Laurentian Bank Posts Loss in Q4, Dividend Raised

Laurentian Bank (LB), Canada’s seventh-largest bank, posted a loss in its fourth quarter due to one-time charges.

The bank raised its quarterly dividend by 10%. (See Analysts’ Top Stocks on TipRanks)

Earnings & Revenue

Laurentian Bank reported a loss of C$102.9 million (C$2.39 per diluted share) for Q4 2021, compared with a net income of C$36.8 million (C$0.79 per diluted share) in Q4 2020. It recorded C$189.4 million in impairment and restructuring charges as a result of a strategic review.

On an adjusted basis, the Montreal-based bank earned C$47.8 million (C$1.06 per diluted share) in the quarter ended October 31, compared to an adjusted profit of C$42.3 million (C$0.91) per diluted share in the same quarter last year.

Revenue came in at C$250.4 million, up 3% from C$243.5 million in the prior-year quarter.

Provisions for credit losses were C$24.9 million for the quarter compared to C$24.2 million for the fourth quarter of 2020, as higher provisions on performing loans were partially offset by lower provisions on bad loans.

Management Commentary

Laurentien Bank president and CEO Rania Llewellyn said, “I am extremely proud of everything we accomplished in resetting and rebuilding the Bank in 2021 as One Winning Team. I look forward to 2022 – a year of execution – with optimism, excitement, and renewed confidence.”

Share Buybacks, Dividend Hike

Laurentian Bank has received the authorization to repurchase up to 875,000 of its common shares, which represents 2% of the shares outstanding.

The bank also said its board of directors approved a 10% dividend increase, bringing the quarterly payment to C$0.44 per share from C$0.40. This decision takes effect with the payment scheduled for February 1.

Wall Street’s Take

On November 30, BMO Capital analyst Sohrab Movahedi maintained a Hold rating on LB with a C$45 price target. This implies 12.7% upside potential.

The rest of the Street is neutral about LB with a Hold consensus rating based on one Buy and five Holds. The average Laurentian Bank price target of C$46.57 implies 16.5% upside potential to current levels.