Standard & Poor’s Ratings Services has lowered its ratings on Laurentian Bank of Canada. The long-term counterparty credit rating was lowered to “BBB+” from “A-“. At the same time, the outlook was revised to stable from negative.

Standard & Poor’s says the rating downgrade reflects concerns over the lack of revenue and loan growth, weaker earnings performance, and pressure on market share, particularly in the bank’s core mortgage product line, despite the strong Quebec economy.

S&P add that the frequent changes in the bank’s business strategy over the years suggest that the bank has been challenged in expanding and defending its business franchise , specifically in its markets outside Quebec and more recently in its home market.

Offsetting some of the concerns are the initiatives Laurentian took to improve credit quality, including exiting noncore commercial lending relationships and reducing hold limits.

As well, S&P views the recent sale of Laurentian Bank’s non-Quebec branches to refocus on its home markets as a favorable development.

The ratings agency notes that Laurentian has significantly downsized its management team recently and announced a three-year repositioning plan to refocus on its Quebec franchise. Significant cost reductions are underway as well

Laurentian Bank has indicated that it expects to redeploy the capital received from the sale of its non-Quebec branches into expanding its retail branch network in and around the Montreal area, which should give it additional scale in its important home market.