Laurentian Bank of Canada announced an uncommon move for a Canadian bank on Friday by sharply reducing its payout to investors.

Effective with the payment in August, Laurentian’s quarterly dividend will fall 40 per cent to $0.40 per share.

The bank justified the decision by saying it will provide greater flexibility to support its strategic plan and bolster its balance sheet.

“We have a strong capital and liquidity position, and disciplined risk management, but it is a time for prudence,” said CEO François Desjardins in a release.

“Although we believe that current earnings are not reflective of the future earnings power of the organisation, we have reduced the dividend to $0.40 per share which improves operational flexibility until we reap the anticipated benefits of our strategic plan.”

Laurentian on Friday also reported a 79 per cent drop in fiscal second-quarter net income as profit fell to $8.9 million for the three-month period ending April 30.

The Montreal-based bank said it booked $54.9 million in provisions for credit losses during the quarter, compared to $9.2 million a year earlier.