ATB Financial earnings drop on potential loan losses amid oilpatch downturn

CALGARY – ATB Financial’s earnings plunged in the last quarter compared with a year ago as the bank prepared for a potential big increase in loan losses amid the continuing downturn in the oilpatch.

The Alberta crown corporation says net income was $32.5 million for the last three months of 2015, down from earnings of $91.5 million in the same quarter a year earlier.

Much of that was attributed to a surge in anticipated loan losses, with the company booking $91.3 million in credit loss provisions in the quarter, compared with $18.8 million a year ago.

The bank says the increase was largely due to several high-value loans in the exploration and production portfolio becoming impaired in the quarter.

ATB said the credit loss provision category was a “clear gauge of the challenges faced by companies in the oil and gas sector, and related service sectors.”

As of the end of December the bank’s gross impaired loans totalled $425.8 million or 1.1 per cent of its total loan portfolio, up from 0.44 per cent a year ago.

“We may well look back on the third quarter of the current financial year as the time the oil price crisis made itself sharply felt across the province,” said ATB chief executive Dave Mowat.

The bank says it is also reaching out to customers whose paycheques have stopped to offer financial advice, with over 1,000 contacted already.

ATB expects Alberta’s economy to shrink by 0.5 per cent this year and unemployment to average 7.2 per cent, with a gradual recovery beginning in the second half of the year.