- Total Revenue: $249.6 million, down 3% year-over-year, stable quarter-over-quarter.
- Net Income (Reported): $38.6 million.
- Diluted EPS (Reported): $0.76.
- Net Income (Adjusted): $39.5 million, down 11% year-over-year, down 4% quarter-over-quarter.
- Diluted EPS (Adjusted): $0.78, decreased by 14% year-over-year, 12% quarter-over-quarter.
- Net Interest Margin (NIM): 1.85%, up 8 basis points sequentially.
- Efficiency Ratio: Exceeded 74%, increased by 130 basis points year-over-year, decreased by 70 basis points sequentially.
- Return on Equity (ROE): 5.3%, down 70 basis points year-over-year, 90 basis points quarter-over-quarter.
- Net Interest Income: Up $1 million year-over-year, up $12.3 million sequentially.
- Other Income: $62.6 million, down 14% year-over-year, 1% sequentially.
- Non-Interest Expenses (Adjusted): $184.9 million, down 2% year-over-year, up 4% sequentially.
- CET1 Ratio: Stable at 10.9%.
- Commercial Loan Growth: Up $600 million or 4% sequentially.
- Inventory Financing Utilization Rate: 45%, below historical averages.
- Residential Mortgage Loans: Down 4% year-over-year, down 1% sequentially.
- Allowances for Credit Losses: $206.9 million, up $3.1 million sequentially.
- Provision for Credit Losses (PCL): $15.2 million, down $1.7 million year-over-year, up $4.8 million sequentially.
- Gross Impaired Loans: Increased by $155.3 million year-over-year, up $21 million sequentially.
Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Laurentian Bank of Canada (LRCDF, Financial) reported a 3.6% quarter-over-quarter growth in commercial loans, driven by inventory and equipment financing specialties.
- The bank's net interest margin (NIM) increased by 8 basis points to 1.85%, supported by favorable loan repricing lags and business mix improvements.
- Laurentian Bank of Canada (LRCDF) successfully completed a comprehensive mainframe upgrade, enhancing operational resiliency.
- The bank announced a new partnership with Yanmar America for exclusive floor plan dealer financing, aligning with its diversification strategy.
- Laurentian Bank of Canada (LRCDF) maintains a strong liquidity and capital position, providing financial stability amid macroeconomic uncertainties.
Negative Points
- Total revenue for the first quarter of 2025 was $249.6 million, down 3% compared to the previous year.
- The bank's efficiency ratio remains elevated, exceeding 74%, with expectations of continued high expense levels for the remainder of the year.
- Net income decreased by 11% year-over-year and 4% quarter-over-quarter, with a diluted EPS of $0.78, down 14% year-over-year.
- Gross impaired loans increased by $155.3 million year-over-year, primarily due to credit migration in commercial loans.
- The bank anticipates a slight decrease in net interest margin (NIM) in the second quarter due to nonrecurring loan repricing lags.
Q & A Highlights
Q: Can you provide more details on the expected decline in net interest margin (NIM) for the next quarter?
A: Yvan Deschamps, CFO, explained that the 8 basis points increase in NIM this quarter was due to loan repricing lags and FX, as well as business mix improvements. The loan repricing lags, related to the US portfolio, are not expected to recur in Q2, leading to a slight reduction in NIM.
Q: How might tariffs impact Laurentian Bank's exposure, particularly in sectors like autos and aluminum?
A: Eric Provost, CEO, stated that the bank is well-positioned to face tariffs, with 90% of its inventory financing business in the US, primarily distributing US products. The commercial real estate segment, focused on housing projects, remains strong, and the bank is confident in its portfolio's resilience.
Q: How do tariffs potentially affect the timing of your strategic plan's delivery?
A: Eric Provost noted that while tariffs could slow consumer confidence and growth, the bank's strategic plan remains on track. The focus is on asset growth and efficiency through investments, with no plans to slow down ongoing projects despite potential tariff impacts.
Q: Can you elaborate on the acceleration of planned project investments in Q2?
A: Eric Provost clarified that the acceleration refers to increased OpEx due to cloud-based solutions aligned with the strategic plan. These investments are foundational and aim to enhance digital offerings and operational efficiency.
Q: What is the impact of the lag in loan repricing on your financials?
A: Yvan Deschamps explained that the lag occurs due to the timing difference between cost of funds reduction and customer repricing, leading to a temporary margin benefit. This effect was present in Q1 but is not expected to recur in Q2 unless further Fed rate reductions occur.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
