President’s Club Investment Letter publisher says he’s cautious about potential “ticking time bomb” in loan book
Quebec-focused Laurentian Bank has announced that it will end teller service at most of its branches from today (7/22).
The latest announcement has been expected with Laurentian having already cut tellers in 31 branches earlier this year. Six rural branches will continue to offer teller services until September.
Laurentian has said for some time that it intends to focus its branch network on providing financial advice while encouraging the use of mobile and online banking for everyday transactions.
The bank has been challenged by several issues including labour disputes, a data breach, and concerns from analysts that it may be at risk from potential credit losses.
Earlier this year, Steve Eisman, who predicted the US housing market crisis, cautioned that Laurentian was among Canadian banks whose CEOs are “ill-prepared” for any potential credit losses stemming from an economic downturn.
But Hamilton Capital said that the Canadian bank short sellers’ outlook for some lenders is overblown as loan-to-value ratio is low at 50% and most loans are covered by mortgage insurance which further reduces the lenders’ exposure.
“Ticking time bomb”
Speaking to BNN Bloomberg, Fabrice Taylor, publisher of the President’s Club Investment Newsletter, said that he sees “something worrisome” about Laurentian.
Taylor said that with the housing market in Quebec so strong currently, Laurentian “should be doing well and they’re not” and that his reading of analysts’ notes on the bank suggest a “ticking time bomb” somewhere in the loan book.
He added that several factors including its Quebec focus and union issues makes it hard for Laurentian to compete with the Big 6.
Despite the “nice” dividend yield of 5.8%, Taylor concluded that he would “give it a wide birth” currently.
