“We are an alternative to the Big Six”, launched the CEO of the Laurentian Bank Friday by sharing her vision of the financial institution for the future and its eagerly awaited strategy to generate “profitable long-term growth”.
Rania Llewellyn presented a three-year plan where she envisions a year of execution in 2022, a year of growth in 2023, and a year of accelerated growth in 2024.
The one who succeeded François Desjardins last year at the head of Laurentian targets a minimum growth of 5% in earnings per share in 2022 and 7 to 10% in the “medium term”.
The growth engine remains business services (financing of equipment, inventories, etc.) which constitutes 42% of all of the bank’s activities. Management intends to enhance the importance of these activities by diversifying into new sectors, such as technology, small construction companies and equipment that comply with ESG (environmental, social and governance) criteria.
To revive the organization and further distinguish it from the major banks in the country, the personal banking services sector is repositioned in digital banking and will focus in particular on segments qualified as “under-served” such as, for example, new immigrants and students. .
“New immigrants have no connection here. So it’s easier to attract them than to get a customer from another bank to change banking institution, ”said Rania Llewellyn in an interview. The bank intends to offer new products and turn to partners who do not offer financial services but who supervise new immigrants to obtain referrals and gain clients.
SCREENSHOT
Rania llewellyn
Rania Llewellyn also wants to bring a more “human” approach. “Most clients of major Canadian banks do not have appointed advisers. All Laurentian Bank clients will have a dedicated advisor and will have a financial assessment once a year in person or virtually, ”she says.
The bank now has about sixty branches, establishments called “financial clinics” in recent years due to a transformation of these locations where financial advice has become the raison d’être of these physical places. For these reasons, Rania Llewellyn considers it misleading to speak of “branches” since the transactional side has been abandoned and says that she does not like the expression “financial clinic” because the word clinical suggests that one must consult because some thing is wrong. “We’re going to find another name,” she said.
Rania Llewellyn adds that using the bank’s new digital platform, virtual advisors will allow Laurentian to have a “national” platform.
Management also intends to close “key fundamental gaps” by launching, among other things, the contactless debit card as the digital shift intensifies with the launch of a mobile application this month and the modernization of the website. bank over the next year.
Rania Llewellyn is also committed to ensuring that Laurentian no longer directly finances projects for the exploration, production or development of coal, oil and gas.
She says this is a “key element” that sets Laurentian apart from other Canadian banks, which she hopes will help her attract companies that are striving to accelerate their transition to green energy and customers and talented people for whom sustainable development is a priority.
Dividend increase
In releasing its year-end results Friday, Laurentian announced a 10% dividend bonus and revealed its intention to repurchase up to 2% of its shares for cancellation within the next year. The increase in the dividend is particularly interesting in the context where this dividend was cut by 40% in the spring of last year.
For the months of August, September and October, the bank generated a loss of 102.9 million mainly attributable to depreciation and restructuring charges related to the strategic review of the depreciation activities of the retail banking sector. .
Excluding these charges, the operations generated a profit of $ 47.8 million in the year-end quarter, or $ 1.06 per share, better than analysts’ expectations who forecast adjusted earnings per share of 92 cents. .
Adjusted earnings generated in the fourth quarter were up 13% year on year, but down 19% from the previous quarter.
While the bank hopes that the hoped-for improvement in profitability will eventually be reflected in the stock market valuation, investors reacted well to today’s announcements on Friday. Laurentian stock rose 5.7% to $ 40.19 in Toronto.
“The bank’s strategic direction is much more important than the year-end performance revealed on Friday,” RBC analyst Darko Mihelic said in a note sent to his clients.
Only one of ten analysts monitoring the bank’s activities recommended buying the stock ahead of Friday’s announcements.