Laurentian Bank of Canada reports second quarter 2024 results
The financial information reported herein is based on the condensed interim consolidated (unaudited) information for the three-month period ended |
For the six months ended
"The Bank maintained a strong and prudent liquidity position and remains well capitalized in light of continuing macroeconomic headwinds," said Éric Provost, President & CEO. "This quarter, we further simplified our operations that demonstrates our conviction and ability to execute on our strategic plan, as we concentrate on our core strengths. We will also unveil our revamped strategic plan on
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For the three months ended |
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For the six months ended |
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In millions of dollars, except per share and percentage amounts (Unaudited) |
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Variance |
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Variance |
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Reported basis |
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Net income (loss) |
$ (117.5) |
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$ 49.3 |
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(338) % |
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$ (80.3) |
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$ 101.2 |
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(179) % |
Diluted earnings per share |
$ (2.71) |
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$ 1.11 |
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(344) % |
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$ (1.97) |
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$ 2.20 |
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(190) % |
Return on common shareholders' equity(2)(3) |
(18.6) % |
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7.7 % |
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(6.7) % |
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7.6 % |
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Efficiency ratio(4) |
152.9 % |
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71.0 % |
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114.3 % |
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70.8 % |
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Common Equity Tier 1 (CET1) capital ratio(5) |
10.4 % |
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9.3 % |
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10.4 % |
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9.3 % |
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Adjusted basis |
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Adjusted net income(1) |
$ 40.5 |
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$ 51.7 |
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(22) % |
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$ 84.7 |
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$ 106.0 |
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(20) % |
Adjusted diluted earnings per share(2) |
$ 0.90 |
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$ 1.16 |
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(22) % |
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$ 1.80 |
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$ 2.31 |
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(22) % |
Adjusted return on common shareholders' equity(2)(3) |
6.1 % |
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8.1 % |
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6.1 % |
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8.0 % |
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Adjusted efficiency ratio(2) |
73.8 % |
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69.7 % |
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73.4 % |
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69.5 % |
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(1) |
This is a non-GAAP financial measure. For more information, refer to the Non-GAAP Financial and Other Measures below and beginning on page 5 of the Second Quarter 2024 Report to Shareholders, including the MD&A for the period ended |
(2) |
This is a non-GAAP ratio. For more information, refer to the Non-GAAP Financial and Other Measures section below and beginning on page 5 of the Second Quarter 2024 Report to Shareholders, including the Management's Discussion and Analysis (MD&A) for the period ended |
(3) |
Effective |
(4) |
This is a supplementary financial measure. For more information, refer to the Non-GAAP Financial below and beginning on page 5 of the Second Quarter 2024 Report to Shareholders, including the MD&A for the period ended |
(5) |
In accordance with the Office of the Superintendent |
In addition to financial measures based on generally accepted accounting principles (GAAP), management uses non-GAAP financial measures to assess the Bank's underlying ongoing business performance. Non-GAAP financial measures presented throughout this document are referred to as "adjusted" measures and exclude amounts designated as adjusting items. Adjusting items include the amortization of acquisition-related intangible assets, and certain items of significance that arise from time to time which management believes are not reflective of underlying business performance. Non-GAAP financial measures are not standardized financial measures under the financial reporting framework used to prepare the financial statements of the Bank and might not be comparable to similar financial measures disclosed by other issuers. The Bank believes non-GAAP financial measures are useful to readers in obtaining a better understanding of how management assesses the Bank's performance and in analyzing trends.
The following tables show a reconciliation of the non-GAAP financial measures to their most directly comparable financial measure that is disclosed in the primary financial statements of the Bank.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES — CONSOLIDATED STATEMENT OF INCOME
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For the three months ended |
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For the six months ended |
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In thousands of dollars (Unaudited) |
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Non-interest expenses |
$ 386,341 |
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$ 197,834 |
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$ 182,472 |
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$ 584,175 |
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$ 366,147 |
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Less: Adjusting items, before income taxes |
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P&C Banking segment impairment charges(1) |
155,933 |
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— |
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— |
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155,933 |
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— |
Restructuring and other impairment charges(2) |
40,832 |
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6,076 |
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— |
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46,908 |
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— |
Amortization of acquisition-related intangible assets(3) |
3,229 |
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3,217 |
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3,221 |
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6,446 |
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6,431 |
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199,994 |
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9,293 |
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3,221 |
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209,287 |
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6,431 |
Adjusted non-interest expenses |
$ 186,347 |
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$ 188,541 |
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$ 179,251 |
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$ 374,888 |
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$ 359,716 |
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Income (loss) before income taxes |
$ (151,678) |
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$ 43,609 |
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$ 58,526 |
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$ (108,069) |
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$ 119,487 |
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Adjusting items, before income taxes (detailed above) |
199,994 |
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9,293 |
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3,221 |
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209,287 |
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6,431 |
Adjusted income before income taxes |
$ 48,316 |
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$ 52,902 |
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$ 61,747 |
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$ 101,218 |
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$ 125,918 |
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Reported net income (loss) |
$ (117,547) |
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$ 37,283 |
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$ 49,291 |
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$ (80,264) |
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$ 101,201 |
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Adjusting items, net of income taxes |
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P&C Banking segment impairment charges(1) |
125,629 |
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— |
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— |
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125,629 |
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— |
Restructuring and other impairment charges(2) |
30,020 |
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4,468 |
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— |
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34,488 |
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— |
Amortization of acquisition-related intangible assets(3) |
2,410 |
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2,402 |
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2,393 |
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4,812 |
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4,779 |
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158,059 |
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6,870 |
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2,393 |
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164,929 |
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4,779 |
Adjusted net income |
$ 40,512 |
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$ 44,153 |
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$ 51,684 |
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$ 84,665 |
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$ 105,980 |
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Net income (loss) available to common shareholders |
$ (118,835) |
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$ 32,682 |
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$ 48,003 |
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$ (86,153) |
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$ 95,312 |
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Adjusting items, net of income taxes (detailed above) |
158,059 |
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6,870 |
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2,393 |
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164,929 |
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4,779 |
Adjusted net income available to common shareholders |
$ 39,224 |
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$ 39,552 |
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$ 50,396 |
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$ 78,776 |
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$ 100,091 |
(1) |
The Personal and Commercial (P&C) Banking segment impairment charges related to the impairment of the P&C Banking segment as part of the goodwill impairment test performed as at |
(2) |
Restructuring and other impairment charges resulted from the Bank's decision to suspend the Advanced Internal-Ratings Based (AIRB) approach to credit risk project and to reduce its leased corporate office premises in |
(3) |
Amortization of acquisition-related intangible assets results from business acquisitions and is included in the Non-interest expenses line item. |
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES — CONSOLIDATED BALANCE SHEET
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For the three months ended |
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For the six months ended |
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In thousands of dollars (Unaudited) |
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Shareholders' equity(1) |
$ 2,744,758 |
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$ 2,886,490 |
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$ 2,845,278 |
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$ 2,744,758 |
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$ 2,845,278 |
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Less: |
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Preferred shares |
(122,071) |
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(122,071) |
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(122,071) |
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(122,071) |
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(122,071) |
Limited recourse capital notes |
(123,487) |
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(123,487) |
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(123,516) |
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(123,487) |
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(123,516) |
Cash flow hedge reserve(2) |
(9,140) |
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(25,535) |
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(32,591) |
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(9,140) |
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(32,591) |
Common shareholders' equity(1) |
$ 2,490,060 |
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$ 2,615,397 |
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$ 2,567,100 |
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$ 2,490,060 |
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$ 2,567,100 |
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Impact of averaging month-end balances(3) |
104,149 |
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(7,616) |
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(24,981) |
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111,010 |
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(36,279) |
Average common shareholders' equity(1) |
$ 2,594,209 |
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$ 2,607,781 |
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$ 2,542,119 |
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$ 2,601,070 |
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$ 2,530,821 |
(1) |
Effective |
(2) |
The cash flow hedge reserve is presented in the Accumulated other comprehensive income line item. |
(3) |
Based on the month-end balances for the period. |
Revamped Strategic Plan
In
Personal and Commercial Banking segment impairment
As at
Refer to the Critical accounting and estimates section on page 21 of the Bank's MD&A for the second quarter of 2024 and to Notes 7 and 17 to the Condensed Interim Consolidated Financial Statements for additional information.
Suspension of the advanced-internal ratings-based (AIRB) approach to credit risk project
In the current context of its revamped strategic plan and priorities, the Bank has made the decision to suspend the AIRB project and to focus on the priorities of its revamped strategic plan to generate additional revenue, or efficiency gains. As a result, the Bank recorded an impairment charge of
Reduction of leased corporate office premises
Since 2021, the Bank has adopted a hybrid work model. With an objective of maximizing shareholder value, increasing efficiency and simplifying our organization, the Bank has made the decision to reduce by two-thirds its leased corporate office premises in
Organizational changes
In line with the Bank's priorities of becoming a simpler and more customer-centric organization, the Bank continued the simplification of its organizational structure. As a result, the Bank recorded severance charges of
Other Business Highlights
Sale of assets under administration of
On
This transaction includes the transfer of approximately
The transaction supports the Bank's strategic focus on simplification, and concentrating on areas of business where it can win and be more competitive.
Key executive changes
On
On
Three months ended
Net loss was
Total revenue
Total revenue decreased by
Net interest income decreased by
Other income was $73.0 million for the second quarter of 2024, unchanged compared with the second quarter of 2023. Higher income from financial instruments in the second quarter of 2024 was mostly offset by lower lending fees due to tempered commercial real estate activity and lower income from mutual funds.
Provision for credit losses
The provision for credit losses was $17.9 million for the second quarter of 2024, compared with
Non-interest expenses
Non-interest expenses amounted to
Salaries and employee benefits amounted to
Premises and technology costs were
Other non-interest expenses were
Impairment and restructuring charges were
Efficiency ratio
The efficiency ratio on a reported basis increased to 152.9% for the second quarter of 2024, compared with 71.0% for the second quarter of 2023 The increase year-over-year is mainly due to the impairment and restructuring charges recorded in the second quarter of 2024, as described above. The adjusted efficiency ratio increased to 73.8% for the second quarter of 2024, compared to 69.7% for the second quarter of 2023 mainly as a result of lower revenues and higher adjusted non-interest expenses.
Income taxes
For the second quarter of 2024, the income tax recovery was
As at
Liquid assets
As at
Loans
Loans and bankers' acceptances, net of allowances, stood at
Deposits
Deposits decreased by
Debt related to securitization activities
Debt related to securitization activities increased by
Shareholders' equity and regulatory capital
Shareholders' equity stood at
The Bank's book value per common share was $56.82 as at
The CET1 capital ratio was 10.4% as at
On
From time to time,
Forward-looking statements typically are identified with words or phrases such as "believe", "assume", "estimate", "forecast", "outlook", "project", "vision", "expect", "foresee", "anticipate", "intend", "plan", "goal", "aim", "target", and expressions of future or conditional verbs such as "may", "should", "could", "would", "will", "intend" or the negative of any of these terms, variations thereof or similar terminology.
By their very nature, forward-looking statements require the Bank to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature, which give rise to the possibility that the Bank's predictions, forecasts, projections, expectations, or conclusions may prove to be inaccurate; that the Bank's assumptions may be incorrect (in whole or in part); and that the Bank's financial performance objectives, visions, and strategic goals may not be achieved. Forward-looking statements should not be read as guarantees of future performance or results, or indications of whether or not actual results will be achieved. Material economic assumptions underlying such forward-looking statements are set out in the 2023 Annual Report under the heading "Outlook", which assumptions are incorporated by reference herein.
The Bank cautions readers against placing undue reliance on forward-looking statements, as a number of factors, many of which are beyond the Bank's control and the effects of which can be difficult to predict or measure, could influence, individually or collectively, the accuracy of the forward-looking statements and cause the Bank's actual future results to differ significantly from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These factors include, but are not limited to general and market economic conditions; inflationary pressures; the dynamic nature of the financial services industry in
Any forward-looking statements contained herein or incorporated by reference represent the views of management of the Bank only as at the date such statements were or are made, are presented for the purposes of assisting investors, financial analysts, and others in understanding certain key elements of the Bank's financial position, current objectives, strategic priorities, expectations and plans, and in obtaining a better understanding of the Bank's business and anticipated financial performance and operating environment and may not be appropriate for other purposes. The Bank does not undertake any obligation to update any forward-looking statements made by the Bank or on its behalf whether as a result of new information, future events or otherwise, except to the extent required by applicable securities legislation. Additional information relating to the Bank can be located on SEDAR+ at www.sedarplus.ca.
This press release can be found on the Bank's website at www.lbcfg.ca, under the
The conference call playback will be available on a delayed basis from
The presentation material referenced during the call will be available on our website under the Investor Centre tab, Financial Results.
Founded in
With a workforce of approximately 2,800 employees, the Bank offers a wide range of financial services and advice-based solutions to customers across
SOURCE