Laurentian Bank announced that it was abandoning certain activities of its Capital Markets division, where growth left something to be desired.
The management of the regional bank decided at the end of May to rationalize the activities of its Capital Markets division, it said on Thursday as part of the unveiling of its second quarter results. In total, the decision affects “less than 20 positions” divided equally between Quebec and Ontario.
The financial institution declared a charge of 6 million dollars (M$) related to this decision, which should allow recurring annual savings of 5 million $, before tax.
The reduction is equivalent to less than 10% of the division’s activities, Laurentian President and CEO Rania Llewellyn said during a conference call to discuss the quarterly results. “This is in line with the actions of other peers over the past twelve months.”
“We want to focus on segments where we can win like fixed income and currencies,” she added. Due to market conditions, and they have been unfavorable for some time, we have made the decision to downsize.”
The chief financial officer, Yvan Deschamps, underlined that the conditions in the capital markets were difficult. “He has fewer activities on the emissions side. Without a shadow of a doubt, it’s more difficult than last year.”
The market will experience a recovery, but Yvan Deschamps has called for patience. “We should see that in the next few quarters. The current term takes place during the summer: we should not expect a lot of activity during this period.
Results above expectations
Despite a difficult economic environment, Laurentian Bank’s profits fell less than expected.
The institution’s net profit fell 17% to $49.3 million in the second quarter ended April 30. Adjusted earnings per share were $1.16.
The board of directors approved a dividend increase of 1 cent to 47 cents per share. This is an increase of 2% compared to the previous quarter and 4% compared to last year.
Prior to the earnings release, analysts had expected earnings per share of $1.12, according to financial data firm Refinitiv.
Analyst Mario Mendonca of TD Securities is positive about the results. “The stock is trading at a significant bargain compared to other banks. The gap is 35% compared to the 2024 forecast, compared to an average gap of 13% over the past five years.
Laurentian shares gained $1.25, or 4.09%, at $31.82 on the Toronto Stock Exchange late Thursday morning.