Laurentian Bank of Canada Q1 2019 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Maybe I'll just start off with Liam. Liam, the benefit from the AIRB conversion, is that -- how much of that benefit gets enhanced or reduced as the mix of the portfolio goes towards commercial away from residential?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : So in other words, the fact that, for example, you're guiding towards higher loan losses given the mix of the portfolio towards commercial will have no bearing on the AIRB benefit you're expecting?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. And while we're on the commercial, maybe -- obviously, good growth. You're expecting it to be a driver of volume growth. How much of that is coming from syndicated credit as opposed to, I guess, self-originated credit? If you can give us a little bit more color around which geographies or what type of loan -- business loan -- business lending you're doing over here to drive this growth?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : And can you just comment how much would be out of the U.S. versus Canada?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Sorry, I've missed it if we have it there.

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay, that's helpful. And you expect that -- like those are the types of trends you expect to continue or expect that to pick up? Like is that current mix between Canada, U.S. the sustained mix you're going for? Or are you trying to grow U.S. faster than Canada? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 27, 2019 / 2:00PM, LB.TO - Q1 2019 Laurentian Bank of Canada Earnings Call

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : And then just one last one for me. Frantois, was the tax rate abnormally low this quarter?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : So as the profitably in Canada rebounds, so will the tax rate, is that what's happening?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : I want to follow up on this liquidity stuff. Firstly, the mechanics. So are we -- is your balance sheet still going to be adjusted for the additional liquidity you're taking on? And where am I going to see that? Is it -- you going to keep taking loans down and replacing those with cash? Or are you going to take on wholesale deposits or something just to build up a extra liquidity buffer? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 27, 2019 / 2:00PM, LB.TO - Q1 2019 Laurentian Bank of Canada Earnings Call

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. So you've been running at these levels, you're just quantifying it now. Maybe a stupid question on my part, but what is the length between the union negotiation and the uncertainty there and having to maintain higher liquidity? I can come up with my own ideas, but I just -- it's not painfully obvious, I guess.

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : And the -- okay. So moving on to the expense line -- sorry, other expenses. Regulatory and compliance costs have been moving higher. And maybe they're not linked. But the message I was getting from you last year was that in the wake of the mortgage issues, you weren't seeing an imminent rise in these types of costs. And it appears to be the case that you're incurring these costs. Are they connected? Or -- and if not, where -- what's driving them? And how, I guess, secular are these types of costs?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. And just to clarify, and this is in relation to Darko's question on that expense line item, the $179 million. I'm not quite sure I got the message there, and maybe you can help me. Is that the number you expect it to be kind of flat for the rest of the year, $179 million or $180 million or so? Or does it go up despite the labor cost reduction from that severance charge?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. All right. And then if next year, you have the new -- union negotiation all tied up, then they go down, that's possibly the case?