Laurentian Bank of Canada (LB) Q3 2024 earnings summary

Executive summary

• Adjusted net income for Q3 2024 was $43.1 million, down 25% year-over-year; reported net income was $34.1 million, down 31% year-over-year, with adjusted EPS at $0.88 and reported EPS at $0.67, both declining significantly from the prior year.

• For the nine months ended July 31, 2024, reported net loss was $46.2 million, mainly due to $212 million in impairment and restructuring charges.

• Strategic plan execution remains a priority, focusing on simplification, technology investment, operational efficiency, and commercial banking growth.

• Leadership changes include the appointment of a new Chief Risk Officer with extensive risk management experience.

• Results included $9.1 million in restructuring charges for Q3 2024; CET1 capital ratio strengthened to 10.9%.

Financial highlights

• Total revenue for Q3 2024 was $256.5 million, down 2% year-over-year but up 2% sequentially.

• Net interest income declined by $11.4 million year-over-year to $180.8 million, mainly due to lower commercial loan volumes; net interest margin was 1.79%.

• Other income increased by $7.0 million or 10% year-over-year to $75.7 million, driven by higher income from financial instruments.

• Adjusted non-interest expenses rose 5% year-over-year to $188.1 million, mainly from investments in technology and compliance; total non-interest expenses were $200.2 million.

• Provision for credit losses increased to $16.3 million in Q3 2024, up from $13.3 million a year ago.

Outlook and guidance

• Loan book expected to be slightly down in Q4, with growth anticipated to resume later in 2025, contingent on further rate reductions.

• Other income projected to decrease in Q4 due to divestitures and normalization of financial instrument income.

• Efficiency ratio expected to rise slightly in Q4 due to revenue pressure and ongoing investments.

• Provision for credit losses (PCL) expected to remain in the high teens to low 20s basis points.

• Medium-term targets include double-digit adjusted EPS growth, adjusted ROE in double digits, adjusted efficiency ratio below 60%, and positive adjusted operating leverage.