Laurentian Bank of Canada Q2 2021 Earnings Call Transcript

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

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Just to stick with this, I guess, some of the stuff we've touched upon already here, but the mortgage distribution channel review, both the branch and the broker. You identify origination processes that are getting fixed, but you also talk about renewals. What's going on there as far as some problems you're seeing? And then I mean just benchmarking the retention rates that you see, how -- where are they and where do you want them to be? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 02, 2021 / 1:00PM, LB.TO - Q2 2021 Laurentian Bank of Canada Earnings Call

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : No, no, I get that. I'm not asking to be -- it's like a glass half/full perspective because a few years ago, we were -- after -- when B20 was coming into effect and we were asking all the banks about retention rates, and I was surprised to hear it was over 90% for pretty much all of them. And are you -- do you know if you're quite a ways off from that because that does represent, if you can fix it, a big opportunity, as you say?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. Expense optimization, that was something that I hadn't heard of before, and you mentioned reviewing partnerships. Is that more of a supplier kind of focused initiative? Or -- I know the one with Mackenzie on the mutual fund, but is it more the former or the latter?

Question: Gabriel Dechaine - National Bank Financial, Inc., Research Division - Analyst : Okay. And then lastly on the deposit/funding side, and the message I'm getting here is -- I mean it's on the tapping into covered bonds, the cheap wholesale funding. Maybe deemphasis of the broker channel for deposits to reduce your funding cost there. Is that correct interpretation? But would that kind of perspective of deemphasis of certain deposit products, would that extend to the broker -- sorry, the branch channel, the core branch channel? Or is that still an area that you're focused on to grow? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 02, 2021 / 1:00PM, LB.TO - Q2 2021 Laurentian Bank of Canada Earnings Call

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. Hopefully, a couple of quick ones. A lot of the questions have been asked and answered. Liam, just first for you. I'm looking on your Slide 18, where you show your PCL trends relative to the Big Six. I think the bank has taken great pride in saying that it's always been consistently below the Big Six. As you think over the next 4 quarters, do you see the risk that you may actually fall above the Big Six?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : So maybe, Rania, maybe it's for you, maybe it's for Liam. But I think you gave a very, I think, full answer as to where the utilization rates, for example, and inventory finance are and what a 1% utilization increase means in terms of dollars of loans. Can you also say what a dollar of incremental loan will mean in terms of additional reserve requirements? I guess what I'm trying to figure out here is how volatile can this line end up getting. Are you trying to grow into your reserves? Or are these reserves coming out, and once there is an economic rebound exposed, then you'll have to kind of build it back up? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 02, 2021 / 1:00PM, LB.TO - Q2 2021 Laurentian Bank of Canada Earnings Call

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. You made mention of the recertification of the union. I think Yvan mentioned that on a full year basis, the expense to revenue ratio should be sub-70%. Are you in a position to quantify what are the financial benefits of the decertification of the union?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : I mean so like how should I think about this from an expense to revenue ratio or expense growth prospects or the mix of expenses? No change?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : Okay. And then one last question, maybe not so quick. But I think on a number of comments that you mentioned, I think you've talked about more fundamental reviews, but also finding low-hanging fruit or some quick fixes. I think in the context of the mortgage review process, for example, like you said, the channel -- the broker channel, you've got some quick fixes and some more, I guess, more fundamental ones coming through. Can you give us some specific examples of some of those quick fixes just so that we have a sense of where the starting point is, if you will, as far as the process, just to be able to get a feel for what the size of the price is at the end?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : And maybe, Rania, just one last question. And maybe if it's too long of an answer, we can save it for another time. But you said you're still in the market for, I think, a Chief Digital Officer or Technology Officer, I may get the characterization wrong. But what is -- what would be the -- what is the goal for that individual? What are you looking for that individual to deliver to the bank and over what sort of time frame?

Question: Sohrab Movahedi - BMO Capital Markets Equity Research - Analyst : But does that indicate, Rania, that you expect personal banking will be a growing piece of the overall pie when we think about the business mix in the future at Laurentian Bank?