(Montreal) Laurentian Bank is preparing a digital offensive to attract more deposits as it prepares to launch an online high-interest account. In an interview, the president and chief executive, Rania Llewellyn, assures that the strategic plan of the financial institution is on the right track.
“Last year we had good rates on guaranteed investment certificates (GICs), but we were limited by the fact that it was impossible to open an account without going through a branch,” says Llewellyn in an interview. , on the sidelines of the shareholders’ meeting on Tuesday.
Within “a few weeks,” savers will be able to open a high-interest account and chequing account online at Laurentian. The institution intends to conduct a “targeted” advertising campaign to promote its interest rate, which, at 3%, would be “among the most attractive in the market”.
The online offer will also make it possible to reach digital customers outside Quebec. This is what the bank has managed to accomplish with its renewed Visa credit card offer, launched recently. “What’s interesting is the 50/50 split between Quebec and the rest of Canada [for card requests]. We attract new customers. »
Opening an online account with a major Canadian bank is a relatively trivial operation, but Laurentian had accumulated a significant technological gap in the industry.
Ms. Llewellyn had been hired in October 2020 to revive the declining Montreal bank as investors lost patience with the little progress seen under her predecessor. When he arrived, Laurentian did not have a mobile app and activating a credit card could take up to 25 days.
Laurentian, which has scalded its shareholders in the past, would now be a different bank, assures Ms. Llewellyn. She points out that management is ahead of its strategic plan.
The bank has a mobile app, its processes are faster, and customer and employee satisfaction rates are up. This progress is also reflected in the financial results. Earnings per share increased by 14% in 2022, compared to an initially targeted growth of 5%.
There are still challenges for Laurentian, said analyst Meny Grauman of Scotiabank. For the first half of fiscal 2023, management warned investors to expect high expenses, tight margins and slower loan book growth in 2023.
“While there is no doubt that the bank is executing its plan well against its objectives, the macro environment is becoming more challenging and we continue to see more upside potential elsewhere among large banks whose revenue streams are more diverse,” comments the analyst.
Laurentian Bank managed to exceed its targets in 2022, despite soaring inflation and economic disruptions related to the war in Ukraine, notes Ms. Llewellyn. It anticipates results will be under pressure for the first half of the year, but foresees a recovery for the rest of the year, “provided interest rates stabilize”.
Laurentian has leeway to accomplish its objectives, even if the economy slows down, because it is ahead of its intermediate targets, adds its CEO. “Our three-year goals have not changed (2022 to 2024). »
On higher than expected spending in the first quarter, Ms. Llewellyn replied that it will stabilize in the second half of FY2023. significant investments, in particular for the renewal of its credit card offer. “To improve our efficiency, you have to spend money to make money. »
The company doesn’t have a reputation for being particularly adept with spending control, but RBC Capital Markets analyst Darko Mihelic is willing to give the new management the benefit of the doubt. “Laurentian has had difficulty in the past with controlling expenses, but in this situation [a major strategic shift], we are not too concerned that expenses are higher than expected,” wrote- there in March.
