Laurentian Bank’s profitability deteriorated a little less than anticipated during the months of May, June and July.
The Montreal financial institution generated net profits of $34 million during the quarter, down about 30% year-on-year.
Adjusted for certain exceptional items, adjusted earnings per share reached 88 cents for the quarter, while analysts had expected 86 cents per share.
A restructuring charge of $9 million is included in the quarter’s results, in particular related to the reduction in leased space for corporate offices in Toronto and the severance payments made to employees laid off in May, a decision affecting around 50 people (approximately 2% of the workforce).
Provisions for credit losses were $16.3 million for the quarter, up from provisions of $13.3 million a year ago.
“Despite the macroeconomic challenges, our solid equity position and our strategic investments pave the way for future growth,” commented Laurentian CEO Éric Provost in a press release.
PHOTO FRANÇOIS ROY, LA PRESSE ARCHIVES
Laurentian CEO Eric Provost
We are resolutely committed to executing our plan and creating an effective organization that drives long-term value and benefits for our customers and all stakeholders.
Éric Provost, CEO of Laurentian
In mid-August, management had the sale of assets under management of the Discount Brokerage division of Laurentian Bank Securities to CI Financial. The transaction includes the transfer of 2,050 clients and $250 million in assets under management. Management explained that this transaction is part of its simplification strategy aimed at focusing efforts on business sectors where Laurentian can differentiate itself and be more competitive.
The renewed strategic plan unveiled in late May reiterated that the bank’s growth engine continues to be commercial banking services, i.e. financing of equipment and inventory, financing of residential, commercial and industrial projects with real estate developers and contractors, and commercial lending to small and medium-sized businesses.
The plan aims to generate over a 3 to 5 year horizon an adjusted earnings per share growth of greater than 10%, an adjusted return on equity of greater than 10%, and an adjusted efficiency ratio of less than or equal to 60%.