Laurentian Bank of Canada said on Friday its second-quarter profit fell in comparison with the same 2006 period because of a favourable tax adjustment in the year-before quarter, but that its profit rose by 37 percent excluding this item.
Laurentian, the country's eighth-biggest bank by market value, posted net income of C$20.7 million ($19.5 million), or 75 Canadian cents a share, for the three months ended April 30. That compared with net income of C$24.6 million, or 91 Canadian cents a share, in the same 2006 period, when tax-related issues added 45 Canadian cents a share to earnings.
Analysts surveyed by Reuters Estimates had expected per-share earnings of 63 Canadian cents in the latest quarter, before exceptional items. A marked jump in net income at Laurentian Bank Securities, to C$5.3 million, or 21 percent of total profit, was mainly due to a C$3.7 million after-tax gain on the sale of a portion of the bank's Montreal Exchange shares, it said.
The Montreal derivatives bourse went public earlier this year. Laurentian, based in Montreal, said profit in its retail financial services segment, which mainly serves clients in the province of Quebec, fell to C$6.8 million, down from C$7.1 million a year earlier, because of higher expenses for salaries and advertising as the bank expanded. Profit rose in both Laurentian's commercial banking business and its B2B Trust unit.
Total revenue climbed by 11 percent to C$145.7 million in the second quarter, as growing loans and deposits lifted net interest income, and mutual fund sales, financial markets activities and brokerage operations brought in higher fee and other income. Overall, non-interest expenses rose 9 percent to C$109 million, mainly due to higher compensation, salaries and employee benefits, the bank said.
Return on equity fell to 9.7 percent from 12.5 percent a year earlier. Laurentian's stock dropped 1.6 percent to C$33.89 a share on the Toronto Stock Exchange on Friday morning, but its shares have posted the best performance among Canadian banks so far in 2007, with a 12 percent gain year-to-date.
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