Canadian Western Bank Q2 profit plunges 37% due to shaky loans to oil-gas sector

EDMONTON – Canadian Western Bank says its second-quarter profit was down 37 per cent from the same time last year, mostly due to previously announced increases to its provisions for bad loans to the energy sector.

The Edmonton-based bank (TSX:CWB) says its net income for the three-month period fell to $32.2 million or 40 cents per share from $51.5 million or 64 cents per share a year earlier.

The bank’s pre-tax provision for credit losses was $39.7 million, up from $7.4 million in the quarter ended April 30, 2015.

The bank also wrote off $15.7 million of bad loans, compared with $2.4 million in last year’s second quarter.

The company, which is working to expand beyond its base in Western Canada, said it had strong growth in loans and branch-based deposits during the quarter.

The second quarter ended before wildfires devastated and forced the evacuation of Fort McMurray, Alta., prompting the shutdown of significant portions of the province’s oil and gas production.

CWB president and CEO Chris Fowler said the bank has a limited presence within Fort McMurray but the impact of the disaster can be felt across the province.

“Our top priorities are to take care of members of our CWB team who have friends and family affected by the fire, and to ensure our clients have the assistance they need,” Fowler said.

“Notwithstanding the short-term economic impact of reduced output from the oilsands, we are confident the community and related activity will be fully restored in time.”