Canadian Western Bank Shares

The Canadian Western Bank is the largest chartered bank in west Canada. It mainly operates in the provinces of Alberta, Manitoba, Saskatchewan and British Columbia and has its headquarters in Edmonton. It operates through five trust offices and over 30 branch offices across the western provinces.

While the unstable conditions of the recession ridden economy continue, the bank declared decent earnings in the third quarter of the financial year 2009. In the 85th consecutive quarter of profit, the bank declared earnings of C$ 28 million and total revenues of C$ 85.5 M, both on an increase of 9% and 12% respectively, as compared to the third quarter results of financial year 2008.

Loan portfolio of the Canadian Western bank also showed positive vibes, as total year-to-year loan increase was up to a 12%. This percentage was offset by the dip in the interest margin by 12 points. The impact of this on the loan increase of the last quarter was 1%.

The Canadian Western bank issued preferred shares in March 2009, and its impact was felt on the earnings per share. Diluted earnings per share were down a total of 7%, and rested at a C$ 0.38. But in spite of this dip, the total capital ratio and the Tier 1 Capital ratio looked up, since the reflections of last year. The total capital ratio was at 15.4% and the tier 1 capital ratio, was at a considerable high of 11.2%, a total of 0.2% increase in both counts. This was well above the mandatory standards required by banks in Canada, and within the targets set last year.

It is also worth mentioning that the return on equity of the bank also dipped 260 points compared to last year. But since this has been on a dip all year, the aim was to increase the numbers per quarter. This target was achieved as a total of 240 points increase from last year’s return on equity.

The results reflected on the share prices as well, as the quarter ended with a share price of C$ 18.19, a low cut compared to C$25 of the third quarter end of July 2008. This price has been steadily climbing up, though, and is at approximately C$ 22. This is a positive sign for interested investors.

Another positive sign is the stable credit quality of the bank. The third quarter had a provision of C$ 3.4 millions in credit loss and within the target range set for year 2009. Actual losses are expected to remain within the acceptability ranges, and not exceeding the panic mark to actually reflect in damages. The Canadian Western bank has a strong and stringent lending practice which will back this assumption and put all stops to a possible increase of loss.

The net margins improved over 20 basis points to 2.13%. This, according to trade analysts, will continue to grow well in to 2010. This will duly increase earnings, revenues and efficiency ratios, but the preferred shares offered in the market will not bring very high earnings on the per share basis for shareholders.
While this is true, it is also true that the bank continues in its efforts to gain more footing in new markets, increase customer base and opportunities for investment. It is prudent in nature, but with the tenacious nature of the economy, this prudency will only be an asset.