The bank has faced multiple headwinds in recent times
Laurentian Bank’s credit rating is at risk, according to an analyst who has become the latest to downgrade the lending giant.
National Bank of Canada’s Gabriel Dechaine, who cut the bank’s rating to underperform, told Bloomberg he had lowered his rating twice over the same month with the first occurring because of the bank’s strategic review that ended with it not finding a buyer. Challenges to the bank soon followed which included a service outage and the departure of some of its key leaders.
S&P Global Ratings recently downgraded the bank’s outlook from negative to stable and Dechaine said that the bank’s wholesale funding costs were rising because of potential rating agency actions. DBRS Morningstar, a global credit rating agency, was said to have a similar review.
A spokesperson from the Laurentian Bank said in an email that the bank had strong capital and liquidity levels. Still, its stock had dropped 2.6% at the close last Tuesday.
Dechaine had dropped his price target from C$32 to C$27, which he said reflected a more conservative net interest margin. This was the lowest target that Bloomberg tracked from analysts.
Bloomberg’s compiled data showed that three analysts have now rated Laurentian Bank with the equivalent of a sell as seven had recommended holding while one retained a buy.
National Bank becomes the latest firm to downgrade and slash Laurentian’s price targets after the conclusion of the September review, with others including Canadian Imperial Bank of Commerce (CIBC) and Royal Bank of Canada (RBC).
