2010-2014 Corporate Plan Summary - EDC

The Corporation is forecasting net income in 2009 of $52 million which represents a
reduction of $96 million from the 2009 Corporate Plan.
4 Net financing and investment income for 2009 is forecast to be $1,034 million,
a $240 million increase over the 2009 Corporate Plan. Many factors have
contributed to this increase. The major factors are a weaker forecast Canadian
dollar (when compared to the 2009 Corporate Plan), higher debt relief and
higher impaired revenue. Also contributing to the increase are higher spreads
on new loans as a result of the recent credit crunch, partially offset by higher
spreads on new long-term debt issues.
4 Insurance premiums and guarantee fees are forecast to be $194 million which
is $32 million higher than the 2009 Corporate Plan. This forecast increase in
revenue is due mainly to the $7.8 billion increase in insurance volume over
Plan and, to a lesser extent, due to a forecast increase in credit insurance
premium rates due to the current riskier credit environment.
4 The other expenses line item in the income statement is mainly comprised of
fair value adjustments on long-term debt and related derivatives, as well as
foreign exchange translation gains and losses. Due to the volatility and
difficulty in estimating these amounts, no forecast amount for any future
period is included in the financial results. As such, the amount included in the
forecast for 2009 of $126 million represents year-to-date results to August 31,
2009. The $126 million of other expenses in the 2009 forecast represents an
increase of $111 million over the 2009 Corporate Plan expense of $15 million.
The key components include unrealized fair value losses on long-term debt
and related derivatives ($185 million) and foreign exchange translation gains
($76 million) which are offset against foreign exchange translation losses
included in Other Comprehensive Income ($74 million).
4 Provisions for credit losses for 2009 are expected to be $569 million, an
increase of $105 million from the 2009 Corporate Plan. Provision expense
resulting from credit migration is projected to be higher than planned,
particularly in the automotive and foreign financial institution sectors due to
the challenging economic environment.
4 Claims related expenses are forecast to be $248 million which is $160 million
higher than the 2009 Corporate Plan of $88 million due in part to forecast
higher claims and expected losses relating to the automotive industry, as well
as to expected losses as a result of the general economic downturn.
In 2010, it is planned that net income will be $353 million representing an increase of
$301 million from the 2009 forecast.
4 Net financing and investment income for 2010 is forecast to increase by
$114 million from the 2009 forecast. The increase is mainly driven by a larger
loans receivable portfolio with higher loan spreads realized throughout 2009
and 2010, which are increasingly funded by short-term debt at lower yields.
Chapter 3 – Financial Plan
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