EDMONTON, AB, Dec. 2, 2022 /CNW/ - CWB Financial Group (TSX: CWB) (CWB) today announced financial performance for the year ended October 31, 2022. Annual diluted earnings per share of $3.39 and adjusted earnings per common share(1) of $3.62, were down 9% and 5%, respectively, reflecting an increase in the performing loan provision for credit losses due to a deterioration in macro-economic forecasts. Fourth quarter diluted earnings per share of $0.72 was down 18% sequentially and reflected the impact of the accelerated amortization of certain previously capitalized Advanced Internal Ratings Based (AIRB) assets recognized concurrently with material completion of the development of revised AIRB tools as we prepare for implementation into our business processes and data. Fourth quarter adjusted earnings per common share of $0.88 was down 2%, sequentially. Our Board of Directors declared a cash dividend of $0.32 per common share, which is up one cent, or 3%, from the dividend declared last quarter and two cents, or 7%, from one year ago.
"Our performance this year reflected solid growth and continued investment in strategically targeted full-service growth initiatives in a volatile economic environment," said Chris Fowler President and CEO. "Our teams delivered 14% annual loan growth in strategically targeted general commercial loans, 11% annual loan growth in Ontario and an 8% annual increase in branch-raised deposits. Our disciplined approach to driving growth within our prudent risk appetite has delivered very strong credit performance and we are in a position of strength to face the potential economic volatility on the horizon."
"Our strategic execution has delivered enhancements to our digital capabilities, increased our physical presence in key markets, and further improved our client offering to provide a foundation to accelerate full-service client growth. We are focused to deliver strong core operating performance next year and achieve the financial performance targets we have set for 2024."
"At our upcoming investor day on December 7, 2022 in Toronto, we look forward to discussing how our strategic execution has positioned our talented teams to drive an unrivaled experience for more full-service clients and increase value for our investors as the best bank for business owners in Canada."
(1) Non-GAAP measure – refer to definitions and detail provided on pages 6 and 7.
Financial Performance
Q4 2022, compared to Q4 2021(1)
Common shareholders' net income $68 million Down 25%
Diluted EPS 0.72 Down 29%
Adjusted EPS $0.88 Down 15%
Adjusted ROE 10.5 % Down 200 bp
Efficiency ratio 52.6 % Down 30 bp
Pre-tax, pre-provision income $133 million Up 8%
Compared to the same quarter last year, common shareholders' net income decreased as 7% revenue growth was more than offset by higher non-interest expenses and an increase in the provision for credit losses on performing loans. Pre-tax, pre-provision income increased 8%. Net interest income increased 4%, as the benefit of 9% loan growth was offset by a 14 basis point decrease in net interest margin(1). Annual loan growth of 9%, including 14% growth in the general commercial portfolio, reflects our strategic focus on full-service client opportunities. The decline in net interest margin reflects that growth in asset yields has lagged the growth in deposit costs over the last year driven by the higher market interest rate environment, and the impact of a proportional shift in our funding mix towards higher-cost fixed term deposits. Net interest margin was also negatively impacted by higher average liquidity and a change in our lending mix to comparatively lower-yielding borrowers and portfolios. Non-interest income growth of 29% primarily reflects higher foreign exchange revenue recorded within 'other' non-interest income. Non-interest expenses were up 18%, which included the $17 million impact of the accelerated amortization of intangible assets as a result of a reduction in estimated useful lives of certain previously capitalized AIRB assets, concurrent with the completion of a material portion of our revised AIRB tools. Adjusted non-interest expenses(1) increased 7%, and we delivered positive operating leverage(1) this quarter. The provision for credit losses on total loans as a percentage of average loans(1) of 14 basis points was 26 basis points higher than last year due to a 22 basis point increase in the performing loan provision and a four basis point increase in the impaired loan provision. The increase in the performing loan provision was driven by the impact of a deterioration in the forward-looking macroeconomic outlook in the rising interest rate environment. We incurred a nil provision for credit losses on impaired loans, compared to a four basis point recovery last year. Gross impaired loan balances represented 0.46% of gross loans, down from 0.61% one year ago and reflect historically low levels.
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