TD Securities Keeps a Hold Rating on Laurentian Bank of Canada

By Ryan Adsit

Wall Street analyst has provided a rating update for the Financial sector company yesterday, while remaining neutral on the stock. Analyst Lemar Persaud from TD Securities reiterated a Hold rating on Laurentian Bank of Canada (TSX: LB), with a C$60 price target.

Persaud wrote:

“We were concerned with the outlook for NIM following recent increases in the cost of deposit broker funding. On the call, management expressed confidence in its ability to pass on the higher funding costs through strategic mortgage pricing and reiterated its guidance for stable margins over the next few quarters. LB reduced its branch count by 23% vs. Q1/17. Importantly, we did not see any evidence of lower fee income which would suggest early signs of attrition of the bank’s customer base. We expect to monitor this closely in the coming quarters. Management disclosed the price of Northpoint as $325mm-$350mm, inclusive of the $130mm-$140mm premium, and that the loans would be risk-weighted at 90%.”

Currently, the analyst consensus on Laurentian Bank of Canada is Hold and the average price target is C$58.50, representing a 12.3% upside.

In a report issued on May 23, Barclays also upgraded the stock to Hold with a C$58 price target.

Based on Laurentian Bank of Canada’s latest earnings report for the quarter ending January 31, the company posted quarterly revenue of C$391 million and quarterly net profit of C$48.46 million. In comparison, last year the company earned revenue of C$368 million and had a net profit of C$45.71 million.

Laurentian Bank of Canada is a banking institution that offers financial services across Canada. It offers its products to a network of independent financial intermediaries through B2B Trust, as well as full-service brokerage solutions through Laurentian Bank Securities. The company operates through the following segments Personal & Commercial, B2B Bank, Laurentian Bank Securities and Capital Markets. Personal & Commercial segment caters to the financial needs of business clients across Canada and retail clients in Québec. The Bank serves retail clients mainly through a network of branches and ATMs, providing a full range of savings, investment and financing products. The B2B Bank segment supplies banking and financial products to independent financial advisors and non-bank financial institutions across Canada. The Laurentian Bank Securities and Capital Markets business segment provides full-service brokerage services to retail and institutional clients and manages bank-related capital market activities. This segment’s Institutional Fixed Income division has a particularly strong presence in government and corporate underwriting, as well as in secondary markets. Its institutional services group largely serves small and mid-sized money managers and brokerage firms. The Other segment includes the activities of the Bank’s various corporate support sectors, mainly treasury, credit, finance, risk management, technology, operations, corporate affairs and human resources. Treasury operations such as securitization activities, liquidity management and other corporate activities are reported in this segment. Laurentian Bank of Canada was founded by Monsignor Ignace Bourget on May 26, 1846 and is headquartered in Montreal, Canada.

The company’s shares closed last Wednesday at $52.08.