CWB’s results were “okay” as I expected. Headlines say their provision for loan losses was up year-over-year (also up from last quarter). But one year algo they had a negative provision for credit losses (income as opposed to expense). The provision this quarter was 19 basis points. That’s at the lower end of their historic average of 18 to 23 . It’s lower than most banks. It’s not something to worry about.
Meanwhile loan growth was slow at just 1% year-over-year. Deposits are also up only 1% as businesses are cautious about borrowing and instead some are drawing down the cash they have on deposit. Net interest margin was improved. Overall it’s steady progress report. They are only looking for mid-single digit EPS growth this year and they indicate they are on track for that.
This is not a high growth company and the ROE has been a bit low- They hope to move the ROE up. The stock is good value for money but not likely be any kind of barn-burner return in the next year.
Capital ratios are good. It’s still not clear if they will redeem one or both of the rate reset preferred shares. I think we will know on March 22 or by April 1 latest. The CCEO has indicated they like having some “excess” capital at this time since it gives them options and flexibility. Looking at their capital ratios I think they have room to redeem possibly both rate reset shares but I don’t know. I’ll try to see if this was brought up on the earnings call. I suspect not given that CWB.PR.B is down a little at the moment. The highest likelihood is that they will redeem CWB.PR.D but not CWB.PR.B.