible (subprime) assets                                                                                                 68                  —
                                                     Class TA – Traditional assets                                                                                                          247                 230

                                                    Total MAV 3                                                                                                                            315                 230

                                                    interest received                                                                                                                        80                  80

                                                    Total                                                                                                                            $   2,506        $      1,436

                                                  (1) Based on fair values established as at December 31, 2008.
D es ja r Di n s gr o up
                                                                                                                1.1 overview      general review of DesjarDins group              39

The following table presents the main features of these new notes:

                                     Coupon                               Legal maturity date         Ranking                                  Rating

  MAV 1 A-1(1)                       Bankers’ acceptance                  July	15,	2056(3)            Ranking senior to MAV 1 A-2              A
                                     rate + 30 basis points(2)                                        notes with respect to interest
                                                                                                      and to MAV 1 B and C notes with
                                                                                                      respect to principal and interest

  MAV 1 A-2(1)                       Bankers’ acceptance                  July	15,	2056(3)            Interest ranks senior to the             A
                                     rate + 30 basis points(2)                                        principal of MAV 1 A-1 notes.
                                                                                                      Subordinated to MAV 1 A-1
                                                                                                      notes with respect to principal

  MAV 1 B(1)                         Bankers’ acceptance                  July	15,	2056(3)            Subordinated to MAV 1 A-2                None

                                                                                                                                                                                        Ma n a g e Me n t ’s D iscussion anD analy si s
                                     rate + 30 basis points(2)                                        notes with respect to principal
                                                                                                      and interest
                                     Interest payable at
                                     maturity, cumulative

  MAV 1 C(1)                         Bankers’ acceptance                  July	15,	2056(3)            Subordinated to MAV 1 B                  None
                                     rate	+	20%	                                                      notes with respect to principal
                                                                                                      and interest
                                     Interest payable
                                     at maturity

  MAV 1 IA notes                     Floating based on                    Between                     Certain notes rank senior                No rating for the MAV 1 IA notes
  and all MAV 3                      the yield of the                     September 19, 2012          with respect to interest                 and all MAV 3 notes, except for
  notes                              underlying assets                    and	July	15,	2056                                                    6 series of MAV 3 notes which
                                                                                                                                               were assigned ratings ranging
                                                                                                                                               from A (low) to AAA

(1)	No	obligation	to	pay	interest	before	January	22,	2019.
(2) The interest rate is LIBOR + 30 basis points for U.S. dollar notes.
(3)	The	expected	payment	maturity	date	is	January	22,	2017.

At the time the Combined Financial Statements                             Leveraged super senior structures (LSS) provide         If the additional collateral cannot be provided,
were prepared, no active market existed yet                               investors with an exposure backed by a super            the LSS is unwound for the benefit of the buyer
for the various restructured notes. In addition,                          senior proportion of a pool of reference assets.        of the protection against the credit default. Such
the trading of MAV 1 notes is subject to                                  The exposure is generally equal to many times           an unwind results in a loss for the protection
considerable restrictions, since MAV 1 A-1,                               the invested amount in a given transaction and          seller, even if the actual losses of the pool

                                                                                                                                                                                        D es ja r Di n s gr o up
A-2, B and C noteholders may only transfer                                pledged as collateral to the credit protection          of reference assets have not reached the
the notes to a third party if such transfer is                            beneficiary, namely the counterparty to the             attachment point for the super senior tranche.
made on a prorata basis of each of the classes                            credit default swap.                                    The widening of certain “spread-loss” triggers,
held by the seller and if the buyer assumes                                                                                       which were implemented as part of the
an equivalent share of the commitments related                            A super senior tranche has an attachment point,         restructuring plan and will apply again to LSS
to the MFF, either directly or through another                            which is the threshold or level of losses that the      at the expiration of the 18-month moratorium
entity, as long as the party assuming the share                           pool of assets must incur before the payment            period, makes the triggering of additional
of the MFF has a sufficiently high credit rating.                         obligations are triggered. In general, this level       collateral calls more remote.
                                                                          is significantly higher than the level of losses
Desjardins Group’s ultimate capacity to recover                           inherent to an R-1 (high) or AAA rating.                Desjardins Group holds or has access to
its investments in replacement notes depends                              Therefore, the level of losses to which the super       the necessary funds to meet all its financial,
on the credit quality of the underlying assets.                           senior tranche is exposed is usually lower than         operating or regulatory obligations, and it
The assets underlying the restructured notes                              the historical experience for this level of rating.     does not expect that the liquidity problems
can be summarized as follows:                                             When the level of losses increases or indicators        related to ABCP and the replacement notes will
                                                                          show that it could increase (additional collateral      have a material adverse impact on its financial
  assets underlying MaV 1                                                 call triggers), the buyers of protection against        soundness, its credit rating or its capital ratios.
  Leveraged	super	senior	structures	                    74.6	 %           the credit default require collateral in addition
  Collateralized debt obligations                       12.2              to the amounts initially invested. To meet such
  Commercial mortgage loans                              7.6              additional collateral calls, the counterparty who
  Canadian subprime residential                                           has sold the protection must have mechanisms
    mortgage loans                                        3.1             to access liquidities.
  Other assets                                            2.5
                                                  40      general review of DesjarDins group            1.1 overview

                                                  indirect impact of aBcp and guaranteed-                 decision to end the program. All these strategic       n   The creation of the Desjardins Group Finance
                                                  capital structured products                             decisions resulted in a total expense of $68 million       and Risk Management Committee, which
                                                                                                          ($60 million after income taxes).                          ensures weekly follow-up on portfolios
                                                  As part of its guaranteed-capital structured
                                                                                                                                                                     and risks
                                                  products, Desjardins had recourse to hedge
                                                                                                          Losses of $434 million ($341 million after
                                                  fund and money market investments, including
                                                                                                          income taxes) were therefore posted                    Lastly, in the second quarter of 2008, a mandate
                                                  ABCP securities for the management of certain
                                                                                                          in 2008 with respect to these projects.                was assigned to the head office of Desjardins
                                                  savings products, also known as guaranteed-
                                                                                                                                                                 Group Internal Audit following a report
                                                  capital structured products, namely the
                                                                                                          non-recurring gains                                    regarding purchasing policies and their
                                                  Alternative and Perspectives Plus guaranteed
                                                                                                                                                                 application, as well as with regard to relations
                                                  investments, and the Strategic Index Plus               In 2007, Desjardins Group recorded two
                                                                                                                                                                 between Desjardins Group entities and their
                                                  and Tactical Index Plus products. These products        non-recurring gains: one for $72 million
                                                                                                                                                                 suppliers. This mandate has ended and
                                                  guarantee capital for the term of the investment        ($64 million after income taxes) realized
                                                                                                                                                                 Desjardins Group Management considers
                                                  and can also enhance the return based on                as part of the VISA global restructuring,
                                                                                                                                                                 that the items brought to their attention
                                                  market developments.                                    and the second for $45 million ($37 million
                                                                                                                                                                 had no material impact on the financial
                                                                                                          after income taxes) following the creation
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                                                                                                                                 information disclosed.
                                                  Management of these market-linked guaranteed            of a strategic partnership with the credit
                                                  products is governed by a risk management               union centrals of the other Canadian
                                                  protocol based on various specific parameters.          provinces, aimed at accelerating the                   proVision for
                                                  The exceptional situation prevailing on financial       growth of Northwest and Ethical funds.                 MeMBer DiViDenDs
                                                  markets for some months has had a major
                                                  impact on the investment portfolio, which               strengtHening tHe                                      In	a	unanimous	decision	made	on	January	20,	
                                                  is what led to the application of the risk                                                                     2009, from a perspective of sound and prudent
                                                                                                          inVestMent actiVity anD risK
                                                  management protocol and the withdrawal                                                                         management, Desjardins Group’s Board of
                                                  of hedge funds from investments in the
                                                                                                          fraMeWorKs                                             Directors opted for a balanced approach in
                                                  context of very strong market turbulence.               As a result of financial market turbulence in          distributing caisse surplus earnings that takes
                                                                                                          2008 and its negative impact on Desjardins             into consideration the expectations of members
                                                  The slump on financial markets that caused              Group’s financial results, Management and              and their communities as well as Desjardins
                                                  the negative performance of the underlying              decision-making bodies within Desjardins               Group’s capital requirements. This exceptional
                                                  assets and hedge funds, as well as the decline          Group put in place measures to mitigate risk           temporary measure is a responsible approach
                                                  in value of ABCP, resulted in losses related            and better regulate investment activities.             to keep the capital base of both Desjardins
                                                  to Desjardins Group’s commitment to guarantee                                                                  Group and the caisses at a high level in the
                                                  the capital of its members and clients. These           Mandates were assigned to Desjardins Group             current economic and financial environment.
                                                  losses of $565 million ($431 million after income       Internal Audit, in collaboration with external
                                                  taxes) related to guaranteed-capital structured         experts, to review the ABCP file, the securities       Consequently, the 2008 financial statements
                                                  products as at December 31, 2008 are reflected          lending activities at Desjardins Trust, as well as     include a $186 million provision for member
                                                  in the Combined Financial Statements.                   the management of hedge funds by Desjardins            dividends, along with a $29 million adjustment
                                                                                                          Asset Management. These mandates were                  for 2007, bringing the total provision to
                                                  The direct and indirect impact of ABCP                  assigned in the second quarter of 2008 and             $215 million for the current year, versus
                                                  and certain guaranteed-capital structured               action plans were progressively implemented            $592 million at the end of 2007. Nonetheless,
                                                  products totalled $1,101 million ($831 million          over the course of the second half of the year.        the sum of $80 million, or $8 million more than
                                                  after income taxes) in 2008, compared to                                                                       in 2007, was returned to the community in the
D es ja r Di n s gr o up

                                                  $289 million ($198 after income taxes) in 2007          Furthermore, other measures were implemented           form of donations, sponsorships and bursaries.
                                                  A charge of $121 million was recorded under             by Management and Desjardins decision-making
                                                  “Client retention expense” the previous year.           bodies. The main measures are as follows:              It should be mentioned that in the past five
                                                                                                                                                                 years, Desjardins Group has paid out more
                                                  Write-offs and negative                                 n   Reinforcing Desjardins Group’s integrated          than $2 billion in member dividends.
                                                  performance of investments                                  risk management role, in particular with
                                                  Desjardins Group holds a high-quality,                      regard to investment portfolios managed            financial anD
                                                  diversified investment portfolio which includes             by Desjardins Asset Management                     operational synergies
                                                  several asset classes. Due to the financial crisis,     n   The revision of Desjardins Trust’s securities
                                                                                                                                                                 In 2008, the competitive environment of
                                                  certain investment portfolios belonging to                  lending policy
                                                                                                                                                                 the market resulted in the continued pursuit
                                                  Desjardins Group components saw revenues
                                                                                                          n   The monitoring system for portfolios               of improved productivity. In this regard,
                                                  decrease by $366 million ($281 million after
                                                                                                              consolidated on Desjardins Group’s                 productivity continues to be a concern which
                                                  income taxes) as at December 31, 2008.
                                                                                                              balance sheet                                      prompts components of Desjardins Group
                                                                                                              The new risk and control analysis approach         to work together to remain competitive.
                                                  During 2008, Desjardins Group repositioned              n

                                                  certain cross-Canada development initiatives,               for new complex financial products
                                                                                                                                                                 Task forces from the FCDQ and Desjardins
                                                  including its data processing service offering          n   The implementation of the Steering Committee
                                                                                                                                                                 Group subsidiaries continued and further
                                                  to Canadian credit unions as well as                        in charge of supervising the accelerated
                                                                                                                                                                 enhanced the work of creating financial and
                                                  the development of Desjardins Credit Union.                 disinvestment of hedge funds managed
                                                                                                                                                                 operational synergies, the first phase of which
                                                  It also eliminated its cheque imaging project               by Desjardins Asset Management and the
                                                                                                                                                                 was launched in 2005. In 2008, the shared
                                                  following the Canadian Payments Association’s               resulting action plan
                                                                                                                                                                 services, with financial benefits estimated
                                                                                                                            1.1 overview             general review of DesjarDins group                        41

to be in excess of $62 million over five years,                            canaDa-WiDe DeVelopMent                                                   the same system as the one that caisses are
paid off with the opening of a shared services                                                                                                       using in Québec and Ontario.This keeps to a
centre for specialized savings back-office                                 Canada-wide development is an important                                   minimum the modifications and adjustments
services of the Investment Funds and Trust                                 part of the growth of Desjardins. In 2008,                                that would otherwise be required by business
Services Executive Division, Desjardins Securities                         the growth of Desjardins components outside                               models that could differ between caisses and
and Desjardins Financial Security. The results for                         Québec, in some cases, outpaced that noted                                credit unions.
2008 show a favourable variance of $6 million.                             for business in Québec. This brought Desjardins
If technological expenses are excluded, this                               closer	to	its	objective	of	realizing	25%	of	sales	                        Desjardins and the Canadian credit unions have
variance	accounts	for	7%	of	the	annual	budget.	    	                       outside Québec.                                                           continued their collaboration, with Desjardins
For the 2008 fiscal year, the capacity increase                                                                                                      providing credit unions across Canada with
achieved close to $8 million in recurring                                  As work continued on the partnerships with                                other products and services such as investment
synergies, which will have an impact on the                                the credit unions and the Canadian cooperative                            funds and credit card, investment and other
2009 fiscal year. This self-funding business                               sector, 2008 was the first year of a strategic                            value-added products.
unit consists of more than 772 persons and has                             partnership leading to the creation of a
an operating budget of close to $123 million.                              national mutual fund firm, Northwest & Ethical                            Basel ii accorD

                                                                                                                                                                                                                    Ma n a g e Me n t ’s D iscussion anD analy si s
                                                                           Investments L.P., with assets under management
Furthermore, the establishment of a shared                                 of close to $4 billion. Though this industry is                           The Basel II Accord was designed to align
services centre in administration, including                               operating in a difficult environment, Northwest                           capital requirements with risk exposure and
property occupation, procurement and other                                 & Ethical Investments is now distributing its                             to favour the continuous development of
administrative services such as accounting                                 investment funds through the caisse network                               the risk assessment capabilities of financial
services,	was	operational	in	January	2008.	                                and through credit unions throughout Canada,                              institutions. Desjardins Group has filed a
Desjardins Administrative Services (DAS)                                   thereby offering strong growth potential.                                 request with the AMF to progressively adopt
includes all of these activities for the FCDQ                                                                                                        the Internal Ratings-Based Approach for credit
and enables the components of Desjardins                                   Among its other partnership initiatives in                                risk, the Internal Models Approach for market
Group to use its services through targeted                                 the Canadian cooperative sector, Desjardins                               risk and the Standardized Approach for
offers of service. The financial benefits relating                         repositioned its offer of IT services to Canadian                         operational risk.
to DAS, including those relating to procurement,                           credit unions. In order to get the most potential
totalled $2.9 million in 2008.                                             out of its computer platform, Desjardins
                                                                           is continuing to provide credit unions with
                                                                           technological solutions, but it is proposing

TABLE 1       DesjarDins group(1)
selected data for years ended December 31
(in	millions	of	$	and	as	a	%)

                                                                                                                                                        2008                    2007                   2006
      operating results
      Total income(2)                                                                                                                               $      8,373           $      9,671            $   9,419
      Provisions for credit losses                                                                                                                           243                    197                  139
      Claims, benefits, annuities and changes in insurance provisions                                                                                      3,144                  3,171                3,342
      Client retention expense                                                                                                                                —                     121                   —

                                                                                                                                                                                                                    D es ja r Di n s gr o up
      Non-interest expense                                                                                                                                 4,800                  4,702                4,534

      Surplus earnings after income taxes and before member dividends(2)                                                                                       78                 1,101                 988

      Provision for member dividends                                                                                                                         215                     592                483

      Key ratios
      Return on equity(2)                                                                                                                                   0.8 %	 	               12.3	 %	 	           12.1	 %
      Productivity ratio for Desjardins Group(2)(3)                                                                                                        91.8                    72.3                 74.6
      Member dividends/surplus earnings                                                                                                                   275.6                    53.8                 48.9
      Tier 1 capital ratio – BIS(3)                                                                                                                       13.39                   14.17                14.18
      Total capital ratio – BIS (3)                                                                                                                       12.85                   13.59                14.33

      financial position as at December 31
      Total assets                                                                                                                                  $ 152,298              $ 144,059               $ 129,140
      Average assets                                                                                                                                  149,676                139,957                 123,563
      Loans                                                                                                                                           104,462                 95,403                  88,646
      Average equity                                                                                                                                    9,569                  8,913                   8,186
      Deposits and subordinated debentures                                                                                                            102,184                 96,624                  89,510

(1)   Excluding the caisses and federations in Manitoba and New Brunswick.
(2)   Data for 2008 were affected by the financial crisis and ABCP. The table on page 42 presents the results of the priority objectives for 2008, excluding the after-tax impact of specific items.
(3)   The productivity ratio is Desjardins Group’s non-interest expense over total income, net of claims and insurance benefits.
(4)   Bank for International Settlements.
                                                  42        general review of DesjarDins group                      1.1 overview

                                                  Monitoring of priority                                                The table on this page presents its financial                         growth in surplus earnings and the productivity
                                                  financial oBjectiVes                                                  performance in relation to strategic                                  ratio. Furthermore, balance sheet quality and
                                                                                                                        planning objectives.                                                  capital position continue to rest on a solid
                                                  As part of Desjardins Group’s 2006-2008                                                                                                     foundation. Its capital ratios in particular are
                                                  Strategic Plan, achieving sufficient and                              It goes without saying that the difficult                             among the best in the industry. The level of
                                                  reliable profitability had been identified as                         market conditions during the second half                              the ratios specifically reflects the prudent capital
                                                  a priority focus. In order to properly evaluate                       of 2008 had a significant impact on Desjardins                        management strategy that has always been
                                                  its financial performance and offer an accurate                       Group’s performance and, consequently,                                advocated by Desjardins Group, thus providing
                                                  and transparent picture of it, Desjardins Group                       the extent to which it reached its financial                          a solid capital base to ensure sustainability and
                                                  developed an integrated financial framework                           objectives. Certain specific items affected                           support business development.
                                                  for itself, including objectives related to                           Desjardins Group’s profitability, which had
                                                  profitability, growth, productivity, balance                          a direct impact on return on equity, the ratio
                                                  sheet quality and capital management.                                 of member dividends to surplus earnings,
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                    Desjardins Group                                                               Priority financial objectives             Results of priority objectives              Results of priority objectives,
                                                                                                                                                     2006-2008                                     in 2008              excluding the after-tax impact
                                                                                                                                                                                                                             of specific items, in 2008

                                                     - Return on equity                                                             Between	12%	and	15%                                                  0.8 %                                 12.4 %

                                                    Balance sheet quality
                                                     - Gross impaired loans/gross loans                                                         Less	than	1.0%                                         0.40 %                                  0.40 %

                                                     - Growth in surplus earnings (after income taxes)                                Between	5%	and	10%                                             (92.9 %)                                    4.3 %

                                                      - Gap between revenue growth(1)                                                      Greater	than	1.0%                                         (21.7 %)                                    1.6 %
                                                        and expense growth

                                                     - Total capital ratio                                                         Greater than or equal to                                          12.85 %                                         —
                                                                                                                                  12.5%	and	bank	medians
                                                       - Tier 1 capital ratio                                                    Greater than or equal to                                            13.39 %                                         —
                                                                                                                            13.0%	and	bank	median	+	3%

                                                    cooperative difference
                                                     - Member dividends (before income taxes)/                                               Limited	to	45%(2)                                       275.6 %                                         —
                                                       surplus earnings (after income taxes)

                                                  (1) Total income, net of claims and insurance benefits.
D es ja r Di n s gr o up

                                                  (2)	 Does	not	take	into	account	the	exceptional	and	temporary	amendment	to	the	distribution	of	surplus	earnings	in	2008,	approved	by	the	Board	of	Directors	in	January	2009.

                                                  financial outlooK for 2009                                            member and client satisfaction, productivity                          that 2009 will bring. Desjardins has a very
                                                                                                                        and returns for owner-members, and employee                           good level of capitalization, still one of the best
                                                  The financial performance set out in                                  and officer satisfaction and motivation.                              in the industry. However, the dreaded effects of
                                                  the 2009 Business Plan carries forward the                                                                                                  the financial crisis and the impact of a recession
                                                  financial objectives determined by Desjardins                         However, the current unstable and                                     that will affect Canada, Ontario and, to a lesser
                                                  Group’s 2006-2008 Strategic Plan. Profitability                       unpredictable economic environment                                    extent, Québec, have prompted Desjardins
                                                  is reflective of the desired balance between                          makes it even more difficult to establish                             Group Management to take a cautious attitude
                                                  cooperative performance and financial                                 future financial results. For this reason,                            that favours strengthening the capital base,
                                                  performance. As mentioned previously,                                 Desjardins Group management has decided                               as several Canadian financial institutions have
                                                  important work was begun in 2008 to develop                           not to disclose its financial outlook for 2009.                       done.
                                                  and implement Desjardins Group’s strategic
                                                  planning for 2010 to 2012. In addition to this,                       In this period of unprecedented volatility                            Naturally, the financial position will demand
                                                  Desjardins will hold its 20th Congress of Elected                     and stock market turbulence, it is essential                          more attention in terms of managing expenses
                                                  Officers in 2009, under the theme “Cooperate                          to focus efforts toward achieving Desjardins                          and will necessarily influence the decisions to
                                                  to shape our destiny”, defining the main                              Group’s strategic objectives and priorities,                          be made in 2009 and subsequent years. The
                                                  orientations in Desjardins Group’s development                        and not lose sight of the long term.                                  authorities at Desjardins Group will redouble
                                                  for the coming years.                                                                                                                       their vigilance in managing the institution,
                                                                                                                        Desjardins Group’s 2009 Capitalization Plan                           especially in risk management and finance.
                                                  All this work will be done with a constant                            has been approved by the Board of Directors.
                                                  concern for maintaining a balance between                             It sets the target capitalization that will ensure
                                                  the three aspects of the management model                             Desjardins Group’s development as well as
                                                  for overall lasting performance, namely,                              enabling it to face the financial challenges
                                                                                            1.1 overview     general review of DesjarDins group              43

In 2009, emphasis will be placed on the five          n   The already-significant synergies created          Desjardins Group’s CEO and CFO that important
major building blocks identified as part of               among Desjardins caisses and subsidiaries          information about Desjardins Group and
the Development Plan described earlier, in                are growing from year to year.                     its components is communicated to them
the “Vision and Strategy” section.                    n   Thanks to the Act respecting the distribution      in a timely fashion so that they can disclose
                                                          of financial products and services, Desjardins     complete and reliable information to the public
However, it must be remembered that the                   caisses can offer a complete line of financial     and to Desjardins Group’s members and clients.
2009 Business Plan will be implemented in                 services.                                          As at December 31, 2008, Management has
an environment of risk and uncertainty                                                                       assessed the financial disclosure controls and
related to capital markets, more specifically         n   In fall 2008, a young leaders’ summit was          procedures. This assessment confirmed their
the prevailing global economic conditions                 held so that young people could express            effectiveness both in design and operation.
and their repercussions on the North American             their needs, expectations and aspirations
market, which could have a noticeable impact              with regard to Desjardins, as well as identify     Given the inherent limitations in any control
on Desjardins Group’s financial performance.              the challenges Desjardins would have to            system, Management of Desjardins Group
                                                          meet in order to become the preferred              acknowledges that disclosure controls and
                                                          financial institution for young people.
HoW We are Different                                                                                         procedures cannot prevent or detect all

                                                                                                                                                                  Ma n a g e Me n t ’s D iscussion anD analy si s
                                                          A large-scale consultation was also held           misstatements, whether caused by error
n   First of all, Desjardins Group is structured          with young people through the Web site.            or fraud.
    as a cooperative, which means that it                 The Chair of the Board, President and CEO
    redistributes a portion of its surplus earnings       sat down for an online chat session so that        Furthermore, concerned with continuously
    to its members in the form of member                  she could find out one-on-one from young           improving its financial governance rules
    dividends, when its financial circumstances           people about their concerns and answer             and practices, Desjardins Group considers
    permit. In this manner, the caisses, which are        their questions.                                   it important to uphold a structured internal
    the pillars of Desjardins Group, contribute to    n   Desjardins maintains a reliable and efficient      control environment that allows it to satisfy
    improving the economic and social conditions          technological platform that supports its           the expectations of the market and of its
    of their members and communities.                     distribution network. Its AccèsD online            members and clients, while at the same time
n   Human capital is Desjardins Group’s most              services and its Web site           acting in accordance with these structures,
    valuable resource. With 5.8 million members           are among the most visited sites in Québec         the context, and its governance process. In
    and clients and some 6,300 elected officers,          and are used as examples by other financial        this regard, and on a voluntary basis, Desjardins
    Desjardins Group, as a democratic institution,        institutions elsewhere in the world.               Group has initiated a gradual implementation
    stands out for offering meaningful                n   The strong decentralization of its distribution    of financial governance rules and practices
    opportunities for involvement. Rounding out           network helps Desjardins to stay very close        that are comparable to those prescribed by
    this human capital are the roughly 40,000             to its members and enjoy an unparalleled           the Canadian Securities Administrators, which
    employees of Desjardins Group, who make               connection with their communities. Open to         will permit it to certify the effectiveness of
    it the largest private employer in Québec             diversity, Desjardins Group also offers services   Desjardins Group’s internal control over financial
    and helped it become one of the 50 Best               in a number of languages.                          reporting as at December 31, 2011.
    Employers in Canada. Desjardins is also the
    financial institution that employs the largest    financial goVernance                                   As at December 31, 2008, two Desjardins
    number of financial planners in Québec.                                                                  Group components, namely, Caisse centrale
                                                      Although Desjardins Group is not a reporting           Desjardins as reporting issuer and Capital
n   Desjardins Group as an employer also stands       issuer or venture issuer under Regulation              Desjardins inc. as venture issuer, complied
    out from the rest of the financial industry       52-109 of the Autorité des marchés financiers          with the new requirements under Regulation
    by maintaining an employee retention rate         (AMF), Management in conjunction with the              52-109. In this regard, Capital Desjardins inc.

                                                                                                                                                                  D es ja r Di n s gr o up
    above	95%.                                        Chief Executive Officer and the Chief Financial        decided to no longer avail itself of the new
n   Desjardins Group, the largest cooperative         Officer of Desjardins Group designed, or caused        provisions concerning the “Venture Issuer Basic
    financial group in Canada, has a financially      to be designed, financial disclosure controls and      Certificate”, which was limited to a prescribed
    solid structure.                                  procedures, which are supported by the process         notice to reader that did not include any
                                                      for periodic certification and internal sub-           representations relating to the establishment
n   Desjardins provides its members and clients
                                                      certification of financial disclosures made in         and maintenance of disclosure controls and
    with a full line of products and services
                                                      annual and interim filings.                            procedures and internal control over financial
    through an extensive distribution network.
                                                                                                             reporting, and has opted to retain the full
n   Desjardins has been part of Québec’s              All information collected as part of the financial     certificate used by reporting issuers.
    economic and financial landscape for over         governance process is reviewed on a quarterly
    a century and holds large market shares in        or annual basis by the members of the                  The management of both these issuers
    the savings and credit sectors; Desjardins        Desjardins Group Disclosure Committee and of           therefore assessed the effectiveness of
    has a strong presence throughout Québec           the Audit and Inspection Commission, who play          disclosure controls and procedures and
    and offers services across Canada and in          a lead role in overseeing and assessing the            internal control over financial reporting,
    the United States.                                appropriateness of financial disclosure controls       which provide reasonable assurance regarding
n   Desjardins Group has excellent credit ratings     and procedures.                                        the reliability of financial reporting and the
    owing to the quality of its financial assets,                                                            preparation of financial statements for external
    financial structure, and equity.                  This rigorous financial governance process,            purposes in accordance with generally accepted
                                                      which is comparable to those used in the               accounting principles.
                                                      industry, provides reasonable assurance to
                                                  44         general review of DesjarDins group                          1.1 overview

                                                  This assessment was carried out using                                      remembered that financial results for the second              personal and commercial
                                                  the recognized control framework of the                                    half of 2007 were affected by the VISA global
                                                                                                                                                                                           The segment mainly comprises the caisse
                                                  Committee of Sponsoring Organizations of                                   restructuring and the partnership with The
                                                                                                                                                                                           network in Québec and Ontario, Caisse centrale
                                                  the Treadway Commission (COSO) and confirms                                Ethical Funds Company. Apart from these
                                                                                                                                                                                           Desjardins, Fonds de sécurité Desjardins, Capital
                                                  the effectiveness of their disclosure controls                             events, no other unusual items had a significant
                                                                                                                                                                                           Desjardins inc., Desjardins Trust, MM Trust,
                                                  and procedures and of their internal control                               impact on results for 2006, 2007 and 2008.
                                                                                                                                                                                           MM Trust II, 9186-8034 Québec inc., the
                                                  over financial reporting.
                                                                                                                                                                                           Fédération des caisses populaires de l’Ontario
                                                                                                                             During these years, no significant business
                                                                                                                                                                                           and the Fédération des caisses Desjardins du
                                                  Various other aspects of governance are                                    acquisitions were completed except for the
                                                                                                                                                                                           Québec, which includes the following business
                                                  examined in more detail on pages 173 to 186                                acquisition of Groupe financier Performa, a
                                                                                                                                                                                           units: Desjardins Card Services, Investment
                                                  of this Annual Report.                                                     mutual fund distribution network, by the life
                                                                                                                                                                                           Fund Services, Financial Engineering Services
                                                                                                                             and health insurance subsidiary as well as the
                                                                                                                                                                                           and Desjardins Payroll and Human
                                                  presentation of                                                            acquisition of the Canadian assets of SIGMA-HR
                                                                                                                                                                                           Resources Services.
                                                                                                                             Solutions Inc., a firm specializing in human
                                                  financial inforMation
                                                                                                                             resources management software solutions,
                                                                                                                                                                                           life and Health insurance
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  Desjardins Group’s Combined Financial                                      by Desjardins Payroll and Human Resources
                                                  Statements are prepared in accordance                                      Services. These transactions were performed                   This segment comprises the activities
                                                  with Canadian generally accepted accounting                                in 2006 but did not have a material impact                    of Desjardins Financial Security.
                                                  principles. All amounts shown in the MD&A are                              on Desjardins Group’s Combined Financial
                                                  in Canadian dollars, unless otherwise indicated.                           Statements as at December 31, 2006.                           general insurance
                                                                                                                                                                                           This segment presents the activities
                                                  Some figures from prior years have been                                    Return on equity provides Management                          of Desjardins General Insurance Group.
                                                  reclassified to conform to the presentation                                with a measure to assess the overall financial
                                                  adopted for 2008.                                                          performance of Desjardins Group.
                                                                                                                                                                                           securities Brokerage, asset
                                                                                                                                                                                           Management and Venture capital
                                                  Financial results for 2008 were affected                                   Transactions with related parties are discussed
                                                  by the instability of financial markets as                                 in Note 30 to the Combined Financial Statements.              This segment comprises the activities
                                                  well as by ABCP (which also had an impact                                                                                                of Desjardins Securities, Desjardins Asset
                                                  on results in 2007), and by the direct and                                 Desjardins Group presents its segmented                       Management and Desjardins Venture Capital.
                                                  indirect impact of ABCP and guaranteed-capital                             information according to four main business
                                                  structured products. Financial performance                                 segments in addition to another category,                     A detailed segment-by-segment analysis
                                                  for 2008 was affected as well by other specific                            labelled “Other.” The latter category includes                of activities is presented on pages 48 to 68.
                                                  items arising from the strategic decisions                                 the consolidation adjustments attributable
                                                  mentioned earlier. Moreover, it should be                                  to all components.

                                                  TABLE 2     contriBution to coMBineD surplus earnings By Business segMent
                                                  Years ended December 31
                                                  (in	millions	of	$	and	as	a	%)

                                                                                                                                                      2008                              2007                                   2006
D es ja r Di n s gr o up

                                                    Personal and Commercial                                                                  $ 16                  20.5 %	 	   $	 794	 	        72.1	 %	 	           $	 752	 	      76.1	 %
                                                    Life and Health Insurance(1)                                                               40                  51.3           211           19.2                    146         14.8
                                                    General Insurance                                                                          36                  46.2           126           11.4                    107         10.8
                                                    Securities Brokerage, Asset Management
                                                       and Venture Capital                                                                      (29)           (37.2)             17              1.5                    14            1.4
                                                    Other                                                                                        15             19.2             (47)            (4.2)                  (31)          (3.1)

                                                    Surplus earnings after income taxes
                                                      and before member dividends                                                            $ 78             100.0 %          $ 1,101         100.0 %               $ 988         100.0 %

                                                  (1) This contribution differs from the subsidiary’s specific results as it includes consolidation adjustments.
                                                               1.2 ANALYSIS OF FINANCIAL RESULTS           general review of desjardins group                            45


2008 FOURTH QUARTER RESULTS                          Desjardins Group components shed $186 million         2008 RESULTS
                                                     in income ($147 million after income taxes),
For the fourth quarter of 2008, Desjardins           excluding those backing insurance contracts,          Desjardins Group declared surplus earnings
Group recorded combined deficits before              with an equivalent amount offset by a decline in      before member dividends of $78 million
member dividends of $476 million, versus             the insurance provision expense for the life and      for 2008, versus $1,101 million in 2007.
combined surplus earnings before member              health insurance subsidiary. In 2007, Desjardins      Overall profitability was, however, significantly
dividends of $273 million for the same quarter       Group recorded two non-recurring gains: one           impacted by the previously described specific
in 2007. Return on equity, namely surplus            for $72 million ($64 million after income taxes)      items that occurred in 2008 and totalled $1,172
earnings before member dividends over average        realized as part of the VISA global restructuring,    million after income taxes. If it had not been for
equity, was (19.3%) for the fourth quarter of        and the second for $45 million ($37 million           the specific items, combined surplus earnings

                                                                                                                                                                              MA N A g E ME N T ’S D ISCUSSION AND ANALY SI S
2008, compared to 11.8% in the same quarter          after income taxes) following the creation            before member dividends would have been
of last year. This large decrease in financial       of a strategic partnership with the credit union      $1,250 million at the end of 2008, up 4.3%
results clearly reflects the impact of sharply       centrals. For additional information on these         over 2007.
deteriorating capital markets in recent months,      specific items, refer to the section titled
resulting in stock market gyrations and              “Specific items relating to the fourth quarter        In the Personal and Commercial segment,
unprecedented volatility.                            and fiscal 2008 primarily as a result of financial    the caisse network, the driving force behind
                                                     market instability” on page 35 of the MD&A.           Desjardins Group, recorded robust growth of
The difficult conditions on capital markets          Income from brokerage, investment fund and            10.9% in surplus earnings, which climbed from
significantly impacted subsidiaries’ investment      trust services, which was also affected by the        $625 million in 2007 to $693 million in 2008.
portfolios and other activities directly related     deteriorating markets, was down $55 million           However, this segment’s overall financial results
to capital markets, including securities, venture    or 29.1%.                                             were severely affected by the specific items that
capital and investment fund activities. Fourth                                                             occurred in 2008 and totalled close to $1 billion
quarter financial results were therefore affected    Overall, Desjardins Group’s total income              after income taxes.
by specific items described in the previous          amounted to $1,729 million, down
section, which had a negative impact of $770         $970 million or 35.9% from the fourth                              SurpluS earningS before
million after income taxes on combined surplus       quarter of 2007.                                                      member dividendS
earnings. Had it not been for the specific items,                                                                                  (in millions of $)
combined surplus earnings before member              Desjardins continues to enjoy a high-quality
dividends would have been $294 million,              loan portfolio; the provision for credit losses
up 11.8% on a year-over-year basis.                  therefore stood at $88 million for the fourth          1,350
                                                     quarter of 2008, compared to $65 million a             1,200

As for revenues, net interest income totalled        year ago.
$869 million, up $48 million or 5.8% from                                                                   1,050

the corresponding quarter in 2007, due               Expenses related to claims, benefits, annuities          900      1,072

mainly to the growth in business volume. Net         and changes in insurance provisions amounted             750
premiums stood at $1,027 million, unchanged          to $965 million in the last quarter of 2008, down
from a year earlier.                                 $98 million or 9.2% on a year-over-year basis.           600

                                                                                                                                                                              d es ja r di n s gr o up
                                                     Most of this decrease was accounted for by an            450
Other income, however, was severely                  equivalent decline in the life and health insurance
affected by the drop in value of restructured        subsidiary’s investment income, as previously

and non-restructured ABCP, financing costs           stated. Lastly, non-interest expense was                 150
and shortfalls in accrued interest amounting         $1,257 million in the fourth quarter of 2008,               0
to $187 million ($160 million after income           virtually unchanged from the same quarter




taxes) in the fourth quarter of 2008, as             of a year earlier, providing proof of the caisse
compared to $132 million ($91 million after          network’s and all Desjardins Group’s components’
income taxes) a year earlier. The negative           tight control over operating expenses.                * excluding the impact of the financial crisis and ABCP
performance of underlying assets and hedge
funds, as well as the decline in value of ABCP,      A summary of results from the past eight
resulted in $565 million ($431 million after         quarters is presented on pages 109 and 110            Owing to the financial crisis, the insurance
income taxes) in losses related to Desjardins        of this MD&A.                                         subsidiaries also turned in a much poorer
Group’s commitment to guarantee its members’                                                               financial performance in 2008, as was
and clients’ capital in guaranteed-capital                                                                 the case for the entire insurance industry.
structured products. Moreover, due to the                                                                  The life and health insurance subsidiary was
financial crisis, certain investment portfolios of                                                         particiularly marked by the write-down in
                                                                                                           ABCP holdings and by the drop in investment
                                                                                                           income due to the difficult capital market
                                                                                                           conditions. It should, however, be noted
                                                                                                           that the life and health insurance subsidiary
                                                                                                           continues to record brisk growth of 9.2%
                                                                                                           in its insurance premium income.
                                                  46         general review of DesjarDins group               1.2 ANALYSiS oF FiNANCiAL reSULTS

                                                  The 2008 financial statements included a                      Desjardins Group is one of the best capitalized      ($831 million after income taxes) in 2008,
                                                  provision of $186 million for member dividends,               financial institutions in Canada. At the end         compared to $289 million ($198 after income
                                                  along with a $29 million adjustment for 2007,                 of December 2008, its reserves represented           taxes) in 2007, $121 million of which was
                                                  bringing the total provision to $215 million for              83.7%	of	total	equity,	as	against	80.5%	a	           recorded as client retention expense. Moreover,
                                                  the current year, versus $592 million at the end              year earlier. This contributed to a Tier 1 capital   the financial crisis led to the investment
                                                  of 2007. As previously stated, this decline was               ratio	of	13.39%,	which	surpasses	target	             portfolio of Desjardins Group components
                                                  a result of an exceptional temporary measure                  capitalization and stands as one of the best in      posting a negative performance of $366 million
                                                  taken by the Board of Directors allowing a                    the	industry.	The	total	capital	ratio	was	12.85%,	   ($281 million after income taxes), including
                                                  larger contribution to the reserve in order to                compared	to	13.59%	as	at	December	31,	2007.	         those backing insurance contracts, with an
                                                  enhance Desjardins Group’s capital base in view                                                                    equivalent amount offset by a decline in the
                                                  of the prevailing economic and financial                                                                           insurance provision expense for the life and
                                                  conditions.                                                                                                        health insurance subsidiary. In 2007, Desjardins
                                                                                                                                                                     Group recorded two non-recurring gains: one
                                                                                                                                                                     for $72 million ($64 million after income taxes)
                                                            PRoviSion FoR membeR DiviDenDS                                  tieR 1 CaPitaL Ratio (biS)
                                                                                                                                                                     realized as part of the VISA global restructuring,
                                                                          (in millions of $)                                             	(as	a	%)
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                                                                                                                                     and the second for $45 million ($37 million
                                                                                                                                                                     after income taxes) following the creation
                                                                                                                                                                     of a strategic partnership with the credit union
                                                     750                                                                                                             centrals of the other Canadian provinces, aimed
                                                                                                                                                                     at accelerating the growth of Northwest and
                                                                                                                                                                     Ethical funds. For additional information on


                                                                                                                                 14.01                               these specific items, refer to the section titled


                                                                                                                                                                     “Specific items relating to the fourth quarter

                                                                                                                                                                     and fiscal 2008 primarily as a result of financial
                                                                                                                     8                                               market instability” on page 35 of the MD&A.

                                                                                                                                                                     Overall, Desjardins Group’s total income stood
                                                                                                                     4                                               at $8,373 million at the close of 2008, down

                                                                                                                                                                     $1,298	million	or	13.4%	from	2007.

                                                        0                                                            0
                                                                                                                                                                     The provision for credit losses expense was










                                                                                                                                                                     $243 million, representing an increase of
                                                                                                                                                                     $46	million	or	23.4%	over	the	year-earlier	
                                                                                                                                                                     period. Despite the upward trend in this
                                                                                                                                                                     provision, Desjardins Group’s loan portfolio
                                                  Return	on	equity	was	0.8%	compared	to	                        Through Caisse centrale Desjardins,                  continued to be of excellent quality, with
                                                  12.3%	in	2007.	Had	it	not	been	for	the	specific	              Desjardins Group maintained its presence             a ratio of gross impaired loans to gross loan
                                                  items, return on equity would have stood at                   on the securitization market for mortgage            portfolio	of	0.40%.
                                                  12.4%.                                                        loans guaranteed by the Government of
                                                                                                                Canada under the Canada Housing Trust                Expenses related to claims, benefits, annuities
                                                                                                                program. Desjardins, represented by CCD, is          and changes in insurance provisions amounted
                                                                      RetuRn on equitY                          now a major player in the Canadian mortgage          to $3,144 million for 2008, compared to
D es ja r Di n s gr o up

                                                                                (as	a	%)
                                                                                                                securitization market, with a volume of close to     $3,171 million on a year-over-year basis.
                                                                                                                $1.6 billion in 2008, or approximately $400          The impact of business growth on claims,
                                                                                                                million per quarter, with five-year terms.           benefits and annuities was offset by the
                                                       20                                                       In addition, Caisse centrale made debt securities    significant decline in insurance provision
                                                                                                                issues totalling close to $1.3 billion on European   expense, which reflects the temporary volatility
                                                                                                                markets in 2008.                                     of investments backing actuarial liabilities for
                                                                                                                                                                     the life and health insurance subsidiary.

                                                                                                                As for revenues, net interest income totalled

                                                       12                                                       $3,418 million for 2008, an increase of              Non-interest expense totalled $4,800 million

                                                                                                                $173	million	or	5.3%	from	the	year-earlier	          for 2008, compared to $4,702 million a year
                                                        8                                                       period, chiefly because of growth in business        earlier,	for	an	increase	of	$98	million	or	2.1%	
                                                                                                                volume. Net premiums were up by $307 million         over 2007. It should be noted that asset
                                                                                                                or	8.0%	as	a	result	of	increases	in	insurance	       write-offs of $68 million were recorded in
                                                                                                                premiums, particularly life and health insurance     2008 in connection with the strategic decisions

                                                                                                                premiums, which grew by $223 million or              previously described.
                                                        0                                                       9.6%,	coupled	with	an	increase	in	annuity	





                                                                                                                premiums	of	$70	million	or	28%.	Other	income	        Had it not been for the specific items, non-
                                                                                                                benefited from an increase of $83 million in         interest expense would have been $4,732
                                                                                                                income from securitization activities and from       million,	up	$30	million	or	0.6%	from	2007.	This	
                                                  * excluding the impact of the financial crisis and ABCP
                                                                                                                growth	of	$29	million	or	7.6%	in	lending	fees	       limited increase is proof of the caisse network’s
                                                                                                                and credit card service revenues.                    and all Desjardins components’ effective control
                                                                                                                                                                     over operating expenses and also shows the
                                                                                                                The direct and indirect impact of ABCP               reduction in the incentive compensation
                                                                                                                and guaranteed-capital structured products           expense.
                                                                                                                brought down other income by $1,101 million
                                                               1.2 ANALYSiS oF FiNANCiAL reSULTS          general review of DesjarDins group            47

The productivity ratio is Desjardins Group’s          contriBution to                                     The General Insurance segment contributed
non-interest expense to total income, net                                                                 $36 million in 2008 to combined results,
                                                      surplus earnings
of expenses related to claims and insurance                                                               versus $126 million a year earlier. Throughout
benefits. Despite effective cost control, the
                                                      By Business segMent                                 the year, Desjardins General Insurance Group
impact of the financial crisis on investment          A brief description of the financial performance    (DGIG) was affected by two major factors,
income, including the write-off in ABCP               of each of the business segments is given           which accounted for its lower profitability.
securities against investment income in               below. Detailed financial analyses are presented    First, the sharp reduction in stock market
2008 and the indirect impact of ABCP and              in subsequent sections.                             value triggered a significant decline of about
guaranteed-capital structured products, was                                                               $79 million in investment income from 2007,
reflected in the productivity ratio. Had it not       Despite the higher profitability of the caisse      resulting primarily from the reduced distribution
been for the specific items caused by the             network in 2008, the financial performance          of investment funds and from disposals of
financial crisis, the productivity ratio would        of the Personal and Commercial segment as           equity investments. Second, the first three
have	been	70.7%,	as	against	71.8%	in	2007.            a whole was down considerably, especially due       quarters were marked by weather disturbances,
                                                      to the decline in value of ABCP holdings and        including abundant snowfall in the winter of
Desjardins Group’s total assets amounted              the indirect impact of ABCP and guaranteed-         2008, heavy rains and violent storms, causing

                                                                                                                                                              Ma n a g e Me n t ’s D iscussion anD analy si s
to $152.3 billion as at December 31, 2008,            capital structured products. Surplus earnings       much more extensive damages in the area of
versus $144.1 billion a year earlier, for growth      before member dividends for this segment            home insurance than in the previous year.
of	$8.2	billion	or	5.7%.	Expansion	slowed	            totalled $16 million in 2008, versus $794 million   However, in automobile insurance, even
sharply in 2008 because of the decline in the         in 2007. It should, however, be noted that the      though the cost of bodily injury was up sharply
amount of securities outstanding, especially          Personal and Commercial segment’s operating         in insurance operations outside Québec, DGIG
securities held for trading and securities            performance in 2008 was solid; net interest         benefited from a reduction in prior years’
purchased under reverse repurchase                    income continued to grow; income related            provisions for claims. Income from premiums
agreements. Despite the deterioration in              to securitization activities was up $83 million;    written,	totalling	$1,459.6	million,	was	up	2%.	
the business climate, demand for credit               the increase in non-interest expense was limited    DGIG recorded growth in individual insurance,
at Desjardins Group remained consistently             to	5.3%,	thus	evidencing	effective	cost	control,	   in both group and individual sales, as well as
very strong.                                          if asset write-offs of $68 million resulting from   in business insurance.
                                                      strategic decisions are excluded; and its loan
                                                      portfolio was of excellent quality, with a stable   The Securities Brokerage, Asset Management
        totaL DeSjaRDinS GRouP aSSetS                                                                     and Venture Capital segment recorded a net
                   (in billions of $)
                                                      ratio of gross impaired loans to the gross
                                                      loan portfolio.                                     loss of $29 million for 2008, versus net earnings
                                                                                                          of $17 million for the previous year. The poorer
  160                                                 The contribution of the Life and Health             financial performance was chiefly due to
                                                      Insurance segment to combined results               deteriorating capital markets and the reduced
  150                                                                                                     value of certain investments in public companies

                                                      was $40 million in 2008, compared to
  140                                                 $211 million on a year-over-year basis.             caused by changes in their stock prices.

  130                                                 Desjardins Financial Security (DFS) posted
                                                      net earnings of $34 million. If it had not          Finally, Desjardins Group’s combined results

  120                                                                                                     for 2008 included consolidation adjustments
                                                      been for the strong impact of the financial

  110                                                 crisis, net earnings would have totalled            attributable to all components. This category
                                                      $190.6 million, compared to $234.4 million          posted net earnings of $15 million in 2008,

                                                      in 2007. Return on shareholder’s equity was         as opposed to a net loss of $47 million in
   90                                                                                                     2007. The various consolidation adjustments

                                                                                                                                                              D es ja r Di n s gr o up
                                                      5.9%,	compared	to	27.5%	in	2007.	This	return	
                                                      would,	however,	have	been	24.0%	had	it	             not reflected in the business segments include,
                                                      not been for the effect of the financial crisis.    in particular, the recognition of the adjustment
   70                                                                                                     to Desjardins Group’s employee future benefits
                                                      The average for the past three fiscal years





                                                      was	18.0%.	Despite	the	difficult	economic	          expense, which was down $71 million after
                                                      environment, DFS continued to post significant      income taxes from 2007, primarily after certain
                                                      growth in its insurance premium income,             actuarial assumptions were updated.
                                                      up	9.2%	to	total	$2,671.4	million	as	at	
Total assets under Desjardins Group’s control         December 31, 2008. Insurance sales totalled
as trustee or manager stood at $201.6 billion         $180.8 million, while total savings sales
as at December 31, 2008, down $9.0 billion            amounted to $1.2 billion, up $48.6 million
or	4.3%	from	2007.	Assets	under	management	           from 2007.
totalled $29.3 billion for 2008, as opposed
to $38.6 billion a year earlier, down $9.3 billion
or	24.1%.
                                                  48     Business segMents      2.1 PerSoNAL AND CoMMerCiAL

Ma n a g e Me n t ’s D iscussion anD analy si s

                                                            anD coMMercial

                                                  profile                                            The Personal and Commercial segment offers           strategy
                                                                                                     a vast array of wholesale and retail financial
                                                  The Personal and Commercial segment                products and services to its members and clients     Vision for individual clientele
                                                  comprises a decentralized network in               and is active in the following areas: financing,     A cooperative financial group, Desjardins has
                                                  Québec and Ontario consisting of 513 caisses,      savings recruitment, credit cards, investment        strengthened its position as the top financial
                                                  51 business centres and one credit union,          funds, trust services and central fund activities.   institution for individuals. Desjardins can meet
                                                  Desjardins Credit Union. It also encompasses
                                                                                                                                                          all of its clients’ financial needs thanks to a
                                                  Caisse centrale Desjardins, which acts as          The Personal and Commercial segment also             group of skilled employees and a full range
                                                  Desjardins Group’s financial agent, as well        offers financial products and services outside       of accessible and customized advisory services.
                                                  as the Fonds de sécurité Desjardins, Capital       Québec and Ontario through the caisse network        Desjardins continues to be a leader in traditional
                                                  Desjardins inc., Desjardins Trust, MM Trust,       and the federations of Manitoba and New              services and is recognized as a premier financial
                                                  MM Trust II, 9186-8034 Québec inc., the            Brunswick, which are auxiliary members               institution for asset management.
                                                  Fédération des caisses populaires de l’Ontario     of the Fédération des caisses Desjardins
                                                  and the Fédération des caisses Desjardins du       du Québec, but which are governed by                 Vision for business clientele
                                                  Québec, which includes the following business      the laws and regulations of the jurisdiction
                                                  units: Desjardins Card Services, Investment Fund   in which they operate. They are not included         Desjardins is recognized as a leader among
D es ja r Di n s gr o up

                                                  Services, Financial Engineering Services, and      in Desjardins Group’s Combined Balance Sheets.       businesses, particularly small and medium-sized
                                                  Desjardins Payroll and Human Resources Services.   The main financial results of these auxiliary        enterprises. Thanks to its qualified personnel,
                                                                                                     members, which are also not included in the          accessible services and full range of integrated
                                                                                                     financial results of the Personal and Commercial     services, it is easy to do business with Desjardins.
                                                                                                     segment, are presented on page 172 of this
                                                                                                     Annual Report.
                                                                                        2.1 PERSONAL AND COMMERCIAL              BUSINESS SEGMENTS        49

OUTLOOK                                               This	segment	is	looking	to	pursue,	via	Caisse	        As	for	card	services,	the	Personal	and	
                                                      centrale	Desjardins,	the	sector	and	geographic	       Commercial	segment	plans	to	implement		
The	Personal	and	Commercial	segment		                 diversification	of	its	loan	portfolio.	Caisse	        the	Verified by VISA	service	designed	to	make	
plans	on	speeding	up	the	development	of	its	          centrale	intends	to	boost	the	development		           online	credit	card	purchases	more	secure	for	
investment-savings	business	among	individuals	        of	its	foreign	currency	exchange	and	cash	            both	merchants	and	cardholders.	In	addition,		
and	businesses	in	Québec,	Ontario	and	                products.	In	particular,	it	plans	to	review		         it	is	looking	to	forge	major	partnerships	with	
elsewhere	in	Canada.	It	intends	to	leverage		         the	Desjardins	Bank	offer	and	to	continue	            credit	unions	and	merchants	across	Canada.
its	cooperative	difference	and	high-quality	          enhancing	the	range	of	services	for	business	
products	and	services	to	boost	its	presence	          members	of	the	caisse	network.	                       INDUSTRY
among	different	categories	of	savings	holders.	
                                                      As	regards	trust	services,	the	Personal	and	          The	Canadian	banking	services	industry	is		
This	segment	also	plans	to	continue	developing	       Commercial	segment	plans	to	consolidate		             highly	concentrated	and	fiercely	competitive.	
its	credit	activities	among	its	members	and		         and	grow	assets	and	volumes	in	all	business	          This	has	resulted	in	market	saturation,	which	is	
its	personal	and	business	clients,	particularly		     lines,	as	well	as	stimulate	the	Canada-wide	          why	one	player’s	market	share	gain	is	another’s	
by	better	promoting	its	cooperative	difference,	      development	of	Desjardins	by	implementing		           loss.	Most	of	our	competitors	focus	their	efforts	

                                                                                                                                                                 MA N A g E ME N T ’S D ISCUSSION AND ANALY SI S
its	special	relationship	with	clients	and	its	        the	business	strategies	of	Northwest	&	Ethical	       on	dominating	lucrative	business	segments	in	
high-quality	products	and	services	in	order		         Investments.                                          order	to	maximize	their	bottom	line	and	so	
to	capture	a	greater	share	of	the	credit	market.                                                            increase	shareholder	satisfaction.

   2008                           •	 The	caisse	network	turned	in	solid	operating	results,	recording	a	10.9%	growth	in	surplus	earnings	for	2008.
   ACHIEVEMENTS                      A
                                  •	 	 ssets	rose	8.5%	to	$124.7	billion	as	at	December	31,	2008,	fuelled	by	consumer	and	business	credit	demand		
                                     that	remained	steady,	despite	the	deteriorating	economic	climate	in	the	second	half	of	2008.
                                  •	 	 etained	a	strong	presence	in	Québec	with	a	39.0%	market	share	in	residential	mortgage	credit,	46.9%		
                                     in	farm	credit	and	43.1%	in	personal	savings,	as	at	December	31,	2008.
                                  •	 	 icked	up	market	share	in	commercial	and	industrial	credit	in	Québec	(24.8%	as	at	December	31,	2008,		
                                     compared	to	23.6%	a	year	earlier).	
                                  •	 Issued	close	to	$1.3	billion	in	debt	securities	on	European	markets	at	the	beginning	of	2008.
                                  •	 	 aintained	its	presence	in	the	securitization	market	for	mortgage	loans	guaranteed	by	the	federal	government	
                                     under	the	Canada	Mortgage	Bonds	Program.	Desjardins,	via	Caisse	centrale,	is	now	a	major	player	in	the	Canadian	
                                     mortgage	securitization	market,	with	almost	$1.6	billion	in	2008,	or	around	$400	million	per	quarter,		
                                     with	five-year	term.
                                  •	 	 usiness	grew	15.0%	at	Desjardins	Card	Services	(DCS)	in	2008	to	$49.8	billion	at	the	end	of	the	year.		
                                     It	will	be	recalled	that	DCS	is	the	largest	credit	and	debit	card	issuer	in	Québec.

                                                                                                                                                                 D ES ja r DI N S Gr o Up
                                                  50        Business segMents             2.1 PerSoNAL AND CoMMerCiAL

                                                  TABLE 3     personal anD coMMercial: segMent results
                                                  selected data for years ended December 31
                                                  (in	millions	of	$	and	as	a	%)

                                                                                                                                                                                              2008             2007              2006
                                                    Total income(1)                                                                                                                       $     4,061      $    4,838        $    4,517
                                                    Provisions for credit losses                                                                                                                  242             197               139
                                                    Client retention expense                                                                                                                       —              121                —
                                                    Non-interest expense                                                                                                                        3,732           3,481             3,324

                                                    Surplus earnings after income taxes and before member dividends(1)                                                                            16              794               752

                                                    Contribution to combined surplus earnings(1)                                                                                                 20.5 %	 	    72.1	 %	 	    76.1	 %
                                                    Provision for member dividends                                                                                                        $       215    $     592     $     483
                                                    Average assets                                                                                                                            117,215      108,311       101,505
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                    Average loans                                                                                                                              96,616       89,469        83,626
                                                    Average deposits                                                                                                                           99,920       92,380        85,725

                                                  (1) Data for 2008 were affected by the financial crisis and ABCP.

                                                  analysis of financial results                                               PeRSonaL anD CommeRCiaL                                     losses after income taxes related to Desjardins
                                                                                                                           ContRibution to SuRPLuS eaRninGS                               Group’s commitment to guaranteeing its
                                                  The Personal and Commercial segment                                                    (in	millions	of	$	and	as	a	%)                    members’ and clients’ capital in guaranteed-
                                                  recorded $16 million in surplus earnings                                                                                                capital structured products. Furthermore, the
                                                  before member dividends at the end of 2008,                                                                                             Personal and Commercial segment’s portfolio
                                                                                                                                    76.1             72.1            78.3*
                                                  down $778 million from the $794 million                              1,050                                                              fell $157 million after taxes, largely due to an
                                                  in surplus earnings recorded for the previous                                                                                     100   other than temporary decline in value of
                                                  year. The segment’s contribution to Desjardins                        900                                                               $88 million after income taxes for certain
                                                  Group’s	combined	results	rose	to	20.5%,	                                                                                          80    collateralized debt obligations belonging to
                                                  versus	72.1%	in	2007.	The	caisse	network,	                            750
                                                                                                                                                                                          Caisse centrale Desjardins. Finally, a decrease

                                                  the driving force behind Desjardins Group,                                                                                              of	$70	million	or	17.2%	in	brokerage,	
                                                                                                                        600                                                         60
                                                  saw	its	surplus	earnings	grow	by	10.9%,	rising	                                                                                         investment and trust income, likewise caused
                                                  from $625 million in 2007 to $693 million in                          450                                                               by market turbulence, also played a role in
                                                  2008. Moreover, average business growth was                                                                        20.5           40
                                                                                                                                                                                          the decline in other income.
                                                  sustained over the past year, resulting in an                         300
                                                  increase in net interest income of $151 million.                                                                                  20    In 2008 the caisse network recorded a


                                                  In fact, financing activities advanced $7.1 billion

                                                                                                                                                                                          $215 million provision for member dividends,
                                                  or	8.0%,	while	savings	on	the	balance	sheet	                             0                                                        0     as compared to $592 million a year earlier.
                                                  recorded a similar increase of $7.5 billion                                                                                             The background to the reduction in dividends



                                                  or	8.2%.	Outstandings	on	Desjardins	Funds	                                                                                              in 2008 is the financial crisis that has affected
                                                  decreased	by	20.4%	or	$2.5	billion	over	                                                                                                financial markets throughout the world.
D es ja r Di n s gr o up

                                                  December 31, 2007. Desjardins Group results                                         Surplus earnings before member dividends            Nevertheless, more than $2.0 billion has
                                                  in this area were badly hit by the collapse                                         (in millions of $)
                                                                                                                                                                                          been paid out as member dividends in the last
                                                  of financial markets.                                                               Contribution to combined surplus earnings           five years.
                                                                                                                                      (as a %)

                                                  The falling profitability that characterized                                 *excluding the impact of the financial crisis and ABCP     Total income (net interest income plus other
                                                  2008 is largely attributable to the instability of                                                                                      income) from the Personal and Commercial
                                                  financial markets, which had a negative impact                                                                                          segment amounted to $4,061 million, down
                                                  on investment portfolios, as did asset-backed                       were affected by a $120 million decline in value                    $777	million	or	16.1%	over	2007.	The	net	
                                                  commercial paper (ABCP). In fact, the 2008                          of ABCP holdings, which was recorded against                        interest margin was $3,422 million, a slight
                                                  financial results recognize a decline in value of                   other income, and $121 million recorded under                       increase	of	4.6%	over	the	$3,271	million	
                                                  ABCP securities, excluding the impact of ABCP                       client retention expense. Moreover, financing                       recorded in 2007. Net interest income
                                                  securities held as part of investment activities                    costs and a shortfall in accrued interest totalled                  represents	84.3%	of	the	segment’s	total	
                                                  for certain guaranteed-capital structured                           $48 million after taxes ($12 million in 2007).                      income,	versus	67.6%	in	2007.	Despite	
                                                  products, of $425 million ($318 million after                                                                                           substantial growth in financing activities
                                                  income taxes) was allocated to the results                          Among the other factors contributing to                             in the past year, net interest income, expressed
                                                  of the Personal and Commercial segment;                             the drop in other income, it is worth noting                        as a percentage of average assets, declined
                                                  meanwhile investment income fell by                                 the negative returns produced by underlying                         somewhat because of the interest rate situation.
                                                  $1,024 million. It should be emphasized                             assets and hedge funds and the decline in value                     This decline contributed to a reduction in the
                                                  that, in 2007, this sector’s surplus earnings                       of ABCP—which resulted in $380 million in                           average return on loans, which was not wholly
                                                                                         2.1 PerSoNAL AND CoMMerCiAL            Business segMents          51

offset by the average cost of deposits. In fact,     Management of these market-linked                     In the area of consumer loans (including credit
the	net	interest	margin	stood	at	2.92%	versus	       guaranteed products is governed by a risk             cards and other personal loans), the Personal
3.02%	in	2007.	Tables	13	and	14	on	page	71	          management protocol based on various specific         and Commercial segment benefited from robust
show the change in the Personal and                  parameters. The exceptional situation prevailing      consumer spending, especially on durable goods.
Commercial segment’s net interest income.            on financial markets for some months has had          At the end of 2008, outstanding loans had
                                                     a major impact, amounting to $491 million,            grown	by	$1.5	billion	or	9.2%	to	$17.6	billion.	
Other income fell $928 million, down to              on the investment portfolio, which is what            Outstanding business and government loans
$639	million	or	59.2%	from	2007.	Income	             led to the application of the risk management         totalled $26.9 billion at the end of 2008,
derived from deposit and payment service             protocol and the withdrawal of hedge funds            up	$2.7	billion	or	11.0%.	
charges stood at $497 million, up $13 million        from investments in the context of very strong
or	2.7%.	Income	derived	from	lending	fees	           market turbulence.                                    In the area of savings recruitment,
and credit card revenues, consisting mostly                                                                the Personal and Commercial segment had
of revenues from the various payment solutions       Provisions for credit losses stood at $242 million    collected $102.0 billion in deposits by year-end,
offered by Desjardins Card Services (DCS),           in	2008,	up	$45	million	or	22.8%	over	the	            an	increase	of	$5.7	billion	or	5.9%	over	2007.	
totalled $414 million in 2008, up $30 million        previous year. Despite this increase, the quality     Of the primary sources of funding, personal

                                                                                                                                                                 Ma n a g e Me n t ’s D iscussion anD analy si s
or	7.8%	over	2007.	This	can	be	explained	by	a	       of Desjardins’s loan portfolio remains excellent,     savings were still at the top, representing
higher business volume. In fact, DCS’s business      with	gross	impaired	loans	accounting	for	0.40%	       70.5%	of	deposit	liabilities	at	the	end	of	2007.	
volume	grew	by	15.0%	to	reach	$49.8	billion	         of the gross loan portfolio, the same level as        This type of savings rose by $6.2 billion or
as at December 31, 2008. Income drawn from           at December 31, 2007. More specifically, as           9.4%	to	reach	$72.0	billion	as	at	December	31,	
brokerage, investment fund and trust services        at December 31, 2008, gross impaired loans            2008. The Personal and Commercial segment’s
fell	by	$70	million	or	17.2%	over	2007	due	          outstanding stood at $422 million, an increase        Québec market share of individual savings on
to the particularly difficult situation prevailing   of	$31	million	or	7.9%	over	2007.	The	allowance	      the	balance	sheet	rose	from	42.9%	as	at	
on world financial markets in 2008. However,         for credit losses was $826 million, as compared       December	31,	2007,	to	43.1%	as	at	December	
other income, at $1,746 million, improved            to $762 million a year earlier, broken down           31, 2008. Savings attracted from business
$96	million,	or	5.8%,	from	2007	mainly	due	          as follows: $130 million for specific allowances      and government advanced $654 million
to the increase in income of $83 million from        and $696 million for the general allowance.           or	3.1%	to	$21.5	billion	at	the	end	of	2008.	
securitization activities.                           At the end of 2008, the coverage ratio, i.e. the      Other types of deposits, such as public securities
                                                     allowance for credit losses in relation to total      issues,	fell	$1.2	billion	or	12.1%	to	close	the	
The decline in total other income is very largely    gross	impaired	loans,	was	195.7%	as	against	          year at $8.6 billion.
attributable to the decrease in investment and       194.9%	the	year	before.
trading income, down $1,024 million in 2008.                                                               The deterioration of global equity markets was
Market instability adversely affected investment     Non-interest expense totalled $3,732 million,         not favorable to sales of off-balance sheet savings
portfolios, as well as the ABCP portfolio. A         $251	million	or	7.2%	more	than	in	2007.	              products, such as investment funds and
$425 million write-down ($120 million in 2007)       Part of this increase is attributable to the rise     other types of securities. In fact, outstanding
for these securities, excluding the impact of        in salary expenses and fringe benefits, owing         investment funds and financial assets under
ABCP securities held as part of investment           mostly to the annual salary indexation. In            management by securities brokerage business
activities for certain guaranteed-capital            addition, 2008 results include $68 million            decreased	by	16.4%	(or	$4.2	billion)	during	
structured products, was recorded. Moreover,         of asset write-offs due to strategic decisions        the year standing at $21.3 billion as at
financing costs and a shortfall in accrued           mentioned earlier.                                    December 31, 2008. During 2007, the
interest totalling $64 million were charged to                                                             increase	was	10.4%	(or	$2.4	billion).
the Personal and Commercial segment. Caisse          As at December 31, 2008, the total assets
centrale Desjardins also recorded an other than      of the Personal and Commercial segment stood

                                                                                                                                                                 D es ja r Di n s gr o up
temporary decline in value of $113 million on        at $124.7 billion, an increase of $9.8 billion
certain collateralized debt obligations indicating   or	8.5%	over	the	previous	year.	
an other than temporary decline in fair value
because of market upheaval.                          As for financing activities, the net loan portfolio
                                                     grew	$8.1	billion	or	8.7%	to	$102.2	billion	
As part of its guaranteed-capital structured         at year-end.
products, Desjardins had recourse to hedge
fund and money market investments, including         The Personal and Commercial segment
ABCP securities for the management of certain        continued to benefit from favorable credit
savings products, also known as guaranteed-          conditions. Outstanding residential mortgages
capital structured products, namely the              grew	$4.1	billion	or	7.4%	to	$58.6	billion	
Alternative and Perspectives Plus guaranteed         as at December 31, 2008.
investments, and the Strategic Index Plus and
Tactical Index Plus products. These products
guarantee capital for the term of the investment
and can also enhance the return based on
market developments.
                                                  52         Business segMents     2.1 PerSoNAL AND CoMMerCiAL

                                                                                                            •	 Consumer	credit,	including—among	other	             outlook
                                                                                                               things—loans for the purchase of durable
                                                                 Main actiVities                               goods (furniture, home and electronic
                                                                                                                                                                   The Personal and Commercial segment plans
                                                                                                                                                                   to continue developing its credit activities
                                                                                                               appliances, and automobiles), advances
                                                                                                                                                                   among its members and clients, both individuals
                                                                                                               to VISA Desjardins credit card holders,
                                                                                                                                                                   and businesses, with the same vigour as in the
                                                       n   Financing activities                                personal lines of credit and student loans
                                                                                                                                                                   past.	Just	as	it	did	for	savings	recruitment,	it	will	
                                                       n   savings recruitment activities                   •	 Financing	for	activities,	equipment,	buildings	     work even harder to promote its cooperative
                                                                                                               or other assets in most commercial, industrial,     difference, its special relationship with its clients
                                                       n   credit card activities
                                                                                                               farm or institutional sectors                       and the high quality of its products and services,
                                                       n   investment fund and                                                                                     in order to boost its market share in the various
                                                           trust service activities                         strategy                                               credit categories.
                                                       n   central fund activities                          The Personal and Commercial segment seeks
                                                                                                            to offer a full range of highly competitive credit
                                                                                                            products and services specially tailored to the
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                                                                            growing needs of its members and clients in
                                                  n   financing activities                                  Québec, Ontario and elsewhere in Canada.
                                                                                                            To this end, the following strategies are used:
                                                  The main financing activities of the Personal
                                                  and Commercial segment are carried out                    •	 Leverage	the	cooperative	difference	to	boost	
                                                  primarily by the caisses, including business                 market share for all products and for all types
                                                  centres, in the following areas:                             of clientele
                                                                                                            •	 Optimize	its	service	offering	and	distribution
                                                  •	 Residential	mortgage	credit,	in	particular	
                                                     loans granted to purchase new or existing
                                                     homes or for renovation

                                                       2008 achievements – Financing activities

                                                       n   Desjardins Financing Services established regional issue tables for better coordination of mortgage financing activities.
                                                       n   Introduced a new approach to mortgage financing, including Expert—a Financing module tool, which will enhance our product offering
                                                           and advisory service for members, as well as be a match for our competitors.
                                                       n   Desjardins Financing Services and Desjardins Card Services organized a meeting called Caucus bâtisseur. More than 600 advisors
                                                           and managers met to take stock of their current clientele, share winning practices and learn more about leverage.
D es ja r Di n s gr o up

                                                       n   Launched last fall, the Overdraft Transfer service is for members who want to avoid account overdraft charges, as well as the inconvenience
                                                           of NSF cheques and denied transactions, by using their VISA Desjardins card.
                                                       n   Introduced the Automobile and Durable Goods Financing business line. It will ensure Desjardins Group’s long-term survival in the highly
                                                           competitive consumer credit industry by combining activities yielding cost-effective solutions and opening up new markets, including
                                                           outside Québec.
                                                       n   Continued the activities of the Desjardins Mid-Market Business Centre (MMBC), which is fulfilling its promise by continuing its upward trend to
                                                           the extent that it has exceeded its goals. The MMBC acts for the benefit of all caisses, wherever they may be.
                                                       n   Presented the Grands Enjeux SECOR–Les Affaires conference series. Designed for business people, the conferences outline the priorities which
                                                           entrepreneurs must set to motivate their employees during a labour shortage. The seminars also acquaint entrepreneurs with new business
                                                           models to help them succeed in an environment of worldwide competition.
                                                       n   The Web site continued to excel in 2008. It is by far the most frequently visited financial site, with nearly 2.3 million monthly
                                                           unique visitors. It was awarded third place in the SECOR/Commerce Internet Index, as well as the Coup de cœur (people’s choice) prize by
                                                           the public.
                                                       n   Desjardins Financing Services launched a mortgage agent recruitment campaign which was a great success. Over 80 members joined the ranks
                                                           of the Desjardins Financing Services sales force.
                                                       n   Set up a team of business valuation experts to support caisse business development with this growing clientele.
                                                       n   The Personal and Commercial segment’s share of the credit market in Québec and Ontario was as follows in 2008:
                                                       	 -	 Consumer	credit	(including	advances	to	credit	card	holders)	rose	0.2%	in	Québec	(22.3%)	and	held	steady	in	Ontario	(0.2%).
                                                       	 -	 Residential	mortgage	credit	rose	0.3%	in	Québec	(39.0%)	and	remained	unchanged	in	Ontario	(0.5%).
                                                       	 -	 Commercial	and	industrial	credit	picked	up	a	significant	1.2%	in	Québec	(24.8%)	and	0.1%	in	Ontario	(0.5%).
                                                       	 -	 Farm	credit	moved	ahead	0.4%	in	Québec	(46.9%)	and	stayed	put	in	Ontario	(0.5%).
                                                                                            2.1 PerSoNAL AND CoMMerCiAL              Business segMents            53

n   savings recruitment activities                       strategy                                               •	 Strengthen	initiatives	to	encourage	savings	
                                                                                                                   recruitment among entrepreneurs and
profile                                                  To effectively meet the growing needs of
                                                                                                                   their businesses
                                                         its members and clients, the Personal and
The Personal and Commercial segment relies on
                                                         Commercial segment seeks to help provide
two broad groups of products to recruit savings.                                                                outlook
                                                         a full range of diversified, personalized and
The first encompasses savings products offered
                                                         competitive savings products and services to its       The Personal and Commercial segment plans
to individuals, businesses and governments and
                                                         members and clients, individuals and businesses        to step up business development in the area
appear as liabilities on the balance sheet, i.e.
                                                         alike, in Québec and across Canada.                    of investment savings among individuals and
all forms of deposit. These products constitute
                                                                                                                businesses in Québec, Ontario and elsewhere in
the largest source of funding to support its
                                                         To this end, the following strategies are used:        Canada by promoting its cooperative difference
expansion efforts. The second comprises
                                                                                                                and the high quality of its products and services
the financial assets administered or managed
                                                         •	 Boost	market	shares	in	targeted	sectors	            with the goal of boosting its presence among
on behalf of its members and clients, more
                                                            through a range of services that changes            the various categories of savers.
specifically, investment funds and other types
                                                            with and is adaptable to the needs of
of securities such as stocks, bonds and Treasury
                                                            each segment of investors—all the while

                                                                                                                                                                       Ma n a g e Me n t ’s D iscussion anD analy si s
bills. These products do not appear on the
                                                            emphasizing the Desjardins cooperative
balance sheet.
                                                         •	 Optimize	distribution	and	continue	improving	
                                                            the synergy among the sales teams in all
                                                            Desjardins Group’s components

    2008 achievements – Savings recruitment activities

    n    Launched the “Development of the asset management sales force” project, created to leverage the skills and competencies of all our employees.
         The caisses all bought into this initiative, designed to, among other things, increase member loyalty, win back clients from the competition,
         and forge ties with non-members.
    n    Held the annual tour of savings and investment partners through the “Le tout Desjardins derrière la caisse” event, reaching
         the 6,500-odd people who make up Desjardins Group’s sales force.
    n    Created a new tool for sales managers: the Performance Workshop—A Potential to Exploit. Offered in DVD form, this tool will help them
         further business development, particularly in the area of personal financial planning.
    n    Enriched the savings and investment offer for caisses under the Ontario Executive Division by making the entire line of Desjardins Group

                                                                                                                                                                       D es ja r Di n s gr o up
         products and services available to them.
    n    As a result of a $150 million issue authorized for 2008, Capital régional et coopératif Desjardins raised $126.4 million between March 18
         and	December	31,	2008.	Purchasers	of	this	issue	received	a	50%	tax	credit	on	up	to	$5,000	of	investment.
    n    Introduced the tax-free savings account (TFSA). Endorsing this government measure, Desjardins Group took all the necessary actions to ensure
         its	members	and	clients	would	be	able	to	take	advantage	of	this	account	on	January	1,	2009	and	thereby	reduce	their	tax	burden.	
    n    For a fourth consecutive year, the AccèsD call centre obtained COPC (Customer Operations Performance Center) certification, the only financial
         institution to earn this honour in North America.
    n	   After	years	of	work	and	collaboration,	launched	the	chip	card	in	the	Saint-Jérôme	region.	A	broadbased	deployment	of	this	new	technology	
         began in the last quarter of 2008.
    n    Introduced “strong authentication” to enhance security for member and client users of AccèsD. This method improves transaction security,
         cuts the risk of fraud and demonstrates the Group’s commitment to protecting the personal information of its members and clients.
    n    Confirmed Desjardins Group’s leadership in online financial services with AccèsD. Launched in 1996, this service is a fully secure, integrated and
         effective	financial	management	tool	with	a	market	share	of	about	56%	in	Québec.	
    n    The Personal and Commercial segment’s share of the personal savings market in Québec and Ontario was as follows in 2008:
    	 -	 	 n-balance	sheet	savings	(chequing	accounts,	regular	savings,	and	term	deposits)	increased	slightly	by	0.2%	in	Québec	(43.1%)	and	held	
         steady	in	Ontario	(0.6%);
    	 -	 	 espite	the	difficult	context,	off-balance	sheet	savings	were	up	by	0.5%	in	Québec	(9.9%)	and	remained	unchanged	in	Ontario	(0.1%),	
         more specifically:
    	 	 .		 ecurities	brokerage	advanced	0.6%	in	Québec	(8.5%)	and	held	steady	in	Ontario	(0.1%);
    	 	 .	Investment	funds	grew	0.1%	in	Québec	(12.7%)	and	held	steady	in	Ontario	(0.1%);
    	 	 .	Social	venture	capital	funds	such	as	Capital	régional	et	coopératif	Desjardins	were	up	2.7%	in	Québec	(11.1%).
                                                  54         Business segMents      2.1 PerSoNAL AND CoMMerCiAL

                                                  n   credit card activities                                strategy                                              To this end, the following strategies are used:
                                                  profile                                                   The strategy is to ensure the profitable
                                                                                                                                                                  •	 Adapt	the	credit	process	to	the	target	markets	
                                                                                                            management, development and evolution of
                                                  Credit card activities are carried out by                                                                       •	 Support	Canada-wide	development	by	
                                                                                                            its credit and debit card offering by leveraging
                                                  Desjardins Card Services (DCS), a business                                                                         offering payment and financing solutions
                                                                                                            the calibre and skills of its employees through
                                                  unit of the Fédération des caisses Desjardins                                                                      to large merchants
                                                                                                            various technologies, namely, by:
                                                  du Québec. With 4.1 million credit card holders
                                                  and 6.2 million debit card holders, DCS is                                                                      •	 Continue	to	automate	business	processes
                                                                                                            •	 Developing	business	models
                                                  the largest issuer of credit and debit cards                                                                    •	 Continue	to	improve	online	account	
                                                  in Québec, providing its diverse clientele with           •	 Setting	objectives,	priorities	and	means	             management services for the benefit
                                                  a full range of products and services (card                  of achieving them                                     of individual and business clients
                                                  payment services for individuals and businesses,          •	 Ensuring	business	and	skills	development
                                                  client loyalty through the BONUSDOLLARS                                                                         outlook
                                                                                                            •	 Managing	the	offering	(including	those	
                                                  Reward Program, and payment services to
                                                                                                               of the subsidiaries)                               •	 Implement	the	Verified	by	VISA	service,	
                                                  some 47,700 merchants).
                                                                                                                                                                     developed to make online shopping safer
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                                                                            •	 Developing	the	products	and	services	with	
                                                                                                               a view to maximizing operational and                  for card holders and online merchants.
                                                  DCS offers consumers financing solutions
                                                  such as Accord D (a separate, second limit                   distribution efficiency                            •	 Forge	partnerships	with	credit	unions	
                                                  on the VISA Desjardins credit card), available            •	 Striving	to	constantly	improve	service	quality        and merchants across Canada.
                                                  from more than 6,500 merchants across                                                                           •	 Design	and	develop	a	new	consumer	
                                                  Canada and also offered by the Desjardins                 Moreover, as a first-rate partner, DCS strives to        loans business model.
                                                  caisse network when amounts under $50,000                 help the caisses achieve their business objectives    •	 Conduct	an	in-depth	review	of	
                                                  are involved. In addition, DCS offers financing           by applying the highest service quality standards        the collection system and optimize
                                                  for automobile and durable goods purchases.               to both its individual and business clienteles,          the process. Update Falcon, the credit
                                                  Business financing is also available through              whether or not they are caisse members.                  card fraud prevention system.
                                                  such products as Business Freedom Solutions,
                                                  Accord D Business financing, the Business card,                                                                 •	 Position	the	e-business	strategy.
                                                  and the Purchasing card.                                                                                        •	 Automate	the	Corporate	and	
                                                                                                                                                                     Business lines.
D es ja r Di n s gr o up

                                                       2008 achievements – Credit card activities

                                                       n    Contributed $86 million to the surplus earnings of the Personal and Commercial segment, compared to $143 million in 2007, due to an unusual
                                                            loss of $5 million after taxes ($64 million gain in 2007) by the Personal and Commercial segment as a result of the restructuring of the VISA
                                                            business model.
                                                       n	   Business	volume	grew	15.0%	to	$49.8	billion.	
                                                       n	   Québec	market	share	reached	51.9%.
                                                       n	   Launched	the	chip	card	in	Saint-Jérôme	and	deployed	it	gradually	to	clients	and	merchants’	POS	terminals.	
                                                       n    Inked an agreement with Leon’s Furniture Limited to become its main provider of payment and financing solutions in the Canadian market.
                                                       n    Integrated the teams of the Automobile and Durable Goods financing business line.
                                                       n    Launched the Overdraft Transfer service.
                                                       n    Ensured fraud prevention management for merchants and continued overall fraud prevention efforts.
                                                       n    Obtained PCI – DSS (Payment Card Industry – Data Security Standard) certification for point-of-sale terminals.
                                                       n	   Launched	cell	phone	insurance	for	the	JUST	FOR	STUDENTS	card.	A	first	in	Canada,	this	protection	covers	lost	or	stolen	cell	phone	
                                                            and is offered at no charge.
                                                       n    Signed an agreement with Université Laval for the Corporate and Purchasing card programs.
                                                                                              2.1 PerSoNAL AND CoMMerCiAL             Business segMents            55

n   investment fund and trust                             To this end, the business unit applies                 •	 Continue	growing	the	Immigrant	Investor	
    service activities                                    the following strategies:                                 Program in order to provide the business
                                                                                                                    centres with an ongoing revenue stream in
                                                          •	 Place	investors’	interests	at	the	heart	               the form of subsidies from this government
The Investment Funds and Trust Services                      of every business decision                             program for members of participating caisses
Executive Division of the Fédération des caisses          •	 Develop	and	market	competitive	products	
Desjardins du Québec comprises the following                 and services tailored to the needs of               outlook
legal entities: Desjardins Trust Inc. and Desjardins         Desjardins members                                  •	 Consolidate	strengths	in	all	business	lines	
Investment Management. A manufacturer,
                                                          •	 Provide	Desjardins	members	with	access	                and step up growth.
wholesaler and distributor of specialized savings
products, this division oversees the private                 to the expertise and know-how of the best           •	 Stimulate	Desjardins	Group’s	Canada-
management, securities custody and trust                     portfolio managers in the world                        wide development by implementing the
services offered by Desjardins Group.                     •	 Develop	investment	solutions	in	the	form	              business strategies of Northwest & Ethical
                                                             of predefined portfolios with optimal                  Investments L.P.
strategy                                                     diversification by asset class, management          •	 Maintain	a	dominant	position	in	Québec	

                                                                                                                                                                        Ma n a g e Me n t ’s D iscussion anD analy si s
                                                             style and geographic region                            and in Canada as a provider of socially
The Investment Funds and Trust Services
Executive Division endeavours to further                  •	 Leverage	the	strategic	alliance	between	               responsible investment products.
the development of the caisses by offering                   Northwest Mutual Funds and Ethical Funds            •	 Actively	participate	in	the	asset	management	
them quality, competitive and high performing                to penetrate the Canadian market                       of Desjardins members and clients by offering
products and services.                                    •	 Remain	the	leading	institutional	custodian	in	         innovative, top-performing products tailored
                                                             Québec with an offer that meets the highest            to each stage of their financial lives.
                                                             standards for quality, compliance and rigour

                                                                                                                                                                        D es ja r Di n s gr o up
    2008 achievements – Investment fund and trust service activities

    n    The year was clouded by bad economic and financial news around the world, culminating in an outright financial crisis that was unfavourable
         to financial products.
    n	   Desjardins	Funds	had	$9.7	billion	in	assets	at	the	end	of	2008,	down	20%	from	the	same	time	last	year.	Net	sales	fell	79%	to	$40	million	
         in 2008. The two periods of comparison reflect the best year (2007) and worst year (2008) in Desjardins Funds’ history.
    n    Changes were made to the investment objectives of three Desjardins Funds following shareholder approval in November 2008.
    n	   Northwest	&	Ethical	Investments	L.P.	(50%	owned	by	the	FCDQ)	ended	its	first	year	of	operation	with	assets	of	$3.7	billion	and	negative	
         net sales of $145 million.
    n	   Assets	under	discretionary	portfolio	management	shed	2.9%	from	the	same	period	last	year	to	$1.7	billion	as	at	December	31,	2008.
    n    The asset custody services at Desjardins administer $156 billion in assets belonging to Québec’s largest public, parapublic and private institutions
         and companies. In 2008, Desjardins held on to its leadership position in this niche with one-third of the Québec market share.
    n    The asset custody team enhanced its control and compliance measures to conform to the highest industry standards.
    n	   The	Immigrant	Investor	Program	continued	to	grow	in	2008,	capturing	an	additional	6%	of	the	Canadian	market	in	this	investment	segment	
         and confirming Desjardins Group’s leadership in this field.
    n    Another record was set in 2008 when Desjardins Trust opened its 10,000th investment account, a first in this industry.
                                                  56          Business segMents      2.1 PerSoNAL AND CoMMerCiAL

                                                  n   central fund activities                                    - Derivative financial instruments and other          •	 Consolidate	CCD’s	position	as	an	important	
                                                                                                                   treasury products (foreign exchange, rate              player in banking syndicates for large
                                                                                                                   swaps and option)                                      Québec-based corporations.
                                                  Caisse centrale Desjardins (CCD) is a cooperative              - Asset-liability matching                            •	 Maintain	proactive	account	management	
                                                  financial institution owned by the Desjardins                                                                           to preserve CCD’s portfolio quality.
                                                  caisse network. It acts as Treasurer for Desjardins         •	 acting as a service provider for businesses
                                                  Group and as its official representative with                  and institutions, in support of the caisse
                                                                                                                 network:                                              outlook
                                                  the Bank of Canada and the Canadian banking
                                                  system. Concurrently, as a supplier of funds                   - Financing and banking services offered to           •	 Pursue	segment-based	and	geographic	
                                                  to the caisse network, CCD taps global capital                   the private, public and parapublic segments            diversification of the loan portfolio.
                                                  markets to maintain the liquidity levels required              - A comprehensive line of international               •	 Step	up	development	of	the	foreign	
                                                  for the smooth functioning of Desjardins                         products and services                                  exchange and treasury product offering.
                                                  Group’s operations.
                                                                                                                 - Banking services to individuals and small           •	 Review	Desjardins	Bank’s	offering	to	ensure	
                                                                                                                   enterprises, and business loans in Florida             a good fit with the new needs of caisse
                                                  CCD offers banking and financial services
                                                                                                                                                                          members in Florida.
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  to Desjardins entities, government institutions,                 through Desjardins Bank
                                                  medium-sized enterprises and large corporations,               - Providing financing to firms with                   •	 Facilitate	U.S.	banking	operations	for	caisse	
                                                  and also provides international services to caisse               operations in Canada and the United                    network business members by continuing
                                                  network members. Its operations generate                         States through Caisse centrale Desjardins              to enhance and expand the service offering,
                                                  spinoffs for the entire Desjardins Group.                        U.S. Branch                                            including a review of factoring products.
                                                                                                                                                                       •	 Continue	with	the	mortgage	loan	
                                                  CCD conducts its operations in Canada and                   Thanks to the support of Desjardins Group,                  securitization program.
                                                  abroad in cooperation with the other Desjardins             the credit ratings assigned to CCD by the
                                                                                                                                                                       •	 Float	additional	issues	on	European	
                                                  Group components, for which it plays a                      main rating agencies are among the best in
                                                                                                                                                                          and Canadian markets in order to supply
                                                  complementary role.                                         the financial industry in Canada and the world.
                                                                                                                                                                          the caisse network with liquid assets.
                                                  CCD’s operations include:                                   strategy                                                 •	 Roll	out	a	securitized	bond	program	
                                                                                                                                                                          for an additional source of financing.
                                                  •	 acting as treasurer for Desjardins group:                •	 Complete	implementation	of	the	Desjardins	
                                                                                                                 Group Treasury function.                              •	 Deploy	a	new	automated	foreign	exchange	
                                                      - Financial settlement and clearing of items                                                                        transaction solution with the caisses.
                                                        through the caisse network across Canada              •	 Continue	to	promote	the	value	added	
                                                        and internationally                                      by CCD in its role as partner to the caisses
                                                      - Obtaining funds on domestic and                          and business centres by focusing
                                                        international capital markets to meet                    on its expertise in specialized sectors,
                                                        Desjardins Group’s liquidity requirements                in supporting expansion into external
                                                                                                                 markets and in international products.
                                                      - Securitization operations as a source
                                                        of funds for Desjardins Group                         •	 Carry	on	development	of	the	Ontario	
                                                                                                                 institutional segment in conjunction with
                                                      - Managing statutory liquidity for                         the Ontario caisses populaires and Desjardins
                                                        the caisses                                              Credit Union.
D es ja r Di n s gr o up

                                                       2008 achievements – Central fund activities

                                                       n    Securities issued on European markets totalling close to $1.3 billion at the beginning of 2008.
                                                       n    Maintained presence in the securitization market for mortgage loans guaranteed by the Government of Canada under the Canada
                                                            Housing Trust program. Desjardins, through CCD, is a major player in the Canadian mortgage securitization market, with a volume
                                                            of close to $1.6 billion in 2008, or approximately $400 million per quarter, with five-year terms.
                                                       n    Supplying the entire Group, in an unstable economic environment, with the required liquidity for carrying on operations and ensuring
                                                            its development.
                                                       n	   Growth	of	37%	in	amounts	outstanding	in	the	business	and	institutional	segments.	Activities	with	medium-sized	enterprises,	large	corporations	
                                                            and the institutional sector continue to rely on three main strategies:
                                                            a) the role of bank syndication agent or co-agent;
                                                            b) segment-based expertise;
                                                            c) geographical diversification.
                                                       n	   In	international	services,	annual	growth	of	14%	for	all	services	(foreign	exchange,	access	to	traders,	letters	of	credit,	transfers,	etc.).
                                                       n    Opening of a new office in Calgary to be closer to the Western Canada client base.
                                                       n	   Outstandings	at	Caisse	centrale	Desjardins	U.S.	Branch	increased	by	69%	in	2008.	This	CCD	unit	serves	firms	that	do	business	with	
                                                            Desjardins and who are expanding to the United States.
                                                                                           2.2 LiFe AND HeALTH iNSUrANCe              Business segMents        57

          life anD HealtH                              insurance, savings and retirement products
                                                       and services through employees and partners
                                                                                                                DFS defined five broad orientations
                                                                                                                in its 2006-2008 Strategic Plan:
          insurance                                    committed to ensuring the satisfaction of clients
                                                       and caisse members.                                      n   Promote accelerated and profitable business
                                                                                                                    growth among Desjardins caisse members
profile                                                As a member of Desjardins Group, DFS                         by enhancing the caisses’ offering through
                                                       strives to accomplish the following:                         value-added life and health insurance products,
Desjardins Financial Security (DFS) ranks fifth                                                                     in partnership with Desjardins Group.
among life and health insurers in Canada, and          n   Optimize its special relationship with               n   In other Québec markets, become a leader
first in Québec. It offers a combination of life           the caisse network                                       in group insurance and outpace industry
and health insurance coverage and innovative                                                                        growth in the areas of group retirement
                                                       n   Be recognized across the country by its
savings plans to individuals as well as to groups                                                                   savings, individual insurance and direct
                                                           distributors as a partner of choice with
and businesses through a variety of distribution                                                                    insurance. Grow the personal savings
                                                           high-quality, competitively priced products
channels, providing peace of mind to more than                                                                      market by maximizing the potential of SFL,
                                                           and services in the markets it serves
five million Canadians.                                                                                             its partner and primary distribution network.

                                                                                                                                                                      Ma n a g e Me n t ’s D iscussion anD analy si s
                                                       n   Be recognized as a company that meets
DFS has two main subsidiaries: Desjardins                  its clients’ expectations by offering them           n   In selected markets outside Québec,
Financial Security Investments Inc., a mutual              excellent value and a cohesive experience                double its total market share, primarily
fund and insurance brokerage firm, and                     in all their dealings with the firm                      through acquisitions.
Sigma Assistel Inc., a provider of telephone           n   Be an organization whose employees                   n   Achieve competitive advantages by
assistance services.                                       are committed to client satisfaction, to                 continuing to improve the operational
                                                           achieving the company’s growth targets,                  efficiency of every segment.
strategy                                                   and to developing its business agility               n   Achieve balanced business operations
                                                           and ability to innovate                                  through sustainable overall performance:
Desjardins Financial Security’s mission is to
                                                       n   Implement processes and technologies                     satisfying caisse members and clients by
meet the changing financial security needs
                                                           to offer clients and partners competitively-             having motivated employees, and meeting
of individuals, groups and businesses by offering
                                                           priced services and integrated solutions                 shareholders’ performance expectations.
a broad spectrum of customized life and health

   2008                              N
                                  •	 	 et	earnings	of	$34	million;	if	it	hadn’t	been	for	the	losses	associated	with	the	financial	crisis,	net	operating	
   acHieVeMents                      earnings would have amounted to $191 million.
                                  •	 In-force	insurance	grew	7.3%.
                                  •	 Net	premiums	up	11.4%	to	$2,868	million:

                                                                                                                                                                      D es ja r Di n s gr o up
                                  	 -		17.0%	increase	in	insurance	premiums	outside	Québec;
                                  	 -		6.4%	increase	in	insurance	premiums	in	Québec.
                                  •	 Individual	life	insurance	sales	advanced	5.0%.
                                  •	 Sales	of	savings	products	rose	sharply:
                                  	 -		19.0%	increase	in	group	retirement	savings	sales;
                                  	 -		71.7%	increase	in	individual	savings	sales.
                                  •	 17.1%	growth	in	premium	volume	for	products	sold	directly.
                                  •	 7.8%	increase	in	premium	volume	for	credit	life	insurance.
                                  •	 	 .9%	return	on	shareholder	equity	in	2008	and	18.0%	over	3	years	(2006–2008).	Excluding	the	impact	
                                     of	the	financial	crisis,	the	return	was	24.0%	in	2008.	
                                  •	 Maintained	solid	capitalization	despite	the	global	financial	crisis.	
                                  •	 Innovations	in	savings	products:	
                                     - Three features added to the Helios product: guaranteed lifetime withdrawal benefit with predictable
                                       age-based income for life, an annual protected value reset and an annual accumulation bonus;
                                     - Transition account converted into a tax-free savings account (TFSA);
                                     - Launched a tax-free savings account for group retirement savings;
                                     - A new secure Web site to help pension plan sponsors manage their plans on a daily basis.
                                  •	 Sigma	Assistel,	DFS’s	telephone	assistance	subsidiary,	obtained	ISO	9001:2000	certification.	
                                  •	 	 omplexe	Desjardins,	owned	by	Desjardins	Financial	Security,	was	named	Best	Office	Building	of	the	Year	in	
                                     the Renovated Building category at the BOMA (Building Owners and Managers Association) International Awards.
                                                  58      Business segMents      2.2 LiFe AND HeALTH iNSUrANCe

                                                  outlooK                                             Desjardins Financial Security’s new three-year       In the area of retirement savings, new
                                                                                                      plan is underpinned by the following strategic       retirement solutions will continue to appear,
                                                  In 2009, Desjardins Financial Security will         orientations:                                        particularly since a growing number of baby
                                                  develop a new, three-year Strategic Plan                                                                 boomers will be entering the five- to ten-year
                                                  that will help it firmly hold on to its position    n   Seek operational balance between clients,        transition toward the payout of their retirement
                                                  in the financial services market and give it            employees and shareholders through               savings. If the stock markets remain depressed
                                                  an edge in a fiercely competitive industry.             sustainable overall performance                  during this period, as they were in 2008, these
                                                  Stepped up organic growth will therefore be                                                              future retirees could end up with less income
                                                                                                      n   Meet client needs while continuing
                                                  the cornerstone of the company’s 2009–2011                                                               than they expected once they retire.
                                                                                                          to offer competitive services and prices
                                                  Business Plan.
                                                                                                      n   Step up organic growth and continue              With respect to individual life insurance, the
                                                  The overriding objective is to achieve a better         to expand nationally                             market is highly segmented. The industry, and
                                                  balance between its activities in the insurance     n   Improve the risk profile by having both          especially advisors, will continue to focus their
                                                  and savings (personal and group) markets by             the geographic sectors and the business          efforts on high-end segments, but not to the
                                                  seizing every business opportunity they offer.          lines contribute equally to revenues             point of neglecting the others. The introduction
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  This balance will shield DFS from fluctuations                                                           of the tax-free savings account (TFSA) confirms
                                                                                                      n   Maintain solid profitability
                                                  in the economic cycle. DFS will continue to                                                              the importance of universal life insurance in
                                                  actively build on its breakthroughs in markets                                                           the high-end market. Growth in the individual
                                                  across Canada, which will also help it balance      inDustry                                             life insurance segment will hinge on two
                                                  its business geographically.                                                                             factors: access to new distribution networks
                                                                                                      The aging population, immigration and
                                                                                                      new family structures are strong demographic         or channels, and offering new living benefits
                                                  DFS will focus more on the savings market,                                                               products such as critical illness and long-term
                                                                                                      trends that will all impact supply and demand
                                                  first, in order to achieve the market balance                                                            care insurance. These products are expected
                                                                                                      for financial products and services in the next
                                                  objective, and second, because baby boomers                                                              to appeal to baby boomers, who as they age,
                                                                                                      two decades.
                                                  offer tremendous business opportunities in this                                                          are becoming increasingly concerned about
                                                  segment,	since	they	hold	41%	of	all	invested	                                                            preserving their quality of life in case of loss
                                                                                                      In the group insurance and retirement savings
                                                  assets and are looking for safe investments in                                                           of autonomy.
                                                                                                      area, employers will increasingly use their
                                                  order to ensure their retirement income.
                                                                                                      benefit plans to attract and retain workers.
                                                                                                      This trend is emerging because benefits are          Lastly, the direct distribution market is growing
                                                  As regards the insurance segment, DFS plans to                                                           and will require innovation on the part of the
                                                                                                      perceived as having value. In light of the aging
                                                  outpace industry growth in individual insurance.                                                         industry players.
                                                                                                      population and impending retirement of a
                                                  At the same time, it will forge ahead in the
                                                                                                      massive number of boomers, employers
                                                  group and business insurance segments, where                                                             analysis of financial results
                                                                                                      must offer health benefits and have a strategy
                                                  it has been growing rapidly since the beginning
                                                                                                      for allowing them to transition from group
                                                  of the decade, increasing its market share from                                                          Like most of Canada’s financial institutions,
                                                                                                      to individual insurance. The trend in the private
                                                  4.3%	in	2002	to	5.6%	in	2007	and	climbing	                                                               Desjardins Financial Security was not spared
                                                                                                      sector to replace defined benefit plans with
                                                  to fourth place in Canada.                                                                               by the financial crisis of 2008. As such, net
                                                                                                      defined contribution plans will continue
                                                                                                      to affect this segment. The industry will also       earnings were $34 million as at December 31,
                                                  More specifically, in direct and credit insurance   be focusing on payout products, client retention     2008, compared to $217 million as at the
                                                  offered through financial institutions, the goal    and retirees’ assets, using group accounts that      same date in 2007. The portion of net earnings
                                                  is also to outpace industry growth, particularly    can be accessed by individuals and from              attributable to the ultimate shareholders, the
                                                  in direct insurance.                                                                                     Desjardins caisses, was $40 million, $171 million
D es ja r Di n s gr o up

                                                                                                      integrated retirement platforms.
                                                                                                                                                           less than in 2007. Despite the market turmoil
                                                  These are the main growth thrusts of the                                                                 that took its toll on profitability, return on equity
                                                                                                      In the credit insurance market, a growing shift
                                                  DFS 2009-2011 Business Plan, which will                                                                  was	5.9%,	for	an	average	of	18.0%	over	three	
                                                                                                      in credit transactions from financial institutions
                                                  be updated in 2009 to ensure coherence                                                                   years. Excluding losses associated with the
                                                                                                      to points of sale (car dealerships, furniture
                                                  with Desjardins Group’s new Strategic Plan,                                                              financial crisis, the return would have been
                                                                                                      stores, etc.) poses a challenge both in terms
                                                  which will be deployed from 2010 to 2012.                                                                24.0%	for	2008.
                                                                                                      of adapting these products and integrating
                                                                                                      them into these distribution channels.
                                                                                                                    2.2 LiFe AND HeALTH iNSUrANCe       Business segMents         59

With respect to overall business growth, income                                               net PRemiumS                         DFS had an excellent year in 2008 in the area
from insurance and annuity premiums rose                                                       (in millions of $)                  of savings products, where sales surged almost
11.4%	in	2008	to	$2,868	million,	compared	                                                                                         50.0%,	totalling	$692	million.	The	quality	of	
with $2,575 million in 2007.                                                                                                       the products, combined with efforts to promote
                                                                                                                                   them, explains this strong growth both in
Net insurance premiums reached $2,553 million,                                                                                     Québec	(up	42.4%)	and	in	the	rest	of	
up $223 million from 2007. In Québec, overall                                                                                      the	country	(up	52.6%).	

growth in premiums across all business segments

was	6.4%.	With	a	17.0%	increase,	premiums	                           1,600                                                         In individual savings, sales reached $432 million,

rose sharply in the other provinces, particularly                                                                                  an increase of $180 million over the previous year.
in group insurance. Individual insurance sales                       1,200                                                         Annuity	sales	were	up	9.0%	across	the	industry	
picked	up	5.0%,	beating	expectations	for	                                                                                          in the first three quarters of 2008, while sales of
Québec. AssurFinance for Individuals, a                                800                                                         guaranteed investment fund contracts advanced
distribution network exclusively for Desjardins                                                                                    7.0%.	DFS	saw	guaranteed	investment	fund	sales	


caisse	members,	saw	sales	grow	by	15.2%,	                              400                                                         jump	113.5%	over	2007,	to	$316	million.	This	

                                                                                                                                                                                         Ma n a g e Me n t ’s D iscussion anD analy si s
confirming the relevance of this network, which                                                                                    excellent performance was largely fuelled by
was set up in the early 2000s and which has now                          0                                                         the Helios product, in addition to optional
successfully completed the development phase.                                                                                      guarantees such as the Guaranteed Minimum



                                                                                                                                   Withdrawal Benefit (GMWB) and Guaranteed
In the savings sector, sales and new deposits                                                                                      Lifetime Withdrawal Benefit (GLWB). These
picked	up	by	4.4%	in	2008,	to	reach	                                                 Group insurance
                                                                                                                                   products appeal to consumers looking for a
$1,155 million. Due to stock market volatility                                                                                     predictable return and seeking to preserve
and shrinking returns, consumers moved away                                          Individual insurance                          their capital. The result of this trend is a
from mutual funds, with the result that sales                                                                                      decrease in mutual fund sales.
in	this	category	fell	27.2%	to	$463	million.	
However, sales of Helios and Millenia segregated
funds	jumped	113.5%	to	$316	million.	As	
for group savings, sales totalled $260 million,                     In 2008, individual insurance sales grew by
up	19.1%	over	2007,	due	to	large	immediate	                         $2 million over 2007, to $44 million, fuelled
annuity contracts signed during the year.                           in large part by sales in Québec. More specifically,
                                                                    sales by financial security advisors assigned
Group and business insurance sales reached                          to	the	Desjardins	caisses	rose	15.2%	over	2007,	
$137 million. Total group insurance premiums,                       to $19 million.
including group and business insurance premiums,
premiums tied to plans offered by financial                         In individual insurance, premium volume
institutions (including the Desjardins caisses),                    was $415 million, an increase of $22 million
and a premium equivalent for administered                           over 2007. The volume of premiums and the
groups (ASO), reached $2,220 million, compared                      number of in-force contracts sold by the
with $2,005 million in 2007. These premiums                         network of financial security advisors assigned
have	shown	average	growth	over	10.0%	in	                            to	the	Desjardins	caisses	increased	by	20.7%	
the last five years. Two main factors account for                   and	10.1%	respectively	over	the	previous	year.	
the	10.7%	increase	in	2008:	strong	group	and	                       In addition, the volume of premiums tied to

                                                                                                                                                                                         D es ja r Di n s gr o up
business insurance sales combined with growth                       products distributed without a representative
in loan insurance. The total volume of insured                      grew	12.3%,	to	$63	million.	
credit, encompassing both loan life insurance
and loan disability insurance, continues to rise.

TABLE 4     DesjarDins financial security
selected data for years ended December 31
(in	millions	of	$	and	as	a	%)	

                                                                                                                                       2008             2007              2006
  Insurance and annuity premiums                                                                                                   $    2,868     $      2,575     $  2,438
  Net investment income(1)                                                                                                               (101)             514          674
  Expenses attributable to policyholders                                                                                                2,089            2,215        2,361
  Operating expenses                                                                                                                      490              473          451
  Income taxes on earnings                                                                                                                  22              71           51
  Net earnings(1)                                                                                                                           34             217          151
  Net earnings attributable to the shareholder(1)                                                                                           40             211          146
  Net earnings disregarding the impact of the financial crisis                                                                            191              234          146
  Return on equity(1)                                                                                                                      5.9 %	 	       27.5	 %	 	   20.7	 %
  Assets under management – general funds                                                                                          $   13,759     $     15,308     $ 12,804
  Assets under management – segregated funds                                                                                            2,051            2,247        2,112
  Assets under administration (mutual funds)                                                                                            3,856            5,021        5,028

(1) Data for 2008 were affected by the financial crisis and ABCP.
                                                  60         Business segMents                 2.2 LiFe AND HeALTH iNSUrANCe

                                                  As for group retirement savings, sales advanced                In 2008, expenses attributable to policyholders,       disability insurance, increased the benefit
                                                  19.3%	to	reach	$260	million.	This	increase	                    which include insurance and annuity benefits,          expense to $2,062 million ($1,953 million
                                                  is attributable to sales growth outside Québec,                policy dividends and refunds, interest on              in 2007), while the temporary decline in
                                                  mainly of immediate annuities.                                 benefits and sums deposited, as well as changes        investments considered in the calculation
                                                                                                                 in actuarial liabilities, decreased by $126 million,   of the actuarial liabilities reduced expenses
                                                                                                                 to $2,089 million. Business growth, mainly in          by $500 million ($69 million in 2007).
                                                               GRouP inSuRanCe PRemiumS
                                                                bY DiStRibution netwoRk
                                                                                                                                                                        Total DFS assets under management and
                                                                              (in millions of $)
                                                                                                                          inDiviDuaL inSuRanCe PRemiumS                 under administration were $20 billion at
                                                                                                                             bY DiStRibution netwoRk                    year-end	2008,	down	12.9%	from	the	same	
                                                                                                                                        (in millions of $)              time in 2007. This decline essentially stems
                                                                                                                                                                        from the decrease in the fair value of investments

                                                                                                                                                                        resulting from the global financial crisis and
                                                                                                                                                                        the liquidity crunch. The volatility is accounted

                                                                                                                                                                        for on the balance sheet in the valuation of the

Ma n a g e Me n t ’s D iscussion anD analy si s

                                                                                                                                                                        assets under administration, which was carried
                                                   1,250                                                            400                                                 out according to current accounting policies.



                                                         0                                                         100






                                                                   Members of Desjardins Group                                                               2008

                                                                   Other clienteles
                                                                                                                              Members of Desjardins Group

                                                                                                                              Other clienteles

                                                  TABLE 5      DesjarDins financial security
                                                  expenses attributable to policyholders for years ended December 31
                                                  (in millions of $)

                                                                                                                                                                            2008             2007              2006
                                                    Insurance and annuity benefits                                                                                      $    2,062       $    1,953        $    1,806
D es ja r Di n s gr o up

                                                    Changes in actuarial liabilities                                                                                          (117)             162               455
                                                    Policyholder dividends and refunds                                                                                         133               87                90
                                                    Interest on benefits and deposits                                                                                           11               13                10

                                                                                                                                                                        $   2,089        $    2,215        $    2,361
                                                                                                       2.3 GeNerAL iNSUrANCe       Business segMents          61

           general                                       strategy                                             DGIG is extending the implementation
                                                                                                              of its 2006-2008 Strategic Plan into 2009,
           insurance                                     DGIG wants to be recognized as the leader            in close cooperation with Desjardins Group.
                                                         in the general insurance sector in Canada —          In 2008, DGIG launched a strategic reflection
                                                         a status it plans to achieve through the skills      process tied to those already under way in
                                                         and commitment of its employees, its in-depth        Desjardins Group.
                                                         knowledge of the general insurance field,
In an industry comprised of around 100 insurer           an approach based on providing the best              outlooK
groups, Desjardins General Insurance Group               price-quality ratio in profitable markets,
(DGIG) is the eleventh most important player             a corporate culture centered on rigorous             The industry’s profitability in 2008 was heavily
in the Canadian general insurance market and             management practices and a results-oriented          affected by the reduced returns on investments
the country’s seventh largest personal insurer.          focus. Moreover, it plans to fully reap the          and by deteriorating loss experience.
Through its five subsidiaries, DGIG provides its         rewards of its partnership with the Desjardins
different client segments with all the coverage          caisse network and its relations with various        The unfavourable impact of the global financial
they need to protect material assets, as well as         other groups.                                        crisis affected insurers’ investments in 2008

                                                                                                                                                                   Ma n a g e Me n t ’s D iscussion anD analy si s
financial compensation for bodily injuries resulting                                                          and caused a recession that will set the tone
from automobile accidents in provinces other             DGIG’s strategy is focused on the following:         for 2009. Furthermore, the rising cost of
than Québec. Desjardins General Insurance                                                                     claims in Ontario and Alberta and the constant
targets individuals and small businesses                 n   Continuing to develop its competitive            increase in the number of climate-related events
in Québec through agents located in the                      advantages to maintain superior profitability,   that affect the industry are all evidence of a
Desjardins caisse network as well as a                       while upholding its operational excellence       downward trend in loss experience.
specialized call centre. The Personal General            n   Achieving dynamic and profitable growth
Insurance company distributes auto and                       outside of Québec through an emphasis            Earnings in the commercial segment were also
property insurance products in Québec,                       on the individual segment of the “group”         down in 2008 due to rate decreases in previous
supported by various groups (professional                    market and the profitable development            years and several major claims.
associations, employers, unions) acting as                   of a “mass market” approach to the
partners. It carries out the same activities                 individual segment                               Industry results should continue their downward
with groups outside Québec. These two                                                                         trend in 2009. Rate increases approved by
                                                         n   Maintaining its profitable growth in             the authorities are not sufficient to cover
entities mainly sell their products through call
                                                             Québec, specifically for the individual          increased claims costs and investment income
centres. Lastly, two other subsidiaries, insurance
                                                             segment of the “group” and “mass”                will remain low.
companies Certas Direct and Certas Home
                                                             markets, the latter in partnership with
and Auto deal directly with consumers, mainly
                                                             the Desjardins caisse network
in Ontario and Alberta.                                                                                       The recession could give rise to more fraud
                                                         n   Making a positive contribution to the            attempts, but also encourage clients to limit
                                                             performance of Québec businesses                 car travel, which tends to reduce the frequency
                                                         n   Ensuring the development of its insurance        of accidents.
                                                             expertise and a future generation of
                                                             committed employees

                                                                                                                                                                   D es ja r Di n s gr o up
   2008                                N
                                    •	 	 et	earnings	of	$36	million	for	a	return	on	equity	for	shareholders	of	8.5%,	which	was	strongly	penalized	
   acHieVeMents                        due to loss experience and low investment income resulting from the financial crisis and global recession.
                                    •	 Growth	in	all	business	lines.
                                    •	 Quality	of	compensation	service	maintained	despite	the	record	number	of	claims	processed.
                                    •	 Successful	launch	of	the	Desjardins	brand	in	the	overall	Ontario	auto	market	through	a	major	media	campaign.
                                    •	 	 ntry	into	new	partnership	agreements	for	the	distribution	of	insurance	to	groups,	representing	200,000	
                                       potential clients.
                                    •	 Pursuit	of	work	toward	a	major	technological	migration	in	2010.
                                    •	 	 reation	of	a	new	corporate	image,	including	a	brand	promise,	positioning	and	a	creative	platform	for	its	banner	
                                       The Personal, which is active in group insurance across Canada.
                                    •	 	 omplete	revision	of	the	training	program	for	new	employees	and	managers	on	the	organization’s	corporate	
                                       culture, mission, vision and values.
                                    •	 New	investment	policies	adapted	to	the	new	financial	context,	risk	management	and	business	opportunities.
                                                  62        Business segMents             2.3 GeNerAL iNSUrANCe

                                                  DGIG will continue to adapt its profitable                          represented	the	remaining	42%.	The	10	largest	      Rules throughout Canada regarding
                                                  growth strategy to the changes in the insurance                     insurance groups with regard to premiums            underwriting, segmentation and rates in
                                                  cycle across Canada. The strategic reflection                       written	accounted	for	55%	of	the	industry	in	       the home insurance sector are less strictly
                                                  process undertaken by the Desjardins Group                          Canada. The degree of consolidation is greater      regulated than those for automobile insurance.
                                                  in 2008 will generate new development                               in personal insurance, with the five and
                                                  opportunities. The development of the large                         ten largest insurers respectively representing      Inflationary pressure on claims costs and
                                                  auto market in Ontario under the Desjardins                         46%	and	73%	of	the	market.	This	trend	              the stability of investment returns brought the
                                                  brand will continue. The management of                              towards consolidation may well continue             industry’s	profitability	down	to	14.7%	in	2008,	
                                                  investments will be closely monitored in the                        over the coming years.                              compared	to	returns	of	more	than	15%	over	
                                                  context of risks and business opportunities that                                                                        the three previous years. The global recession,
                                                  may arise if the financial markets pick up again.                   In	the	Canadian	market,	68%	of	companies	           unstable financial markets and the industry’s
                                                                                                                      sell	their	products	through	brokers	while	32%	      inability to have rates increase at the same
                                                  With the decreasing industry returns                                are direct insurers. This latter group, which has   pace as rising claims costs should again have
                                                  and pressures on capital, some insurers may                         been growing steadily over the last few years,      a negative impact on industry results in 2009.
                                                  become available for sale. DGIG intends to                          is more active in the personal insurance sector,
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  take advantage of these business opportunities                      with	a	41%	market	share	(59%	in	Québec).            analysis of financial results
                                                  to meet its growth objectives.
                                                                                                                      Ontario is the leader as regards premiums,          As at December 31, 2008, Desjardins General
                                                  inDustry                                                            accounting	for	46%	of	the	market.	Automobile	       Insurance Group generated net income of
                                                                                                                      insurance is the most important business line,      $41 million, down from $140 million in 2007.
                                                  Canada’s general insurance industry did not                         representing	45%	of	all	premiums.                   The portion of its net earnings attributable to its
                                                  undergo any significant changes in 2008. On                                                                             shareholder, Desjardins Group, was $36 million
                                                  the other hand, some important trends, such                         Automobile insurance is administered by             with	a	return	on	equity	of	8.5%,	compared	to	
                                                  as increased market share by direct insurers,                       public authorities in British Columbia, Manitoba    $126	million	and	26.7%	respectively	last	year.	
                                                  were maintained. In 2008, the total market                          and Saskatchewan. In Québec, bodily injuries        As with the rest of the industry, DGIG had
                                                  volume of premiums was $37 billion, divided as                      resulting from automobile accidents fall under      higher home insurance loss experience and
                                                  follows:	personal	insurance	accounted	for	58%	                      the government’s purview. Moreover, this same       lower investment income.
                                                  of the total market, while commercial insurance                     sector is highly regulated in Alberta, Ontario
                                                                                                                      and the Maritimes.

                                                  TABLE 6     DesjarDins general insurance group
                                                  selected data for years ended December 31
                                                  (in	millions	of	$	and	as	a	%)

                                                                                                                                                                              2008             2007              2006
                                                    Gross premiums written                                                                                                $    1,460     $      1,429        $    1,412
                                                    Net premiums earned                                                                                                        1,426            1,379             1,376
                                                    Combined ratio                                                                                                              97.8 %		 	       92.5	 %		   	     91.9	 %	
                                                    Underwriting profit(1)                                                                                                $        32    $        103        $      111
                                                    Investment income(1)                                                                                                           24             104                78
                                                    Net earnings(1)                                                                                                                41             140               119
D es ja r Di n s gr o up

                                                    Net earnings attributable to the shareholder(1)                                                                                36             126               107
                                                    Return on equity(1)                                                                                                           8.5 %	 	       26.7	 %	    	     25.2	 %
                                                    Total assets                                                                                                          $    2,882     $      3,147        $    2,664

                                                  (1) Data for 2008 were affected by the financial crisis and ABCP.

                                                  The combined ratio, which represents                                record snowfalls in winter 2008 caused              infiltration, wind and hail. The weather in
                                                  total claims and operating expenses                                 extensive damage to structures and swimming         2007 was very favourable by comparison,
                                                  divided	by	net	premiums	earned,	was	97.8%,	                         pools. Secondly, the spring and summer were         with very few major events.
                                                  a 5.3-point increase over 2007. This increase                       rainy and multiple thunderstorms generated
                                                  is primarily due to the higher home insurance                       a large number of claims caused by water
                                                  loss experience across Canada. First of all,
                                          2.4 SeCUriTieS BroKerAGe, ASSeT MANAGeMeNT, veNTUre CAPiTAL AND oTHer                              Business segMents                  63

Automobile insurance results in 2008 did                  Over the past two years, DGIG has invested          DGIG	experienced	a	1%	growth	in	volume	
not vary much compared to 2007. Accidents                 additional amounts to increase its growth           due to the addition of new group insurance
and thefts decreased in Québec compared to                capacity, product offering, underwriting            partners and partnership renewals. Premium
2007,	despite	the	hailstorm	on	June	10,	2008.	            and rates expertise, as well as technological       income from commercial insurance in Québec
The lower cost of claims in operations outside            development teams. These choices explain            was $57 million.
Québec for years prior to 2008 offset the                 its higher operating expenses ratio. Some key
higher number of civil liability insurance claims.        priorities include additional expenses related                      GRoSS PRemiumS wRitten
                                                          to the media campaign in Ontario, a project                                     (in millions of $)
                                                          to implement a new technology platform,
                            CombineD Ratio
                 (as	a	%	of	net	premiums	earned)
                                                          the development of e-commerce and
                                                          underwriting rules.
                                                          The investment market performed very poorly

    120                                                   in	2008.	DGIG	was	affected	by	the	40%	drop	             750


                                                          in common shares on global stock markets.

                                                                                                                                                                                     Ma n a g e Me n t ’s D iscussion anD analy si s
    100                                                                                                           600

                                                          Earnings from common shares were dramatically
                                                          reduced as were investments in asset allocations
     80                                                   and resources.                                          450

     60                                                   Gross	premiums	written	rose	2.2%,	or	$31	               300
                                                          million, compared to last year, despite the lower
     40                                                   automobile insurance rates in Québec. In the            150
                                                          individual market, growth was generated by the
     20                                                   partnership with the Desjardins caisses and the           0



                                                          major initiative in Ontario under the Desjardins
       0                                                  General Insurance (DGI) trademark. The latter



                                                          segment	increased	6%	in	2008.	
                                                                                                                               Individual market

                                                                                                                               Group market
                 Loss experience


               securities BroKerage, asset ManageMent,
               Venture capital anD otHer

securities BroKerage, asset                               It consists of securities brokerage activities      otHer

                                                                                                                                                                                     D es ja r Di n s gr o up
ManageMent anD Venture                                    performed by Desjardins Securities, asset
                                                          management activities conducted by                  The “Other” category mainly includes other
capital                                                   Desjardins Asset Management and venture             Desjardins components and consolidation
                                                          capital investing carried out by Desjardins         restatements for all components.
This business segment brings together various
components boasting highly specialized fields             Venture Capital.
of expertise and working in close collaboration
with the Desjardins caisse network and
Desjardins Group’s various subsidiaries.

TABLE 6      suMMary of results – securities BroKerage, asset ManageMent anD Venture capital
selected data for years ended December 31
(in millions of $)

                                                                                                                  2008                      2007                   2006
  Total income                                                                                                $         355           $            404         $          386
  Non-interest expense                                                                                                  387                        379                    366

  Operating earnings (loss)                                                                                             (32)                        25                     20

  Income tax (recovered) on earnings                                                                                     (3)                         8                      6

  Net earnings (loss)                                                                                         $         (29)          $             17         $           14
                                                  64         Business segMents      2.4 SeCUriTieS BroKerAGe, ASSeT MANAGeMeNT, veNTUre CAPiTAL AND oTHer

                                                                                                            The following strategies will help Desjardins            The group of eight firms owned by the major
                                                                     actiVities                             Securities carry out this vision:                        Canadian banks as at November 30, 2008,
                                                                                                                                                                     (full-service and online brokerage) held
                                                                                                            •	 Continue	to	develop	Desjardins	Securities	            the following:
                                                       n   securities activities                               to its full potential so that Desjardins Group
                                                                                                               can take its rightful place in the securities         •	 3.9%	of	the	total	number	of	firms
                                                       n   asset management activities
                                                                                                               brokerage industry                                    •	 60.4%	of	total	industry	income
                                                       n   Venture capital activities
                                                                                                            •	 Further	develop	employees’	skills	and	                •	 78.6%	of	total	industry	earnings
                                                       n   other                                               the quality of Desjardins Securities products
                                                                                                               in order to raise awareness of Desjardins             As at November 30, 2008, the income
                                                                                                               among target clienteles                               of brokerage firms in Canada had fallen
                                                                                                            •	 Strengthen	human,	technological	and	                  by	17.2%	compared	to	the	same	period	in	
                                                  n   securities activities
                                                                                                               organizational infrastructures in order to            2007. In contrast, Desjardins Securities posted
                                                  profile                                                      foster growth and maximum profitability               a	decline	of	5.5%.
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  Desjardins Securities is Desjardins Group’s               •	 Make	Desjardins	Securities	a	Best	Employer	
                                                  securities brokerage firm. It provides individuals,          by providing a stimulating and respectful             Market review
                                                  institutional investors, businesses and                      workplace for all employees                           The year 2008 can be summed up in one word:
                                                  governments with the comprehensive line                                                                            volatility. North American markets plummeted,
                                                  of products and services associated with a                outlook                                                  posting	losses	of	over	30%	compared	to	a	year	
                                                  fully-integrated brokerage firm. Individuals                                                                       earlier because of the financial crisis and
                                                                                                            •	 Ensure	the	profitability	of	operating	activities.
                                                  are served by the Full Service Brokerage,                                                                          deteriorating conditions world-wide. More
                                                  Online Brokerage (Disnat) and Desjardins                  •	 Monitor	operating	expenses	strictly.                  specifically, it should be noted that S&P/TSX
                                                  Network Service divisions. The needs of                   •	 Continue	the	work	begun	by	Caisse	                    closed	the	year	down	35%,	its	first	decline	in	six	
                                                  businesses, institutions and governments                     centrale Desjardins towards increasing                years.	At	the	end	of	2008,	the	Dow	Jones,	S&P	
                                                  are met by the Corporate Finance,                            the presence of Desjardins in corporate               500	and	Nasdaq	closed	down	33.8%,	38.5%	
                                                  Fixed Income Group and Equity Capital Markets                financing transactions (bank financing                and	40.5%	respectively.	
                                                  divisions. With a presence in all regions of                 and debt or property securities issuances).
                                                  Québec, Desjardins Securities also operates                                                                        In	December	2008,	the	Dow	Jones	lost	
                                                                                                            •	 Work	with	the	caisse	network	to	increase	
                                                  eight branches in Ontario, notably in Toronto,                                                                     0.4%	to	close	at	8,776.4.	S&P	500	managed	a	
                                                                                                               the proportion of personal financial assets
                                                  North	York,	Peterborough	and	Sudbury.	In	                                                                          1.1%	(903.3)	gain.	Nasdaq	rose	2.8%	(1,577.0)	
                                                                                                               in Québec managed by Desjardins.
                                                  addition, Desjardins Securities has a presence                                                                     and	the	TSX	lost	2.6%	(8,987.7).	The	following	
                                                  in Vancouver, essentially to serve institutional          •	 Continue	implementing	measures	to	                    segments proved to be the best performers:
                                                  investors and very active independent investors.             promote client loyalty and attract skilled            basic	materials	(15.1%),	consumer	staples	
                                                                                                               human resources.                                      (8.0%)	and	industrials	(4.1%);	in	contrast,	
                                                  strategy                                                  •	 Maintain	a	compliance	culture.                        the	following	declined:	financials	(-9.4%),	
                                                  To help Desjardins Group achieve its objective            •	 Participate	in	various	synergy	projects	              energy	(-8.9%)	and	technologies	(-8.1%).
                                                  of becoming the largest wealth manager by                    with Desjardins Group.
                                                  offering a complete line of quality financial                                                                      analysis of the financial results
                                                  products and advisory services to Canadian                industry                                                 For the year ended December 31, 2008,
                                                  individual and institutional clients. Desjardins                                                                   total income stood at $265 million compared
                                                                                                            The industry had a very bumpy ride in 2008.
D es ja r Di n s gr o up

                                                  Securities also seeks to support the growth                                                                        to	$291	million	in	2007,	a	decrease	of	8.9%.	
                                                                                                            Nevertheless, the Canadian securities industry
                                                  of businesses and entrepreneurs by rounding                                                                        This decrease is mainly attributable to a decline
                                                                                                            still consisted of 203 brokerage firms at
                                                  out the service offering of Desjardins Group,                                                                      in income from the Services for Individuals
                                                                                                            November 30, 2008, the same number as
                                                  as well as by assuming a leadership role in                                                                        segment and groups in the Equity Capital
                                                                                                            in 2007. It had hired 41,269 employees by
                                                  select activity sectors.                                                                                           Markets segment.
                                                                                                            that date (42,329 a year earlier), a decline
                                                                                                            of	2.5%.

                                                       2008 achievements – Securities activities

                                                       n   Services for Individuals: In December, a secured Internet site,, for Full Service Brokerage clients was successfully launched.
                                                           This	segment	also	prepared	itself	to	offer	tax-free	savings	accounts	(TFSAs)	starting	January	1,	2009.
                                                       n   Equity Capital Markets: The firm is recognized as an increasingly important player in the preferred shares market; it continued to increase
                                                           its	participation	(reaching	12%)	in	issues	by	Canadian	financial	institutions.	
                                                       n   Fixed Income Group: This segment saw its market share grow in 2008. Desjardins Securities consolidated its ranking as eighth in Canada.
                                                           Traded client volumes grew over those of competitors, who saw their volumes decline in 2008 in comparison with 2007.
                                                2.4 SECURITIES BROKERAGE, ASSET MANAGEMENT, VENTURE CAPITAL AND OTHER                          BUSINESS SEGMENTS            65

                              Income                           As at November 30, 2008, Desjardins Securities’            three investment areas: securities investments,
                         (in millions of $)                    earnings fell 5.5% compared to 17% for                     mortgage investments and institutional
                                                               comparable industry competitors.                           financing, as well as real estate investments.

   300                                                         In accordance with the development strategy                Desjardins Asset Management manages
                                                               adopted in 2001, Desjardins Securities continues           $38.4 billion primarily from the equity of the

                                                               to make investments in order to raise its profile          insurance subsidiaries and from management


                                                               in current markets and penetrate new ones,                 mandates assigned to it by other Desjardins

                                                               enabling it to strengthen its position in both             Group components.

                                                               Québec and Canada.
   150                                                                                                                    Strategy
                                                               The net loss for 2008 stood at $23.4 million
                                                                                                                          Desjardins Asset Management aims to meet
   100                                                         compared to net earnings of $0.6 million in
                                                                                                                          all the investment needs of its Desjardins
                                                               2007. Profitability in 2008 was severely affected
                                                                                                                          Group partners, as part of sound risk
     50                                                        by volatile and unpredictable financial markets.
                                                                                                                          management. To do so, Desjardins Asset

                                                                                                                                                                                 MA N A g E ME N T ’S D ISCUSSIoN AND ANAly SI S
                                                                                                                          Management collaborates closely with Desjardins
      0                                                        Remuneration paid to the Desjardins caisse
                                                                                                                          Group Integrated Risk Management. Accordingly,
                                                               network came to $13.0 million in 2008,





                                                                                                                          Desjardins Asset Management helped implement
                                                               bringing the total paid out since 2000 to
                                                                                                                          the action plan that resulted from the internal
                                                               $75.5 million.
                                                                                                                          audit mandates discussed on page 40 and
                                                                                                                          regarding ABCP and hedge funds in particular.
  contrIbutIon to the DesjarDIns network                       As at December 31, 2008, total assets under
                                                               management for Desjardins Securities stood
                              (Referrals)                                                                                 In the context of the global financial crisis and
                         (in millions of $)                    at $16.3 billion, down $2.3 billion over 2007.
                                                                                                                          in accordance with the 2006-2008 Three-Year
                                                               Equity totalled $46.9 million. Desjardins Securities
                                                                                                                          Plan, the following strategies will help the
     16                                                        complies with all capital-related regulations
                                                                                                                          company carry out its vision:
                                                               imposed by regulatory organizations.

                                                                                                                          •	 Play	an	advisory	role	in	terms	of	asset	
                                                                   Asset management activities

     12                                                        n
                                                                                                                             management with Desjardins Group partners

     10                                                        Profile
                                                                                                                          •	 Maintain	solid	expertise	in	asset	management	
                                                               Desjardins Asset Management is a group of                     and adapt this expertise to meet client needs

                                                               Desjardins Group investment managers.                      •	 Focus	on	development	of	savings	and	
      6                                                                                                                      investment products

                                                               Desjardins Asset Management has approximately
      4                                                                                                                   •	 Optimize	operational	and	management	
                                                               260 employees: 200 in its offices in Montréal,
      2                                                        Toronto, Vancouver and Québec City and
                                                               about 60 at its subsidiary, Desjardins Property
                                                               Management. Its employees work primarily in





                                                                                                                                                                                 D ES ja r DI N S Gr o Up
Selected data for years ended December 31
(in millions of $ unless indicated otherwise)

                                                                                                                            2008               2007              2006
  Assets under management                                                                                             $      16,309        $   18,601        $ 17,603
  Total income                                                                                                                  265               291             273

  Net earnings (net loss)                                                                                                     (23.4)               0.6              (6.1)

  Points of service                                                                                                              48                44                43
  Total number of employees                                                                                                   1,041             1,303             1,268
    In Québec                                                                                                                   911             1,164             1,128
  	 Outside	Québec	                                                                                                   	         130               139               140
                                                  66          Business segMents      2.4 SeCUriTieS BroKerAGe, ASSeT MANAGeMeNT, veNTUre CAPiTAL AND oTHer

                                                  outlook                                                     practices. Investors need to remain cautious,            DVC manages the assets of nine funds,
                                                                                                              however, since the Canadian market is not                each with its own specific mission for active
                                                  In 2009, in line with Desjardins Group orientations,
                                                                                                              immune to corrections, in particular in Western          participation in the economic development
                                                  Desjardins Asset Management plans to carry out
                                                                                                              Canada and Ontario.                                      of all regions in Québec. The funds include
                                                  the following:
                                                                                                                                                                       the seven Desjardins private funds, as well as
                                                                                                              analysis of financial results                            Capital régional et coopératif Desjardins (CRCD)
                                                  •	 Give	priority	to	continuing	to	closely	manage	
                                                                                                                                                                       and Desjardins – Innovatech S.E.C. Through
                                                     its partners’ portfolios in the wake of major            At	$82	million,	fee	income	was	down	7.9%	
                                                                                                                                                                       each of these funds and in tandem with
                                                     market instability through close collaboration           from 2007, largely because of the reduction
                                                                                                                                                                       Desjardins business centres, DVC has a
                                                     with Desjardins Group Integrated Risk                    in assets under management due to the
                                                                                                                                                                       presence throughout Québec and supports
                                                     Management                                               poor performance of capital markets and
                                                                                                                                                                       313 businesses, cooperatives and funds.
                                                  •	 Finetune	its	business	model	and	bring	it	into	           disinvestment in the underlying instruments
                                                     line with Desjardins Group’s orientations                for structured products managed by Desjardins
                                                                                                                                                                       As DVC’s main activity is to invest in businesses
                                                                                                              Asset Management. Operating expenses, at
                                                  •	 Develop	savings,	investment	and	payout	                                                                           throughout Québec, it has investment managers
                                                                                                              $67 million, remained at the same level as in
                                                     products in compliance with Desjardins                                                                            in 24 offices, most of which are located in
                                                                                                              2007. Desjardins Asset Management continued
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                     Group Integrated Risk Management                                                                                  business centres with which they work closely
                                                                                                              implementing its development plan related
                                                                                                                                                                       on a regular basis. DVC is thus in a position to
                                                  •	 Optimize	real	estate	portfolio	management	               to improving its operational efficiency and
                                                                                                                                                                       offer entrepreneurs in all regions expert support
                                                     with a view to attaining the target size for             optimizing its management capabilities.
                                                                                                                                                                       tailored to their needs and their growth
                                                     this asset class
                                                                                                                                                                       potential. Through a blend of its traditional
                                                  •	 Continue	with	promising	investments	                     Assets under management were down
                                                                                                                                                                       financing and venture capital expertise,
                                                     in technology in order to increase its                   $12.4	billion	or	24.5%	from	December	31,	
                                                                                                                                                                       Desjardins is able to support entrepreneurs
                                                     operational efficiency                                   2007, essentially because of the global financial
                                                                                                                                                                       seeking advice and financing for their growth,
                                                                                                              crisis. Securities-related assets decreased
                                                                                                                                                                       succession and acquisition projects.
                                                  industry                                                    considerably, but there was a slight increase
                                                                                                              in the real estate and mortgage loan portfolios
                                                                                                                                                                       In order to meet the needs of entrepreneurs
                                                  If 2008 was dominated by the credit and                     at Desjardins Asset Management.
                                                                                                                                                                       appropriately and support them effectively in
                                                  liquidity crunch, 2009 began with the resulting
                                                                                                                                                                       their growing their business, DVC has designed
                                                  global recession. As a result, the asset and                n   Venture capital activities
                                                                                                                                                                       a dynamic internal structure based on four
                                                  investment management industry is facing
                                                                                                              profile                                                  business lines: venture capital, development
                                                  major challenges, especially the decline in fee
                                                                                                                                                                       capital, cooperative capital and resource
                                                  income given the reduction in the value of                  Desjardins Venture Capital (DVC), a subsidiary
                                                                                                                                                                       regions, as well as major investments and
                                                  assets under management. While the industry,                of Desjardins, is a venture capital manager
                                                                                                                                                                       company buyouts.
                                                  like Desjardins Asset Management, must show                 specializing in risk capital. As a manager, it
                                                  considerable prudence, it must also stay alert              has a dual mission: to help individual owners of
                                                  in order to capitalize on the market’s recovery             funds under management realize the expected
                                                  when it happens. Unlike the U.S. real estate                return on their investments and achieve their
                                                  market, which experienced a meltdown,                       specific objectives, and to provide entrepreneurs
                                                  the Canadian market held up fairly well,                    with the capital and strategic support necessary
                                                  on account of its more conservative credit                  to expand their businesses.

                                                  TABLE 9      DesjarDins asset ManageMent
D es ja r Di n s gr o up

                                                  selected data for years ended December 31
                                                  (in millions of $)

                                                                                                                                                                          2008              2007              2006
                                                    Fee income                                                                                                        $       82        $       89        $       87
                                                    Operating expenses                                                                                                        67                67                63
                                                    Net earnings                                                                                                              11                16                17
                                                    Assets under management                                                                                               38,355            50,773            46,671

                                                       2008 achievements – Asset management activities

                                                       n    Gave priority to managing the impacts of the financial crisis on its partners’ and clients’ assets in order to protect their interests first and foremost,
                                                            as well as those of Desjardins and its members.
                                                       n    Actively participated in Desjardins Group’s efforts to deal with the asset-backed commercial paper (ABCP) securities crisis.
                                                       n    Continued research into the development of new savings products for members and clients.
                                                       n    Underwrote $521 million in new commercial mortgage loans nationwide.
                                                       n	   Received	the	title	of	The	Office	Building	of	the	Year	(Renovated	Building	category)	for	Complexe	Desjardins	at	the	BOMA	
                                                            (Building Owners and Managers Association) International awards. Complexe Desjardins is managed by Desjardins Property Management,
                                                            a subsidiary of Desjardins Asset Management.
                                  2.4 SeCUriTieS BroKerAGe, ASSeT MANAGeMeNT, veNTUre CAPiTAL AND oTHer                            Business segMents        67

strategy                                               outlook                                                The trends for growth cycles and new
                                                                                                              investments were similar to the previous year.
Desjardins Venture Capital is able to provide          In an ever-changing climate, the DVC team
                                                                                                              Growing or expanding businesses were at the
entrepreneurs with a comprehensive and unique          puts over 35 years of expertise at the service
                                                                                                              hub	of	activity,	attracting	59%	of	investments,	
service offering. Its blend of diversified expertise   of entrepreneurs, offering them innovative
                                                                                                              whereas emerging businesses attracted less
and synergies allows it to construct financing         financing solutions and a partnership based
                                                                                                              than	30%	of	investments.
packages and development strategies adapted            on increasing and supporting their growth
to different socio-economic situations, such as        so as to meet their wishes and anticipate
                                                                                                              The share of investments made in the Greater
business transfers or buyouts, thus promoting          their changing needs.
                                                                                                              Montréal region remained at the forefront
the retention of jobs and business ownership
                                                                                                              in	2008,	garnering	73%	of	investments.	
in the various regions.                                industry
                                                                                                              The Hull-Gatineau region came second with
                                                       After four years of growth, the Québec venture         an	11%	share,	followed	by	Québec	City	with	
As part of its 2009 Business Plan, the following
                                                       capital industry sharply declined in 2008, along       6%	and	Sherbrooke	with	5%.	This	left	the	
strategies will help DVC achieve its vision:
                                                       with a massive slowdown on North American              other	regions	with	only	5%	of	all	investments	
                                                       and international markets. Clear evidence of           made in the course of the year.
•	 Develop	the	management	segment	in	order	

                                                                                                                                                                  Ma n a g e Me n t ’s D iscussion anD analy si s
                                                       this decline was the fact that in 2008 $349
   to diversify sources of funds and ensure
                                                       million were invested in Québec, compared              Lastly, in 2008 Québec was significantly affected
   income growth
                                                       to $642 million a year earlier, representing a         by the serious decrease in the proportion of
•	 Promote	true	partnerships	by	proposing	             decrease	of	45.6%.	It	should	be	noted	that	            U.S. and foreign funds. Since 2003, investment
   solutions and added-value strategies                the decline in activity in Québec is on par with       activity had steadily increased to peak in 2007.
   customized to each individual business line         that in Canada as a whole, which similarly fell        Last year, the proportion of these funds
•	 Promote	the	creation	of	workers’	cooperatives	      nearly	36%.	This	was	the	first	twelve-month	           plummeted	by	62%	to	represent	only	22%	
   for the purpose of sharing wealth                   recession in the Canadian market since 2003,           of all investments in Québec. This had a major
                                                       and the annual results are among the worst             impact on the average transaction size, down
•	 Contribute	to	the	economic	development	
                                                       since the mid-1990s.                                   from $3.4 million in 2007 to $2.5 million in
   of Québec by meeting, year over year,
                                                                                                              2008. Fortunately, tax-advantaged and private
   the	regulatory	target	of	60%	for	eligible	
                                                       The slowdown in the Québec market affected             funds in Québec continued to play a key role
   investments	as	a	whole	and	35%	for	
                                                       all sectors, both technological and non-               in supporting businesses in an extremely
   investments in cooperatives and resource
                                                       technological. Unlike the trends of the previous       turbulent market.
   regions, in accordance with the Act constituting
                                                       year, activity in 2008 boosted the information
   Capital régional et coopératif Desjardins
                                                       technology sector, which attracted nearly half
•	 Develop	business	plans	together	with	               of all investments. In 2007, the life science
   business centres to round out their offer           sector had attracted the lion’s share.
•	 Become	a	leader	in	business	transfers

                                                                                                                                                                  D es ja r Di n s gr o up
   2008 achievements – Venture capital activities

   n   Partnership with BioScience Managers Limited, an international private equity firm specializing in the life science sector, to ensure and boost
       DVC’s high-potential investments in this industry.
   n   Renewed Québec government confidence in DVC by transferring the assets of Innovatech du sud du Québec to Desjardins – Innovatech S.E.C.
       This type of transaction gives DVC an even higher profile among regional entrepreneurs.
   n   Maintained business transfers at the core of DVC activities. In 2008, nearly $34 million were invested in 23 businesses to support them through
       this important stage of their development.
   n   Bought out two businesses, including an $11-million deal that allowed ownership of the business to remain in its home region.
   n   Established, in line with its cooperative difference, strategies promoting the rise of workers’ cooperatives that enable employees to share
       ownership of their company with the management team and Desjardins.
   n   Completed a CRCD economic impact study showing DVC’s major contribution to the economic development of the regions.
   n   Created an organizational strategy to promote the contribution of entrepreneurs in residence in the information technology
       and telecommunication sectors in order to increase the value of portfolio businesses.
   n   Developed a follow-up program for service delivery and satisfaction surveys for both business centres and portfolio businesses.
   n   Set up a CRCD asset management committee ensuring follow-up of the asset allocation platform and financial risks.
   n   Made new commitments of $73 million in 85 businesses, bringing the number of portfolio businesses to 313 and helping to maintain
       or create over 34,000 jobs.
   n   DVC declared a dividend in the amount of $3 million.
                                                  68         Business segMents              2.4 SeCUriTieS BroKerAGe, ASSeT MANAGeMeNT, veNTUre CAPiTAL AND oTHer

                                                  analysis of the financial results                                     As at December 31, 2008, the assets                                    Since spring 2004, the portfolio held by
                                                                                                                        of DVC’s nine funds under management                                   Desjardins Venture Capital L.P. has been
                                                  DVC’s investment and reinvestment activities
                                                                                                                        totalled $914 million, compared to                                     in a disinvestment phase. In addition, as of
                                                  translated into commitments totalling
                                                                                                                        $848 million in 2007. This represents a                                the beginning of 2006, the six regional funds
                                                  $73 million in 85 businesses and cooperatives
                                                                                                                        growth	of	7.8%,	compared	to	9.0%	in	2007.	                             of Desjardins Capital de développement no
                                                  in Québec. Commitments relating to CRCD
                                                                                                                        This growth is mainly attributable to CRCD’s                           longer participate systematically with CRCD
                                                  and Desjardins – Innovatech S.E.C. represented
                                                                                                                        annual net capital-raising, which stood at                             in new investments. This explains why
                                                  more	than	93%	of	investment	activity;	financial	
                                                                                                                        $109 million in 2008 ($100 million in 2007).                           investments made in 2008 for Desjardins
                                                  data for these two funds do not appear on
                                                                                                                        CRCD’s	assets	now	represent	89.1%	of	total	                            Group funds totalled only $4 million.
                                                  Desjardins Group’s books. Capital invested
                                                                                                                        assets under management.
                                                  amounted to $366 million, down by
                                                                                                                                                                                               n   other
                                                  $41 million over 2007. This slight decrease
                                                                                                                        DVC’s ratio of operating expenses to average
                                                  is mainly attributable to disbursements of                                                                                                   The results of various consolidation adjustments
                                                                                                                        assets	under	management	stood	at	2.4%	
                                                  $77 million and the disposal of investments                                                                                                  not reflected in the business segments showed
                                                                                                                        in	2008	(2.6%	in	2007).	It	will	be	important	
                                                  totalling $41 million, as well as to the under-                                                                                              net earnings of $15 million in 2008, compared
                                                                                                                        for	DVC	to	keep	this	ratio	below	2.5%	in	
                                                  performance of investments whose value                                                                                                       to a net loss of $47 million in 2007. These
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                                                                                        the coming years. In fact, the billing rate for
                                                  was reduced by $79 million. In fact, market                                                                                                  consolidation adjustments include the recording
                                                                                                                        CRCD’s management fee income will decline
                                                  turbulence, particularly in the information                                                                                                  of Desjardins Group employee future benefits
                                                                                                                        from	3.0%	to	2.5%	as	of	2009,	because	its	
                                                  technology, telecommunication and health                                                                                                     expenses. It should be noted that employee
                                                                                                                        total assets exceeded $750 million in 2008.
                                                  sectors, as well as tighter credit conditions                                                                                                future benefits expenses represent
                                                                                                                        Investments in DVC’s systems and development
                                                  on the markets, resulted in large fluctuations                                                                                               a considerable after-tax decrease of $71 million
                                                                                                                        will be required to meet this challenge.
                                                  in value for certain investments.                                                                                                            compared to 2007, mainly because of updated
                                                                                                                                                                                               actuarial assumptions.

                                                  TABLE 10      DesjarDins Venture capital – Venture capital actiVity
                                                  selected data as at December 31
                                                  (in millions of $ unless otherwise indicated)

                                                                                                                                                                                                   2008                2007          2006
                                                    Assets under management
                                                     Desjardins Group                                                                                                                         $         70         $     92     $       96
                                                     Third parties                                                                                                                                     844              756            682

                                                    Total                                                                                                                                     $        914         $    848     $      778

                                                    Number of business partners                                                                                                                        313              296            274
                                                    Capital invested                                                                                                                          $        366     $        407      $     364
                                                    Management fee income for the year                                                                                                        $          27    $          26     $       23
                                                    Ratio of operating expenses to average assets under management for the year                                                                         2.4 %	 	         2.6	 %	 	      2.6	 %
D es ja r Di n s gr o up

                                                  TABLE 11      DesjarDins group funDs unDer ManageMent(1)
                                                  selected data as at December 31
                                                  (in millions of $)

                                                                                                                                                                                                   2008                2007          2006
                                                    Investments, at book value                                                                                                                $          40        $     69     $       70
                                                    Equity                                                                                                                                               70              92             95
                                                    New investments during the year                                                                                                                       4                8             7
                                                    Proceeds of the disposal of investments during the year                                                                                               5              13             47
                                                    Net earnings (net loss)                                                                                                                             (22)              (3)            2

                                                  (1) Desjardins Group funds under management include Desjardins Venture Capital L.P., as well as the six regional funds of Desjardins Capital de développement.
                                                                   3.1 review oF reSULTS      analYsis of the coMBineD financial stateMents      69

                                analysis of tHe
                                coMBineD financial

                                                                                                                                                      Ma n a g e Me n t ’s D iscussion anD analy si s
 3.1          reVieW of results

total incoMe

    HigHligHts                    •	 Total	income	down	$1,298	million	or	13.4%.
                                  •	 Net	interest	income	ahead	$173	million	or	5.3%.
                                  •	 Net	insurance	premiums	advanced	$307	million	or	8.0%.
                                  •	 Other	income	down	$1,778	million	or	68.3%.

                                                                                                                                                      D es ja r Di n s gr o up
TABLE 12     total incoMe
Years ended December 31
(in	millions	of	$	and	as	a	%)

                                                                          2008                              2007                          2006
  Net interest income                                 $    3,418             40.8 %	 $	      3,245	 	   	    33.6	 %	 $	   3,081	 	   	    32.7	 %
  Net premiums                                             4,131             49.4            3,824           39.5          3,688           39.2
  Other income                                               824              9.8            2,602           26.9          2,650           28.1

                                                      $   8,373            100.0 %     $     9,671          100.0 %   $    9,419          100.0 %
                                                  70        analYsis of the coMBineD financial stateMents                  3.1 review oF reSULTS

                                                  For 2008, total income, consisting of net interest               in 2008, compared to $168 million the previous       off the average return on loans. Although
                                                  income, net premiums and other income,                           year. In 2007, a charge of $121 million was          the average deposit cost fell 20 basis points,
                                                  stood at $8,373 million, down $1,298 million                     recorded under client retention expense.             it was not enough to offset the decline in return
                                                  or	13.4%	from	the	previous	year,	considering	                    Moreover, the financial crisis led to the            on assets.
                                                  the impact of the financial crisis and ABCP                      investment portfolio of Desjardins Group
                                                  on investment income.                                            components posting a negative performance of         The	$151	million	or	4.6%	gain	in	net	interest	
                                                                                                                   $366 million, excluding those backing insurance      income is explained in Table 14 by the sharp
                                                                                                                   contracts, with an equivalent amount offset by a     increase in average credit volume, which at
                                                                             totaL inCome
                                                                                                                   decline in the insurance provision expense for       $7.1	billion,	translates	into	8.0%	growth.	
                                                  10,200                                                           the life and health insurance subsidiary. In 2007,   Overall,	the	$9.0	billion	or	8.7%	growth	in	
                                                                                                           824*    Desjardins Group recorded two non-recurring          the average volume of interest-bearing assets
                                                   9,600                                                           gains: one for $72 million ($64 million after        boosted interest income by $470 million, while

                                                                                                                   income taxes) realized as part of the VISA global    the 33 basis point decline in the average return

                                                   8,000                                                           restructuring, and the second for $45 million        on these assets caused interest income to fall
                                                              3,263 2,338

                                                                                                                   ($37 million after income taxes) following the       by $331 million.
Ma n a g e Me n t ’s D iscussion anD analy si s


                                                                                                                   creation of a strategic partnership with the

                                                                                                                   credit union centrals of the other Canadian          Interest expense stood at $2,643 million,
                                                   4,800                                                           provinces. For further details on these specific     down	$12	million	or	0.5%	from	2007.	
                                                                                                                   items, refer to the section titled “Specific items   The	$7.3	billion	or	7.8%	growth	in	our	capital	
                                                   3,200                                                           relating to the fourth quarter and fiscal 2008       supply as a result of deposits, borrowings and

                                                                                                                   primarily as a result of financial market            subordinated debentures added $184 million

                                                   1,600                                                           instability” on page 35 of the MD&A. Finally, a      in interest charges, while the decrease of
                                                                                                                   decrease	of	$121	million	or	16.4%	in	income	         22 basis points in the average cost of these
                                                        0                                                          from brokerage, investment fund and trust            fund sources pushed the interest expense





                                                                                                                   services due to the turmoil on the capital           down by $196 million.
                                                                                                                   markets also contributed to the decrease of
                                                                                                                   other income.                                        Demand for credit was quite strong in 2008,
                                                                      Net interest income                                                                               fuelled by, among other things, a still robust
                                                                                                                   net interest income                                  housing market and vigorous spending by
                                                                      Net premiums
                                                                                                                                                                        consumers and businesses. Loans outstanding,
                                                                                                                   As explained in Note 29 to the Combined
                                                                      Other income                                                                                      net of the allowance for credit losses, grew
                                                                                                                   Financial Statements, which presents segmented
                                                                                                                                                                        8.7%	or	$8.1	billion	over	year-end	2007,	
                                                                                                                   information, net interest income stems exclusively
                                                                                                                                                                        allowed the Personal and Commercial segment
                                                  * excluding the impact of the financial crisis and ABCP, other   from the Personal and Commercial segment.
                                                    income would have amounted to $2,291 million, and total                                                             to break the $100-billion mark to stand at
                                                                                                                   The following analysis and comments therefore
                                                    income, $9,840 million.                                                                                             $102.2 billion as at December 31, 2008.
                                                                                                                   only cover this segment.
                                                                                                                                                                        Desjardins Group stood out in both consumer
                                                                                                                                                                        loans and loans to business and government.
                                                                                                                   Net interest income is the difference between
                                                  Net interest income rose $173 million or
                                                                                                                   interest income earned on assets (such as
                                                  5.3%	to	$3,418	million,	fuelled	largely	by	                                                                           Accordingly, residential mortgages
                                                                                                                   loans and securities) and the interest expense
                                                  increased business volume.                                                                                            outstanding	were	up	7.4%	or	$4.1	billion	
                                                                                                                   related to liabilities (such as deposits,
                                                                                                                                                                        in 2008, totalling $58.6 billion at year-end, a
                                                                                                                   borrowings, and subordinated debentures).
                                                  Net premium income (insurance premiums                                                                                remarkable performance. Desjardins Group
D es ja r Di n s gr o up

                                                                                                                   It is affected by interest rate fluctuations, fund
                                                  from life and health insurance and general                                                                            securitized $2.2 billion of this type of loan
                                                                                                                   procurement strategies, and by the composition
                                                  insurance activities, as well as annuities)                                                                           during the same period. The strong housing
                                                                                                                   of interest-bearing or non-interest-bearing
                                                  advanced	$307	million	or	8.0%	over	last	                                                                              market in Québec and Ontario enabled
                                                                                                                   financial instruments.
                                                  year to $4,131 million at the end of 2008.                                                                            Desjardins to continue growing its business in
                                                  This growth stems primarily from the life and                                                                         this segment.
                                                                                                                   Table 13 shows the change in net interest
                                                  health insurance activities of Desjardins Financial
                                                                                                                   income for the main asset and liability classes
                                                  Security (DFS). Strong group and business                                                                             The Personal and Commercial segment also
                                                                                                                   of the Personal and Commercial segment.
                                                  insurance sales as well as growth in loan                                                                             stood out in consumer, credit card and other
                                                                                                                   Table 14 details how the interest margin was
                                                  insurance are in large part responsible for                                                                           personal loans. Thus, personal loans
                                                                                                                   affected by changes in the volume and interest
                                                  this increase.                                                                                                        outstanding amounted to $17.6 billion
                                                                                                                   rates of the assets and liabilities.
                                                                                                                                                                        as	at	December	31,	2008,	an	increase	of	9.2%	
                                                  Other income stood at $824 million, a decrease                                                                        or $1.5 billion over the end of 2007. Business
                                                                                                                   The Personal and Commercial segment
                                                  of	$1,778	million	or	68.3%	from	the	previous	                                                                         and government loans also turned in an
                                                                                                                   ended 2008 with net interest income of
                                                  year. This decrease mainly affected investment                                                                        excellent performance, with loans outstanding
                                                                                                                   $3,422	million,	up	$151	million	or	4.6%.	
                                                  income, which fell $1,749 million due to volatility                                                                   to	business	and	government	up	11.0%	or	
                                                                                                                   However, expressed as a percentage of average
                                                  on the capital markets that adversely impacted                                                                        $2.7 billion, to $26.9 billion at year-end.
                                                                                                                   assets, this financial intermediation net margin
                                                  the year’s financial results. The drop in other
                                                                                                                   fell 10 basis points. Thus, the change in interest
                                                  income can be explained by the direct and
                                                                                                                   rates and its effect on the credit and investment
                                                  indirect impact of ABCP and certain guaranteed-
                                                                                                                   savings products and maturities selected by
                                                  capital structured products of $1,101 million
                                                                                                                   Desjardins members shaved 33 basis points
                                                                                       3.1 review oF reSULTS                 analYsis of the coMBineD financial stateMents                               71

TABLE 13     net interest incoMe on aVerage assets anD liaBilities(1)
personal and commercial segment
Years ended December 31
(in	millions	of	$	and	as	a	%)

                                                                                                   2008                                                                2007
                                                                            average                                      average                 Average                                      Average
                                                                            balance                 interest                Rate                 Balance                Interest                 Rate
  Interest-bearing assets
    Securities, cash and deposits
      with financial institutions                                       $    15,370           $        462                   3.01 %	 $	 13,520	 	                 $	       443	 	        	       3.28	 %
    Loans                                                                    96,616                  5,603                   5.80       89,469                           5,483                   6.13

                                                                                                                                                                                                              Ma n a g e Me n t ’s D iscussion anD analy si s
  Total interest-bearing assets                                             111,986                  6,065                   5.42               102,989                  5,926                   5.75
  Other assets                                                                5,229                     —                      —                  5,322                     —                      —

  Total assets                                                          $ 117,215             $     6,065                    5.17 %        $ 108,311              $      5,926                   5.47 %

  liabilities and equity
  Interest-bearing liabilities
    Deposits                                                            $    99,920           $      2,604                   2.61 %	 $	 92,380	 	                 $	     2,593	 	        	       2.81	 %
    Borrowings and subordinated debentures                                      838                     39                   4.66        1,061                              62                   5.84

  Total interest-bearing liabilities                                        100,758                  2,643                   2.62 %              93,441                  2,655                   2.84
  Other liabilities                                                           8,342                     —                      —                  7,415                     —                      —
  Equity                                                                      8,115                     —                      —                  7,455                     —                      —

  Total liabilities and equity                                          $ 117,215             $     2,643                    2.25 %        $ 108,311              $      2,655                   2.45 %

  net interest income(2)                                                                      $     3,422                                                         $      3,271

  as a percentage of average assets                                                                                          2.92 %                                                              3.02 %

(1) The difference between the average assets in the Personal and Commercial segment according to Table 3 and the above table is due primarily to the loans and deposits concluded with the entities
    of the other segments, which have been eliminated from the combined results. As well, the average balance in the Personal and Commercial segment is established by excluding securities lending.
(2) The difference between the total net interest income in the Personal and Commercial segment presented in Table 13 and the net interest income presented in Table 12 pertains
    to intersegment transactions.

TABLE 14     iMpact of cHanges in Balances anD rates on net interest incoMe
personal and commercial segment

                                                                                                                                                                                                              D es ja r Di n s gr o up
Years ended December 31
(in	millions	of	$	and	as	a	%)

                                                                                                                      2008-2007                                                  increase (decrease)
                                                                                                  Change in            Change in
                                                                                                   average              average                                        average               average
                                                                                                    volume                  rate                 interest               volume                   rate
  Securities, cash and deposits
    with financial institutions                                                               $      1,850                  (0.27) %       $          19          $         56           $        (37)
  Loans                                                                                              7,147                  (0.33)                   120                   414                   (294)

  change in interest income                                                                                                                $         139          $        470           $       (331)

  Deposits                                                                                    $      7,540                  (0.20) %       $          11          $        197           $       (186)
  Borrowings and subordinated debentures                                                              (223)                 (1.18)                   (23)                  (13)                   (10)

  change in interest expense                                                                                                               $         (12)         $        184           $       (196)

  change in net interest income                                                                                                             $       151           $        286           $      (135)
                                                  72        analYsis of the coMBineD financial stateMents                        3.1 review oF reSULTS

                                                  net premiums                                                        investments in products other than segregated                     sales in the individual market advanced
                                                                                                                      funds	grew	28.6%,	from	$245	million	in	2007	                      6%	thanks	to	distribution	efforts	in	Ontario.	
                                                  Net premium income (insurance premiums
                                                                                                                      to $315 million in 2008. These other products                     Group insurance premiums for Canada as
                                                  from life and health insurance and general
                                                                                                                      meet the needs of clients seeking a predictable                   a whole grew from $650 million in 2007
                                                  insurance activities, as well as annuities)
                                                                                                                      return and capital guarantee.                                     to $659 million in 2008.
                                                  advanced	$307	million	or	8.0%	over	last	
                                                  year to $4,131 million at the end of 2008.
                                                                                                                                             net PRemiumS(1)                            other income
                                                  This growth stems primarily from the life
                                                  and health insurance activities carried out                                                      (in millions of $)                   Other income stood at $824 million in
                                                  by Desjardins Financial Security (DFS).                                                                                               2008,	down	$1,778	million	or	68.3%	from	
                                                                                                                                                                                        last year. The ratio of other income to total
                                                  DFS activities generated net insurance                               3,200                                                            income	was	9.8%	in	2008,	versus	26.9%	
                                                  premiums and annuities of $2,868 million,                                                                                             for 2007.

                                                  compared to $2,575 million as at December 31,
                                                  2007,	an	increase	of	11.4%.	Net	insurance	                           2,400                                                            Other income was hard hit by the decrease

                                                  premiums	advanced	9.6%	over	2007,	to	                                                                                                 in investment income, which fell $1,749 million
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  $2,553 million. In Québec, overall growth                                                                                             due to the volatility in the capital markets,
                                                  in premiums across all business segments                             1,600                                                            which had a negative impact on the investment
                                                  was	6.4%,	while	the	17.0%	increase	posted	                                                                                            portfolio and on asset-backed commercial paper


                                                  by the other provinces stemmed mostly from                                                                                            (ABCP) holdings. Other income items account
                                                  group insurance. Total group insurance                                 800                                                            for direct and indirect impact of ABCP and
                                                  premiums, including group and business                                                                                                certain guaranteed-capital structured products
                                                  insurance premiums, premiums tied to plans                             400                                                            of $1,101 million in 2008, compared to
                                                  offered by financial institutions (including the                          0                                                           $289 million in 2007, $121 million of which
                                                  Desjardins caisses), and a premium equivalent                                                                                         was recorded as client retention expense.


                                                  for administered groups (ASO), reached                                                                                                Moreover, the financial crisis led to the
                                                  $2,220 million, compared with $2,005 million                                                                                          investment portfolio of Desjardins Group
                                                  in 2007. Two main factors account for this                                                                                            components posting a negative performance
                                                                                                                                      Life and health insurance
                                                  10.7%	increase	in	2008:	strong	group	and	                                                                                             of $366 million, excluding the investments
                                                  business insurance sales combined with growth                                       General insurance                                 backing insurance contracts, with an equivalent
                                                  in loan insurance.                                                                                                                    amount offset by a decline in the insurance
                                                                                                                                                                                        provision expense for the life and health
                                                                                                                      (1) The difference between total results and total business
                                                  Premium volume for individual insurance                                 segment results is due to intersegment transactions.          insurance subsidiary. In 2007, Desjardins
                                                  was $415 million, up $22 million over 2007.                                                                                           Group recorded two non-recurring gains:
                                                  The volume of premiums and the number                                                                                                 one for $72 million ($64 million after income
                                                                                                                      In the general insurance area, Desjardins
                                                  of in-force contracts sold by the network                                                                                             taxes) as part of the VISA global restructuring,
                                                                                                                      General Insurance Group wrote $1,460 million
                                                  of financial security advisors assigned to                                                                                            and the second for $45 million ($37 million
                                                                                                                      in	gross	premiums,	up	2.2%	over	2007.	
                                                  Desjardins	caisses	increased	by	20.7%	and	                                                                                            after income taxes) following the creation of
                                                  10.1%	respectively,	from	the	previous	year.	                                                                                          a strategic partnership with the credit union
                                                                                                                      Premiums sold to Desjardins caisse members
                                                  In addition, the volume of premiums tied to                                                                                           centrals of the other Canadian provinces.
                                                                                                                      totalled $698 million, as against $682 million
                                                  products distributed without a representative
                                                                                                                      a year earlier, due to a decrease in automobile
                                                  reached	$63	million,	an	increase	of	12.3%.	
                                                                                                                      insurance rates in Québec. Outside Québec,
D es ja r Di n s gr o up

                                                  On the savings side, premiums representing

                                                  TABLE 15     otHer incoMe
                                                  Years ended December 31
                                                  (in	millions	of	$	and	as	a	%)

                                                                                                                                                                                            2008            2007              2006
                                                    Deposit and payment service charges                                                                                                 $     497       $       484       $      447
                                                    Lending fees and credit card service revenues                                                                                             410               381              326
                                                    Brokerage, investment fund and trust services                                                                                             617               738              625
                                                    Investment and trading income                                                                                                              —                 —               878
                                                    Income (losses) from available-for-sale securities(1)                                                                                    (413)              141               —
                                                    Trading income (losses) (1)                                                                                                              (993)              262               —
                                                    Other investment income                                                                                                                   239               179               —
                                                    Other                                                                                                                                     467               417              374

                                                                                                                                                                                        $    824        $     2,602       $    2,650

                                                    Growth (decrease) in other income                                                                                                        (68.3) %   	       (1.8)	%	 	        5.8	 %

                                                    Other income as a percentage of total income                                                                                               9.8 %    	      26.9	 %	 	       28.1	 %

                                                  (1) Data for 2008 were affected by the financial crisis and ABCP.
                                                                    3.1 review oF reSULTS          analYsis of the coMBineD financial stateMents                    73

For further details on these specific items, refer     fact,	DCS	saw	business	volume	jump	15.0%,	to          Income in the “Other” item advanced
to the section titled “Specific items relating to      $49.8 billion at year-end and market share reach      $50	million	or	12.0%	over	2007	to	$467	
the fourth quarter and fiscal 2008 primarily as a      51.9%	in	Québec.	Finally,	the	number	of	credit	       million. This item benefited from the increase
result of financial market instability” on page 35     and debit cards stood at 4.1 million and 6.2          in revenues from the mortgage securitization
of the MD&A.                                           million, respectively, at the end of 2008.            program, which was once again successful
                                                                                                             in 2008. In fact, Desjardins, through Caisse
Income derived from deposit and payment                As a result of poor conditions on the financial       centrale Desjardins, is a major player in the
service charges was positively affected by volume      markets throughout the year, income drawn             Canadian mortgage securitization market, with
growth,	moving	ahead	2.7%	or	$13	million.	             from brokerage, investment fund and trust             a volume of close to $1.6 billion in 2008, or
Fuelled by growth in VISA business volume,             services	fell	$121	million	or	16.4%	from	2007.	       approximately $400 million per quarter, with
income from lending fees and credit card service       The financial crisis that took hold in the summer     five-year terms. Miscellaneous other income
revenues, consisting mostly of revenues from           of 2007 spurred investor jitters, and extreme         stems mostly from management fees collected
payment solutions offered by Desjardins Card           stock market volatility last September and            by Desjardins Group’s subsidiaries.
Services (DCS), rose $410 million in 2008, an          October only exacerbated the situation.
increase	of	7.6%	or	$29	million	over	2007.	In	

                                                                                                                                                                         Ma n a g e Me n t ’s D iscussion anD analy si s
claiMs, Benefits, annuities anD cHanges in insurance proVisions

   HigHligHt                          D
                                   •	 	 ecrease	of	claims,	benefits,	annuities	and	changes	in	insurance	provisions	to	$3,144	million	as	at	December	31,	
                                      2008, as compared to $3,171 million as at December 31, 2007.

In life and health insurance, Desjardins Financial     In general insurance, Desjardins General                     CLaimS, beneFitS, annuitieS anD
Security recorded expenses of $2,089 million           Insurance Group posted expenses of                          ChanGeS in inSuRanCe PRoviSionS
as a result of insurance benefits, annuities,          $1,055 million ($956 million in 2007),                               (in	millions	of	$	and	as	a	%)
other payments to insured persons and changes          representing	loss	experience	of	74.1%	(69.3%	
in actuarial liabilities. This is $126 million less    in 2007). This increase of 4.8 points was mainly
than the $2,215 million of expenses recorded           attributable to results in home insurance. Fiscal                2.8             -5.1         -0.9     12
in	2007.	This	5.7%	drop	stems	largely	from	            2008 was marked by record accumulations                3,500
a lower fair value reported for investment             of snow, which caused a significant claims
income, whose $500 million of temporary                experience due to damage to swimming pools             3,400                                           4
volatility is reflected in an equivalent reduction     and structures as well as violent storms. The loss
in actuarial liabilities. However, business growth,    experience in business insurance is also higher                                                        0
mainly in disability insurance, pushed up              than last year because the average cost for claims                                                     -4
the benefit expense to $2,062 million                  grew significantly. In automobile insurance, the

                                                                                                                                                                         D es ja r Di n s gr o up
($1,953 million in 2007).                              negative	impact	of	a	hailstorm	in	June	and	            3,200                                           -8
                                                       increased claims experience for personal injuries                                                      -12


                                                       outside of Québec were mostly negated by               3,100
                                                       favourable developments in reserves for                                                                -16
                                                       estimated claims at the end of 2007.                   3,000                                           -20



                                                                                                                         In millions of $

                                                                                                                         Growth as a %
                                                  74        analYsis of the coMBineD financial stateMents                           3.1 review oF reSULTS

                                                  client retention eXpense                                               the risk. These purchases were made at a price                 as a result of financial market instability –
                                                                                                                         corresponding to amortized cost plus accrued                   Commercial paper subject to the Montréal
                                                  No charge was recorded against earnings in                             interest according to the original terms of the                Accord” on page 35 of the Management’s
                                                  2008 under client retention expense for ABCP,                          ABCP. The $121 million difference between                      Discussion and Analysis.
                                                  as compared to a $121 million charge in 2007.                          the purchase price and fair market value of
                                                  This charge reflected the FCDQ’s acquisition                           the ABCP on the acquisition date was recorded
                                                  of ABCP in the money market mutual funds                               as a client retention expense. The impact of
                                                  it manages and in the securities lending                               the liquidity crisis on Desjardins is more fully
                                                  operations of Desjardins Trust clients for which                       explained in the section “Specific items relating
                                                  Desjardins Group had not originally assumed                            to the fourth quarter and fiscal 2008 primarily

                                                  non-interest eXpense
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                       HigHligHts                             •	 Non-interest	expense	rose	$98	million	or	2.1%,	to	$4,800	million	as	at	December	31,	2008.
                                                                                              •	 	 esjardins	Group’s	productivity	ratio	at	91.8	%	compared	to	72.3	%	in	2007,	considering	the	specific	items	
                                                                                                 described previously.
                                                                                              •	 Excluding	the	specific	items,	the	productivity	ratio	would	have	stood	at	70.7	%,	from	71.8	%	in	2007.

                                                  TABLE 16     non-interest eXpense
                                                  Years ended December 31
                                                  (in	millions	of	$	and	as	a	%)

                                                                                                                                                                                            2008             2007              2006
                                                    Salaries and fringe benefits
                                                      Salaries                                                                                                                          $    1,911       $    1,904        $    1,807
                                                      Fringe benefits                                                                                                                          339              434               464

                                                                                                                                                                                            2,250             2,338             2,271

                                                    Premises, equipment and furniture, including amortization
                                                      Technology                                                                                                                               62                75                84
                                                      Amortization                                                                                                                            165               141               144
                                                      Other                                                                                                                                   166               165               145
D es ja r Di n s gr o up

                                                                                                                                                                                              393               381               373

                                                    Outsourcing of processing services                                                                                                        322               308               315

                                                    Communications                                                                                                                            252               236               237

                                                     Business and capital tax and deposit insurance premiums                                                                                  161               159               158
                                                     Donations and sponsorships                                                                                                                80                72                64
                                                     Employee training                                                                                                                         33                30                31
                                                     Deposit-related expenses                                                                                                                  50                49                47
                                                     Commissions                                                                                                                              265               291               253
                                                     Other personnel-related expenses                                                                                                          67                67                66
                                                     Other                                                                                                                                    927               771               719

                                                                                                                                                                                            1,583             1,439             1,338

                                                    Total non-interest expense                                                                                                          $   4,800        $    4,702        $    4,534

                                                    Productivity ratio – Desjardins Group(1)                                                                                                  91.8 %     	      72.3	 %	 	        74.6	 %
                                                    Productivity ratio – Desjardins Group(2)                                                                                                  70.7              71.8              74.6

                                                  (1) Established considering non-interest expense over Desjardins Group total income, net of claims expenses and insurance benefits.
                                                  (2) Excludes specific items resulting primarily from financial market instability described on page 35.
                                                                                            3.1 review oF reSULTS                      analYsis of the coMBineD financial stateMents                               75

Non-interest expense totalled $4,800 million,                             The ratio of fringe benefits to total                                     In accordance with the Act respecting
as against $4,702 million in 2007, up $98 million                         compensation	went	from	22.8%	in	2007	                                     the disclosure of the compensation received
or	2.1%.	This	small	increase	confirms	the	tight	                          to	17.7%	in	2008.	This	increase	is	attributable	                          by the executive officers of certain legal
control exercised over operating expenses in the                          to the reduced employee future benefit expense                            persons, Desjardins Group publishes the
caisse network and in all Desjardins subsidiaries.                        that resulted when certain actuarial assumptions                          compensation earned by its five most highly
                                                                          were updated. In this regard, Note 23 to                                  paid senior executives.
The productivity ratio (non-interest expense                              the Combined Financial Statements, Employee
over total income, net of claims and insurance                            Future Benefit Plans, mentions that the costs                             Table 17 below provides detailed information on
benefits)	was	91.8%	for	2008,	versus	72.3%	                               associated with the defined benefit pension                               the individual remuneration paid to these
a year earlier, due to the significant impact                             plans fell approximately $103 million to                                  executives for the year ended December 31, 2008.
of market volatility on investment and trading                            $123 million in 2008, while the $39 million
income. Had it not been for the specific items                            expense associated with other plans in 2008                               other expenses
resulting from the financial crisis, the productivity                     was $2 million less than the comparable
                                                                                                                                                    At the end of 2008, expenses related to
ratio	would	have	stood	at	70.7%,	from	71.8%	                              amount reported a year earlier.
                                                                                                                                                    premises, equipment and furniture, including
in 2007.
                                                                                                                                                    amortization, stood at $393 million, compared

                                                                                                                                                                                                                        Ma n a g e Me n t ’s D iscussion anD analy si s
                                                                                           non-inteReSt exPenSe                                     to $381 million in 2007. This increase is
salaries and fringe benefits                                                                 (in	millions	of	$	and	as	a	%)                          explained by a higher amortization expense.

Expenses incurred for salaries and fringe benefits
                                                                                                                                                    Fees associated with the outsourcing of
fell	$88	million	or	3.8%	to	$2,250	million	as	
                                                                                                                                                    processing	services	grew	$14	million,	or	4.5%,	
at December 31, 2008. This reduction is mainly                                           7.4                 3.7       2.1         12
                                                                                                                                                    as compared to last year, to $322 million as at
attributable to a lower fringe benefit expense.                             5,000
                                                                                                                                                    December 31, 2008. This growth was mainly
This	expense	item	represents	46.9	%	of	                                                                                            10
                                                                                                                                                    due to increased fees paid on sub-contracted
Desjardins Group’s total non-interest
                                                                            4,500                                                                   IT services. Communication expenses, which
expense,	compared	to	49.7%	in	2007.                                                                                                8
                                                                                                                                                    include telephony, advertising, courier and
                                                                                                                                                    stationery,	grew	$16	million	or	6.8%	from	
For 2008, base compensation stood at                                                                                               6


                                                                            4,000                                                                   last year, to $252 million for 2008. This increase
$1,911	million,	up	0.4%	from	$1,904	million	
                                                                                                                                                    is mainly attributable to the large advertising
in 2007, mainly the result of the annual
                                                                                                                                                    campaign mounted outside Québec.
indexation of salaries, which was offset by the                             3,500
decrease in the incentive remuneration expense.                                                                                    2

                                                                            3,000                                                  0



                                                                                          In millions of $

                                                                                          Growth as a %

TABLE 17     tHe fiVe Most HigHly paiD senior eXecutiVes in 2008

                                                                                                                                                                                                                        D es ja r Di n s gr o up
                                                                                                                                                                  incentive plan
                                                                                                                                                                                   Long-                 other
                                                                                                                                   Salary                annual                     term               benefits
  name and main responsibilities                                                                                                        $                    $                         $                      $
  Monique f. leroux
  President and Chief Executive Officer
    Desjardins Group                                                                                                           714,318(1)                      —                     N/A                     N/A
  Bertrand laferrière
  President and Chief Operating Officer
    Fédération des caisses Desjardins du Québec                                                                                 590,920                        —                            (2)              N/A
  richard fortier
  President and Chief Operating Officer
    Desjardins Financial Security                                                                                               395,743                        —                            (2)              N/A
  germain carrière
  President and Chief Operating Officer
    Desjardins Securities                                                                                                       395,026                        —                            (2)              N/A
  Bruno Morin
  General Manager
    Caisse centrale Desjardins                                                                                                  385,241 (3)                    —                     N/A                     N/A

(1) Salary of Monique F. Leroux: $492,364 until the end of March, then $788,302 until the end of December 2008.
(2) Participant in the integrated management incentive bonus plan, which combines short- and long-term bonuses. The bonus available under the plan is determined at the end of each year based on the
     extent	to	which	the	objectives	set	at	the	beginning	of	the	year	have	been	met	(annual)	and	on	Desjardins	Group’s	overall	performance	(long-term).	For	a	given	year,	40%	or	50%	of	the	available	bonus	
     is payable in cash, and the balance (long-term) is not vested and remains at risk based on the results of Desjardins Group. The bonus portion thus accrued but not earned is generally not paid out until death,
     retirement, or disability. No short-term bonus was awarded for 2008 given the financial results. As for the long-term bonus, which consists of amounts from previous years, the decision was made to
     cancel its 2008 instalment, and this amount is not vested and remains at risk based on the rules established under the remuneration plan.
(3)	 	 alary	of	Bruno	Morin:	$352,491	until	the	end	of	July,	then	$431,090	until	the	end	of	December	2008.
                                                  76      analYsis of the coMBineD financial stateMents           3.1 review oF reSULTS

                                                  The other expense categories rose $144 million         applicable to private companies. Legislation           benefits based on years of service and average
                                                  or	10.0%	over	2007,	to	$1,583	million.	In	             has made these regulations adaptable to enable         earnings at time of retirement. Post-retirement
                                                  this	item,	commissions	fell	$26	million	or	8.9%	       the caisses to accumulate a sufficient general         benefits include health, dental and life
                                                  to $265 million. At $926 million, miscellaneous        reserve to serve as a capital base for the             insurance coverage. Desjardins funds its defined
                                                  expenses	were	up	$155	million	or	20.1%	                protection of members’ deposits. When the              benefit retirement plans in accordance with
                                                  over 2007, for the most part attributable to           general reserve reaches the level specified in         provincial regulations. Its defined benefit
                                                  a combination of factors, including higher             the legislation, the caisse is subject to the same     retirement plans will continue to be funded in
                                                  professional fees associated with strategic            tax rates as large companies. Furthermore, the         accordance with provincial regulations.
                                                  development projects and the BONUSDOLLARS              caisses are subject to a tax on capital, based on      The current economic environment has had a
                                                  program extended to the cardholders registered         a formula for cooperative financial organizations.     negative impact on the return on assets in our
                                                  in this loyalty program. Write-offs regarding                                                                 retirement plans. Desjardins Group has valued
                                                  strategic decisions also caused an increase in         The Desjardins entities that are not financial         its accrued benefit obligations and determined
                                                  this expense category. Meanwhile, donations            services cooperatives are subject to the tax           the market and actuarial values of its assets
                                                  and sponsorships totalled $80 million,                 regulations that apply to corporations.                as at September 30, 2008. The accrued benefit
                                                  up	$8	million	or	11.1%	from	2007.                                                                             liability was measured as at December 31, 2008.
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                                                                         Indirect taxes consist of income taxes and             Returns on bonds have increased due to
                                                  income and other taxes                                 taxes on capital, property and business taxes,         uncertainty and volatility in financial markets
                                                                                                         taxes on payroll and fringe benefits, the goods        around the world, and this had an impact
                                                  Income taxes on surplus earnings include
                                                                                                         and services tax (GST) and sales taxes. Indirect       on the discount rate used to value its accrued
                                                  income taxes on the activities of Desjardins
                                                                                                         taxes are included in non-interest expense.            pension benefit obligations. This situation
                                                  Group’s entities.
                                                                                                                                                                generated an actuarial gain in an amount of
                                                                                                         The entities of Desjardins Group paid                  $776 million with respect to the accrued benefit
                                                  Desjardins Group is a decentralized cooperative
                                                                                                         $690 million in direct and indirect taxes for 2008.    obligations, which has offset $1,182 million
                                                  financial group in which each entity that is
                                                                                                                                                                in losses on retirement plan assets and reduced
                                                  a financial services cooperative—primarily
                                                                                                         accrueD Benefit oBligations                            total liabilities. Gains and losses beyond the
                                                  the caisses, Caisse centrale Desjardins, the
                                                                                                                                                                10%	corridor	are	amortized	over	average	
                                                  Fédération des caisses Desjardins du Québec,           for retireMent plans anD                               expected service lives, which tempers the
                                                  the federation in Ontario and Desjardins Credit        post-eMployMent Benefits                               volatility of the expenses recorded each year.
                                                  Union—is considered a private and independent
                                                  company. This distinguishes Desjardins Group           Desjardins Group offers its employees benefit
                                                  from most other financial institutions, which          plans that provide pension benefits and
                                                  are large public corporations. Each caisse             post-retirement benefits to eligible employees.
                                                  is therefore subject to the tax regulations            Its defined benefit retirement plans provide

                                                  creDit Quality

                                                       HigHligHts                    •	 At	0.40%	of	the	portfolio,	gross	impaired	loans	remained	at	a	level	relatively	unchanged	from	recent	years.
D es ja r Di n s gr o up

                                                                                     •	 The	quality	of	the	portfolio	engenders	confidence	in	Desjardins	Group’s	ability	to	confront	a	more	difficult	period.

                                                  impaired loans                                         In line with the outlook announced at the              the gross loan portfolio, unchanged from
                                                                                                         beginning of the year, impaired loans increased        2007. This impaired loan ratio is considered
                                                  Loans are considered impaired when
                                                                                                         from $391 million in 2007 to $422 million as at        quite acceptable.
                                                  Management has reason to believe that
                                                                                                         December 31, 2008. This remains an historically
                                                  the principal or interest cannot be collected.
                                                                                                         low level. Less than expected, this increase is        provisions for credit losses
                                                  All loans 90 or more days past due fall into
                                                                                                         mainly attributable to the continued financial
                                                  this category, unless the loan is fully secured                                                               When a loan becomes impaired, a reduction in
                                                                                                         health of households and businesses, sound
                                                  or in the process of collection. Finally, all loans                                                           its carrying amount is recorded in the results for
                                                                                                         loan management, favourable interest rates
                                                  except those fully guaranteed by a government                                                                 the period in which the impairment is identified.
                                                                                                         and sustained strength in the housing market.
                                                  program are considered impaired when they are
                                                  contractually more than 180 days in arrears. An                                                               In 2008, Desjardins Group recorded $243 million
                                                                                                         The net impaired loan balance, equal to the
                                                  allowance is recorded for credit card balances                                                                in provisions for credit losses, compared to
                                                                                                         gross amount less the specific allowance, rose
                                                  when they are 30 days in arrears and balances                                                                 $197	million	a	year	earlier,	representing	0.24%	
                                                                                                         $24 million, from $268 million at the end of
                                                  are written off in their entirety when no                                                                     of	average	gross	loans	versus	0.21%	in	2007.	
                                                                                                         2007 to $292 million at the end of December
                                                  payment has been received after 180 days.                                                                     This higher amount stems in part from an
                                                                                                         2008. As Table 18 on page 77 shows, net
                                                                                                                                                                amount of $169 million posted to the
                                                                                                         impaired	loans	now	account	for	0.28%	of	
                                                                                                                                                                general allowance.
                                                                                               3.1 review oF reSULTS                    analYsis of the coMBineD financial stateMents                  77

outlook for 2009                                                         Layoffs and higher rates of personal bankruptcy                            allowance for credit losses
                                                                         will result in higher consumer credit losses, but
The high volatility of the Canadian dollar                                                                                                          Based on Management’s best estimate
                                                                         the financial health of most households should
and resource prices throughout 2008 and                                                                                                             of potential credit losses and assessment
                                                                         remain satisfactory, and these increases will
the negative economic outlook around the world                                                                                                      of economic conditions, the allowance for
                                                                         be limited.
should temper sales and profits at most Canadian                                                                                                    credit losses on the balance sheet is sufficient
companies and lead to an appreciable rise in                                                                                                        to cover the loan portfolio risks. This allowance
                                                                         As for residential mortgage finance activities,
impaired loans and provisions for business loans.                                                                                                   is decreased by actual write-offs, net of
                                                                         the health of the current portfolio should limit
                                                                                                                                                    recoveries, and increased by the provisions
                                                                         any impact of increases to impaired loans on the
                                                                                                                                                    for credit losses, which are recorded in
                                                                         general quality of the portfolio.
                                                                                                                                                    the Combined Statements of Income. The
                                                                                                                                                    allowance for credit losses, which comprises
                   GRoSS imPaiReD LoanS                                             PRoviSionS FoR CReDit LoSSeS                                    specific allowances and a general allowance,
                      (in	millions	of	$	and	as	a	%)                                             (in	millions	of	$	and	as	a	%)                       is deducted from the appropriate asset on
                                                                                                                                                    the Combined Balance Sheets.

                                                                                                                                                                                                            Ma n a g e Me n t ’s D iscussion anD analy si s
                                                                                    0.13 0.12 0.16 0.21 0.24                                        specific allowances
                                                             1.20                                                                      0.25
   800                                                                       240                                                                    When a loan is identified as impaired, the loan’s
            0.53 0.39 0.39 0.41 0.40                         1.00                                                                                   carrying value is adjusted to reflect its estimated
                                                                                                                                       0.20         realizable value and to determine whether a
   600                                                                       180
                                                             0.80                                                                                   specific allowance should be established.
   400                                                                       120


   200                                                                        60








      0                                                      0.00               0                                                      0.00









                   In millions of $                                                          In millions of $

                   As a % of gross loans                                                     As a % of average gross loans

TABLE 18     iMpaireD loans By category of BorroWer
as at December 31
(in millions of $ and as a percentage)

                                                                                                                              2008                                           2007           2006

                                                                                                                                                                                                            D es ja r Di n s gr o up
                                                                                 Gross                                   Gross            allowances               net            Net            Net
                                                                                 loans                                 impaired             for credit        impaired       impaired       impaired
                                                                                                                         loans                  losses           loans          loans          loans
  Residential mortgages                                                  $    61,081             $              107             0.18 % $          11      $        96    $         72   $        59
  Consumer, credit card and
    other personal loans                                                      18,121                             84             0.46              32               52            53              42
  Business and government                                                     26,086                            231             0.89              87              144           143             130

  Total                                                                  $ 105,288               $          422                    —      $     130       $      292     $      268     $       231

  As a percentage of gross loans                                                     —                           —              0.40 %             —             0.28 % 	      0.28	%		        0.26	 %

TABLE 19     specific coVerage ratio(1)
as at December 31
(as	a	%)

                                                                                                                                                         2008               2007            2006
  Residential mortgage                                                                                                                                    10.3 %	 	          11.1	 %	 	        15.7	 %
  Consumer, credit card and other personal loans                                                                                                          38.1               39.1              43.2
  Business and government                                                                                                                                 37.7               35.9              36.9

                                                                                                                                                          30.8 %             31.5 %            34.0 %

(1) The specific coverage ratio is equal to the balance of the specific allowances divided by the total balance of gross impaired loans.
                                                  78      analYsis of the coMBineD financial stateMents          3.2 review oF FiNANCiAL PoSiTioN

                                                  At the end of 2008, specific allowances               This model provides a risk estimate for each            The general allowance is sufficient to reflect
                                                  totalled $130 million ($123 million in 2007),         loan category, taking into account changes              Management’s best estimate of provisions
                                                  representing	30.8%	of	gross	impaired	loans,	          in the portfolio over time and the impact of            for credit losses on loans not yet identified
                                                  compared	to	31.5%	a	year	earlier.                     the business cycle on credit risk.                      as impaired on an individual level.

                                                  general allowance                                     As at December 31, 2008, the general
                                                                                                        allowance stood at $696 million, an increase
                                                  To determine the required level of the general
                                                                                                        of $57 million over the $639 million recorded
                                                  allowance, Desjardins Group uses an internal
                                                                                                        at the end of 2007.
                                                  model to estimate the potential losses in the
                                                  loan portfolio, excluding impaired loans.

                                                   3.2      reVieW of financial position
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  The FCDQ’s Board of Directors, with the support       from Desjardins Group components.                       This strategic function is a source of reference
                                                  of the Desjardins Group Strategic Management          Coordinated by the Financial Executive                  and coordination for Desjardins in financial
                                                  Structure Committee, oversees Desjardins              Division, this committee’s role is to help              matters and matters involving disclosure,
                                                  Group’s single management. As such, it is             Desjardins Group’s single management                    accounting standards, economic studies,
                                                  responsible for directing, planning and               execute responsibilities entailing significant          financial planning and capital management.
                                                  overseeing all of Desjardins Group’s financial        financial impact. Trend charts showing                  It also assumes the operational responsibility
                                                  activities. The Board of Directors receives           changes in financial indicators, the progress           of Desjardins Group’s pension fund.
                                                  support from the Audit and Inspection                 of financial results, the organization’s cash
                                                  Commission with respect to some specific              position and capital management are                     Financial entities are operating in a context
                                                  responsibilities related to financial governance.     periodically prepared for the Asset/Liability           characterized by: (i) a more stringent legal
                                                  Additional information on financial governance        Committee and the Desjardins Strategic                  and regulatory framework; (ii) growing market
                                                  is available under the “Financial governance”         Management Structure Committee.                         complexity and economic globalization; (iii)
                                                  heading in the “General review of Desjardins                                                                  more specialized professions; and (iv) an
                                                  Group” section. Moreover, the Internal Audit          The Financial Executive Division of Desjardins          environment that is changing rapidly and
                                                  team and the Desjardins Bureau for Financial          Group’s main mission is to provide a financial          extensively. In this increasingly demanding
                                                  Monitoring and Enforcement, through their             framework for Desjardins Group, help                    context, coordinating all of the Desjardins
                                                  oversight roles, support the financial                management and the Audit and Inspection                 stakeholders is crucial to sound balance sheet
                                                  governance framework.                                 Commission implement financial governance               and capital management. Besides the Asset/
                                                                                                        throughout Desjardins and report to the                 Liability Committee, this Desjardins-wide
                                                  Desjardins Group also set up an Asset/Liability       Board of Directors, the Audit and Inspection            coordination is overseen by other, more
                                                  Committee, which consists of the heads of             Commission and Management as part of                    operational financial committees.
                                                  the Desjardins strategic functions and of experts     its management and oversight responsibilities.
D es ja r Di n s gr o up

                                                  Balance sHeet ManageMent

                                                       HigHligHts                      T
                                                                                    •	 	 he	rate	of	expansion	of	Desjardins	Group	slowed	in	2008.	The	serious	financial	crisis	and	the	rapidly	deteriorating	
                                                                                       economy clearly played a role in this slowdown. It nevertheless continued to perform well in residential financing
                                                                                       and business credit.
                                                                                    •	 	 his	rather	uncertain	climate	complicated	the	recruitment	of	off-balance	sheet	savings,	but	it	also	drove	accelerating	
                                                                                       growth in outstanding deposits made by Desjardins Group’s members and clients, both individuals and businesses.

                                                  total assets                                          therefore continued to expand but at a slower           of credit conditions, Desjardins Group posted
                                                                                                        rate than in 2007, mostly due to the deepening          solid performance in its traditional financial
                                                  As at December 31, 2008, Desjardins
                                                                                                        global financial crisis. Indeed, the collapse of        intermediation activities, particularly in
                                                  Group’s total assets stood at $152.3 billion,
                                                                                                        equity markets has had a considerable impact            residential financing, business credit
                                                  up	$8.2	billion	or	5.7%	in	the	last	year,	as	
                                                                                                        on the value of most securities portfolios.             and recruitment of savings.
                                                  compared with growth of $14.9 billion or
                                                                                                        Yet	despite	the	more	difficult	economic	
                                                  11.6%	in	2007.	Desjardins	Group’s	assets	
                                                                                                        environment and a severe deterioration
                                                   3.2 REVIEW OF FINANCIAL POSITION                      ANALYSIS OF the COMBINeD FINANCIAL StAteMeNtS              79

In 2008, Québec and Ontario experienced                              Asset growth                                 relatively vibrant due in part to still strong
a serious economic slowdown that in both                                    (as a %)                              consumer spending and sustained non-
cases provoked recession conditions that will                                                                     residential investment. However, this enthusiasm
carry into 2009. It will be a softer landing                                                                      began to wane toward the end of the second
for the Québec economy, far less severe than             14                                                       half of the year. Desjardins Group, which can
the recessions in the early 1980s and 1990s,                                                                      count on strong expertise in the financing of
but the fallout will be more serious in Ontario.         12                                                       economic activity, again performed well,

Ontario’s economy was harder hit in part                                                                          particularly in residential mortgage credit and


because of the large role played by the auto                                                                      commercial and industrial credit.

industry, while the industrial structure of               8
Québec will suffer a bit less because it is less                                                                  Desjardins Group also made its mark in 2008
dependent on this sector. Despite a weaker                6                                                       in savings recruitment from individuals
loonie at the start of the year, exports from                                                                     and businesses. The accelerating growth

both provinces continued to fall due to growing           4                                                       in outstanding balances was offset in part
problems in the United States. In addition,                                                                       by weaker trust and wealth management

                                                                                                                                                                         MA N A g E ME N T ’S D iSCuSSiON AND ANALy Si S
domestic demand, which resisted well through                                                                      activities, which faltered due to the collapse
the first three quarters, began to lose steam.            0                                                       of equity markets; this was also the case at
In 2008, real GDP in Québec should therefore                                                                      other financial institutions.





grow only 0.9%, with Ontario showing no
real growth.                                                                                                      Despite the less favourable environment,
                                                                                                                  Desjardins Group managed to grow its market
Despite a rather morose and uncertain              working population. The unemployment rate                      shares in 2008 in many of the sectors where
economic climate, job creation in 2008             for Québec was 7.2%, unchanged from 2007                       it is active. These excellent results bear witness
remained positive in both provinces. The           and one of the lowest rates recorded in the last               to the superior quality of Desjardins Group’s
number of new workers, however, fell from          30 years, while the rate for Ontario rose slightly,            products and the confidence shown by its
2007. For example, approximately 30,000            to 6.5% (6.4% in 2007).                                        members and clients.
and 93,500 positions were created in Québec
and Ontario, respectively, compared to gains       This weakening economic environment did
of 86,300 and 101,100, respectively, in 2007.      not lead to a collapse of credit demand from
The unemployment rate, however, stood virtually    individuals and businesses in Québec and
unchanged due to modest growth in the active       Ontario. In fact, credit demand remained

As at December 31
(in millions of $ and as a %)

                                                                     2008                                      2007                                2006
   Cash and deposits with financial institutions     $     1,489                 1.0 %        $    1,499                1.0 %      $    1,334                 1.0 %
   Securities                                             29,222                19.2              31,560               21.9            27,043                20.9
   Securities borrowed or purchased under

                                                                                                                                                                         D eS jA r DI N S gr O up
     reverse repurchase agreements                         6,130                 4.0               7,593                5.3             4,147                 3.2
   Loans                                                 104,462                68.6              95,403               66.2            88,646                68.7
   Other assets                                           10,995                 7.2               8,004                5.6             7,970                 6.2

                                                     $ 152,298                100.0 %         $ 144,059               100.0 %      $ 129,140               100.0 %

  Liabilities and equity
    Deposits                                         $ 101,436                  66.6 %        $   95,766               66.5 %      $   88,143                68.3 %
    Other liabilities                                   39,465                  25.9              37,169               25.8            30,498                23.6
    Subordinated debentures                                748                   0.5                 858                0.6             1,367                 1.1
    Non-controlling interests                              776                   0.5                 984                0.7               579                 0.4
    Equity                                               9,873                   6.5               9,282                6.4             8,553                 6.6

                                                     $ 152,298                100.0 %         $ 144,059               100.0 %      $ 129,140               100.0 %
                                                  80        analYsis of the coMBineD financial stateMents          3.2 review oF FiNANCiAL PoSiTioN

                                                  savings recruitment activities
                                                     A $5.7-billion jump in deposits
                                                                                                                                                               ComPoSition oF the DePoSit PoRtFoLio
                                                                                                                                                               As at December 31, 2008

                                                  As at December 31, 2008, Desjardins Group’s
                                                  outstanding deposits totalled $101.4 billion,                                                                1.       70,9 %   Individuals
                                                                                                                                                               2.       21,2 %   Business and government
                                                  a	jump	of	$5.7	billion	or	5.9%	as	compared	
                                                                                                                    1.                                         3.        7,9 %   Deposit-taking and other institutions
                                                  to	the	$7.6	billion	or	8.6%	increase	recorded	
                                                  in 2007. Growth slowed last year, despite its
                                                  success recruiting deposits from individuals and
                                                  businesses as well as governments. These
                                                  deposits,	which	made	up	92.1%	of	Desjardins	
                                                  Group’s deposit liabilities, increased $6.4 billion
                                                                                                           Deposits from business and government                     very popular source of financing at all financial
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  or	7.3%	in	the	last	year	to	$93.4	billion	at	the	
                                                                                                           grew	$728	million	or	3.5%	in	2008,	reaching	              institutions, above all because of its more
                                                  end of 2008. This compares with a $8.2 billion
                                                                                                           $21.5 billion as at December 31, 2008.                    stable nature, the heterogeneous profile of
                                                  or	10.4%	increase	in	2007.	Deposits	constitute	
                                                                                                           This	compares	with	a	$4.5	billion	or	27.7%	               savers (age, gender, income, occupation and
                                                  the primary source of financing supporting the
                                                                                                           increase recorded in 2007. They totalled                  place of residence) as well as the generally low
                                                  expansion of Desjardins Group.
                                                                                                           21.2%	of	deposit	liabilities	at	the	end	of	2008,	         acquisition cost of personal savings. The major
                                                                                                           compared	with	21.7%	on	the	same	date	a	year	              stakeholders maintain a highly competitive
                                                                                                           earlier.                                                  market in personal savings recruitment.
                                                                 québeC maRket ShaRe
                                                              PeRSonaL SavinGS aCtivitieS                  Other sources of funds used to support                    Desjardins Group’s results in this area are
                                                                                  (as	a	%)                 development mostly involved issuing securities            therefore highly commendable. As at December
                                                                                                           on financial markets. As at December 31, 2008,            31, 2008, accumulated personal savings stood
                                                                                                           outstanding securities stood at $8.0 billion,             at	$72.0	billion,	up	$5.6	billion	or	8.5%	as	
                                                                                                           down	$697	million	or	8.0%	from	the	previous	              compared	to	a	$3.7	billion	or	5.9%	increase	
                                                                                                           year. This compares with a $548 million or                reported for 2007.
                                                                                                           5.9%	reduction	posted	for	2007.	Outstanding	
                                                                                                           securities	represented	only	7.9%	of	deposit	              Of the three broad categories of deposits
                                                       40                                                  liabilities at the end of 2008. Additional                offered by Desjardins Group, savings payable
                                                                                                           information on the state of cash position,                on a fixed date is undeniably the largest,
                                                       30                                                  sources of financing and Desjardins Group’s               representing	69.7%	of	the	total	personal	
                                                                                                           liquidity risk management policies can be found           savings portfolio as at December 31, 2008.
                                                                                                           on pages 88 and 94.                                       This category represented $50.1 billion in
                                                                                                                                                                     outstanding personal deposits, up $3.4 billion
                                                                                                                                                                     or	7.2%	from	2007,	as	compared	to	an	increase	
                                                       10                                                    Personal savings is a large part                        of	$3.0	billion	or	6.8%	reported	one	year	
                                                                                                             of the Desjardins savings portfolio                     earlier. The other types of savings—payable on
                                                        0                                                                                                            demand and payable upon notice—made up
D es ja r Di n s gr o up

                                                                                                                                                                     30.3%	of	the	outstanding	deposits	accumulated	





                                                                                                           personal savings                                          by Desjardins Group as at December 31, 2008.

                                                                                                           Among all the sources of financing available to           It should be mentioned that Desjardins Group
                                                                  On-balance sheet savings
                                                                                                           Desjardins Group, clearly there has always been           is the market leader in personal savings deposits
                                                                  Securities                               a	preference	for	personal	savings.	At	70.9%	of	           in Québec. As at December 31, 2008, it held
                                                                  Investment funds                         deposit liabilities as at December 31, 2008, they         43.9%	of	the	market,	a	proportion	similar	to	
                                                                                                           are by far the largest single source of financing,        that observed in 2007.
                                                                                                           and this share grew from a year earlier. This is a

                                                  TABLE 21     Deposits
                                                  as at December 31
                                                  (in	millions	of	$	and	as	a	%)

                                                                                                                                               2008                                                                 2007
                                                                                                                                Payable         Payable
                                                                                                              Payable             upon        on a fixed
                                                                                                           on demand             notice             date                total                                            total
                                                    Individuals                                            $ 18,327       $      3,483    $     50,148     $   71,958            70.9 %          $	 66,319	 	 	                  69.3	 %
                                                    Business and government                                  10,594                276          10,642         21,512            21.2               20,784                       21.7
                                                    Deposit-taking and other institutions                        23                 —            7,943          7,966             7.9                8,663                        9.0

                                                                                                           $ 28,944           $ 3,759     $ 68,733         $ 101,436         100.0 %             $     95,766             $      100.0 %
                                                     3.2 review oF FiNANCiAL PoSiTioN              analYsis of the coMBineD financial stateMents             81

                                                      December 31, 2008, outstanding assets in this          This represents very strong growth given
   Large stock market decline in 2008                 area (administered and managed for others) fell        that Desjardins was pursuing its securitization
                                                      $6.4	billion	or	17.0%	from	                            program last year. This program trimmed
                                                      the same date in 2007, to $31.4 billion. This          $2.2 billion of residential mortgage loans from
                                                      compares	with	$3.0	billion	or	8.7%	growth	             the portfolio, effectively reducing growth in
The Canadian stock market has been hit hard in
                                                      recorded at the end of 2007.                           the	loan	portfolio	by	2.3%.	It	should	be	recalled	
2008, particularly since September, when the
                                                                                                             that this securitization complements Desjardins
financial crisis worsened considerably. A
dramatic turn of events followed, resulting
                                                      financing activities                                   Group’s other methods of raising funds.
in a serious deterioration of global economic
                                                                                                             It is evident from Table 22 that by the end
conditions. Investor confidence was seriously
                                                         Despite a deteriorating economy, Desjardins         of 2008, loans to individuals (which comprises
undermined when a recession was declared in
                                                         Group continued to perform well                     residential mortgage credit, consumer loans,
the United States and several other developed
                                                                                                             credit card loans and other personal loans)
countries, when signs of a stronger slowdown
                                                                                                             accounted	for	a	sizable	75.2%	of	Desjardins	
were noted in the emerging countries and
                                                      In Québec, Desjardins Group is without                 Group’s loan portfolio, evidence of its know-
when it became apparent that the Canadian

                                                                                                                                                                   Ma n a g e Me n t ’s D iscussion anD analy si s
                                                      a doubt the leading institution financing              how in this market. As at December 31, 2008,
economy would also go into an albeit milder
                                                      economic activity. It has also built a strong          these loans totalled $79.2 billion, up $6.1 billion
recession. For example, the S&P/TSX index of
                                                      base in certain regions of Ontario and even            or	8.3%	from	a	year	earlier	and	compared	to	a	
the Toronto Stock Exchange posted an annual
                                                      elsewhere in Canada. Over the decades,                 $5.3	billion	or	7.8%	increase	reported	for	2007.	
decline	of	35.0%	when	markets	closed	on	
                                                      Desjardins has marketed flexible and highly            However, it is worth noting that this pace would
December 31, 2008, compared to increases
                                                      diversified credit products in order to effectively    have been even greater but for Desjardins
of	7.2%	in	2007	and	14.5%	in	2006.	This	was	
                                                      meet the changing and growing needs of its             Group’s securitization program, which tempered
one of the worst performances for the index
                                                      members and clients. In 2008, through its              the reported volume of residential mortgage
since the crisis of 1929.
                                                      extensive involvement in the socio-economic            loans.
In such a difficult environment, it should not        development of communities, Desjardins
                                                      profited from a robust housing sector and              Loans to businesses, which includes farm loans
be surprising that the popularity of off-balance
                                                      dynamic business investments.                          and commercial and industrial credit as well as
sheet savings products, such as investment
                                                                                                             loans to various levels of government, accounts
funds and other securities, was hard hit. In
                                                      As at December 31, 2008, Desjardins                    for the rest of Desjardins Group’s total portfolio.
Canada, for example, the value of these
                                                      Group’s portfolio of outstanding loans, net            As at December 31, 2008, these loans totalled
products outstanding at all financial institutions
                                                      of the allowance for credit losses, totalled           $26.1	billion,	up	$3.0	billion	or	13.1%	over	
fell	19.0%,	while	the	comparable	figures	for	
                                                      $104.5 billion, an increase of $9.1 billion or         the year. This compares with an increase of
Québec	and	Ontario	were	21.2%	and	20.3%,	
                                                      9.5%	for	the	year,	as	compared	to	an	increase	         $1.5	billion	or	7.1%	reported	for	2007.
respectively. Desjardins Group was also affected
by this trend, but to a lesser extent. As at          of	$6.8	billion	or	7.6%	recorded	for	2007.	

TABLE 22     loans By category of BorroWer
as at December 31
(in	millions	of	$	and	as	a	%)

                                                                                                            2008                              2007

                                                                                                                                                                   D es ja r Di n s gr o up
  Residential mortgages                                                                     $    61,081            58.0 %     $	 56,662	 	      	      58.9	 %
  Consumer, credit card and other personal loans                                                 18,121            17.2          16,440                17.1
  Business                                                                                       24,707            23.5          21,804                22.7
  Loans to government                                                                             1,379             1.3           1,259                 1.3

                                                                                                105,288          100.0 %	 	       96,165	 	     	    100.0	 %
  Allowance for credit losses                                                                      (826)            —               (762)               —

                                                                                            $ 104,462                —        $   95,403                 —

  Loans secured by governments and other public and parapublic
    institutions included above                                                             $    27,211              —        $   24,727                 —

  Loans secured by governments and other public and parapublic
    institutions as a percentage of total gross loans                                              25.8 %            — 	      	      25.7	 %	 	          —

  Loans to individuals as a percentage of total gross loans                                        75.2 %            —        	      76.0	 %	 	          —
                                                  82        analYsis of the coMBineD financial stateMents                3.2 review oF FiNANCiAL PoSiTioN

                                                  The management of risk, and especially                                                                                                    The resale sector declined in 2008 in almost
                                                  credit risk, is a constant concern for Desjardins                Once again, Desjardins Group excels                                      all Canadian provinces with the exception
                                                  Group, as it is for all large financial institutions.            in residential financing in Québec                                       of Newfoundland and Labrador, where it grew
                                                  Financing activities are guided                                                                                                           5.0%.	Québec,	however,	figured	among	
                                                  by the most rigorous management practices,                                                                                                the regions where the resale market declined
                                                  which are described in detail in the “Risk              residential mortgages                                                             the least, with 79,402 transactions recorded
                                                  Management“ section on pages 91 to 97.                                                                                                    by the Interagency system (SIA-MLS). This
                                                                                                          Residential construction in Québec showed
                                                                                                                                                                                            represented	only	4.9%	less	than	2007.	
                                                                                                          some weakness in 2008. The change was
                                                  The next two pages present a brief analysis                                                                                               In Ontario, 181,001 homes changed hands
                                                                                                          felt in most segments except condominiums
                                                  of Desjardins Group’s results by major category                                                                                           in 2008, as compared to 213,379 the previous
                                                                                                          and income properties of four units or less,
                                                  of borrower.                                                                                                                              year.	This	was	a	fall	of	15.2%	and	compares	
                                                                                                          where there was growth. Overall, housing
                                                                                                                                                                                            with	a	9.5%	increase	in	2007.	
                                                                                                          starts	fell	1.3%	in	2008,	to	47,901	units,	
                                                                    québeC maRket ShaRe                   as compared to 48,553 in 2007 (where
                                                                                                                                                                                            Despite weaker demand in the housing market
                                                                     FinanCinG aCtivitieS                 they	were	up	1.4%	for	the	year).	In	Ontario,	
                                                                                                                                                                                            in 2008, Desjardins Group recorded sustained
                                                                                                          however, residential construction expanded
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                                              (as	a	%)
                                                                                                                                                                                            growth in this sector. Its residential mortgage
                                                                                                          in 2008, with 75,076 new housing starts
                                                                                                                                                                                            portfolio	grew	$4.4	billion	or	7.8%	in	2008	to	
                                                                                                          and	10.2%	growth,	as	compared	to	a	7.2%	
                                                                                                                                                                                            $61.1 billion as at December 31, as compared
                                                                                                          decline in 2007 to 68,123 units.
                                                       50                                                                                                                                   to	$4.2	billion	or	8.0%	growth	posted	for	
                                                                                                                                                                                            2007. In addition and as mentioned above,
                                                       45                                                            ReSiDentiaL moRtGaGeS in québeC                                        the securitization program removed $2.2 billion
                                                                                                                                               (as	a	%)                                     in residential mortgage loans from the portfolio,
                                                       40                                                                                                                                   so the actual pace of growth in 2008 was
                                                                                                                                                                                            even greater.
                                                       35                                                           14                                                  41
                                                                                                                                                                                            Desjardins Group’s performance in 2008 was
                                                       30                                                           12                                                                      reflected in even greater activities in Québec,
                                                                                                                                                                                            where it already had an enviable position.
                                                       25                                                                                                               39                  For example, Desjardins Group’s market
                                                                                                                     8                                                                      share	in	Québec	grew	0.2%	to	39.3%	as	at	
                                                                                                                                                                             Market share
                                                       20                                                                                                                                   December 31, 2008, while in Ontario it held

                                                                                                                     6                                                                      its	own	at	1.1%.	These	results	are	worth	





                                                                                                                                                                        37                  mentioning, because the very nature of this
                                                                                                                     4                                                                      type of lending makes it a particularly attractive
                                                                Farm loans                                                                                              36                  market to financial institutions, which fight
                                                                                                                                                                                            a daily battle to make the smallest of gains.
                                                                Residential mortgages
                                                                                                                     0                                                  35
                                                                Consumer, credit card





                                                                and other personal loans

                                                                Commercial and industrial

                                                                                                                                Growth in volume –
                                                                                                                                Desjardins Group
D es ja r Di n s gr o up

                                                                                                                                Growth in volume – market

                                                                                                                                Market share
                                                                                  3.2 review oF FiNANCiAL PoSiTioN             analYsis of the coMBineD financial stateMents             83

                                                                                  Desjardins Group’s growth in the consumer,             needs of small and medium-sized businesses
         Desjardins Group’s Versatile Line of Credit                              credit card and other personal loans market            (SMEs), while continuing to expand activities
         a resounding success                                                     remained strong through 2008. As at December           with larger businesses.
                                                                                  31, 2008, the amount outstanding for these
                                                                                  types of loans was $18.1 billion, up $1.7 billion      In 2008, Desjardins Group’s business loan
consumer, credit card                                                             or	10.2%.	This	compares	with	growth	of	                portfolio, including commercial and industrial
and other personal loans                                                          $1.1	billion	or	6.9%	recorded	for	2007.	               credit as well as farm loans, jumped $2.9 billion
                                                                                  The growing popularity of the Versatile Line           or	13.3%	on	an	annual	basis	to	$24.7	billion	
In 2008, income tax cuts implemented
                                                                                  of Credit played a part in these excellent results.    as at December 31, 2008. This compares to a
by the two levels of government and a lower
                                                                                  Due to the faster pace of activities, market           $1.6	billion	or	7.7%	increase	posted	for	2007.	
GST allowed Québec and Ontario households
                                                                                  shares in Québec and Ontario grew slightly             This is a substantial improvement, representing
to maintain spending on durable goods.
                                                                                  through	the	year,	to	22.6%	and	0.5%,	                  a significant increase in lending in the Québec
Purchases of automobiles, furniture, electronics
                                                                                  respectively, at the end of 2008.                      commercial and industrial credit sector and
and	appliances	grew	2.8%	in	Québec	and	0.7%	
                                                                                                                                         a consolidation of activities in Ontario. For
in Ontario, slowing slightly from 2007 when
                                                                                                                                         example,	market	share	in	Québec	grew	1.2%	
they	grew	3.4%	and	1.8%,	respectively.	The	

                                                                                                                                                                                              Ma n a g e Me n t ’s D iscussion anD analy si s
                                                                                    Desjardins Group’s continued progress                to	25.0%	at	the	end	of	2008,	while	in	Ontario	
active housing sector and the strong labour
                                                                                    in lending to business                               it	grew	0.1%,	to	approximately	1.0%.
market also provided some support. Despite
a less vigorous job creation rate in Québec, the
                                                                                                                                         Furthermore, Desjardins Group remains the
unemployment rate remained relatively stable.
                                                                                  loans to businesses                                    key financial institution granting farm loans
                                                                                                                                         in	Québec,	as	can	be	seen	in	its	46.9%	market	
               ConSumeR LoanS in québeC                                           The financial markets, already tight by the            share at the end of 2008. The outstanding
                                     (as	a	%)                                     beginning of 2008, considerably deteriorated           balance of its farm loan portfolio was
                                                                                  in September. One of the impacts of this more          $5.2 billion as at December 31, 2008, up
                                                                                  difficult environment was a marked tightening          $178	million	or	3.6%.	This	compares	with	
          14                                                  30                  of credit conditions, which has dampened               a	$164	million	or	3.4%	increase	recorded
                                                                                  business investment activity. Since the recession      in 2007. Despite a slowdown in Desjardins
          12                                                  28                  in the United States has made the economic             Group’s financing of the beef and pork
                                                                                  outlook in Canada that much darker, business           industries, the portfolio as a whole continued
          10                                                  26                  expenditures will necessarily be curtailed.            to grow, in part due to strong growth in loans
                                                                                  In Québec, for example, the outlook is for             to the dairy, grain, poultry and horticulture
           8                                                  24
                                                                   Market share

                                                                                  3.6%	real	growth	in	business	investment	for	           industries.

           6                                                  22                  the	year,	down	from	7.6%	in	2007.	Much	the	
                                                                                  same is expected in Ontario, where real growth         loans to government
           4                                                  20                  of	2.6%	is	expected	for	2008,	as	compared	
                                                                                  to	5.9%	in	2007.                                       Desjardins Group is also very active financing
           2                                                  18                                                                         various levels of government, especially
                                                                                  Desjardins Group has an extensive distribution         Québec municipalities. As at December 31,
           0                                                  16                                                                         2008, loans outstanding to different tiers of
                                                                                  network for financial service delivery, particularly





                                                                                  to business. The network includes caisses and          government totalled $1.4 billion, for an increase
                                                                                  business centres located throughout Québec             of	$120	million	or	9.5%	from	a	year	earlier.	This	
                                                                                  and in some regions of Ontario, as well as             compares with a slight decrease of $31 million
                      Growth in volume –

                                                                                                                                                                                              D es ja r Di n s gr o up
                      Desjardins Group                                            Caisse centrale Desjardins. Desjardins Group is        or	2.4%	recorded	in	2007.	It	should	be	noted	
                                                                                  therefore ideally situated to respond to the           that a substantial share of the loans issued
                      Growth in volume – market
                                                                                  financing needs of the majority of business            in this market consists of lines of credit with
                      Market share
                                                                                  people, regardless of the size of their operations     balances that may change substantially from
                                                                                  or their industry. Over the years Desjardins has       one month to the next.
                                                                                  become a key financial institution serving the
                                                  84      analYsis of the coMBineD financial stateMents          3.2 review oF FiNANCiAL PoSiTioN

                                                  capital ManageMent anD creDit ratings

                                                       HigHligHts                   •	 At	13.39%,	the	ratio	of	Tier	1	capital	remains	one	of	the	highest	in	the	Canadian	banking	industry.
                                                                                    •	 A	$785	million	increase	in	reserves	and	a	5.9%	increase	in	risk-weighted	assets.
                                                                                    •	 Repayment	of	debentures	in	March	2008	in	an	amount	of	$110	million.	

                                                  objective                                             Tier 2 capital decreased by $78 million as a          Minimum ratios
                                                                                                        result of the $110 million repayment of
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  The goal of Desjardins Group’s capital                                                                      The minimum capital ratio recommended
                                                                                                        debentures in March 2008. The components of
                                                  management is to ensure maintenance of                                                                      for compliance with regulatory requirements
                                                                                                        capital are presented in Table 24 on page 86.
                                                  sufficient quality capital to supply the leeway                                                             of the Bank for International Settlements and
                                                  necessary for its development, maintain a                                                                   to be ranked as a well-capitalized institution
                                                                                                        Due	to	$3.7	billion	or	5.9%	growth	in	risk	
                                                  premium credit rating and uphold the                                                                        is	8%.	In	addition,	Tier	1	capital	must	represent	
                                                                                                        assets combined with capital at a level similar
                                                  confidence of its depositors and the financial                                                              at least half of the total ratio.
                                                                                                        to 2007, the Tier 1 capital ratio, which
                                                                                                        represents the best barometer of Desjardins
                                                                                                                                                              These recommendations were adopted by the
                                                                                                        Group’s	financial	strength,	was	13.39%,	versus	
                                                  policies                                                                                                    Autorité des marchés financiers (AMF). The
                                                                                                        14.17%	in	2007.	If	not	for	the	specific	items	in	
                                                                                                                                                              Office of the Superintendent of Financial
                                                  Capital management is the responsibility of           2008, the Tier 1 capital ratio would have been
                                                                                                                                                              Institutions Canada, however, has capped its
                                                  the FCDQ’s Board of Directors. To help them           approximately	1.5%	higher.	
                                                                                                                                                              targets	at	7%	for	the	Tier	1	capital	ratio	and	
                                                  with this task, they have mandated the Asset/
                                                                                                                                                              10%	for	the	total	capital	ratio.	
                                                  Liability Committee to ensure that Desjardins         The increase in risk assets is primarily explained
                                                  Group has a sufficient and reliable capital base.     by the increase of $1.5 billion in risk assets
                                                                                                                                                              Despite a lower level of profitability, the Tier 1
                                                  The Financial Executive Division of Desjardins        related to mortgage loans, $3.3 billion in risk
                                                                                                                                                              capital	and	total	capital	ratios	are	13.39%	and	
                                                  Group is responsible for preparing, on                assets related to other loans and $361 million
                                                                                                                                                              12.85%,	respectively.	They	therefore	exceed	
                                                  an annual basis and with the help of Desjardins       in risk assets related to off-balance sheet assets.
                                                                                                                                                              these regulatory requirements, and Desjardins
                                                  Group's components, a capitalization plan that        Also of note is a $1.3-billion reduction in risk
                                                                                                                                                              Group’s minimum capitalization targets as well.
                                                  sets and updates capital objectives and targets       assets related to securities. This growth in risk
                                                                                                                                                              Moreover, Desjardins Group’s capital ratios
                                                  for all components.                                   assets, combined with the repayment of $110
                                                                                                                                                              remain higher than average among the major
                                                                                                        million of debentures, led to a decrease in the
                                                                                                                                                              banking institutions in Canada. This high level
                                                  The current situation and that forecast for           total	capital	ratio,	from	13.59%	to	12.85%.	
                                                                                                                                                              of Tier 1 capital further demonstrates the
                                                  the duration of the Strategic Plan shows that         Desjardins Group continues to exercise control
                                                                                                                                                              financial strength of Desjardins Group, even in a
                                                  Desjardins Group has an excellent capital base        over the growth of risk assets and uses the
                                                                                                                                                              more challenging economic environment.
                                                  overall and, therefore, ample latitude to pursue      appropriate mitigation measures to reduce
                                                  development objectives.                               these risks. A detailed breakdown of assets
                                                                                                                                                              In addition to the minimums required for Tier 1
D es ja r Di n s gr o up

                                                                                                        adjusted according to risk is presented in
                                                                                                                                                              capital ratio and total capital ratio, the AMF
                                                  analysis of results                                   Table 25 on page 87.
                                                                                                                                                              requires Desjardins Group to maintain an asset/
                                                  At the end of 2008, total capital reached                                                                   capital ratio that is less than 20. This data allows
                                                  $8.6 billion, an amount comparable to a year                                                                the overall sufficiency of capital to be measured
                                                  earlier. Tier 1 capital was relatively unchanged                                                            against the entity’s total capital, including
                                                  from 2007 due to specific items that had a
                                                  negative impact on surplus earnings. However,
                                                     3.2 review oF FiNANCiAL PoSiTioN             analYsis of the coMBineD financial stateMents               85

certain off-balance sheet items. With a ratio        evolution of capital-related                           The reports of the rating agencies primarily
of 14.0 as at December 31, 2008, Desjardins          banking standards                                      deal with Desjardins Group, on a combined
easily meets the requirement set by the AMF.                                                                basis, since the credit ratings of Caisse centrale
                                                     A few years ago, the Basel Committee on
                                                                                                            Desjardins and Capital Desjardins are based
                                                     Banking Supervision began a thorough
Due to the fall in overall profitability of                                                                 on the strength of the balance sheets of
                                                     re-evaluation of capital adequacy requirements.
operations in 2008, Desjardins Group reduced its                                                            the caisses.
                                                     The re-evaluation was aimed at matching capital
provision for member dividends to $215 million.
                                                     requirements to specific foreseeable risks, based
This is less than the amount reported in 2007.                                                              Throughout the last year, the rating agencies
                                                     on the particular experience of the financial
                                                                                                            maintained the credit ratings of Desjardins
                                                     institution. The final text of the New Basel
compliance with requirements                                                                                Group and once again recognized its very
                                                     Capital	Accord	was	approved	in	June	2004.	
                                                                                                            strong capitalization, the stability of its
With regard to regulatory capital, capital
                                                                                                            operating surplus earnings, its dominance in
composition and adequacy for all of Desjardins       These changes allow for more precise
                                                                                                            the local market and the quality of its assets.
Group are evaluated according to the guideline       measurement of the risk and sensitivity of on-
issued by the AMF on standards governing the         and off-balance sheet activities, so as to better
                                                                                                            However, on March 3, 2009, the rating agency
adequacy of base capital. The AMF requires that      align regulatory equity requirements with the

                                                                                                                                                                   Ma n a g e Me n t ’s D iscussion anD analy si s
                                                                                                            Moody’s informed the Management of Desjardins
a minimum amount of capital be maintained on         institution’s economic capital.
                                                                                                            Group that it was lowering its outlook on Caisse
a combined basis by all components and, in
                                                                                                            centrale Desjardins from “Stable” to “Negative”,
particular, the caisses, the FCDQ, Caisse centrale   For example, regulatory capital will now include
                                                                                                            while maintaining its rating of Aa1. Moody’s
Desjardins, Fonds de sécurité Desjardins, Capital    an amount associated with the operational risk.
                                                                                                            recognizes Desjardins Group’s solid balance sheet,
Desjardins and Desjardins Credit Union. This         In addition, like the current provisions, the new
                                                                                                            excellent capital base and major Québec market
capital takes into consideration investments         rules will allow regulatory bodies to require that
                                                                                                            shares. The announcement is part of an overall
made in other components within Desjardins           financial institutions hold capital in excess of the
                                                                                                            North American trend resulting from the crisis
Group. Additional details on the guideline           prescribed minimums.
                                                                                                            currently shaking the financial sector.
issued by the AMF, and on the regulatory
framework on the capitalization of each              Scheduled for implementation in the first
                                                                                                            The high credit ratings reflect the financial
Desjardins entity, are presented in Note 28          quarter of 2009, these new rules will lead to
                                                                                                            solidity of Desjardins Group and its network of
to the financial statements.                         greater transparency with respect to information
                                                                                                            caisses and ensure its credibility and recognition
                                                     on risk management. In light of this, in 2008,
                                                                                                            among institutional investors. The borrowing
All Desjardins Group entities that are subject       Desjardins Group continued efforts to account
                                                                                                            programs set up by CCD provide access to a
to minimum capitalization requirements were          for the many changes contained in the new
                                                                                                            diverse range of funding sources, including
in compliance with these requirements as at          requirements and to comply with best practices
                                                                                                            clients, markets, maturities, currencies and
December 31, 2008, as they were in 2007.             in risk management.

                                                     rating agencies
                                                     Desjardins Group’s reporting issuers, Caisse
                                                     centrale Desjardins and Capital Desjardins, enjoy
                                                     premium credit ratings from rating agencies. In
                                                     fact, their ratings are among the best of the
                                                     major banking institutions in Canada.

                                                                                                                                                                   D es ja r Di n s gr o up
TABLE 23   creDit ratings
Desjardins group’s financial strength is reflected in the premium quality credit ratings of caisse centrale Desjardins

                                                                                                                 DbRS           Standard           moody’s
                                                                                                                                 & Poor’s
  Short-term debt                                                                                           R-1(high)              A-1+               P-1
  Medium-term and long-term senior debt                                                                           AA                AA-               Aa1
                                                  86        analYsis of the coMBineD financial stateMents                             3.2 review oF FiNANCiAL PoSiTioN

                                                  TABLE 24     capital anD capital ratios(1)
                                                  as at December 31
                                                  (in	millions	of	$	and	as	a	%)

                                                                                                                                                                                                                             2008                    2007
                                                    tier 1 capital
                                                    Eligible capital stock                                                                                                                                               $        917           $        868
                                                    Reserves                                                                                                                                                                    8,230                  7,445
                                                    Undistributed surplus earnings                                                                                                                                                (96)                   772
                                                    Non-controlling interests                                                                                                                                                      40                     31
                                                    Goodwill                                                                                                                                                                     (113)                  (146)

                                                                                                                                                                                                                                8,978                  8,970

                                                    tier 2 capital
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                    Subordinated debentures                                                                                                                                                       750                    860
                                                    Eligible general provision(2)                                                                                                                                                 581                    549
                                                    Other eligible securities                                                                                                                                                      69                     69

                                                                                                                                                                                                                                1,400                  1,478

                                                    investments(3)                                                                                                                                                             (1,766)                (1,842)

                                                    total capital                                                                                                                                                        $     8,612            $      8,606

                                                    risk-weighted assets
                                                    On-balance sheet assets                                                                                                                                                   64,437                 61,081
                                                    Off-balance sheet financial instruments                                                                                                                                    2,596                  2,235

                                                                                                                                                                                                                         $ 67,033               $ 63,316

                                                    capital ratios
                                                    Tier 1 capital ratio                                                                                                                                                        13.39 %         	      14.17	 %
                                                    Total capital ratio                                                                                                                                                         12.85                  13.59

                                                  (1) This specific Group data includes the FCDQ , as well as the federation and the network of caisses in Ontario. It differs from the data submitted to the AMF, which has Québec jurisdiction. The Tier 1 capital
                                                      ratios	and	total	capital	filed	with	the	AMF	were	13.46%	and	12.83%,	respectively,	in	2008	vs.	14.25%	and	13.59%,	respectively,	in	2007.
                                                  (2) In accordance with the guideline issued by the AMF, the general allowance qualifies as eligible Tier 2 capital for an amount of up to 87.5 basis points of risk-weighted assets.
                                                  (3) This amount corresponds to investments in the subsidiaries (mainly Desjardins Financial Security, Desjardins General Insurance Group, Desjardins Securities and Desjardins Trust) accounted for using the
                                                      equity method and to any other investments held that must be deducted in accordance with the AMF’s guideline.
D es ja r Di n s gr o up
                                                                       3.2 review oF FiNANCiAL PoSiTioN                          analYsis of the coMBineD financial stateMents                                 87

TABLE 25     risK-WeigHteD assets(1)
as at December 31
(in	millions	of	$	and	as	a	%)

                                                                                                                                                    2008                                           2007
  on-balance sheet amount                                                                                                on-balance               main risk-                   Risk-                   Risk-
                                                                                                                              sheet               weighting                weighted                weighted
                                                                                                                            amount                    rates                 balance                 balance
  Cash and deposits with financial institutions                                                                          $     1,568                  0-100 %          $          66          $          77
  Securities issued or guaranteed by Canada,
    the provinces and the municipalities                                                                                       6,186                   0-20                       7                     15
  Other securities                                                                                                             8,347                  0-100                   3,383                  4,652
  Loans issued or guaranteed by Canada,
    the provinces and the municipalities                                                                                       9,729                   0-20                    930                    828
  Mortgage loans insured by the government                                                                                    14,116                      0                     —                      —

                                                                                                                                                                                                                    Ma n a g e Me n t ’s D iscussion anD analy si s
  Other mortgage loans                                                                                                        41,969                  0-100                 25,925                 24,389
  Other loans                                                                                                                 35,198                  0-100                 31,126                 27,867
  Other assets                                                                                                                 8,009                  0-100                  3,000                  3,253

                                                                                                                         $ 125,122                                     $ 64,437               $    61,081

                                                                                                                                                    2008                                           2007
  off-balance sheet instruments                                                                       Credit                  Credit              main risk-                   Risk-                   Risk-
                                                                          Contractual             conversion                    risk              weighting                weighted                weighted
                                                                             amount                   factor              equivalent                  rates                 balance                 balance
  credit instruments
  Guarantees and standby letters of credit                                $         568                    100 %         $        568               20–100 %           $        561           $         419
  Credit substitutes                                                                137                                           137                                            72                      75
  Securities lending                                                                 69                                            69                                             7                       6
  Credit commitments
    Original term of one year or less                                          33,948                       0                     —                       0                      —                      —
    Original term of over one year                                              3,079                    0–50                  1,878                  0–100                   1,431                  1,457

                                                                                                                                                                              2,071                  1,957

  Derivative financial instruments(3)
  Interest rate contracts                                                      90,555                         (2)              3,339                   0–50                     678                      90
  Foreign exchange contracts                                                   18,563                         (2)              1,772                  20–50                     393                     230
  Other contracts                                                              15,718                         (2)              1,364                   0–50                     210                     336

                                                                                                                                                                              1,281                     656

                                                                                                                                                                                                                    D es ja r Di n s gr o up
  Impact of master netting agreements                                                                                                                                          (756)                   (378)

                                                                                                                                                                                525                     278

  total off-balance sheet financial instruments                                                                                                                              2,596                   2,235

  total risk-weighted assets                                                                                                                                           $ 67,033               $    63,316

(1) This specific Group data includes the FCDQ and the network of caisses in Ontario. It differs from the data submitted to the AMF, which has Québec jurisdiction. The total amounts of risk-weighted
     assets filed with the AMF were $65.3 billion in 2008 and $61.8 billion in 2007.
(2) Interest rate, foreign exchange and other contracts are converted into their “credit risk equivalents” by adding the total replacement cost (obtained by market evaluation) of all outstanding contracts
     that have a positive value and an amount of future risk exposure based on the total contract amount, distributed according to the remaining term, as shown in the above table.
(3)		Since	January	1,	2007,	all	derivative	financial	instruments	are	recorded	on	the	Combined	Balance	Sheets.
                                                  88        analYsis of the coMBineD financial stateMents                        3.2 review oF FiNANCiAL PoSiTioN

                                                  casH position                                                        constitutes an advantageous strategy that                          Residential mortgage loans granted by
                                                                                                                       allows Desjardins to maintain its objectives                       the	caisse	network	comprised	65.0%	of	all	
                                                  anD sources of financing
                                                                                                                       despite an environment characterized by                            loans	in	2008,	28.5%	of	which	were	insured	
                                                  In 2008, Desjardins Group’s treasury                                 considerable instability around the world.                         by the CMHC. The primary objective of this
                                                  operations continued to be integrated with                                                                                              program has been to ensure lower-cost funding
                                                  those of Caisse centrale Desjardins (CCD),                           In deposits by individuals, the Desjardins                         for the network. The unprecedented crisis in
                                                  given the ultimate objective of adding more                          caisses again maintained a brisk pace.                             the ABCP market contributed to a global
                                                  value to all treasury activities.                                    However, because of faster growth in the                           financial climate characterized by instability.
                                                                                                                       deposits made by businesses and governments,                       Recourse to the CMHC securitization program
                                                  The network’s demand for funds grew at                               personal	savings	varied	slightly,	from	69.3%	                      and the lengthening of the average maturity
                                                  an	annual	rate	of	7.7%	during	the	year	as	                           in	2007	to	70.9%	in	2008.                                          for institutional funding has helped CCD ride
                                                  compared	to	7.6%	in	2007.	Annual	deposit	                                                                                               out extremely volatile market conditions.
                                                  growth	was	5.9%,	as	compared	to	a	8.6%	                              In accordance with the policy to lengthen
                                                  increase in 2007. There was therefore less                           maturities in institutional financing, CCD                         In 2008, cash and securities as a percentage
                                                  recourse to capital markets in 2008 than in                          became more active in the securitization                           of	total	assets	was	20.2%,	down	from	2007	
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  the previous year.                                                   market for mortgage loans insured by the                           (22.9%).	These	securities	were	mainly	those	
                                                                                                                       federal government as part of the Canada                           issued by governments or private corporations
                                                  Several years ago, CCD decided to adopt                              Housing Trust program. Once again in 2008,                         with high credit ratings. Such securities can be
                                                  an institutional strategy that would be more                         CCD was very active in the securitization of                       used in the event of sudden, higher-than-
                                                  diversified and less dependent on short-term                         mortgage loans insured by the Canada Mortgage                      expected demand for funding from the network.
                                                  methods of raising funds, in anticipation of                         and Housing Corporation (CMHC). CCD
                                                  the day that it might face liquidity problems.                       securitized loans in a total amount of close to                    In October 2008, Desjardins Group secured
                                                  This strategy included securitization through                        $2.2 billion in transferred assets. The program’s                  admission to the federal government’s
                                                  its program of mortgage loans insured by                             two objectives are to obtain a source of                           insurance program for large lenders. The
                                                  the federal government and the issuance                              long-term financing at the lowest price available                  program is designed to help large Canadian
                                                  of medium-term debt securities on European                           in the market and, by securitizing mortgages,                      lending institutions survive the current financial
                                                  markets. Rigorous application of this program                        to maximize the return on regulatory capital.                      crisis. Even though, generally speaking, the
                                                  has allowed Desjardins Group to securely raise                                                                                          industry has not yet taken advantage of the
                                                  funds and has once again demonstrated the                            The global financial crisis underscored the                        program, Desjardins Group requested admission
                                                  relevance and effectiveness of its policy of                         importance of our securitization program.                          in order to secure the same rights as other
                                                  lengthening the average maturity in its                              Our expertise in this area also allows us to                       Canadian financial institutions. Its admission
                                                  institutional funding.                                               participate in the Government of Canada’s                          is clear evidence that Desjardins operates at
                                                                                                                       reverse mortgage purchase auctions as required.                    the same level as other Canadian financial
                                                  In fact, it should be pointed out that CCD,                          In addition, government authorities have                           institutions. Desjardins Group is also eligible
                                                  as part of its ongoing funding strategy, has                         announced that the program will be expanded                        for other assistance programs run by the Bank
                                                  completed two issues of debt securities on                           in 2009, to $50 billion.                                           of Canada.
                                                  European markets for a value of close to
                                                  $1.3 billion in order to meet liquidity needs                                  ReSiDentiaL moRtGaGe LoanS                               In	January	2009,	Capital	Desjardins	announced	
                                                  in the Desjardins network. Lengthening the                                    aS a PeRCentaGe oF totaL LoanS                            the	redemption	of	all	outstanding	3.887%	
                                                  average maturity in institutional funding                                           GRanteD bY CaiSSeS                                  Senior Series D bonds, maturing in 2014 having
                                                                                                                                                     (as	a	%)                             a par value of $450 million. These Senior Series D
                                                                                                                                                                                          bonds will be redeemed on March 17, 2009.
D es ja r Di n s gr o up

                                                              DePoSitS bY inDiviDuaLS aS
                                                            a PeRCentaGe oF totaL DePoSitS
                                                                                  (as	a	%)
                                                                                                                          80                                                                        CaSh anD SeCuRitieS aS a

                                                                                                                                                                                                   PeRCentaGe oF totaL aSSetS

                                                                                                                                                                                                                  (as	a	%)







                                                       60                                                                                                                                    24







                                                                                                                            0                                                                 12






                                                        0                                                                                                                                      4
                                                                                                                                       CMHC-insured mortgages as a %





                                                                                                                                       of residential mortgages
                                                                                                                                       Residential mortgages as a % of all loans





                                                                   Deposits by individuals payable on demand
                                                                   and upon notice

                                                                   Total deposits by individuals
                                                                        3.2 review oF FiNANCiAL PoSiTioN                           analYsis of the coMBineD financial stateMents                     89

off-Balance sHeet iteMs

    HigHligHts                                •	 Assets	under	administration	were	down	4.3%	to	stand	at	$201.6	billion	as	at	December	31,	2008.	
                                              •	 Credit	instruments	totalling	$38.5	billion	were	made	available	to	members	and	clients	in	2008.
                                              •	 Virtually	all	counterparties	to	derivative	financial	instruments	assigned	high	credit	ratings.	
                                              •	 Securitization	of	financial	assets	in	order	to	diversify	sources	of	financing.

                                                                                                                                                                                                          Ma n a g e Me n t ’s D iscussion anD analy si s
In the normal course of its operations,                                  marked by high volatility, had a negative impact                          Note 24 to the Combined Financial Statements
Desjardins Group makes various off-balance                               on financial products presented at their fair                             of Desjardins Group explains the accounting
sheet commitments.                                                       value. Desjardins Group’s outstanding investment                          policy used to account for derivative financial
                                                                         funds	therefore	fell	by	$3.4	billion	or	21.6%	                            instruments, which are all recognized at fair
This includes assets under administration and                            to total $12.1 billion as at December 31, 2008.                           value. In addition, Notes 24 and 26 provide
management on behalf of its members and                                                                                                            detailed information on derivative financial
clients, credit instruments, derivative financial                        Assets under administration and management,                               instruments and commitments, respectively.
instruments, and contractual commitments.                                it should be recalled, are composed chiefly of
                                                                         financial assets in the form of investment funds,                         credit instruments
assets under administration                                              securities held in custody, and accrued pension
                                                                                                                                                   In order to meet its members’ and clients’
and assets under management                                              fund assets. As a result, they do not belong
                                                                                                                                                   financing needs, Desjardins Group makes
                                                                         to Desjardins Group, but to its members and
Total assets administered and managed                                                                                                              credit instruments available to them. Credit
                                                                         clients. For this reason, they are not recorded
by Desjardins Group stood at $201.6 billion                                                                                                        instruments include guarantees and standby
                                                                         on its balance sheet.
as at December 31, 2008, down $9.0 billion                                                                                                         letters of credit, securities lending and credit
or	4.3%	from	a	year	earlier,	compared	to	a	                                                                                                        commitments representing authorized amounts
decrease	of	$13.6	billion	or	6.1%	in	2007.	
                                                                         credit instruments and derivative
                                                                                                                                                   that have not been used by members and clients.
Moreover, in terms of wealth management,
                                                                         financial instruments
Desjardins Group recorded a decrease of                                  The risks related to these off-balance sheet                              These instruments expose Desjardins Group
$9.3	billion	or	24.1%	in	financial	assets	under	                         items are managed using the same strict rules                             to credit and liquidity risks. The management
management, which totalled $29.3 billion as                              as those applied to on-balance sheet items.                               of these risks is described on pages 91 to 97
at December 31, 2008, versus an increase of                              In Management’s opinion, these off-balance                                of the MD&A. Table 27 on page 90 presents the
$2.5	billion	or	7.0%	in	2007.                                            sheet items result in no unusual risk.                                    contractual amounts of the credit instruments
                                                                                                                                                   by term to maturity. Since many of these credit
Like other major Canadian trustees and wealth                            The calculation of the risk-weighted balance                              instruments expire or terminate without being
managers, Desjardins Group felt the impact                               related to these off-balance sheet items,                                 funded, the contractual amounts do not
of the sharp decline in Canadian stock market                            presented in Table 25 on page 87, is consistent                           represent actual future cash requirements.

                                                                                                                                                                                                          D es ja r Di n s gr o up
activity	(with	a	35.0%	drop	in	the	S&P/TSX	                              with the guideline on capital adequacy
index). These particularly difficult conditions,                         requirements issued by the AMF.

TABLE 26      assets unDer aDMinistration anD assets unDer ManageMent
as at December 31
(in	millions	of	$	and	as	a	%)			

                                                                                                                                                      2008                               2007
                                                                                                                                                   Percentage                           Percentage
                                                                                                                                                       change                               change
  assets under administration
  Individual and institutional trust and custodial services                                                                $ 189,504                       (2.9) %	 $	 195,189	 	   	       (7.4)	%
  Investment funds(1)                                                                                                         12,143                      (21.6)        15,494              15.4

                                                                                                                           $ 201,647                       (4.3) %   $ 210,683               (6.1) %

  assets under management
  Institutions and individuals                                                                                             $    17,149                    (25.7) %	 $	 23,075	 	    	        2.0	 %
  Investment funds(1)                                                                                                           12,143                    (21.6)       15,494               15.4

                                                                                                                           $ 29,292                      (24.1) %    $   38,569               7.0 %

(1) In 2008, included $9.7 billion in Desjardins Funds, $1.7 billion in Northwest Funds, and $0.7 billion in segregated funds at Desjardins Financial Security.
                                                  90         analYsis of the coMBineD financial stateMents      3.2 review oF FiNANCiAL PoSiTioN

                                                  TABLE 27      creDit instruMents By terM to Maturity
                                                  as at December 31
                                                  (in millions of $)

                                                                                                                                                                2008                               2007
                                                                                                           Less than         From 1 to            over 3    more than
                                                                                                              1 year           3 years         to 5 years     5 years               total             Total
                                                    Guarantees and standby letters of credit           $       514       $         44      $          7     $        1       $      566        $      435
                                                    Securities lending                                       1,271                 63                —              —             1,334             1,788
                                                    Credit commitments                                      33,852              1,750             1,250          1,253           38,105            37,694

                                                    Total credit instruments                           $ 35,637          $     1,857       $     1,257      $   1,254        $ 40,005          $   39,917
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  Derivative financial instruments                    obligations toward Desjardins Group at a time         As a general rule, the market risk associated
                                                                                                      when the fair value of the instrument is positive     with derivative financial instruments with
                                                  Desjardins Group uses derivative financial
                                                                                                      for Desjardins. The credit risk associated with       short-term maturities is less than that associated
                                                  instruments for asset and liability management
                                                                                                      derivative financial instruments normally             with derivative financial instruments with longer
                                                  and trading purposes. Derivative financial
                                                                                                      corresponds to a small fraction of the notional       maturities. As at December 31, 2008, based
                                                  instruments are contracts whose value is
                                                                                                      amount. The replacement cost and the credit           on	the	notional	amounts,	33.9%	of	derivative	
                                                  notably based on an underlying asset, interest
                                                                                                      risk equivalent are two measurements used             financial instruments had maturities of less
                                                  rates or exchange rates. The derivative financial
                                                                                                      to measure this risk. The replacement cost            than one year.
                                                  instruments used include a broad range of
                                                                                                      refers to the current replacement cost of
                                                  financial contracts, particularly interest rate
                                                                                                      all contracts that have a positive fair value.        The risk-weighted balance for all Desjardins
                                                  swaps, foreign exchange swaps, credit swaps,
                                                                                                      The credit risk equivalent is equal to the sum        Group’s derivative financial instruments as at
                                                  futures and options. These instruments are
                                                                                                      of this replacement cost and the future credit        December 31, 2008 amounted to $535 million
                                                  important risk management tools, mainly to
                                                                                                      exposure, which is an estimate of the possible        once all master netting agreements were
                                                  mitigate the risks associated with fluctuations
                                                                                                      increase in the replacement cost over the             accounted for ($292 million in 2007).
                                                  in interest and exchange rates and other
                                                                                                      remaining term of the contracts, calculated
                                                  market risks. Most contracts are traded
                                                                                                      according to a formula established by the             securitization
                                                  by mutual agreement.
                                                                                                      Bank for International Settlements.
                                                                                                                                                            As part of its liquidity and capital management
                                                  Desjardins Group recognizes all its stand-alone                                                           strategy, Desjardins Group conducts mortgage
                                                                                                      Desjardins Group limits the credit risk
                                                  derivative financial instruments on the Combined                                                          securitization transactions in the normal course
                                                                                                      associated with derivative financial instruments
                                                  Balance Sheets in accordance with the financial                                                           of operations. These transactions involve the
                                                                                                      by doing business with highly creditworthy
                                                  instrument accounting standards of the                                                                    use of off-balance sheet arrangements and
                                                                                                      counterparties. One of the tables in Note 24
                                                  Canadian Institute of Chartered Accountants                                                               special purpose entities (SPEs) The SPE used
                                                                                                      to the Combined Financial Statements of
                                                  (CICA). Under these standards, derivative                                                                 by Desjardins Group is the Canada Housing
                                                                                                      Desjardins Group presents derivative financial
                                                  financial instruments are recognized on the                                                               Trust, which was developed by the Canada
                                                                                                      instruments according to credit risk rating
                                                  Combined Balance Sheets at fair value,                                                                    Mortgage and Housing Corporation (CMHC)
                                                                                                      and the type of counterparty. According to the
                                                  including derivatives designated as hedging                                                               under the Canada Mortgage Bonds Program.
                                                                                                      replacement cost, the table shows that virtually
D es ja r Di n s gr o up

                                                  items. According to Section 3865 “Hedges”
                                                                                                      all counterparties have a credit rating ranging
                                                  published by the CICA, derivative financial                                                               In this type of transaction, Desjardins Group
                                                                                                      from AAA to A. Desjardins also limits credit
                                                  instruments may be designated in a fair                                                                   transfers mortgages to the SPE in return for
                                                                                                      risk with certain counterparties by entering
                                                  value or cash flow hedging relationship. This                                                             money, and the SPE finances these purchases
                                                                                                      into master netting agreements which allow,
                                                  section covers the eligibility criteria for hedge                                                         by issuing bonds to investors. The terms of
                                                                                                      in the event that a counterparty becomes
                                                  accounting, as well as the recognition of                                                                 the Canada Mortgage Bonds Program require
                                                                                                      insolvent, for the net settlement of all positions
                                                  fair value and cash flow hedging relationships.                                                           that swap agreements be made between
                                                                                                      with this counterparty. Credit support annexes
                                                  Note 24 to the Combined Financial Statements                                                              the Canada Housing Trust and Desjardins Group
                                                                                                      (CSA) are also used. By virtue of these CSAs,
                                                  presented on page 154 provides details on                                                                 in order to receive the total cash flows related
                                                                                                      Desjardins has the right to demand that the
                                                  the accounting policies relating to derivative                                                            to the mortgage loans underlying securitized
                                                                                                      counterparty pay or guarantee the current
                                                  financial instruments and the effect of these                                                             mortgages on a monthly basis and for
                                                                                                      market value of the positions once this value
                                                  standards on income for the year.                                                                         Desjardins Group to pay quarterly interest to the
                                                                                                      exceeds a certain threshold.
                                                                                                                                                            Canada Housing Trust on the Canada Mortgage
                                                  These derivative financial instruments result                                                             Bonds series, as well as the principal at maturity.
                                                                                                      The market risk associated with derivative
                                                  primarily in a credit and market risk exposure                                                            Securitization operations are accounted for as
                                                                                                      financial instruments refers to the risk of
                                                  for Desjardins Group. The management                                                                      sales of assets only when Desjardins Group is
                                                                                                      variation in the market value of these instruments
                                                  of these risks is described on pages 91 to 97                                                             deemed to have surrendered control of the
                                                                                                      resulting from fluctuations in the parameters
                                                  of the Management’s Discussion and Analysis.                                                              assets and when it receives a consideration
                                                                                                      affecting this value, notably interest and
                                                                                                                                                            other than the beneficial interests in these
                                                                                                      exchange rates. One of the tables in Note 24
                                                  The credit risk associated with derivative                                                                assets. At the time of sale of the assets,
                                                                                                      to the Combined Financial Statements of
                                                  financial instruments refers to the risk that a                                                           Desjardins Group retains certain interests
                                                                                                      Desjardins Group presents the maturities
                                                  counterparty will fail to honour its contractual                                                          regarding excess interest margins, which
                                                                                                      of the total notional amounts of the derivative
                                                                                                                                                            constitute retained interests, and assumes
                                                                                                      financial instruments.
                                                                                                                                                            responsibility for managing the transferred
                                                      3.2 review oF FiNANCiAL PoSiTioN           analYsis of the coMBineD financial stateMents              91

mortgages. No loss is expected on the                  contractual commitments                               plan, ranks equal with other MFF participants
mortgage loans because they are guaranteed                                                                   and	expires	in	July	2017	or	earlier	if	all	credit	
                                                       Desjardins Group has contractual commitments
by the CMHC. Desjardins Group periodically                                                                   default swap transactions have been settled. For
                                                       to make future payments on borrowings,
reviews the value of these interests and records                                                             further details, see “Subsequent events – ABCP
                                                       subordinated debentures and leases. Borrowings
in income any other than temporary declines                                                                  restructuring plan” in the Overview section.
                                                       and subordinated debentures are presented in
in value, if applicable. In 2008, the securitized
                                                       Desjardins Group’s Combined Balance Sheets,
mortgage loans outstanding totalled $4,074                                                                   financial assets received as collateral
                                                       but leases are not. Notes, 12, 14 and 26 to
million, compared to $2,596 million in 2007.
                                                       the Combined Financial Statements contain             Desjardins Group receives financial assets as
As at December 31, 2008, $170 million was
                                                       information on these contractual commitments.         collateral after trading securities borrowed or
recorded in the Combined Balance Sheets
                                                                                                             purchased under reverse repurchase agreements.
as retained interests versus $82 million as
                                                       Desjardins Group has undertaken to provide            Such trading is carried out under normal
at December 31, 2007, and $30 million was
                                                       a Margin Funding Facility (MFF) with respect          conditions for these types of transactions.
recorded as servicing liabilities, as opposed to
                                                       to ABCP holdings. Desjardins Group’s share in         Note 26 in Desjardins Group’s Combined
$20 million as at December 31, 2007. Note 6
                                                       this credit commitment, totalling $1,193 million      Financial Statements provides more information
to the Combined Financial Statements provides
                                                       under the December 24, 2008 restructuring             about financial assets received as collateral.

                                                                                                                                                                  Ma n a g e Me n t ’s D iscussion anD analy si s
detailed information regarding these entities.

risK ManageMent

   HigHligHts                       •	 Extensive	ongoing	Desjardins-wide	work	to	harmonize	and	consolidate	integrated	risk	management	practices.
                                    •	 Desjardins-wide	implementation	or	review	of	frameworks	in	core	risk	areas.
                                    •	 Management	of	the	financial	crisis	and	participation	in	the	restructuring	of	asset-backed	commercial	paper	(ABCP).
                                    •	 	 trengthening	Desjardins	Group	Integrated	Risk	Management	through	the	creation	of	the	Desjardins	Group	Finance	
                                       and Risk Management Committee.

Desjardins Group is exposed to different types         functions and in-house experts, to support            committees support the boards and
of risk in the normal course of operations,            the Desjardins Group Strategic Management             management teams of each component
including credit risk, liquidity risk, market risk,    Structure Committee, whose role is to ensure          in their efforts to fulfill their main risk
operational risk, insurance risk and reputation        that Desjardins Group has an appropriate,             management responsibilities.
risk. Its role in risk management is to strive         effective, ongoing and integrated risk
to optimize the risk-return trade-off, within set      management process.                                   A training program for board members and
limits, by applying integrated risk management                                                               FCDQ and subsidiary management committee

                                                                                                                                                                  D es ja r Di n s gr o up
and control strategies, policies and procedures        A risk report containing key indicators               members, was followed in 2007 and 2008
to all its activities.                                 for each type of risk is prepared periodically        by the introduction of an integrated risk
                                                       for the Integrated Risk Management Committee,         management training program for Desjardins
The FCDQ’s Board of Directors is responsible           the Desjardins Group Strategic Management             caisse general managers and officers.
for guiding, planning, coordinating and                Structure Committee and the Risk Management           Information bulletins on various risk
overseeing all Desjardins Group activities.            Commission. Constantly being updated, the             management topics are also presented on a
The Board also has specific risk management            report includes the latest risk management            regular basis to the Risk Management
responsibilities with respect to the Desjardins        developments. Information about capital,              Commission and the Integrated Risk
Group and, in this regard, is supported by             particularly capital adequacy in relation to          Management Committee.
the Risk Management Commission, the Audit              Desjardins Group’s risk profile, completes
and Inspection Commission and the Board                the report.                                           Three independent functional units complete
of Ethics and Professional Conduct. Additional                                                               Desjardins Group’s risk management framework.
information on these bodies may be found               Under Desjardins Group’s risk management
on pages 173 to 186 of the section on                  approach, the organization’s entities and units
corporate governance.                                  are accountable for the results and quality
                                                       of the risk management practices. The boards
The Board of Directors set up an Integrated            of directors of all Desjardins Group components
Risk Management Committee, comprised                   also play a pivotal role in monitoring the risks
of the heads of Desjardins Group’s strategic           and results of these units and entities. Several
                                                  92      analYsis of the coMBineD financial stateMents            3.2 review oF FiNANCiAL PoSiTioN

                                                  The Integrated Risk Management Executive                fourth quarter of 2008. This committee is made      credit risk management
                                                  Division of Desjardins Group is a strategic             up of key players in Desjardins Group finance
                                                                                                                                                              Desjardins Group upholds its goal of effectively
                                                  function charged primarily with setting up              and risk, and its members meet on a weekly basis.
                                                                                                                                                              serving all its members and clients. To this end,
                                                  a risk management framework for Desjardins
                                                                                                                                                              it has developed robust distribution channels
                                                  Group, optimizing the risk-return trade-off,            Basel ii capital accorD                             specialized by product and client. The units
                                                  ensuring risk integration and adequate risk
                                                                                                                                                              and components that make up these channels
                                                  management by all entities, and reporting               Basel II is an international capital adequacy
                                                                                                                                                              are considered centres of expertise and are
                                                  to the Board of Directors, to the Audit and             tool designed to align regulatory capital
                                                                                                                                                              accountable for their performance in their
                                                  Inspection Commission, to the Risk                      requirements more closely with risk exposure
                                                                                                                                                              respective markets, including credit risk. In
                                                  Management Commission and to senior                     and to further the continuous development
                                                                                                                                                              this regard, they have latitude regarding the
                                                  management as part of its management                    of the risk assessment capabilities of financial
                                                                                                                                                              framework they use and the approval given
                                                  and oversight responsibilities. This executive          institutions.
                                                                                                                                                              and are also equipped with the corresponding
                                                  division also ensures coordination between
                                                                                                                                                              management and monitoring tools and
                                                  the FCDQ, its Key Markets and Desjardins                The Basel II framework essentially rests
                                                  Group subsidiaries. This Desjardins-wide                on three pillars: the first pillar sets out the
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  coordination is overseen by three management            requirements for risk-weighted regulatory
                                                                                                                                                              In addition, Desjardins Group has set up
                                                  committees (credit risk, market risk and                capital; the second pillar deals with the
                                                                                                                                                              centralized structures and procedures to ensure
                                                  operational risk).                                      supervisory review process; and the third pillar
                                                                                                                                                              that this risk management framework permits
                                                                                                          stipulates financial disclosure requirements.
                                                                                                                                                              effective management that is also sound and
                                                  Desjardins Group Internal Audit is an independent,
                                                                                                                                                              prudent. Accordingly, the Risk Management
                                                  objective Desjardins-wide function in charge of         The AMF issued its guideline on capital
                                                                                                                                                              Commission ensures that risk management
                                                  informing, advising and supporting the boards           adequacy requirements, amended to reflect
                                                                                                                                                              activities are adequately structured and
                                                  of directors, senior management and managers,           the provisions of Basel II, which came into
                                                                                                                                                              monitored throughout Desjardins Group by,
                                                  and providing them with reasonable assurance            force	on	January	1,	2009.
                                                                                                                                                              among other things, examining the main credit
                                                  as to the degree of control over the operations
                                                                                                                                                              policies and follow-up reports, including those
                                                  of each entity and all of Desjardins Group, so          Again this year, numerous efforts were made
                                                                                                                                                              produced by the independent supervisory units.
                                                  they can effectively carry out their responsibilities   throughout Desjardins Group to support the
                                                                                                                                                              The Integrated Risk Management Committee
                                                  in accordance with regulatory requirements and          implementation of sound risk management
                                                                                                                                                              supports the members of the Risk Management
                                                  corporate governance rules while simultaneously         practices. Desjardins Group continues to
                                                                                                                                                              Commission in carrying out their responsibilities
                                                  contributing to the organization’s objectives. As       build on the progress made a few years ago
                                                                                                                                                              by analyzing the key elements involved in risk
                                                  the functional head of the Audit and Inspection         in obtaining tools and systems conforming
                                                                                                                                                              management, as well as the main reports on
                                                  Commission, Internal Audit directly supports            to recognized standards in the core risk areas.
                                                                                                                                                              specific situations and portfolio status.
                                                  the latter in its work. Desjardins Group Internal
                                                  Audit’s role includes providing independent             With the adoption of these approaches, it
                                                                                                                                                              credit risk framework
                                                  assessments of risk management, control and             will be possible to better identify and measure
                                                  corporate governance procedures and making              risk, and to more closely link regulatory capital   Desjardins Group created a Credit Risk Executive
                                                  recommendations on how to improve their                 requirements to incurred risk. Desjardins intends   Department, whose mandate is to develop
                                                  effectiveness as well as ensuring that managers         to constantly improve its risk assessment           a Desjardins-wide framework for managing
                                                  conduct their activities in an effective, efficient,    capacity, thus reaffirming its formal commitment    and monitoring credit risk. The Executive
                                                  sound and prudent manner.                               to meeting the risk management targets and          Department is responsible for a single general
                                                                                                          expectations put forth by the AMF.                  policy that sets out the main elements of credit
                                                  The Desjardins Bureau for Financial Monitoring                                                              risk management at Desjardins Group. Credit
D es ja r Di n s gr o up

                                                  and Enforcement (the Bureau) has oversight              Desjardins Group continued to implement its         risk management units, which have been set
                                                  over the caisse network in Québec, as required          Integrated Risk Management and Basel Accord         up within the main components, assume specific
                                                  under the Act respecting financial services             program in 2008. Significant strides were made      responsibilities related to credit granting and
                                                  cooperatives. The purpose of such oversight,            during the year to harmonize and consolidate        management, and providing a framework for
                                                  conducted by applying best practices, is                global risk management and integrate it into        their operations and those of the components
                                                  to evaluate the caisse network’s policies,              all of Desjardins Group’s activities.               for which they are responsible. These units
                                                  procedures and controls, as well as the manner                                                              establish their own credit risk policies in light
                                                  in which they are applied in order to ensure            credit risk                                         of their market niches, products and clients
                                                  sound and prudent risk management. In                                                                       in accordance with Desjardins Group policies.
                                                                                                          Credit risk is the risk of losses resulting from
                                                  addition, the Bureau examines activities carried
                                                                                                          a borrower’s or counterparty’s failure to honour
                                                  out by the FCDQ on behalf of the caisses,                                                                   These structures and policies make it possible to
                                                                                                          its contractual obligations, whether or not this
                                                  including liquidity management. The boards of                                                               define the responsibilities of the parties involved,
                                                                                                          obligation appears on the balance sheet.
                                                  directors of the caisses and of the FCDQ, as well                                                           the level of risk that Desjardins Group is willing
                                                  as the Audit and Inspection Commission, strictly                                                            to assume, the concentration limits, and set out
                                                                                                          Desjardins Group is exposed to credit risk first
                                                  monitor the reports received from the Bureau.                                                               risk management and control guidelines.
                                                                                                          through its direct loans (as at December 31,
                                                                                                          2008,	loans	represented	68.6%	of	balance	
                                                  With regard to the current situation on the                                                                 Finally, a steering and information committee,
                                                                                                          sheet assets) but also through its credit
                                                  world financial markets and to strengthen                                                                   comprised of senior executives from the main
                                                                                                          commitments, letters of credit and various
                                                  Desjardins Group's integrated risk management                                                               components specializing in credit risk, ensures
                                                                                                          activities such as foreign exchange lines and
                                                  role, a Desjardins Group Finance and Risk                                                                   cohesion between the parties involved.
                                                                                                          transactions involving derivative financial
                                                  Management Committee was formed in the
                                                                                                          instruments and securities.
                                                           3.2 review oF FiNANCiAL PoSiTioN            analYsis of the coMBineD financial stateMents                      93

credit granting                                            file monitoring and management                            the Canada Mortgage and Housing Corporation
                                                           of higher risks                                           (CMHC) or La Financière agricole du Québec
This responsibility is assumed by the risk
                                                                                                                     are used in addition to customary collateral.
management units of the main components                    Portfolios are monitored by the business units
where they exist in order to meet the                      using procedures that set out the degree of
                                                                                                                     The large number of borrowers, for the
characteristics of each product or client.                 thoroughness and frequency of review based
                                                                                                                     most part individuals, but also small and
This is done using specialized teams and                   on the quality and extent of the risk exposure.
                                                                                                                     medium-sized businesses from most sectors
specific procedures.                                       Both portfolios and basic data on certain
                                                                                                                     of the economy, plays a role in the sound
                                                           economic sectors under watch are monitored
                                                                                                                     diversification of the financing portfolio.
To assess the risk of credit activities with individuals   for warning signs. Various reports are
and smaller businesses, credit scoring systems             distributed to all levels of the organization,
                                                                                                                     Where required, Desjardins Group uses
based on proven statistics are generally used.             including senior management, the Integrated
                                                                                                                     mechanisms to share risk with other financial
These systems were developed using a history               Risk Management Committee and the Risk
                                                                                                                     institutions.The chart below presents the
of borrower behaviour with a profile or                    Management Commission.
                                                                                                                     distribution of loans by borrower category.
characteristics similar to those of the applicant
                                                                                                                     Over half of the portfolio consists of residential
to determine the transaction risk.The performance          The management of higher-risk loans

                                                                                                                                                                               Ma n a g e Me n t ’s D iscussion anD analy si s
                                                                                                                     mortgages, for which, statistically, the loss
of these systems is analyzed on an ongoing basis           involves follow-up adapted to their particular
                                                                                                                     experience is low. (Desjardins Group is not
and adjustments are made regularly with a view             circumstances and is supported by specialized
                                                                                                                     directly exposed to high-risk subprime
to determining transaction and borrower risks              turnaround teams, who are available to help
                                                                                                                     mortgages.) Additional information on changes
as accurately as possible.                                 manage more difficult files. Other specialized
                                                                                                                     in the loan portfolio, including the distribution
                                                           teams help settle files for which the chances of
                                                                                                                     of loans to businesses and governments, by
The granting of credit to businesses is based              improvement are slim in order to minimize losses.
                                                                                                                     industry sector, can be found on pages 78 to
on an analysis of the various parameters of
                                                                                                                     83 of the balance sheet management section.
each file, where each borrower is assigned                 counterparty and issuer risk
a risk rating. These ratings are assigned
                                                           Of the securities held in all securities portfolios       In its derivative financial instrument and
individually following a detailed examination
                                                           by	Desjardins,	50%	are	issued	or	guaranteed	by	           securities lending transactions, Desjardins
of the financial, market and management
                                                           public or parapublic entities. The portfolios are         Group uses various techniques to reduce
characteristics of the business.
                                                           mainly with Canadian issuers and counterparties           its counterparty credit risk.
                                                           of extremely high quality.
For the main commercial portfolios, the
scoring system has 19 ratings, broken down
into 12 levels, each representing a default
probability level. The characteristics of each                                4.
borrower are analyzed using models based
                                                                                                               Loan DiStRibution bY boRRoweR CateGoRY
on internal and external historical data,
                                                                                                               As at December 31, 2008
taking into account the specific features
of the borrower’s economic sector and
the performance of comparable businesses.                                                                      1.      58,0 %   Residential mortgages
These analyses are performed using systems                        3.                                           2.       5,5 %   Credit cards
                                                                                                               3.      11,7 %   Consumer and other personal loans
that can make quantitative comparisons, and
                                                                                                               4.      23,5 %   Business
are supplemented by the professional judgment                                                                  5.       1,3 %   Government
of the personnel involved with the file. Real                            2.

                                                                                                                                                                               D es ja r Di n s gr o up
estate and agricultural portfolio files are
analyzed using different scoring methods
adapted to their specific characteristics.

The depth of the analysis and the approval
                                                           The Integrated Risk Management Executive                  Most derivative financial instrument
level required depend on the product, as well
                                                           Division of Desjardins Group sets the maximum             transactions are governed by International
as the complexity and scope of the transaction
                                                           exposure for each counterparty and issuer based           Swaps and Derivatives Association (ISDA)
risk. Larger loans are approved by credit
                                                           on quantitative and qualitative criteria. The             master agreements, which define the terms
committees that include senior executives.
                                                           amounts are then allocated to components                  and conditions for the transactions.
The Executive Committee or the Board of
                                                           based on their investment needs.                          These agreements are legal contracts binding
Directors is involved in the approval of loans
                                                                                                                     the counterparties. Most of Desjardins Group’s
that exceed policy-defined limits.
                                                           Mitigating credit risk                                    agreements provide for netting to determine
                                                                                                                     the net exposure in the event of default.
                                                           In its lending operations, Desjardins Group
                                                                                                                     An annex may also be added to the Master
                                                           obtains collateral if deemed necessary for a
                                                                                                                     Agreement in order to obtain financial collateral
                                                           member’s or client’s loan facility following an
                                                                                                                     from counterparties.
                                                           assessment of their creditworthiness. Collateral
                                                           normally takes the form of assets such as cash,
                                                           government securities, shares, receivables,
                                                           inventory or capital assets. For some portfolios,
                                                           programs offered by organizations such as
                                                  94         analYsis of the coMBineD financial stateMents           3.2 review oF FiNANCiAL PoSiTioN

                                                  Securities lending transactions are regulated             includes, inter alia, setting up an internal crisis   Desjardins Group is exposed to market risk
                                                  by participation agreements from the                      committee vested with special decision-making         primarily through positions taken in the
                                                  Investment Industry Regulatory Organization               powers to deal with crisis situations. This plan      course of its traditional financing and savings
                                                  of Canada. Desjardins Group also uses netting             also lists the sources of liquidity available in      recruitment activities. It is also exposed to
                                                  agreements with its counterparties to mitigate            exceptional situations.                               market risk through its trading activities.
                                                  credit risk and requires a percentage of                                                                        Desjardins Group and the components have
                                                  collateralization (a pledge) on the transaction           The plan makes it possible to quickly and             adopted policies that set out the principles,
                                                  equivalent to industry best practices.                    effectively intervene to minimize disruptions         limits, and procedures to use in managing
                                                                                                            caused by sudden changes in member and                market risk.
                                                  Desjardins Group accepts from its counterparties          client behaviour and potential disruptions in
                                                  financial collateral that complies with the eligibility   markets or economic conditions.                       interest rate risk management
                                                  criteria set out in its policies. These eligibility
                                                                                                                                                                  Desjardins Group is exposed to interest rate
                                                  criteria promote a quick realization, if necessary,       A specific framework sets out the minimum
                                                                                                                                                                  risk, which represents the potential impact of
                                                  of collateral in the event of default. The types          level of liquid securities that the caisse network,
                                                                                                                                                                  interest rate fluctuations on net interest
                                                  of collateral received by Desjardins Group are            the FCDQ and Caisse centrale Desjardins must
                                                                                                                                                                  income and the economic value of equity.
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  mainly cash and government securities.                    maintain. This liquidity level is centrally managed
                                                                                                            by the Desjardins Group Treasury and is
                                                                                                                                                                  Dynamic and prudent management is applied
                                                  Desjardins Group also enters into long hedges             monitored on a daily basis. Eligible securities
                                                                                                                                                                  to achieve the objective of optimizing net
                                                  through credit derivatives. With these derivative         must meet high security and negotiability
                                                                                                                                                                  interest income while minimizing the negative
                                                  financial instruments (credit default swaps               standards. The liquid securities portfolio
                                                                                                                                                                  impact of interest rate movements. The
                                                  and total return swaps), Desjardins Group can             comprises mostly securities issued by
                                                                                                                                                                  established policies describe the principles,
                                                  transfer credit risk to a counterparty or hedge           governments, public bodies and private
                                                                                                                                                                  limits and procedures that apply to interest
                                                  itself against different types of risks.                  companies with high credit ratings, i.e.
                                                                                                                                                                  rate risk management. Simulations are used
                                                                                                            AA- or better.
                                                                                                                                                                  to measure the impact of different variables on
                                                  liquidity risk
                                                                                                                                                                  changes in net income and the economic value
                                                                                                            The Desjardins Group Treasury ensures stable
                                                  Liquidity risk refers to Desjardins Group’s                                                                     of equity. Assumptions used in the simulations
                                                                                                            and diversified sources of funding by type,
                                                  capacity to raise the necessary funds                                                                           are based on an analysis of historical data
                                                                                                            source and maturity. Desjardins Group can
                                                  (by increasing liabilities or converting assets)                                                                and on the impact of different interest rate
                                                                                                            also issue securities and borrow on national
                                                  to meet a financial obligation, whether or                                                                      conditions on changes in the data. These
                                                                                                            and international markets to round out and
                                                  not it appears on the combined balance sheet,                                                                   assumptions concern changes in the structure
                                                                                                            diversify its funding.
                                                  on the date it is due or otherwise.                                                                             of the Consolidated Balance Sheets, member
                                                                                                                                                                  behaviour and pricing by Desjardins Group’s
                                                                                                            A securitization program for mortgages
                                                  Managing liquidity risk                                                                                         asset and liability management committee (the
                                                                                                            insured by the Canada Mortgage and
                                                                                                                                                                  Asset/Liability Committee), which is responsible
                                                  Desjardins Group manages liquidity risk in                Housing Corporation (CMHC) is also in place.
                                                                                                                                                                  for analyzing and adopting the global matching
                                                  order to ensure that it has access, on a timely
                                                                                                                                                                  strategy while respecting the parameters defined
                                                  basis and in a profitable manner, to the funds            The strategies implemented in recent years
                                                                                                                                                                  in the interest rate risk management policies.
                                                  needed to meet its financial obligations as they          to diversify and extend sources of funding have
                                                  become due, in both routine and crisis situations.        proven to be effective in weathering the current
                                                                                                                                                                  The following table presents the potential
                                                  Managing this risk involves maintaining a                 capital market crisis. Desjardins Group is also
                                                                                                                                                                  impact on the non-trading portfolio of a sudden
                                                  minimum level of liquid securities, stable                eligible for the Bank of Canada’s various
                                                                                                                                                                  and sustained 100- and 200-basis-point increase
                                                  and diversified sources of funding, and an                intervention programs.
D es ja r Di n s gr o up

                                                                                                                                                                  or decrease in interest rates on the economic
                                                  action plan to implement in extraordinary
                                                                                                                                                                  value of equity.
                                                  circumstances. Liquidity risk management is               Market risk
                                                  a key component in an overall risk management
                                                                                                            Market risk refers to the risk of changes in          The extent of the interest rate risk depends
                                                  strategy, because it is essential to preserving
                                                                                                            the fair value of financial instruments resulting     on the gap between cash flows from assets,
                                                  market and depositor confidence. Thus,
                                                                                                            from fluctuations in the parameters affecting         liabilities and off-balance sheet financial
                                                  Desjardins Group and its components have
                                                                                                            this value; in particular, interest rates, exchange   instruments. The position presented reflects
                                                  established policies describing the principles,
                                                                                                            rates, and their volatility.                          the position as of that date only and may
                                                  limits and procedures that apply to liquidity
                                                  risk management. Desjardins Group has also
                                                  developed a liquidity contingency plan that

                                                  TABLE 28      interest rate sensitiVity (Before incoMe taXes)
                                                  as at December 31, 2008
                                                  (unaudited, in millions of $)

                                                    Impact on the economic value of equity of a 100-basis-point increase in interest rates                                                           $       (21)
                                                    Impact on the economic value of equity of a 100-basis-point decrease in interest rates                                                                    23

                                                    Impact on the economic value of equity of a 200-basis-point increase in interest rates                                                                   (42)
                                                    Impact on the economic value of equity of a 200-basis-point decrease in interest rates                                                                    45
                                                                                                                       3.2 review oF FiNANCiAL PoSiTioN                                                                   analYsis of the coMBineD financial stateMents                                                                                           95

change depending on member behaviour,                                                                                   The following table presents the aggregate VaR                                                                               Desjardins Group carries out back testing
the interest rate environment and the strategies                                                                        of the trading activities of Desjardins Group by                                                                             daily, applying a hypothetical P&L to its trading
adopted by the Asset/Liability Committee.                                                                               risk category as well as the diversification effect,                                                                         portfolios. The hypothetical P&L is calculated
                                                                                                                        which represents the difference between                                                                                      by determining the difference in value resulting
Management of market risk related                                                                                       aggregate VaR and the sum of VaR for the                                                                                     from changes in market conditions between
to trading activities – Value-at-risk                                                                                   different risk categories. Equity, interest rate                                                                             two consecutive days. The portfolio mix
                                                                                                                        and foreign exchange risks are the three risk                                                                                between these two days remains static.
The market risk of trading portfolios is managed
                                                                                                                        categories to which Desjardins Group is
daily within the framework of a specific policy
                                                                                                                        exposed. The definition of a trading portfolio                                                                               The following chart presents changes in VaR
for that purpose.
                                                                                                                        meets the various criteria defined in the Basel II                                                                           for trading activities as well as income related
                                                                                                                        Capital Accord.                                                                                                              to these activities. Since September, the extent
The main tool used to measure the market
                                                                                                                                                                                                                                                     of P&L increased substantially, thus mirroring
risk of trading portfolios is the “Value-at-Risk”
                                                                                                                        As at December 31, 2008, the aggregate VaR                                                                                   volatility movements on capital markets. Losses
(VaR), which represents an estimate of the
                                                                                                                        was $3.1 million, the interest rate VaR being                                                                                exceeded VaR 14 times in 2008; nine of these
potential loss for a certain period of time
                                                                                                                        the largest component. This aggregate VaR                                                                                    times occurred in the second half of the year.
at a given confidence level.

                                                                                                                                                                                                                                                                                                                                                                       Ma n a g e Me n t ’s D iscussion anD analy si s
                                                                                                                        was higher than its annual average of                                                                                        These losses are related to the extreme
                                                                                                                        $2.6 million. The risk mitigation related                                                                                    turbulence in the global economy in 2008 in
A Monte Carlo VaR is calculated daily, using a
                                                                                                                        to diversification amounted to $1.0 million                                                                                  the wake of the most serious global financial
99%	confidence	level,	on	the	trading	portfolios	
                                                                                                                        as at December 31, 2008.                                                                                                     crisis since the Great Depression in the 1930s.
for a holding horizon of one day. It is therefore
reasonable to expect a loss exceeding the VaR
                                                                                                                        Back testing
figure once every 100 days. The calculation of
VaR is based on historical data for a one-year                                                                          Back testing is conducted to validate the VaR
interval.                                                                                                               model used by comparing the VaR with profits
                                                                                                                        or losses (hereinafter referred to as “P&L”)
                                                                                                                        of Desjardins Group portfolios.

                                                                                                                      vaR ComPaReD to inCome FRom tRaDinG aCtivitieS
                                                                                                                                                                 (in millions of $)







                                                                                                                                                                                                                                                                                                                                                                       D es ja r Di n s gr o up
            Jan. 3/08

                           Jan. 17/08

                                        Jan. 31/08

                                                     Feb. 14/08

                                                                  Feb. 28/08

                                                                               Mar. 13/08

                                                                                            Mar. 28/08

                                                                                                         Apr. 11/08

                                                                                                                        Apr. 25/08

                                                                                                                                     May 9/08

                                                                                                                                                May 26/08

                                                                                                                                                            June 9/08

                                                                                                                                                                        June 23/08

                                                                                                                                                                                     July 9/08

                                                                                                                                                                                                 July 23/08

                                                                                                                                                                                                              Aug. 7/08

                                                                                                                                                                                                                           Aug. 22/08

                                                                                                                                                                                                                                        Sept. 8/08

                                                                                                                                                                                                                                                         Sept. 22/08

                                                                                                                                                                                                                                                                        Oct. 6/08

                                                                                                                                                                                                                                                                                    Oct. 21/08

                                                                                                                                                                                                                                                                                                     Nov. 5/08

                                                                                                                                                                                                                                                                                                                  Nov. 20/08

                                                                                                                                                                                                                                                                                                                               Dec. 4/08

                                                                                                                                                                                                                                                                                                                                               Dec. 18/08

                        Trading income

                        Total Monte Carlo VaR 99%

TABLE 29        Var By risK category (traDing portfolio)
as at December 31, 2008
(unaudited, in millions of $)

                                                                                                                                                                                                                                                                                             For the year ended
                                                                                                                                                                                                                                                                                             December 31, 2008
                                                                                                                                                                            as at December 31, 2008                                                        average                                               high                                       Low
  Equity                                                                                                                                                                                                  $                0.7                       $                  1.1                      $               2.5                       $                0.6
  Foreign exchange                                                                                                                                                                                                         0.2                                          0.7                                      4.7                                         —
  Interest rate                                                                                                                                                                                                            3.2                                          2.3                                      4.4                                        0.9
  Diversification effect(1)                                                                                                                                                                                               (1.0)                                        (1.5)                                     N/A(2)                                     N/A(2)

  Aggregate VaR                                                                                                                                                                                           $                3.1                       $                 2.6                       $               5.1                       $                1.4

(1) Risk reduction related to diversification, namely the difference between the sum of the VaR for the various market risks and the aggregate VaR.
(2) Not applicable. The highs and lows of the various market risk categories can refer to different dates.
                                                  96      analYsis of the coMBineD financial stateMents             3.2 review oF FiNANCiAL PoSiTioN

                                                  stress testing                                           risk, it is responsible for monitoring the              V. Insurance and external coverage: Activities
                                                                                                           implementation and ongoing use of operational              through which some of the exposure
                                                  From time to time, certain events that
                                                                                                           risk management principles and practices.                  to operational risk is transferred by
                                                  are considered highly unlikely may happen
                                                                                                                                                                      purchasing insurance
                                                  and have a significant impact on Desjardins
                                                                                                           risk measurement                                        VI.Internal audit: Internal auditors express
                                                  Group’s portfolios. These events at the tail-end
                                                  of distribution are the result of extreme situations.    Major efforts have been made in the past few               opinions on the internal controls and
                                                                                                           years to realize this management framework,                procedures for which the business
                                                  The approach used to measure the risk                    the implementation of which will continue over             segments are responsible; for the Québec
                                                  related to events which are highly unlikely,             the next few years in order to achieve Desjardins          caisses, they are provided by the Desjardins
                                                  but plausible, is applied through a stress testing       Group’s vision of operational risk management.             Bureau for Financial Monitoring and
                                                  program (sensitivity tests, historical scenarios                                                                    Enforcement. Independent opinions are
                                                  and hypothetical scenarios) at regular intervals.        Through this implementation, Desjardins                    also sometimes provided on the governance
                                                  Stress testing results are analyzed together             Group seeks to acquire an overview of the risk             process associated with operational
                                                  with the VaR calculations in order to detect             profile and exposure to operational risk in order          risk management.
                                                  Desjardins Group’s vulnerability to such                 to improve, if necessary, control management
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  events. The stress testing program is reviewed           and the control environment.                            presentation of information
                                                  periodically to ensure that it is kept current.
                                                                                                                                                                   Quarterly reports on Desjardins Group’s
                                                                                                           Risk and control self-assessment                        operational risk provide officers and directors
                                                  operational risk                                                                                                 with an update on insurable operational losses.
                                                                                                           A program has been implemented to ensure
                                                  Operational risk is defined as the risk of               that key activities undergo an operational              Risk and trend indicators are now also included
                                                  inadequacy or failure attributable to processes,         risk assessment. A unit’s own assessment                in this periodic reporting.
                                                  people, internal systems or external events and          of risks and controls helps identify and measure
                                                  resulting in losses, failure to achieve objectives       significant operational risks as well as the existing   regulatory compliance
                                                  or a negative impact on reputation.                      mitigation measures and how effective they              A regulatory compliance function was
                                                                                                           are in managing such risks.                             created at Desjardins Group in 2003.
                                                  Operational risk is inherent to all business activity,
                                                                                                                                                                   In 2004, the FCDQ’s Board of Directors
                                                  whether performed in-house or outsourced.                Collecting loss data                                    adopted a regulatory compliance framework
                                                  Losses can mainly arise from fraud, damage
                                                                                                           Desjardins Group has a database that is used            policy specifically for Desjardins Group.
                                                  to tangible assets, illegal acts, lawsuits, systems
                                                                                                           to collect information on the nature, frequency         Desjardins Group is currently working
                                                  failure, or problems in transaction processing
                                                                                                           and seriousness of its operational losses. The          on a framework program for regulatory
                                                  or process management.
                                                                                                           information collated includes the amount of             compliance management.

                                                  The overriding objective is to keep operational          the losses, the amounts recovered, relevant
                                                                                                           dates and the risk factors and causes.                  insurance risk
                                                  risk at an acceptable level while ensuring
                                                  organizational efficiency and quality service                                                                    Insurance risk includes risks tied to the
                                                  to clients of Desjardins Group.                          risk control                                            design and pricing of insurance products
                                                                                                           Desjardins Group has put into place a number            as well as risks associated with underwriting
                                                  governance                                               of operational risk management and risk                 and claims settlements.

                                                  A Desjardins Group framework policy on                   transfer initiatives and programs:
                                                                                                                                                                   The risk associated with designing and
                                                  operational risk management was adopted
                                                                                                           I. Fraud management: Prevention, research               pricing products is the risk that the initial
D es ja r Di n s gr o up

                                                  at the end of 2008. This framework policy
                                                                                                              and intervention activities for internal             pricing is or will become insufficient. The
                                                  provides an official operational risk management
                                                                                                              and external fraud                                   risk associated with underwriting and claims
                                                  framework, establishing the practices and
                                                                                                                                                                   settlements pertains to risks arising from risk
                                                  guidelines leading to its implementation, as             II. Business continuity: Planning, preparation          selection, claims settlement, and contractual
                                                  well as the related roles and responsibilities.              and coordination of measures to contend             clause management.
                                                  This management framework, which Desjardins                  with any business interruption or crisis
                                                  Group is currently implementing, is based on                 that may affect the ability to deliver
                                                                                                                                                                   Managing insurance risk
                                                  Desjardins-wide decentralized management                     quality service to members and clients
                                                  where all managers assume management                                                                             Product design and pricing risk arises from
                                                                                                           III. Information security: Activities to organize,
                                                  of operational risks.                                                                                            potential errors in projections concerning the
                                                                                                                manage and protect informational assets
                                                                                                                                                                   many factors used to set premiums, including
                                                  A centralized operational risk management                IV. Regulatory compliance: Efforts to set               future returns on investments, underwriting
                                                  team has been set up within the Integrated                   up a coordinated process to ensure                  experience in terms of claims experience,
                                                  Risk Management Executive Division of                        that operations comply with the                     mortality and morbidity, and administrative
                                                  Desjardins Group. In addition to developing                  relevant regulations                                expenses. Strict pricing standards and policies
                                                  policies and plans for managing operational                                                                      are adopted, and the insurance subsidiaries
                                                       3.2 review oF FiNANCiAL PoSiTioN              analYsis of the coMBineD financial stateMents             97

perform spot checks to compare the projections          adequacy testing. Various pessimistic scenarios        and its risk management framework. Officers
with actual results. Some product pricing may           were tested during the year to measure their           and employees are required to perform their
be adjusted depending on the results obtained.          effect on the capitalization ratio. The capital        duties in accordance with these practices
                                                        proved adequate in each case.                          and Desjardins Group’s permanent values.
The risk associated with underwriting and
claims settlements is managed by establishing           reputation risk                                        The Integrated Risk Management
appropriate risk selection criteria and policies                                                               Executive Division is responsible for
                                                        Reputation risk arises from a deterioration of
and by limiting potential losses through                                                                       disclosing reputation risk. It provides the
                                                        reputation with stakeholders such as members,
reinsurance treaties. Such treaties do not,                                                                    Risk Management Commission and the
                                                        clients, employees, the media, rating agencies
however, release the insurance subsidiaries                                                                    Integrated Risk Management Committee with
                                                        and regulators.
from their obligations toward clients in                                                                       a report containing information on reputation
the event that reinsurers experience financial                                                                 risk and the key indicators for such risk. In
                                                        For a leading financial organization such
difficulties. Consequently, the subsidiaries                                                                   addition, there is a review of the activities
                                                        as Desjardins Group, reputation is extremely
are also exposed to a credit risk related to the                                                               of Legal Affairs, the Secretariat General,
                                                        important and as such, cannot be managed
reinsurers. To minimize this risk, the subsidiaries                                                            and Communications and Public Affairs.
                                                        separately from the other risks. Consequently,

                                                                                                                                                                    Ma n a g e Me n t ’s D iscussion anD analy si s
sign reinsurance treaties with stable, financially
                                                        managing reputation risk in all its spheres of
solid, and duly accredited companies.
                                                        activity is a constant concern for Desjardins Group.

The insurance subsidiaries comply with the
                                                        Desjardins Group uses various means to ensure
standards for sound management practices
                                                        sound reputation risk management, including
established by the regulatory bodies that
                                                        a Code of Ethics and Professional Conduct,
govern them and are subject to capital
                                                        governance practices, awareness sessions,

aDDitional inforMation relateD to eXposure to certain risKs

    HigHligHts                         D
                                    •	 	 esjardins	Group’s	exposure	to	consolidated	and	unconsolidated	special	purpose	entities	is	8.4%	of	the	total	assets	
                                       of the special purpose entities.
                                    •	 Desjardins	Group	does	not	own	loans	on	the	U.S.	subprime	market.

To give external users a better idea of Desjardins      exposure to subprime residential                       residential mortgage-backed
Group’s exposure to risks related to current            and alt-a mortgage loans                               securities
market events, Desjardins Group decided to
                                                        As part of its operations, Desjardins Group            The fair value and principal amount of
use the best practices promoted by the Financial

                                                                                                                                                                    D es ja r Di n s gr o up
                                                        is exposed to credit risks related to subprime         residential mortgage-backed securities totalled
Stability Forum (“FSF”) as a guideline. It should
                                                        residential mortgage loans (defined as loans           $36 million and $34 million, respectively.
be mentioned that in April 2008, a report was
                                                        to borrowers with a high credit risk profile)          These securities are presented on the Combined
issued by the FSF in response to a request from
                                                        and Alt-A mortgage loans (defined as loans             Balance Sheets as securities held for trading.
G7 ministers and central bank governors.
                                                        to borrowers with non-standard income
                                                        documentation). However, Desjardins Group’s            leveraged finance loans
These best practices include enhanced
                                                        exposure to subprime residential mortgage
disclosures of risks related to financial                                                                      Exposure to leveraged finance loans (defined
                                                        loans was less than $2 million, and its exposure
instruments which markets consider to                                                                          as loans to large corporations and finance
                                                        to Alt-A mortgage loans was $83 million.
be higher risk. It should be noted that some                                                                   companies whose credit rating is between
                                                        Subprime residential and Alt-A mortgage
of these disclosures are already made in the                                                                   BB+ and D and whose level of debt is very
                                                        loans are recorded on the balance sheet as
MD&A in the following sections:                                                                                high compared to other companies in the
                                                        loans measured at amortized cost. None of
                                                                                                               same industry) was $76 million. This exposure
                                                        these loans is exposed to the risks related to
n   Risk management                                                                                            takes the form of disbursed and undisbursed
                                                        the U.S. subprime market. As at December 31,
                                                                                                               commitments. Leveraged finance is generally
                                                        2008, total subprime residential mortgage
n   Off-balance sheet items                                                                                    used to achieve a specific objective, such as
                                                        loans and Alt-A mortgage loans represented
                                                                                                               making an acquisition, or effecting a takeover
                                                        approximately	0.1%	of	Desjardins	Group’s	
n   Fair value of financial instruments (see Note                                                              or share buy-back. Leveraged finance loans
                                                        total assets.
    25 to the Combined Financial Statements)                                                                   are recorded on the balance sheet as loans
                                                                                                               and receivables and totalled approximately
Desjardins Group used these recommendations                                                                    0.1%	of	Desjardins	Group’s	total	assets.
as a guideline in making the following
disclosures as at December 31, 2008:
                                                  98         analYsis of the coMBineD financial stateMents                              3.2 review oF FiNANCiAL PoSiTioN

                                                  collateralized debt obligations                                           commercial mortgage-backed                         financial asset-backed securities
                                                  The positive fair value of collateralized debt
                                                                                                                            securities                                         The fair value and notional amount of financial
                                                  obligations was $144 million (notional amount:                            The fair value and principal amount of             asset-backed securities were $288 million and
                                                  $294 million). None of the securities held                                commercial mortgage-backed securities totalled     $303 million respectively. These securities are
                                                  is directly backed by subprime residential                                $342 million and $355 million, respectively.       presented on the Combined Balance Sheets
                                                  mortgage loans. An other than temporary                                   These securities are presented on the Combined     as available-for-sale securities and as securities
                                                  decline in value of $113 million was recognized                           Balance Sheets as securities held for trading.     held for trading.
                                                  in Desjardins Group’s combined income with
                                                  respect to these securities. They are presented                                                                              The following table provides additional details
                                                  on the Combined Balance Sheets as available-                                                                                 concerning exposure to asset-backed securities:
                                                  for-sale securities.

                                                  TABLE 30     fair Value of asset-BacKeD securities By creDit rating
Ma n a g e Me n t ’s D iscussion anD analy si s

                                                  as at December 31, 2008
                                                  (unaudited, in millions of $)

                                                                                                                                                                             Collateralized      mortgage-            Financial
                                                                                                                                                                                      debt          backed        asset-backed
                                                                                                                                                                               obligations        securities         securities
                                                    notional amount                                                                                                            $       294      $       355        $      303

                                                    fair value of securities, by credit rating
                                                    AAA                                                                                                                        $       129      $       333        $      182
                                                    AA                                                                                                                                  —                 8                23
                                                    A                                                                                                                                   —                 1                28
                                                    BBB                                                                                                                                 —                —                 16
                                                    Lower than BBB-                                                                                                                     15               —                 —
                                                    Not rated                                                                                                                           —                —                 39

                                                    Total                                                                                                                      $      144       $      342         $      288

                                                  TABLE 31     fair Value of sWaps By Maturity
                                                    as at December 31, 2008
                                                    (unaudited, in millions of $)

                                                                                                                                                                                      credit          Credit             total
                                                                                                                                                                                    default          default            return
                                                                                                                                                                                     swaps            swaps (1)         swaps(2)
D es ja r Di n s gr o up

                                                    notional amount of swaps
                                                    Notional amount of swaps with a positive fair value                                                                        $        —       $        —         $       29
                                                    Notional amount of swaps with a negative fair value                                                                                 37              159             1,750

                                                    Total notional amount                                                                                                      $        37      $      159         $   1,779

                                                    fair value of swaps with a positive fair value, by maturity
                                                      Less than 1 year                                                                                                         $         —      $         —        $        —
                                                      From 1 to 3 years                                                                                                                  —                —                 1
                                                      Over 3 to 5 years                                                                                                                  —                —                 —
                                                      Over 5 years                                                                                                                       —                —                 —

                                                    Total fair value of swaps with a positive fair value                                                                       $         —      $         —        $         1

                                                    fair value of swaps with a negative fair value, by maturity
                                                      Less than 1 year                                                                                                         $        —       $        —         $       (57)
                                                      From 1 to 3 years                                                                                                                (12)             (30)                (1)
                                                      Over 3 to 5 years                                                                                                                 —               (81)                (1)
                                                      Over 5 years                                                                                                                      —                (7)                —

                                                    Total fair value of swaps with a negative fair value                                                                       $       (12)     $      (118)       $       (59)

                                                    Total fair value                                                                                                           $       (12)     $     (118)        $      (58)

                                                  (1) Only on collateralized debt obligations.
                                                  (2) Excluding total return swaps entered into in connection with securitization activities.
                                                                      3.2 review oF FiNANCiAL PoSiTioN                           analYsis of the coMBineD financial stateMents                              99

credit default swap portfolio                                           assets under administration and                                         special purpose entities
                                                                        assets under management                                                 In the normal course of business, Desjardins
First-to-default credit default swaps and credit
                                                                        Desjardins Group is one of the leading wealth                           Group enters into various financial transactions
default swaps (collateralized debt obligations)
                                                                        managers and trustees in Canada. Assets under                           with special purpose entities or SPE. The entities
were entered into with counterparties. Desjardins
                                                                        administration and assets under management                              are usually created for a unique and distinct
Group’s commitments and the nature of
                                                                        are essentially comprised of financial assets                           purpose—they often have a limited life—and
the underlying assets are presented under
                                                                        in the form of investment funds, mainly from                            are used to legally isolate the financial assets
“Derivative financial instruments” in Note 26,
                                                                        individuals, and securities in custody and assets                       they hold from the transferring organization,
“Commitments, Guarantees and Contingencies”
                                                                        accumulated by pension funds; they therefore                            which could be one of its clients or the
to the Combined Financial Statements of
                                                                        do not belong to Desjardins Group but to its                            organization itself. SPEs are not operating
Desjardins Group. As at December 31, 2008,
                                                                        members and clients. These assets are described                         entities and generally have no employees.
the negative fair value of these first-to-default
                                                                        in detail under “Off-balance sheet items”                               In accordance with generally accepted
credit default swaps and credit default swaps
                                                                        and in Table 26 “Assets under administration                            accounting principles, special purpose entities
amounted to $130 million (notional amount:
                                                                        and assets under management” in the                                     can be recognized or not recognized
$196 million). Credit default swaps are
                                                                        Annual Report.                                                          on the balance sheet. Please refer to Note 1

                                                                                                                                                                                                                 Ma n a g e Me n t ’s D iscussion anD analy si s
presented on the Combined Balance Sheet
                                                                                                                                                “Significant Accounting Policies” to the
as derivative financial instruments.
                                                                        securitization                                                          Combined Financial Statements of Desjardins
                                                                                                                                                Group to learn more about the variable
total return swap portfolio                                             Desjardins Group participates in the Mortgage-
                                                                                                                                                interest entities that have been consolidated
                                                                        Backed Securities Program under the National
The positive and negative fair values of total                                                                                                  (on-balance sheet).
                                                                        Housing Act. These transactions involve the
return swaps, excluding those entered into
                                                                        use of off-balance sheet arrangements with
in connection with securitization activities,                                                                                                   Details concerning significant exposure
                                                                        special purpose entities (SPE). The SPE used
were $1 million and $59 million respectively                                                                                                    to other SPEs are provided in the table below.
                                                                        by Desjardins Group is the Canada Housing
(notional amount: $1,779 million). Total return
                                                                        Trust, which was set up by the Canada Mortgage
swaps are presented on the Combined Balance
                                                                        and Housing Corporation under the Canada
Sheet as derivative financial instruments.
                                                                        Mortgage Bonds Program. These arrangements
                                                                        are described in detail under “Off-balance sheet
                                                                        items” and in Note 6 to the Combined Financial
                                                                        Statements in the Annual Report.

TABLE 32      significant eXposure to otHer special purpose entities
as at December 31, 2008
(unaudited, in millions of $)

                                                                                                                                                                        Desjardins                    total
                                                                                                                                                                          Group’s                 assets of
                                                                                                                                                                         exposure                     SPes(1)
  unconsolidated spes
  Trusts for Canadian non-bank asset-backed
    commercial paper (ABCP) subject to the Montréal Accord restructuring plan(2)                                                                                       $     2,446            $ 31,838

                                                                                                                                                                                                                 D es ja r Di n s gr o up
  Other trusts for bank and non-bank ABCP                                                                                                                                       12               5,009
  Private investment funds related to guaranteed-capital products and other activities(3)                                                                                      144                 377

  consolidated spes
  Private hedge funds related to guaranteed-capital
    products and other activities(3)                                                                                                                                   $        537           $       956
  Desjardins Credit Union Inc.(4)                                                                                                                                               175                 1,497

(1) The total assets of the SPEs disclosed correspond to the most recent data available to Desjardins Group. For investment funds and hedge funds related to guaranteed-capital structured products,
    the amount presented corresponds to the entity’s net assets.
(2) Please see the “Specific items relating to the fourth quarter and fiscal 2008 primarily as a result of financial market instability” section of this MD&A. The indicated amount is presented before
    the write-down.
(3) For presentation purposes, cross-investments between investment funds and hedge funds have not been eliminated.
(4) See Note 1 “Significant Accounting Policies” to the Combined Financial Statements.
                                                  100    aDDitional inforMation   4.1 reGULATorY CoNTexT AND 4.2 FACTorS THAT MAY iNFLUeNCe FUTUre reSULTS

Ma n a g e Me n t ’s D iscussion anD analy si s

                                                   4.1     regulatory conteXt

                                                  Desjardins Group’s operations are governed in particular by the Act respecting financial services cooperatives.
                                                  The Autorité des marchés financiers (AMF) is the main government agency that has oversight over and monitors deposit-
                                                  taking institutions (other than banks) that carry on business in Québec, including the caisses and the FCDQ. This constitutes
                                                  a significant difference from the Canadian banks, which are governed by a federal charter. Desjardins complies with banking
                                                  regulations, even if it is under no legal obligation to do so because of its status as a cooperative. Desjardins also voluntarily
                                                  complies with the regulatory requirements of the Basel Committee on Banking Supervision of the Bank for International
                                                  Settlements (BIS). It furthermore applies rigorous corporate governance and financial governance practices, which are
                                                  discussed on page 43 and pages 173 to 186 of this Annual Report.

                                                  Other regulations may also apply to some activities of Desjardins Group entities, as for instance, in the area of insurance
                                                  or securities brokerage.

                                                   4.2     factors tHat May influence future results
D es ja r Di n s gr o up

                                                  Many factors, several of which are beyond our control, could arise and have a material impact on our financial results and
                                                  could consequently cause Desjardins Group’s actual results to differ from those expected. Given the uncertain nature of
                                                  these factors, the predictions in the forward-looking statements may not occur. This is explained in the “Caution concerning
                                                  forward-looking statements” on page 31.

                                                  Certain factors are economic in nature or subject to regulation. These include interest rates, the inflation rate, foreign
                                                  exchange rates, stock indices, monetary and tax policies, consumer spending, the demand for credit, personal savings
                                                  patterns, the unemployment rate, trade between Québec and the United States and amendments to laws and regulations.

                                                  Risk factors also come into play, including credit risk, liquidity risk, market risk, operational risk, insurance risk and reputation
                                                  risk. These factors, for which Desjardins Group has implemented risk management strategies, are discussed in the “Risk
                                                  Management” section on pages 91 to 97.

                                                  In addition, the critical accounting policies and estimates used by Desjardins Group dictate how it is to present its financial
                                                  position and results of operations, and may require that Management make assumptions on matters that intrinsically involve
                                                  uncertainties. Any change in such estimates and assumptions could significantly affect Desjardins Group’s financial position
                                                  and results of operations.

                                                  The above list of factors likely to influence future results is not exhaustive.
                                                           4.3 CriTiCAL ACCoUNTiNG PoLiCieS AND eSTiMATeS                   aDDitional inforMation          101

 4.3       critical accounting policies anD estiMates

A description of the accounting policies used         financial instruMents –                                 and interest rate and stock index options. These
by Desjardins Group is essential to understanding     recognition anD                                         derivative financial instruments are recognized
and interpreting the results presented in the                                                                 on the Combined Balance Sheets at fair value.
Combined Financial Statements as at December
31, 2008. The significant accounting policies are     Desjardins Group initially recognizes all financial     Derivative financial instruments are used
described in Note 1 (pages 124 to 126) or, when       assets and financial liabilities at fair value on       for trading purposes or for asset-liability
possible, in the notes to the Combined Financial      the Combined Balance Sheets. Subsequently,              management purposes. They are used to
Statements to enable the reader to understand         financial assets and financial liabilities held         transfer, modify or reduce actual or expected
these policies. Some of these policies are of         for tradi