Bay Street is taking a wait-and-see approach to the plan presented Friday by Laurentian Bank executives, preferring to see how management will manage to implement its strategy before showing more confidence.
The unveiled strategy places commercial banking services (financing of equipment and inventories in particular) as a growth engine and focuses on services to individuals particularly focused on digital technology.
This renewed plan remains close to the diagnosis established by the previous management team, comments analyst Meny Grauman of Scotia. “The difference is on the personal banking side, where the bank plans to launch a hybrid digital strategy focused on offering low- or no-fee products. »
Personal services must become more efficient, says this expert, adding that the planned transformation is accompanied by significant investment needs in technology and marketing.
“This is a credible plan, but it carries significant execution risk with respect to retail banking,” underlines Meny Grauman in a note sent to his clients on Monday.
For Paul Holden of CIBC, Laurentian’s new strategic plan is very logical and, ultimately, not that different from the previous plan. The plan, he says, continues to emphasize growth in commercial services – a sector he calls the bank’s golden goose – and attempts to address declining profitability in personal services.
“What’s changing is the approach taken to turn around this business segment. » Given the past failures of previous CEOs, we will have to wait and see how things evolve, he believes.
Execution will be far from simple, adds Paul Holden, given the scale of the work and investment required to turn around consumer services in a “highly competitive” environment.
Darko Mihelic, at RBC, also displays a certain skepticism regarding personal services. “Conquering customers and market share with an online offering will be difficult. »
Mike Rizvanovic, from Keefe, Bruyette
Of the ten or so analysts monitoring Laurentian, there is still no purchase recommendation.
After losing 6.5% of its value on Friday, Laurentian Bank shares gained 2% during the first session of the week.
The strategic plan presented by Laurentian comes after a reshuffle of the management team in the fall following a week-long system outage.
A routine update gone wrong at the end of September caused the outage.
Laurentienne has been directed by Éric Provost since October. The leadership was handed to him after the sudden departure of Rania Llewellyn in the wake of the outage and after a review of strategic options ended with a potential sale ruled out.
Rania Llewellyn led Laurentian for three years from October 2020 to October 2023. It was notably during this period that the dissolution of the bank employees’ union occurred.
Rania Llewellyn’s predecessor as head of Laurentian – François Desjardins – also left his position suddenly in June 2020. The bank was subsequently led for several months by an interim CEO before Ms. Llewellyn’s appointment .