March 4, 2009 / 2:30 PM / 9 years ago

UPDATE 2-Laurentian profit rises; credit worries hit shares

* Q1 EPS C$0.91 vs C$0.68

* Revenue up 3.6 percent at C$156.5 mln

* Shares sag 4.5 percent to C$28.98 (Adds details and comments)

By Frank Pingue

TORONTO, March 4 (Reuters) - Laurentian Bank of Canada (LB.TO) reported a 31 percent jump in its quarterly profit on Wednesday, but its shares fell as it missed estimates and cited concerns about credit quality.

Canada’s seventh-largest bank by market value reported net income of C$25 million ($19.5 million), or 91 Canadian cents a share, for the first quarter, ended Jan. 31. That compared with net income of C$19.1 million, or 68 Canadian cents a share, in the same period a year ago.

Analysts had expected a profit of 99 Canadian cents a share before one-time items, according to Reuters Estimates.

Laurentian said provisions for credit losses were C$12 million, up from C$9.5 million a year earlier. The increase, it said, related mainly to consumer loan portfolios where credit conditions deteriorated.

The bank said impaired loans deteriorated only slightly and that the economic environment remained a source of concern.

“(The earnings) were a little lower than expected and there are some concerns about credit quality,” said Michael Goldberg, an analyst as Desjardins Securities.

“And when you look at the relative valuations it’s held up better, so some of these issues could have a negative impact on performance, which is what I think we are seeing.”

Laurentian stock fell C$1.37, or 4.5 percent, to C$28.98, while the broader financial index was up 1.2 percent. The bank’s shares are down about 16 percent this year, while the financial index is down about 23 percent.

The bank said its total personal deposits rose by C$738.4 million during the quarter to C$13.2 billion. Revenue rose 3.6 percent to C$156.5 million.

The bank’s return on common shareholders’ equity was 10 percent, up from 8.1 percent a year earlier.

“Despite market conditions, we had another good quarter with solid loan and deposit growth,” Rejean Robitaille, Laurentian’s chief executive, said in a statement.

“However, results also reflected concerns related to the slowing economy and, as anticipated, margin compression and higher loan losses.”

For fiscal 2009, Laurentian expects diluted earnings per share to be in a range of C$3.70 to C$4.40, and a return on common shareholders’ equity of 10 percent to 12 percent. Its revenue is expected to be in a range of C$645 million to C$665 million.

$1=$1.28 Canadian Editing by Rob Wilson

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