Canadian Western Bank updated June 10, 2018

The report for Canadian Western Bank is updated and the stock is rated (higher) Buy at $37.05.

On Thursday, CWB reported strong growth in its Q2. In its 2017 annual report, the company very much emphasized that it intends to focus even more heavily on serving businesses and their owners. This could lead to some interesting developments as it may decide to shed its retail consumer divisions including its Alternative mortgage provider operation and its online savings operation. It still wants to also meet the personal banking needs of the owners of its business customers but I speculate that it could begin to do so more through partnerships with bigger banks which is how it deals with offering credit cards. CWB has pushed its lending operations very much towards Ontario which now accounts for 21% of its loans which are mostly lease financing and franchise loans. It has no branches in Ontario. With a current ROE of 11.5% that appears set to rise and price to book ratio of 1.46, CWB appears to be an attractive investment.

CWB’s shares had declined 15% in 2014 and a further 29% in 2015 with the recession in Alberta. The shares then rose 30% in 2016 and 29% in 2017. It had been down as much as about 20% in 2018 before partially recovering and is now down 6% in 2018 to date.