Laurentian Bank (TSX:LB) has become the first Canadian lender in nearly 30 years to cut its dividend.
Laurentian Bank has announced that it is slashing its dividend by 40% as it struggles in the wake of the COVID-19 pandemic lockdown. The dividend is being lowered to 40 cents a share from 67 cents a share previously.
The cut to the dividend comes after the Montreal-based lender reported that its profit fell by 79% to $8.9 million, and its provisions for credit losses — the amount of money the bank is setting aside to cover loans that may go bad — soared to $54.9 million. That's up from $9 million in the same period a year ago.
“It is a time for prudence,” Laurentian Bank Chief Executive Officer François Desjardins said in a news release.
“Although we believe that current earnings are not reflective of the future earnings power of the organisation, we have reduced the dividend to $0.40 per share which improves operational flexibility until we reap the anticipated benefits of our strategic plan.”
The last time a major Canadian bank reduced its dividend was 1992, when National Bank (TSX:NA) cut its payout to shareholders.
