Sept. 17 (Bloomberg) -- Laurentian Bank of Canada expects record loan growth this year and may raise its quarterly dividend once new capital requirement rules are announced, President and Chief Executive Officer Rejean Robitaille said.

“We’re in a very good position” to increase the payout, Robitaille said today in an interview in Toronto. “But there are rules that might change, and it’s sometimes difficult to play the game when you don’t have the rules.”

Canada’s seventh-largest bank is waiting for the panel that oversees the Basel Committee on Banking Supervision to issue proposals on capital requirements by the end of this year. The Montreal-based lender paid out 31 percent of its earnings through dividends in the most recent quarter, lagging behind the bank’s targeted ratio of 40 percent to 50 percent.

“Based on their strong capital position, stable earnings power and low payout ratio, we expect that Laurentian Bank will be one of the first members of the group to raise their dividend,” said Macquarie Capital Markets analyst Sumit Malhotra, who rates the shares “outpeform.”

Laurentian and Toronto-Dominion Bank, were the last Canadian banks to increase their dividends. Laurentian raised its quarterly payout to 34 cents a share in 2008.

Robitaille, 49, said Laurentian is expecting record loan and deposit growth for the year that ends in October. The bank topped analysts’ estimates this month when it reported that third-quarter profit fell 7.1 percent to C$28.7 million ($26.9 million), or C$1.08 a share.

‘Opportunities’

Laurentian, which does most of its business in Quebec, has focused on consumer and small business lending, avoiding investments tied to U.S. home loans that have led to more than $1.6 trillion in writedowns by financial firms globally since 2007. Now the bank has “opportunities” to buy portfolios and books of business to expand in Canada, Robitaille said.

Laurentian has increased lending after foreign lenders retreated from Canada, Robitaille said. That echoes comments made by National Bank of Canada CEO Louis Vachon at an investor conference yesterday.

“Some players have reduced, quite considerably, their exposures,” Robitaille said. “So we’ve seized those opportunities, and our real estate financing group will have this year another record year.”

Laurentian rose 30 cents to C$39.87 at 4:10 p.m. in trading on the Toronto Stock Exchange. The shares have risen 16 percent this year, the worst-performing stock among Canada’s eight publicly traded banks.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.

Last Updated: September 17, 2009 16:53 EDT