Laurentian Bank (TSX:LB) Q3: Efficiency Ratio Near 76% Undercuts Margin-Improvement Narrative

Laurentian Bank of Canada (TSX:LB) just posted fiscal Q3 2025 revenue of about CA$235.7 million, with EPS of roughly CA$0.73, setting the tone for its latest earnings snapshot. The bank has seen quarterly revenue move from roughly CA$240.3 million in Q4 2024 to CA$234.5 million in Q1 2025 and CA$225.8 million in Q2 2025 before landing at CA$235.7 million in Q3, while EPS shifted from CA$0.88 to CA$0.76, CA$0.69 and then CA$0.73 over the same stretch. This frames a choppy but measurable earnings path that now puts the focus squarely on how sustainable margins really are.

See our full analysis for Laurentian Bank of Canada.

With the headline numbers on the table, the next step is to see how this earnings profile lines up with the dominant narratives around Laurentian Bank, highlighting where the story matches expectations and where the latest figures might force a rethink.

See what the community is saying about Laurentian Bank of Canada

Efficiency Ratio Stuck Near 76%

• The cost to income ratio sits at 75.7% in Q3 2025, little changed from 75.2% in Q2 and 74.3% in Q1, showing that expenses are still eating up most of the revenue.
• Consensus narrative expects technology modernization to eventually lift margins, yet
  • persistent efficiency ratios in the mid 70s and a modest net interest margin of 1.82% suggest those benefits are not yet visible in the current numbers
  • while total revenue over the last twelve months of CA$936.3 million gives them room to scale, the lack of clear cost progress keeps profitability constrained.

Credit Risk Edges Higher

• Non performing loans increased from CA$378.8 million in Q4 2024 to CA$419.4 million in Q3 2025, and the bank is flagged as having a relatively low 42% allowance for bad loans.
• Bears focus on rising impaired loans and limited loss buffers because
  • gross impaired balances have been climbing alongside total loans, now at CA$35.8 billion, leaving more exposure if credit conditions weaken
  • a 42% allowance ratio, combined with only CA$134.7 million of trailing twelve month net income, means a meaningful uptick in loan losses could quickly weigh on profitability.

Over the past year, that combination of rising non performing loans and thin loss coverage is exactly the sort of pattern skeptics highlight when they question how resilient this loan book really is. 🐻 Laurentian Bank of Canada Bear Case

Valuation Sits Close To DCF Fair Value

• With the share price at CA$39.86 and DCF fair value at CA$39.55, the stock trades almost exactly in line with that CA$39.55 DCF fair value, while the trailing P/E of 13.2 times is below the Canadian market’s 16.0 times but above the 11.7 times North American banks average.
• Supporters of the bullish case point to renewed profitability and tech driven upside because
  • the bank has swung from negative EPS in late 2024 to trailing twelve month EPS of CA$3.05 and net income of CA$134.7 million, showing that recent quarters are back in the black
  • if analysts are right that margins can improve from around 14.4% today and earnings can grow from CA$134.7 million, paying roughly market like value near modeled fair value could look reasonable in hindsight.

Bulls argue that paying roughly in line with DCF fair value today could be attractive if modernization and loan mix shifts really do lift earnings from this CA$134.7 million base. 🐂 Laurentian Bank of Canada Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Laurentian Bank of Canada on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers differently? Use the latest figures to quickly build your own take on Laurentian Bank’s outlook in just a few minutes, Do it your way.

A great starting point for your Laurentian Bank of Canada research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

See What Else Is Out There

Laurentian Bank’s stubbornly high efficiency ratio, modest margins, and rising non performing loans highlight pressure on profitability and balance sheet resilience if conditions worsen.

If those trends leave you uneasy, you may want to shift your focus toward companies with stronger cushions and healthier fundamentals by screening for solid balance sheet and fundamentals stocks screener (1942 results) today, before the next downturn tests weaker names.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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