PrefBlog

Laurentian Bank chopped its dividend today:

At its meeting held on May 28, 2020, given the highly uncertain economic environment, the Board of Directors of the Laurentian Bank of Canada (TSX: LB) (the “Bank”) has approved a reduction of the quarterly dividend on its common shares by $0.27 or 40% to provide greater financial strength and flexibility to support continued growth, the pursuit of the Bank’s Strategic Plan, and the alignment of the Bank’s payout ratio with the Bank’s policy.

… and the stock got hammered, down 9.14% with volume at a thirty-day (at least) high. Paul Chiasson comments in the Globe:

Laurentian Bank of Canada slashed its dividend by 40 per cent on Friday after a sharp drop in profit, becoming the first large Canadian bank to cut its payout in nearly 30 years.

The Montreal-based bank came into the COVID-19 crisis on a back foot, having struggled in recent years with wage disputes and a challenging transition toward digital banking that has seen it shutter many branches and phase out teller services.
…
Canada’s seventh largest bank reported a 79-per-cent drop in profit for the three months ended April 30, with net income falling to $8.9-million from $43.3-million in the same quarter last year. The decline was largely attributed to a spike in provisions for potential loan losses tied to weakening economic conditions.

Laurentian responded by cutting its quarterly dividend to 40 cents a share, down from 67 cents. This is the first time a large Canadian bank has cut its dividend since National Bank of Canada did so in 1992, according to data from Refinitiv.
…
The bank’s capital position deteriorated slightly in the quarter, with the closely watched common equity Tier 1 ratio falling to 8.8 per cent from 9 per cent. The bank said it now expects its capital levels ”will remain below the level observed over the recent quarters.”

The preferreds were relatively unscathed, with LB.PR.H down 1.5% on elevated volume and LB.PR.J down 0.38% on slightly above average volume.

This entry was posted on Friday, May 29th, 2020 at 6:11 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.