Bottom line suffers major setback
Laurentian Bank of Canada plunged into the red in the second quarter of 2024, reporting significant losses as it undergoes a strategic restructuring process.
The bank reported a net loss of $117.5 million for Q2 – down from the net income of $49.3 million reported in Q2 2023. The substantial loss translates to a diluted loss per share of $2.71 for the quarter.
Its adjusted net income also declined to $40.5 million ($0.90 per share) from $51.7 million ($1.16 apiece) in the same quarter last year.
Commercial loans and acceptances were $17.2 billion as of April 30, 2024, reflecting a 4% decrease from $17.8 billion on Oct. 31, 2023. This decline was mainly due to a reduction in real estate commercial loans. Meanwhile, residential mortgage loans increased slightly by 1% to $16.8 billion from $16.7 billion over the same period.
Total assets stood at $48.4 billion on April 30, 2024, down 3% from $49.9 billion at the end of October 2023. This decrease is attributed to a lower level of loans and liquid assets.
"The Bank maintained a strong and prudent liquidity position and remains well capitalized in light of continuing macroeconomic headwinds," president and CEO Éric Provost said in a press release.
"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 May 31, 2024, which will position us for future growth as an even stronger bank."
Impairment and restructuring charges
A significant factor contributing to the reported net loss was $196.8 million in impairment and restructuring charges related to the restructuring of the bank's operations and the impairment of its Personal and Commercial (P&C) Banking segment.
The charges reflected the bank's decision to simplify its organizational structure and reduce its leased corporate office premises in Toronto, as well as the costs associated with the simplification of the bank's operations and headcount reduction.
Excluding these impairment and restructuring charges, Laurentian Bank reported an adjusted net income of $40.5 million for the second quarter of 2024. The bank's adjusted diluted earnings per share were $0.90.
Credit risk and provisions
The provision for credit losses was $17.9 million for the second quarter of 2024, an increase of $1.8 million compared to the same quarter last year. This increase was mainly the result of higher provisions on impaired loans due to credit migration, partly offset by a release of provisions on performing loans.
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The provision for credit losses as a percentage of average loans and acceptances was 20 basis points for the quarter, compared to 18 basis points for the same period a year ago.
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