Laurentian Bank of Canada Tops Q3 Expectations on Provision Reversal, National Bank Says

04:23 PM EDT, 08/29/2025 (MT Newswires) -- National Bank of Canada said Friday Laurentian Bank of Canada (LB.TO) beat its earnings per share estimate of $0.70 mainly due to provision for credit losses, offset by taxes.

Analyst Gabriel Dechaine said the stronger-than-expected results were driven by $9 million in performing provision releases, compared with National Bank's expectation of $3 million in new provisions. This helped boost EPS by $0.20. However, this release of provisions contrasts with rising credit risks like impaired loan losses being higher than expected and new formations rising 28% from the previous quarter, mainly due to commercial loans.

Management remains confident, pointing to strong collateral backing for these loans, and kept its guidance for credit losses at a "high-teens" basis point range for Q4, he added.

Dechaine said total loans came in 1% higher than National Bank's projection, with an expected seasonal decline in inventory finance loans offset by 8% quarter-over-quarter increase in commercial real estate construction loans. "Looking ahead, management expects loan growth near term to be 'muted' as depressed utilization rates in inventory finance are expected to take time to normalize and CRE demand for new projects remains weak."

Interest rate cuts could help turn this around in 2026, he added.

National Bank reduced its target on Laurentian Bank of Canada (LRCDF) to $26.00 from $27.00 while maintaining its underperform rating.

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