CWB Reports Q3 Profit Down from Year Ago, Provision for Credit Losses Up

Key Takeaways

• CWB's Q3 profit declined by 23% year-over-year.
• The provision for credit losses increased significantly.
• Net interest income and non-interest income both decreased.

Financial Performance

CWB Financial Group (TSX: CWB) reported a 23% decrease in its third-quarter profit year-over-year. The bank reported net income of $74.2 million for the quarter ended July 31, 2023, compared to $96.6 million in the same period last year.

The decline in profit was primarily due to a $36.5 million increase in the provision for credit losses. This provision is set aside to cover potential losses on loans and other financial instruments. The increase in the provision reflects CWB's expectation of higher credit losses in the future due to the uncertain economic environment.

Net interest income, which is the difference between the interest earned on loans and the interest paid on deposits, decreased by 4.3% to $160.1 million. This decrease was primarily due to lower loan volumes and a decline in the net interest margin. Non-interest income, which includes fees and commissions, also decreased by 7.6% to $41.6 million.

Outlook

CWB's CEO Chris Fowler said that the bank is "cautiously optimistic" about the future. He said that the bank is "well-positioned to navigate the challenges of the current economic environment." However, he also noted that the bank is "mindful of the risks" and is "taking steps to mitigate them."