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.
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