It will be taking a restructuring charge
Laurentian Bank of Canada’s (LBC’s) fourth-quarter earnings release showed that it missed all its financial goals for 2023, with the bank set to take a restructuring charge and reduce costs.
“We will focus our efforts on renewing the trust of loyal customers while driving greater operational efficiency and refocusing the bank’s core activities to create maximum value for our customers,” said Eric Provost, the bank’s new chief executive officer.
Under the leadership of Rania Llewellyn, the former chief executive pushed out by the board and replaced with Provost, the bank began a strategic plan two years ago. This plan laid out ambitious targets for its earnings growth, expenses, operating leverage, and return on equity. In 2023, the bank failed to reach its target for all four.
With Provost now at the helm, the bank stated that it will be re-examining the goals in the upcoming year as it makes ample changes for its strategy.
Reportedly, the bank’s profits were impacted by the costs in line with the major technical outage in September, which caused several services unavailable to customers, as well as the expenses that came with a strategic review.
LBC said that the cost of the outage was nine cents per share on a pretax basis. Overall, the non-interest expenses reached 13% in Q4 because of costs for restructuring and conducting the strategic review.
While the bank looked for a buyer for its businesses, it failed to attract bids and opted to continue being independent.
In the middle of the outage, the board replaced Llewellyn with Provost.
“We will focus our efforts on renewing the trust of loyal customers while driving greater operational efficiency and refocusing the bank’s core activities to create maximum value for our customers,” said Provost.
For the quarter ending in Oct 31, the lender reported an adjusted profit of $1 per share which was lower than the $1.16 average estimate of analysts in a survey by Bloomberg. Provisions for credit losses were slightly lower than expected, at $16.7 million.
The bank’s streamlining will cost another $6.5 million pretax charge in the current quarter and will be expected to result in $8 million in annual savings before income taxes.