(Montreal) Laurentian Bank is preparing a digital offensive to attract more deposits as it prepares to launch an online high-interest account. In an interview, the president and chief executive, Rania Llewellyn, assures that the strategic plan of the financial institution is on the right track.
“Last year, we had good rates on guaranteed investment certificates (GICs), but we were limited by the fact that it was impossible to open an account without going through a branch,” explains Ms.me Llewellyn in an interview on the sidelines of the shareholders’ meeting on Tuesday.
Within “a few weeks”, savers will be able to open a high-interest account and a checking account online at Laurentian. The institution intends to conduct a “targeted” advertising campaign to promote its interest rate, which, at 3%, would be “among the most attractive in the market”.
The online offer will also make it possible to reach digital customers outside Quebec. This is what the bank has managed to accomplish with its renewed Visa credit card offer, launched recently. “What is interesting is the 50/50 split between Quebec and the rest of Canada [pour les demandes de cartes]. We attract new customers. »
Opening an online account with a major Canadian bank is a relatively trivial operation, but Laurentian had accumulated a significant technological gap in the industry.
Mme Llewellyn had been hired in October 2020 to revive the declining Montreal bank as investors lost patience with the little progress seen under her predecessor. When he arrived, Laurentian did not have a mobile app and activating a credit card could take up to 25 days.
Strategic plan update
Laurentian, which has scalded its shareholders in the past, would now be a different bank, assures Mme Llewellyn. She points out that management is ahead of its strategic plan.
The bank has a mobile app, its processes are faster, and customer and employee satisfaction rates are up. This progress is also reflected in the financial results. Earnings per share increased by 14% in 2022, compared to an initially targeted growth of 5%.
There are still challenges for Laurentian, said Scotiabank analyst Meny Grauman. For the first half of fiscal 2023, management warned investors to expect high expenses, tight margins and slower loan book growth in 2023.
“While there is no doubt that the bank is executing its plan well against its objectives, the macroeconomic environment is becoming more difficult and we continue to see more upside potential elsewhere among large banks whose sources of income are more diversified”, comments the analyst.
Laurentian Bank managed to exceed its objectives in 2022, despite soaring inflation and the economic disruption linked to the war in Ukraine, underlines Mr.me Llewellyn. It anticipates that results will be under pressure for the first half of the year, but sees a recovery for the rest of the year, “provided that interest rates stabilize”.
Laurentian has leeway to accomplish its objectives, even if the economy slows down, because it is ahead of its intermediate targets, adds its CEO. “Our three-year objectives have not changed (2022 to 2024). »
On higher-than-expected spending in the first quarter, Mr.me Llewellyn replies that they will stabilize during the second half of the 2023 financial year. During the first six months of the financial year, the bank must make significant investments, in particular for the renewal of its offer of cards credit. “To improve our efficiency, we have to spend money to make money. »
The company doesn’t have a reputation for being particularly adept at controlling expenses, but RBC Capital Markets analyst Darko Mihelic is willing to give the new management the benefit of the doubt. “Laurentian has had difficulty in the past with controlling expenses, but in this situation [un important virage stratégique]we are not too concerned to see that the expenses are higher than expected, ”he wrote in March.