Noah Zivitz

Managing Editor, BNN Bloomberg

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Laurentian Bank of Canada warned on Tuesday that it’s facing a $209-million hit to its fiscal fourth quarter profit (or $163 million after-tax) as the lender accounts for a strategic review that reveals the extent of disruption it’s planning.

The largest component of the profit drag is a $93-million impairment charge to Laurentian’s personal banking division due to a drop in assets and deposits as well as what the bank described as “limited digital capabilities” that “made it challenging to retain existing customers and acquire new ones.”

Laurentian also announced a plan to adopt a hybrid work model, which will result in a $49-million charge as it prepares to cut half of its leased corporate offices in Montreal, Toronto, and Burlington, Ont. The bank also said it’s facing $9 million in severance costs as it cuts 64 positions in a bid to simplify its structure. 

As well, Laurentian said it’s expecting a $19-million rise in credit loss provisions in its fiscal fourth quarter and will take a $38-million charge as it halts the second phase of a technological overhaul at the bank in favour of exploring partnerships to update its systems. 

“These difficult but necessary changes make us more confident than ever about our future,” said Laurentian Bank Chief Executive Officer Rania Llewellyn in the release.

Laurentian said the charges will reduce its adjusted profit by $14 million after-tax in its fourth quarter and will cut its Common Equity Tier 1 capital ratio by approximately 25 basis points. The bank added that it’s expecting $20 million in cost reductions as a result, starting in 2022.