Laurentian Bank of Canada reported a net loss in its second quarter as the Montreal-based lender continues to work toward completing a strategic transaction involving Fairstone Financial Inc. and National Bank of Canada.
The bank posted a net loss of $34.5 million for the quarter ended April 30, compared with a profit of $48.2 million in the same period last year. The loss was largely attributed to restructuring costs and provisions related to the planned sale of its consumer lending business.
Deal Details
In March, Laurentian announced an agreement to sell its consumer lending portfolio to Fairstone and National Bank, a move aimed at streamlining operations and focusing on core banking services. The deal is expected to close later this year, pending regulatory approvals.
"We are making steady progress on the transaction, which will strengthen our balance sheet and position us for future growth," said Laurentian CEO Rania Llewellyn in a statement.
Financial Highlights
Revenue for the quarter fell 12% to $234 million, driven by lower net interest income and higher expenses. The bank also set aside $15 million for restructuring costs related to the deal.
Laurentian's common equity tier 1 ratio, a key measure of financial strength, stood at 11.2%, down from 11.8% in the previous quarter but still above regulatory requirements.
"The quarter reflects the transitional nature of our business," Llewellyn added. "We remain confident in our strategy and the long-term value it will create for shareholders."
Market Reaction
Shares of Laurentian Bank fell 2.3% to $24.50 on the Toronto Stock Exchange following the earnings release. Analysts noted that the loss was within expectations given the restructuring.
The bank's stock has declined about 15% since the deal announcement, reflecting uncertainty about the outcome and integration risks.
Outlook
Laurentian reaffirmed its guidance for the full year, expecting the transaction to close in the third quarter. The bank also plans to reduce its workforce by 10% as part of cost-cutting measures.
"We are taking decisive actions to reshape our business and improve efficiency," Llewellyn said. "We look forward to completing the deal and delivering sustainable profitability."
