{"id":48420,"date":"2017-05-12T22:13:00","date_gmt":"2017-05-13T02:13:00","guid":{"rendered":"https:\/\/prefblog.com\/?p=48420"},"modified":"2025-07-18T22:14:26","modified_gmt":"2025-07-19T02:14:26","slug":"lb-outlook-negative-says-sp","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=48420","title":{"rendered":"LB Outlook Negative, Says S&#038;P"},"content":{"rendered":"<p>Standard &#038; Poor&#8217;s <a href=\"https:\/\/www.standardandpoors.com\/en_AU\/web\/guest\/article\/-\/view\/type\/HTML\/id\/1848355\">has announced<\/a>:<\/p>\n<blockquote>\n<ul>\u2022We believe Montreal-based Laurentian Bank of Canada&#8217;s funding metrics have weakened, as reliance on unsecured wholesale funding has increased because loan growth has accelerated in the past couple of years more than for peers.<\/p>\n<li>\u2022We are revising our outlook on Laurentian Bank to negative from stable, to account for the bank&#8217;s higher dependence on short-term wholesale funding (as we define it), which we view as a riskier and less-reliable funding source.\n<li>\u2022The negative outlook also reflects the potential risks we believe could materialize from the bank&#8217;s aggressive business growth (both organic and acquisitive), particularly in Business Services, which includes specialty lending to commercial segments such as equipment finance as well as lending to small- and medium-size enterprises (SMEs) and B2B Bank, its broker and third-party advisor channel, in the next two years.\n<li>\u2022We are also affirming our &#8216;BBB\/A-2&#8217; long- and short-term issuer credit ratings on Laurentian Bank.<\/ul>\n<p><b>&#8230;<\/b><br \/>&#8220;The outlook revision reflects our assessment of the bank&#8217;s weakening funding metrics due to management&#8217;s increased appetite for unsecured wholesale funding, with a higher emphasis on short-term wholesale funding (as we define it), which we view as a riskier and less reliable funding source&#8221; said Michael Leizerovich S&#038;P Global Ratings credit analyst. By our calculation, Laurentian Bank&#8217;s short-term wholesale percentage of funding base has meaningfully risen from 14.6% at year-end 2012 to 25.4% at first-quarter 2017 (versus the peer average of 23.8%). As of first-quarter 2017, the bank&#8217;s stable funding ratio (which measures the company&#8217;s ability to fund long-term assets with long-term funding) was about 87.8%, which is below the Canadian bank peer average of 98.0%. By our estimate, this ratio, which was 95.4% at year-end 2013, has steadily declined for several years as the company has sought to diversify its funding sources to fund its loan growth. <\/p>\n<p>The outlook is negative, reflecting the bank&#8217;s weakening funding profile and heightened risks associated with aggressive business growth. We will continue monitoring the bank&#8217;s progress against its ambitious seven-year transformation plan and remain vigilant regarding any changes in asset performance.<\/p>\n<\/blockquote>\n<p>Affected issues are LB.PR.F, LB.PR.H and LB.PR.J.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Standard &#038; Poor&#8217;s has announced: \u2022We believe Montreal-based Laurentian Bank of Canada&#8217;s funding metrics have weakened, as reliance on unsecured wholesale funding has increased because loan growth has accelerated in the past couple of years &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-48420","post","type-post","status-publish","format-standard","hentry","category-issue-comments"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/48420","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=48420"}],"version-history":[{"count":1,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/48420\/revisions"}],"predecessor-version":[{"id":48421,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/48420\/revisions\/48421"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=48420"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=48420"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=48420"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}