September 5, 2008 / 1:39 PM / in 9 years

UPDATE 2-Laurentian reports higher profit, hikes dividend

(Recasts, adds details)

By Frank Pingue

TORONTO, Sept 5 (Reuters) - Laurentian Bank (LB.TO) reported a 33 percent jump in quarterly profit on Friday, helped in part by the sale of securities and growth in its loans and deposits.

The results beat analyst estimates and gave a boost to Laurentian shares on a day when its peers on the Toronto Stock Exchange were lower amid a broad selloff.

Laurentian rose as much as 85 Canadian cents, or 2 percent, to C$39.94 before easing slightly to C$39.70, for a gain of 1.6 percent, at midday. The broader financial index was down 0.85 percent.

Laurentian also said its “solid financial condition” and “ability to pursue the bank’s development” convinced it to hike its quarterly dividend to 34 Canadian cents a share from 32 Canadian cents a share.

Canada’s eighth-largest bank by market value and the last of the group to report results for its third quarter, said it earned C$30.9 million ($29 million), or C$1.17 a share, in the three months ended July 31.

That compared with profit of C$23.2 million, or 85 Canadian cents, a year earlier.

Analysts, on average, had expected earnings per share of 93 Canadian cents, before exceptional items, according to Reuters Estimates.

The results prompted at least one analyst upgrade: John Aiken of Dundee Securities changed his rating on the stock to “neutral” from “sell” with a target price of C$44.

“We had been looking for a sign of confidence from management and we received it in the form of a ... dividend increase,” Aiken wrote in a note. “Performance was very good along all of its segments and the bank continues to generate volume growth,”

Laurentian’s results included a C$7.6 million net gain on the sale of securities, stemming from a C$12.9 million gain on the sale of Montreal Exchange shares. This was partly offset by losses of C$5.3 million on the sale of other securities.

Revenue climbed 13 percent to C$171 million from C$151 million.

Montreal-based Laurentian, a big financial player in the province of Quebec, said its return on equity was 13.4 percent, up from 10.5 percent a year earlier.

Its provision for credit losses stood at C$18.5 million in the quarter, but included an C$8 million increase in the general allowance for loan losses because of the recent slowdown in the Canadian economy and its strong loan growth.

$1=$1.06 Canadian Reporting by Frank Pingue; editing by Rob Wilson

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