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Laurentian Bank beats expectations, raises dividend for second time in a year

A pedestrian walks past a Laurentian Bank branch in Montreal March 20, 2012.

CHRISTINNE MUSCHI/REUTERS

Laurentian Bank of Canada is raising its dividend for the second time in a year after beating expectations by posting $39.4-million in adjusted profit, up slightly from the prior year.

The Quebec-based bank said Wednesday its quarterly payment to shareholders will increase a penny to 52 cents per share as of Aug. 1. It is the fourth of the seven largest Canadian banks to raise its dividend this quarter, following National, CIBC and Bank of Montreal.

Laurentian earned $1.29 per diluted share in adjusted profit for the period ended April 30, beating expectations by five cents. That compared with $1.24 per share or $39.25-million in the second quarter of 2013.

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Including one-time charges such as AGF Trust integration costs, its net income dropped 8.4 per cent to $31-million or 99 cents per share, from $33.84-million or $1.05 per share a year earlier. Earnings available to common shareholders fell to $28.49-million, from $29.78-million a year earlier.

The bank was expected to earn $1.24 per share on $214.2-million of revenues, according to analysts polled by Thomson Reuters. With its results, all of the top Canadian banks beat analyst forecasts on adjusted earnings per share in the second quarter.

Revenues were $216.9-million, up from $214.85-million.

The bank said its return on equity was 9.2 per cent for the quarter, compared with 10.4 per cent a year ago.

Chief executive Rejean Robitaille said the bank delivered "solid core earnings" as it targeted improved efficiency, maximized operating leverage and cost savings from acquired businesses.

"The sustained credit quality of the loan portfolio and rigorous control over expenses contributed to the good performance for the quarter," he said in a statement.

"In an environment of consumer deleveraging and compressed margins, we maintain our focus on further developing our higher-margin commercial activities and growing income from non-interest sensitive sources in order to foster profitable revenue growth."

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Laurentian's provision for loan losses increased by $1.5-million to $10.5-million.

The personal and commercial banking segment's profit surged nearly 22 per cent to $30.3-million from $24.8-million a year ago even though revenues grew 3.8 per cent to $146.7-million.

The B2B Bank business segment's income plummeted to $5.08-million from $9.09-million a year earlier as revenues dropped 6.4 per cent to $52.48-million. Excluding one-time charges including those related to AGF, the segment's adjusted profit dipped to $13.5-million from $14.5-million due to lower net interest income, a few number of days in the quarter and higher loan losses.

Laurentian Bank Securities and capital markets segment's income fell 13.3 per cent to $2.58-million, despite an increase in revenues to $17.59-million, mainly on as higher underwriting fees in the small-cap equity markets and increased non-interest expenses.

Laurentian Bank is Quebec's second-largest bank and third biggest financial institution in the province with $34.26-billion of assets, 3,764 employees, 153 branches and 423 automated teller machines.

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