New medium-term financial targets1
introduced:
- Double digit adjusted diluted EPS growth
- Double digit adjusted ROE
- Adjusted efficiency ratio of 60% or less
- Positive adjusted operating leverage
1: The new medium-term
financial targets introduced are non-GAAP financial measures.
Please refer to the Non-GAAP Financial and Other Measures section
below for further details.
|
MONTREAL, May 31, 2024
/CNW/ - Laurentian Bank of Canada
(TSX: LB) ("Laurentian Bank" or the "Bank") today launched "Our
Path Forward", its revamped strategic plan, charting the course to
a stronger future. It defines the Bank's approach in the financial
services sector and outlines what sets it apart from its
competition, including its specialized approach to Commercial
Banking and a simple, digitally-led everyday banking
experience.
The Bank also unveiled its new ambition: foster prosperity
for all customers through specialized commercial banking and
low-cost banking services to grow savings for middle-class
Canadians.
"Our Path Forward, the revamped Strategic Plan we
unveiled today, charts the path to a stronger, sustainable, and
more profitable Laurentian Bank," said Éric Provost, President and
Chief Executive Officer. "Commercial Banking will remain the Bank's
growth engine, and we will grow market share in Personal Banking by
introducing new, low-cost, value-add products to attract new
customers and increase deposits, while simultaneously simplifying
our offering."
"Our success will be driven by our focus on execution, by
competing in areas where we have a competitive advantage, and by
harnessing the power of partnerships," he added. "I am incredibly
proud of the dedication and resilience that our employees have
shown over the course of the last year, and can say that today, we
have the right plan at the right time. Our team is united in its
resolve of achieving the objectives we have laid out for ourselves,
and we are confident in our path forward."
Commercial Banking
The Bank forecasts continued growth in lending as a shortage of
housing supply and a rebound in consumer confidence drive
demand.
These opportunities create significant headroom for growth
within the Bank's key specializations, including Inventory
Financing, Commercial Real Estate, Equipment Financing and
Commercial small and medium size enterprise (SME) Lending.
Commercial Banking objectives:
- Continue to grow organically and through partnerships;
- Maximize the value of preexisting ecosystems; and
- Diversify intro adjacent sectors and specializations.
Personal Banking
The Bank will position itself as an alternative bank for
middle-class customers that tend to be underserved or under
appreciated by other banks, as well as for younger customers, who
are more likely to consider switching banks and demand competitive
digital banking capabilities.
Gaining market share in this segment will rest on empowering the
middle-class through tailored interactions with advisors and
best-in-class support, amplifying the customer experience with
enhanced self-serve capabilities, and accelerating technology
investments, including through partnerships.
Personal Banking objectives:
- Improve the Bank's product offering, including self-serve
options;
- Simplify the Bank by reducing complexities in order to serve
customers more effectively; and
- Accelerate technology investments and explore
partnerships.
Capital Markets
The Bank will simplify its Capital Markets franchise to focus on
areas where it has the strongest expertise. This includes the
Bank's Fixed Income offering, which supports the government's role
in investing in people and growing the economy, and its Foreign
Exchange offering, to continue supporting Commercial Banking
customers.
Technology and
Operations
Technology and Operations consist of two of the Bank's key
enablers to achieve the objectives set out in its revamped
strategic plan.
In Technology, the Bank will implement a two-pronged
approach:
- Simplifying its technology stack and improving resiliency,
while also
- Enhancing its digital offering to improve the customer
experience.
In Operations, three principles will guide decision-making:
- "Where we work"
- "How we work"; and
- "How we organize our work for customers".
Team and Culture
Over the last three years, Laurentian Bank has made significant
improvements to its culture. It has:
- reduced annual turnover by approximately 40%, moving it closer
to industry standard;
- increased its employee engagement score to approximately 80%,
in line with industry average; and
- attracted strong talent from across the industry while
recruiting and filling positions in line with industry
average.
With its renewed plan, the Bank will evolve its culture to be
more impact-oriented, focusing on execution, outcomes, and
engagement, and creating an environment where employees continue to
be proud of the path forward.
Our Financial Path
The Bank has established the following medium-term financial
targets in connection with its new strategic plan:
Growth Drivers
Metrics
|
Mid-Term
Targets
|
Loan growth
|
Mid single
digit
|
Deposit
growth
|
Mid single
digit
|
Net interest
margin1 (NIM)
|
2%+
|
Loan portfolio
mix
|
>55%
Commercial
|
Financial Targets
Metrics
|
Mid-Term
Targets
|
Adjusted diluted
EPS1
growth
|
Double digit
|
Adjusted return on
equity (ROE)1
|
Double digit
|
Adjusted efficiency
ratio1
|
≤60%
|
Adjusted operating
leverage1
|
Positive
|
1: This is a non-GAAP
financial measure, please refer to the Non-GAAP Financial and Other
Measures section below for further details.
|
"Our strategic path is rooted in our belief that combining our
specialized expertise and focus on underserved customers can build
a more competitive bank," said Provost. "The work is far from over,
but Laurentian is ready for a brighter future."
Non-GAAP Financial and Other
Measures
In addition to financial measures based on generally accepted
accounting principles (GAAP), management uses non-GAAP financial
measures to assess the Bank's underlying ongoing business
performance. Non-GAAP financial measures presented throughout this
document are referred to as "adjusted" measures and exclude amounts
designated as adjusting items. Adjusting items include the
amortization of acquisition-related intangible assets, and certain
items of significance that arise from time to time which management
believes are not reflective of underlying business performance.
Non-GAAP financial measures are not standardized financial measures
under the financial reporting framework used to prepare the
financial statements of the Bank and might not be comparable to
similar financial measures disclosed by other issuers. The Bank
believes non-GAAP financial measures are useful to readers in
obtaining a better understanding of how management assesses the
Bank's performance and in analyzing trends.
Non-GAAP ratios are not standardized financial measures under
the financial reporting framework used to prepare the financial
statements of the Bank to which the non-GAAP ratios relate and
might not be comparable to similar financial measures disclosed by
other issuers. Ratios are considered non-GAAP ratios if adjusted
measures are used as components, refer to the non-GAAP financial
measure section above. The Bank believes non-GAAP ratios are useful
to readers in obtaining a better understanding of how management
assesses the Bank's performance and in analyzing trends.
Management also uses supplementary financial measures to analyze
the Bank's results and in assessing underlying business performance
and related trends. Please refer to the Glossary on page 25 of the
Second Quarter 2024 Report to Shareholders, including the MD&A
for more information about the composition of supplementary
financial measures disclosed in this document.
For more information, refer the Non-GAAP financial and other
measures section beginning on page 5 of the Second Quarter 2024
Report to Shareholders, including the MD&A for the quarter
ended on April 30, 2024, which is
incorporated by reference. The MD&A is available on SEDAR+ at
www.sedarplus.ca.
Webcast Details
To access the live video webcast of the Investor Day,
participants can connect by registering on the Investor Relations
page at laurentianbank.ca.
Caution Regarding Forward-Looking
Statements
From time to time, Laurentian Bank of Canada and, as applicable its subsidiaries
(collectively referred to as the Bank) will make written or oral
forward-looking statements within the meaning of applicable
Canadian and United States (U.S.)
securities legislation, including, forward-looking statements
contained in the Bank's 2023 Annual Report (2023 Annual Report),
the Management's Discussion and Analysis (the MD&A) for
the fiscal year ended October 31,
2023 and in the documents incorporated by reference herein
as well as in other documents filed with Canadian and U.S.
regulatory authorities, in reports to shareholders, and in other
written or oral communications. These forward-looking statements
are made in accordance with the "safe harbor" provisions of, and
are intended to be forward-looking statements in accordance with,
applicable Canadian and U.S. securities legislation. They include,
but are not limited to, statements regarding the Bank's vision,
strategic goals, business plans and strategies, priorities and
financial performance objectives; the economic, market, and
regulatory review and outlook for Canadian, U.S. and global
economies; the regulatory environment in which the Bank operates;
the risk environment, including, credit risk, liquidity, and
funding risks; the statements under the heading "Risk Appetite and
Risk Management Framework" contained in the 2023 Annual Report,
including, the MD&A for the fiscal year ended October 31, 2023, and other statements that are
not historical facts .
Forward-looking statements typically are identified with words
or phrases such as "believe", "assume", "estimate", "forecast",
"outlook", "project", "vision", "expect", "foresee", "anticipate",
"intend", "plan", "goal", "aim", "target", and expressions of
future or conditional verbs such as "may", "should", "could",
"would", "will", "intend" or the negative of any of these terms,
variations thereof or similar terminology.
By their very nature, forward-looking statements require the
Bank to make assumptions and are subject to inherent risks and
uncertainties, both general and specific in nature, which give rise
to the possibility that the Bank's predictions, forecasts,
projections, expectations, or conclusions may prove to be
inaccurate; that the Bank's assumptions may be incorrect (in whole
or in part); and that the Bank's financial performance objectives,
visions, and strategic goals may not be achieved. Forward-looking
statements should not be read as guarantees of future performance
or results, or indications of whether or not actual results will be
achieved. Material economic assumptions underlying such
forward-looking statements are set out in the 2023 Annual Report
under the heading "Outlook", which assumptions are incorporated by
reference herein.
The Bank cautions readers against placing undue reliance on
forward-looking statements, as a number of factors, many of which
are beyond the Bank's control and the effects of which can be
difficult to predict or measure, could influence, individually or
collectively, the accuracy of the forward-looking statements and
cause the Bank's actual future results to differ significantly from
the targets, expectations, estimates or intentions expressed in the
forward-looking statements. These factors include, but are not
limited to general and market economic conditions; inflationary
pressures; the dynamic nature of the financial services industry in
Canada, the U.S., and globally;
risks relating to credit, market, liquidity, funding, insurance,
operational and regulatory compliance (which could lead to the Bank
being subject to various legal and regulatory proceedings, the
potential outcome of which could include regulatory restrictions,
penalties, and fines); reputational risks; legal and regulatory
risks; competitive and systemic risks; supply chain disruptions;
geopolitical events and uncertainties; government sanctions;
conflict, war, or terrorism; and various other significant risks
discussed in the risk-related portions of the Bank's 2023 Annual
Report, such as those related to: Canadian and global economic
conditions (including the risk of higher inflation and rising
interest rates); Canadian housing and household indebtedness;
technology, information systems and cybersecurity; technological
disruption, privacy, data and third party related risks;
competition; the Bank's ability to execute on its strategic
objectives; digital disruption and innovation (including, emerging
fintech competitors); changes in government fiscal, monetary and
other policies; tax risk and transparency; fraud and
criminal activity; human capital; business continuity; emergence of
widespread health emergencies or public health crises;
environmental and social risks including, climate change; and
various other significant risks, as described beginning on page 38
of the 2023 Annual Report, including the MD&A, which
information is incorporated by reference herein. The Bank further
cautions that the foregoing list of factors is not exhaustive. When
relying on the Bank's forward-looking statements to make decisions
involving the Bank, investors, financial analysts, and others
should carefully consider the foregoing factors, uncertainties, and
current and potential events.
Any forward-looking statements contained herein or incorporated
by reference represent the views of management of the Bank only as
at the date such statements were or are made, are presented for the
purposes of assisting investors, financial analysts, and
others in understanding certain key elements of the Bank's
financial position, current objectives, strategic priorities,
expectations and plans, and in obtaining a better understanding of
the Bank's business and anticipated financial performance and
operating environment and may not be appropriate for other
purposes. The Bank does not undertake any obligation to update any
forward-looking statements made by the Bank or on its behalf
whether as a result of new information, future events or otherwise,
except to the extent required by applicable securities legislation.
Additional information relating to the Bank can be located on
SEDAR+ at www.sedarplus.ca.
About Laurentian Bank
Founded in Montréal in 1846, Laurentian Bank wants to foster
prosperity for all customers through specialized commercial banking
and low-cost banking services to grow savings for middle-class
Canadians.
With a workforce of approximately 2,800 employees, the Bank
offers a wide range of financial services and advice-based
solutions to customers across Canada and the
United States. Laurentian Bank manages $48.4 billion in balance sheet assets and
$26.6 billion in assets under
administration.
SOURCE Laurentian Bank of Canada