Dec 7, 2023
Laurentian stock is 'where money goes to die': portfolio manager
, BNN Bloomberg
Laurentian Bank is where investor money goes to die: portfolio manager
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After an earnings miss from Laurentian Bank of Canada, a portfolio manager says he sees a difficult period ahead for the Montreal-based lender.
Laurentian Bank of Canada reported earnings on Thursday that fell short of all of its financial goals in 2023. The bank said it will undertake restructuring efforts to reduce costs.
Steve DiGregorio, vice president and portfolio manager at Canoe Financial, told BNN Bloomberg that he believes Laurentian Bank is facing a “painful couple of years” ahead.
“If we look at this company over the last 20 to 25 years, it has gone nowhere. It is the definition of where money has gone to die,” DiGregorio said in a Thursday interview.
“Why would you possibly think that's going to change in this environment?”
In September, the bank experienced an IT outage which weighed on profits as various services were not available to customers. DiGregorio said about half of the total miss could be attributed to the outage and the other half to business operations.
The company said the outage had a pre-tax cost of nine cents per share in the fourth quarter.
ANALYST REACTION
Scotiabank analyst Meny Grauman said it is difficult to view a 14 per cent miss to estimates as “anything but a negative result.”
“Results were clearly weighed down by September’s systems outage, but as the eight (basis points) in sequential margin pressure attests, the bank’s challenges go beyond that one event,” Grauman wrote in a Thursday note.
“In fact, we would say that the systems outage had less of a negative impact on the balance sheet (namely deposits) than some had feared.”
Going into 2024, Grauman noted that Laurentian Bank will launch a new strategic plan focusing on customer experience, simplification and technology.
The bank is also working to simplify its organizational structure and reduce its workforce by two per cent.
CANADIAN BANKS IN Q4
Earnings from Laurentian come after mixed earnings results from Canada’s largest banks in the fourth quarter.
TD Bank, Scotiabank and Bank of Montreal all missed earnings estimates, while National Bank of Canada, CIBC and Royal Bank beat earnings estimates.
