DBRS Morningstar Assigns Long-Term Issuer Rating of A (low) with Stable Trend to B2B Bank

DBRS Limited (DBRS Morningstar) assigned B2B Bank, a wholly owned subsidiary of Laurentian Bank of Canada (LBC; rated A (low) with a Stable trend by DBRS Morningstar), a Long-Term Issuer Rating of A (low) with a Stable trend. DBRS Morningstar equalized the ratings with those of LBC, which is consistent with DBRS Morningstar’s standard practice of equalizing ratings of fully-owned, strategically important subsidiaries that have no cross border risk.

LBC has traditionally accessed non-Québec-based retail clients through B2B Bank, a banking subsidiary that specializes in distributing products to a network of around 27,000 financial advisors nationally. B2B Bank has been a growth driver that has contributed to geographic diversification for LBC by offering a suite of products, including investment loans, deposits, and mortgages, to clients across Canada, with over 50% of its loans originating in Ontario.

RATING DRIVERS
Over the longer term, a sustained improvement in the level of earnings and operating efficiency and the strengthening of capital buffers would result in an upgrade of LBC’s ratings.

Conversely, material losses caused by operational difficulties as LBC implements various organizational projects, sustained negative operating leverage, or significant losses in the loan portfolio as a result of unforeseen weaknesses in the risk management process would lead to a downgrade.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

The Grid Summary Grades for LBC are as follows: Franchise Strength – Strong/Good; Earnings Power –
Good; Risk Profile – Good; Funding & Liquidity – Strong/Good; and Capitalization – Good/Moderate.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (June 8, 2020; https://www.dbrsmorningstar.com/research/362170). Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021; https://www.dbrsmorningstar.com/research/373262).

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found on the issuer page at www.dbrsmorningstar.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are under regular surveillance.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com.

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