Laurentian Bank of Canada Q4 2024 Earnings Call Transcript

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

Question: Meny Grauman - Scotiabank - Analyst : Hi, good morning. Yvan, a few questions. One, on the efficiency ratio guidance that you provided, so you're saying Q1 will be in line with Q4 and then will remain relatively stable at that level from there throughout the year. I just want to make sure I understand the pattern for the year on efficiency.

Question: Meny Grauman - Scotiabank - Analyst : And that was my second question. So you're saying the latter part of '25, you should get some growth in the commercial loan book. But overall, for the year, you expect loan growth to be to be essentially flat even with that uptick in commercial that you're guiding to. Is that correct?

Question: Meny Grauman - Scotiabank - Analyst : Understood. And then I was hoping you could expand on your comments on capital deployment. Is that you signaling that M&A might be on the table? So I just wanted to better understand that.

Question: Meny Grauman - Scotiabank - Analyst : So the comment on capital is really more about sustaining the loan growth that you're forecasting not anything else?

Question: Meny Grauman - Scotiabank - Analyst : Understood. Thank you.

Question: Sohrab Movahedi - BMO Capital Markets - Analyst : Hey, thanks very much for taking my question. Just to pick up Yvan where you left off. When there is this rebound, hopefully in utilization rates and loans. Can you talk us through how it will be funded on the other side of the balance sheet? And I saw an article that perhaps Laurentian Bank is looking to partner with some, I don't know, let's call it, credit firms, private credit firms for about $1 billion of Northpoint assets. So I just want to -- I just want to make sure I understand how that fits in with the loan growth that you're talking about and whether or not you are trying to rethink the business model? Or do you need to actually help on funding some of this rebound in loan growth?

Question: Sohrab Movahedi - BMO Capital Markets - Analyst : That's helpful, Eric. Can I just clarify, I suppose what you're saying -- I just want to make sure I'm understanding this correctly. You are not looking for someone to take on some of the existing loans. You're trying to bring in a part -- you're looking at potential for partnerships as far as go-ahead growth is concerned. Is that the right way to think about it? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 06, 2024 / 2:00PM, LB.TO - Q4 2024 Laurentian Bank of Canada Earnings Call

Question: Sohrab Movahedi - BMO Capital Markets - Analyst : It's crystal clear. Thank you. And just one final point on that. Is that the Bloomberg article made reference to a $1 billion fund. Eric, is that the potential -- Northpoint's potential over a number of years? Or like over what sort of time frame should Northpoint if you were able to find a partner over what sort of timeframe would you be able to deploy $1 billion?

Question: Sohrab Movahedi - BMO Capital Markets - Analyst : Okay. That's an interesting development. Thank you very much.

Question: Gabriel Dechaine - National Bank Financial Inc - Analyst : Hi. Sorry. Yeah, can you just give me some numbers, please. with regards to the broker business, so I can kind of make notes on the impact there, the revenue and expense impact of like foregone revenues and expenses in the quarter, I guess. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 06, 2024 / 2:00PM, LB.TO - Q4 2024 Laurentian Bank of Canada Earnings Call

Question: Gabriel Dechaine - National Bank Financial Inc - Analyst : Yeah.

Question: Gabriel Dechaine - National Bank Financial Inc - Analyst : All right. No, I understand that. Now as far as this Northpoint business, I got a couple of questions here. One on the partner strategy you're looking at? And then the -- I guess, the broadening of the lending to include more consumer, end consumer in lending. Well, on the partnership stuff, is it really you want to have more originations at the balance sheet impact. So you want to kind of go more in the originate to distribute direction, the fee-based kind of business and broaden your -- the types of loans you're targeting, and that's the gist behind it?

Question: Gabriel Dechaine - National Bank Financial Inc - Analyst : And predominantly in the US, I guess?

Question: Gabriel Dechaine - National Bank Financial Inc - Analyst : Okay. And in case we haven't asked for why go down this route? Is it really just to be more capital light and that's the pit? Or is there another motivation there? I know I don't think funding is an issue, you clarified that, but just wondering, strategically, the primary motivation?

Question: Gabriel Dechaine - National Bank Financial Inc - Analyst : Okay. And then the switching over to the other direction. I guess, at the same time as you're doing this, you're -- and correct me if I'm wrong, please, your -- evolving the overall Northpoint strategy in the sense that -- you're not just targeting floor plan financing, you're going for you want to be at the lending terminal offering a loan to the person buying the boat or the RV or whatever. That's how we think about it?

Question: Gabriel Dechaine - National Bank Financial Inc - Analyst : Okay. So you're one face of the franchise lending to the OEM to the dealer, to the consumer, is that it?

Question: Gabriel Dechaine - National Bank Financial Inc - Analyst : Okay. So like fleets and stuff like that?

Question: Gabriel Dechaine - National Bank Financial Inc - Analyst : Got it. Okay. All right. That clarifies. Thanks, and you know, (inaudible)

Question: Doug Young - Desjardins Capital Markets - Analyst : Hi, good morning. Just maybe to kind of extend on this. Like it sounds like you are going with a merger of BC and Northpoint, you're going into the US, you're going into the US with your equipment financing background that you built in Canada, what exactly silos or areas are you going after in the US and expanding into? If you can kind of talk about that? And have you been in some of these areas in the US? Or has it just been more in the US [or sort of] in Canada in the past?

Question: Doug Young - Desjardins Capital Markets - Analyst : And you've talked about efficiencies, I think getting the efficiencies from this. It sounds like this is more of a growth opportunity than it is a cost savings opportunity from merging these two entities? Or maybe it's a bit of a both. Can you talk about the efficiency side?

Question: Doug Young - Desjardins Capital Markets - Analyst : And yeah, on the efficiency side, can you talk about what your adjusted efficiency ratio is for commercial versus personal? And just trying to get a sense of the business mix shifts? Like I know your target is to get the ratio below 60%. I think you outlined that last year's Investor Day. Just trying REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 06, 2024 / 2:00PM, LB.TO - Q4 2024 Laurentian Bank of Canada Earnings Call to get a sense of the two businesses. And has that anything changed in terms that you still think you can get below 60%? I know you're not doing it in fiscal '25, but I'm just trying to get a sense, yeah.

Question: Doug Young - Desjardins Capital Markets - Analyst : And just lastly, I know this is medium-term targets, and I know you're investing this year. Is there a path to move towards that 60% in fiscal '26 or is this much longer?

Question: Doug Young - Desjardins Capital Markets - Analyst : Appreciate your time. Thank you.