November 27, 2022

Friday was a quiet day in the markets with the S&P 500 about unchanged and Toronto up 0.2%.

Monday appears set to open with a market decline due to concerns about unrest in China.

On Tuesday we will get the first of the Q4 earnings reports from Canada’s largest banks.

When it comes to Canadian Western, they already indicated in their Q3 report that Q4 will include a material write-off of some older software associated with their efforts to switch to a more advanced and advantageous way of calculating their risks and the capital that they need to hold in each loan category. Also they continue to indicate that their operating expenses are higher than normal as they invest for future growth. Therefore, expect the headline number to be a bit ugly. I don’t expect any issues with actual loan losses but it seems likely that all the banks will have to increase their provisions for possible loan losses due to forecasts of recession and a softer economy as well as higher interest rates that could push more customers into insolvency. Overall, I expect Canadian Western Bank to continue to be attractive at its current price. But we will know a lot more this coming Friday morning when they release earnings. They are holding what I understand is their first ever investor day in Toronto on December 7th. I don’t think they would be holding their first investor day and doing it in Toronto if they did not have good news and optimism to share.

Scroll to Top