December 5, 2012 / 4:53 PM / 5 years ago

UPDATE 1-Laurentian Bank shares fall on results

3 Min Read

* Core results miss estimates

* Dividend rises 4.3 pct to C$0.49/shr

* Shares down 2.6 pct (Adds details, shares)

Dec 5 (Reuters) - Laurentian Bank of Canada profit rose 71 percent in the fourth quarter due to the impact of recent acquisitions, but the result missed analysts' estimates, prompting the shares to sink 2.3 percent on Wednesday.

The share decline came despite an announced 4.3 percent dividend increase for Laurentian, which is Canada's eighth-largest bank by market capitalization.

Net profit income was C$45.7 million ($46.04 million), or C$1.51 per share, in the fiscal fourth quarter ended Oct. 31. That was up from with C$26.7 million, or 99 Canadian cents per share, a year earlier.

Loan growth of 21 percent helped stoke the results, but the bulk of the rise was due to a C$16.4 million after-tax gain on the bank's acquisition of AGF Trust Co. in August.

Excluding acquisition-related items, the bank earned C$1.17 a share, falling short of the profit of C$1.31 expected by analysts, according to Thomson Reuters I/B/E/S.

At mid-morning, the bank's shares were down C$1.17 at C$44.58, making it the weakest Toronto-listed financial issue and underperforming the 0.2 percent rise of the S&P/TSX financials index.

Laurentian paid C$415.5 million to buy AGF Trust from former owner AGF Management and combine it with Laurentian's B2B Trust subsidiary.

Laurentian recorded a C$16.4 million after-tax gain during the quarter as the estimated fair value of the AGF Trust assets exceeded the purchase price, the bank said.

The AGF Trust takeover followed the acquisition of the MRS companies - a group of four financial-management firms with about C$850 million in assets - from mutual fund company IGM Financial last year.

Laurentian said both acquisitions contributed to the strong loan growth during the quarter.

"As net interest margins continued to be pressured throughout the year, sustained organic growth in loan and deposit volumes combined with the bank's acquisitions... generated strong revenue growth,", Laurentian Chief Executive Rejean Robitaille said in a statement.

Revenue at Laurentian rose 15 percent to C$210.4 million, but was pressured by net interest margins that narrowed to 1.62 percent from 1.76 percent, due to low interest rates.

Low rates have taken an increasingly big bite out of Canadian bank profit, as shown by Bank of Montreal and Canadian Western Bank, who reported results on Tuesday. .

Loan-loss provisions declined 38 percent to C$8 million. ($1 = 0.9927 Canadian dollars) (Reporting By Cameron French, additional reporting by Maneesha Tiwari in Bangalore; editing by Andrew hay)

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