RE:Results are Actually Pretty Good Shares of Canadian Western Bank fell in early trading Friday after the company said higher loan provisions weighed on profit in the fourth quarter.
At 9:40 a.m. ET, shares were trading 6.5% lower at C$23.77.
The Edmonton, Alberta-based bank reported a decline of 25% in net income to 68 million Canadian dollars, the equivalent of US$50.6 million, for the three months ended Oct. 31, compared with the prior-year period.
On an adjusted basis, earnings per share fell 15% to C$0.88, in line with analyst expectations, according to FactSet.
Meanwhile total revenue rose to C$279.8 million from C$260.6 million, but missed forecasts of reaching C$282.3 million.
The company said it had higher provision for credit losses on performing loans, which as a percentage of average loans was 0.14% compared with an allowance of 0.12% this time last year. DeanEdmonton wrote: On the bad side, net interest margins have gone down, despite the higher interest rates, and their wealth management group has had quite a run off in assets, or at least the value of them is down quite a bit. Their ROE number is still very week, and at least 8% below where it should be. On the positive side, good growth in both deposits and loans. In fact, deposits are getting close to matching loans, but without knowing the structure of the deposits it is hard tto tell how sticky they are. Could be a lot of hot short term money.
They posted a decent efficiency ratio, and loan lloss provisisons are prudent but well within normanl ranges. Don't know what the markets don't like about the earnings release, becasue even though I am not a fan of current CWB leadership, these seem to be pretty good results for a small bank narrowly focused on commercial lending.