Laurentian Bank of Canada is delaying any further hike in its dividend until it gets a clearer picture of new international rules governing financial institutions.
Laurentian was the only Canadian chartered bank to increase its dividend last December when it raised its quarterly payment to shareholders by 2 cents to 36 cents despite uncertainty about forthcoming regulations on capital ratios.
While it remains confident that it could afford a further hike based on existing rules, it will wait until the end of the second quarter to follow up with more changes, chief executive officer Rejean Robitaille said Wednesday.
"So by the end of the second half of the year, we should have better clarity on this and then we will be able to address the dividend," he said during a conference call about the bank's first-quarter results.
The Basel Committee, an international body based in Switzerland that sets international banking standards, has released a series of proposals aimed at improving the risk protection and transparency of the global banking industry, particularly by boosting banks' capital requirements.
A finalized package of reforms is expected by the end of this year.
Canada's seventh-largest bank beat expectations by earning $32-million, or $1.21 per share, in the quarter ended Jan. 31. That was up from the first quarter of 2009 when Laurentian earned $25-million, or 91 cents per share.
The average analyst estimate had been for $1.09 per share according to Thomson Reuters.
Laurentian's revenue during the quarter was $180.4-million, up from $156.5-million a year before.
"While we recognize that we only have one quarter under our belt, these results today suggest that we are on track so far to achieve our 2010 objectives," Mr. Robitaille told analysts.
"Our business plan and a more supportive economic environment in conjunction with our high level of liquidity and good capital base provides the flexibility to prudently continue to deliver growth."
The bank's net interest income increased 22 per cent to $120.7-million as a result of strong loan and deposit growth, combined with higher interest margins.
Total loans and bankers acceptances increased by more than $2-billion over the last 12 months. Its assets increased to $23-billion.
"The bank continues to generate the best levels of loan growth in the sector," said analyst Sumit Malhotra of Macquarie Securities.
Although the strong results are unlikely to continue at this pace for the rest of the year, Mr. Malhotra said he will raise hits annual forecasts currently pegged at $4.30 per share to near the upper end of management's goal of $4 to $4.70.
The bank's provision for loan losses amounted to $16-million in the first quarter of 2010. That was in line with the past two quarters but compared with $12-million in the first quarter of 2009.
The gross impaired loans included two large loans that are under duress but are not expected to result in material losses. The largest is a $14-million loan for a condo complex, while the other is a $6-million commercial loan in the transportation sector.