(Bloomberg) -- Laurentian Bank of Canada slashed its quarterly dividend, the first payout cut by a large Canadian lender in almost three decades.
The Montreal-based regional bank chopped its dividend by 27 Canadian cents to 40 cents, a 40% reduction. The move came as Laurentian posted fiscal second-quarter results Friday that missed analysts’ estimates, the result of higher provisions for loan losses to brace for the financial impacts of the coronavirus pandemic.
Citing the “highly uncertain economic environment,” Laurentian said it cut the quarterly payout “to provide greater financial strength and flexibility to support continued growth” and “the pursuit of the bank’s strategic plan.”
The last time a major Canadian bank reduced its dividend was in 1992, a move made by Montreal-based National Bank of Canada.
Laurentian’s net income for the three months through April plunged 79% to C$8.9 million ($6.5 million), or 13 cents a share. Adjusted earnings of 20 cents missed the 42-cent average estimate of 10 analysts in a Bloomberg survey.
“We have a strong capital and liquidity position, and disciplined risk management, but it is a time for prudence,” Chief Executive Officer Francois Desjardins said in a statement. “Although we believe that current earnings are not reflective of the future earnings power of the organization,” the dividend cut “improves operational flexibility.”
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