Canadian Western Bank continues to churn out record profits, attracting even more attention to the Edmonton-based financial institution.
Fourth quarter and annual earnings have now been reported, and full year revenue jumped 14 per cent, while profit popped 9 per cent. However, it should be noted that this is the first full year in which CWB National Leasing Group’s revenues and profits were incorporated into its own, following the 2010 acquisition.
Beneath the headline numbers, one of the more interesting stats is CWB’s 16 per cent loan growth in 2011, growing its loan book to $1.7-billion. That’s impressive in an environment in which some of the bigger banks are willing to lend, but have trouble finding people to loan to, which RBC’s chief executive officer Gord Nixon recently highlighted.
And CWB expects this growth to continue. Management has set a target of, and expects to attain, 10 per cent loan growth in fiscal 2012.
But CWB can’t buck all of the trends. While its annual net interest margin was up 8 basis points at 2.82 per cent, the quarterly numbers are starting to fall, hitting 2.72 per cent last quarter. Plus, "in view of expectations for a prolonged period of very low interest rates, a flat interest rate curve and ongoing competitive influences, pressure on net interest margin will likely continue,” the company said in its earnings release.
The bank also expects an overall slowdown next year, mainly because of Europe’s effect on the macro banking system. However, “the bank’s key markets in western Canada are expected to perform well relative to the rest of Canada largely owing to strong capital investment related to a favourable long-term outlook for commodities, including the positive impact on demand from developing economies,” the company said.
CWB bumped its quarterly dividend to 15 cents per share this quarter, up 7 per cent over the previous quarter and 15 per cent over same period last year. That puts CWB’s payout ratio for the year at 24 per cent, just below the 25 to 30 per cent range the bank targets.