...- On May 29, 2020, Laurentian Bank of Canada (LBC) reported a 79% year-on-year decline in net income as a result of a substantial increase in loan loss provisions. - The company also announced a 40% cut in its dividend to 40 Canadian cents from 67 Canadian cents to preserve capital and provide operational flexibility to support growth and complete its strategic plan. - We are affirming our '###' rating on LBC on expectations that capital ratios will offer the company sufficient cushion to offset the abrupt downturn and reduced earnings capacity. - Our negative outlook reflects the potential for substantially lower profitability, and potential downside risk for funding. Further dividend cuts could result in a downgrade even if our risk-adjusted capital ratio (RAC) remains in our adequate 7%-10% range, if accompanied by substantially weaker earnings capacity or disproportionately higher credit losses relative to that of peers....
