First Quarter 2020 Highlights(1) (compared to the same period in the prior year)
Adjusted cash EPS | Total revenue | Loans | Branch-raised | Common share |
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11% in general |
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(1) | Includes certain non-IFRS measures – refer to definitions provided on page 4 of this news release, with further detail provided on page 6 of the 2020 First Quarter Report to Shareholders. |
(2) | Declared by our Board of Directors on |
This news release and accompanying financial highlights are supplementary to CWB's 2020 First Quarter Report to Shareholders and the 2019 Annual Report and should be read in conjunction with those documents. |
Financial Performance
"We delivered strong first quarter financial performance, increased funding diversification, and continued strategic execution," said
Q1 2020, | Common shareholders' net income of | Up 8% |
Adjusted cash EPS of | Up 4% | |
Adjusted ROE of 11.3% | Down 60 bp(2) | |
Operating leverage of negative 2.6% | Down 300 bp |
(1) | Includes certain non-IFRS measures – refer to definitions provided on page 4 of this news release, with further detail provided on page 6 of the 2020 First Quarter Report to Shareholders. |
(2) | bp – basis point |
Growth in common shareholders' net income was supported by an increase in total revenue driven by strong loan growth. Robust growth in branch-raised deposits supported a further reduction in broker deposits. Growth in non-interest expenses has temporarily outpaced revenue growth, reflecting investments to support continued execution of our targeted business transformation activities. Our 18 basis point provision for credit losses on total loans as a percentage of average loans was six basis points below last year and at the low end of our historical range. Acquisition-related fair value changes were nil and
Q1 2020, | Common shareholders' net income of | Up 7% |
Adjusted cash EPS of | Up 6% | |
Adjusted ROE of 11.3% | Up 60 bp(2) | |
Operating leverage of negative 2.6% | Improved 80 bp |
(1) | Includes certain non-IFRS measures – refer to definitions provided on page 4 of this news release, with further detail provided on page 6 of the 2020 First Quarter Report to Shareholders. |
(2) | bp – basis point |
Compared to the prior quarter, total revenue was relatively unchanged. Loan growth of 1% was driven by strong funding volumes, mostly offset by a larger volume of paydowns. In line with our strategy, we delivered robust branch-raised deposit growth, including 8% sequential growth of notice and demand deposits and a continued reduction in higher cost broker deposits. Our provision for credit losses on total loans as a percentage of average loans improved one basis point sequentially while non-interest expenses were down 6%, largely reflecting normal seasonal patterns in our expenditures.
Strategic Performance
Focused business transformation and investments in digital capabilities will enhance our differentiated full-service client experience. This quarter, we:
- moved into the final stages before submission of our AIRB application, with regulatory approval expected within fiscal 2020;
- partnered with Temenos, our existing core banking system provider and an industry leader in the digital banking space, to accelerate our strategy to improve our client experience and fuel more efficient and higher levels of client growth. Our focus this year includes digital onboarding for personal banking clients in Motive Financial, followed by our remaining digital and branch channels; and,
- remain on track to open our first full-service branch in
Mississauga, Ontario in the spring to support and expand our growing footprint in the province.
"Our 2020 initiatives will elevate our growth, culture, and client service to the next level," said
About
Fiscal 2020 First Quarter Results Conference Call
CWB's first quarter results conference call is scheduled for
The conference call may be accessed on a listen-only basis by dialing (416) 764-8688 (
www.cwb.com/investor-relations/quarterly-reports.
A replay of the conference call will be available until |
Forward-looking Statements
From time to time, we make written and verbal forward-looking statements. Statements of this type are included in our Annual Report and reports to shareholders and may be included in filings with Canadian securities regulators or in other communications such as press releases and corporate presentations. Forward-looking statements include, but are not limited to, statements about our objectives and strategies, targeted and expected financial results and the outlook for CWB's businesses or for the Canadian economy. Forward-looking statements are typically identified by the words "believe", "expect", "anticipate", "intend", "estimate", "may increase", "may impact", "goal", "focus", "potential", "proposed" and other similar expressions, or future or conditional verbs such as "will", "should", "would" and "could".
By their very nature, forward-looking statements involve numerous assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations and conclusions will not prove to be accurate, that our assumptions may not be correct and that our strategic goals will not be achieved.
A variety of factors, many of which are beyond our control, may cause actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, but are not limited to, general business and economic conditions in
Additional information about these factors can be found in the Risk Management section of our annual Management's Discussion and Analysis (MD&A). These and other factors should be considered carefully, and readers are cautioned not to place undue reliance on these forward-looking statements as a number of important factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. Unless required by securities law, we do not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time by us or on our behalf.
Assumptions about the performance of the Canadian economy over the forecast horizon and how it will affect our businesses are material factors considered when setting organizational objectives and targets. In determining expectations for economic growth, we consider our own forecasts, economic data and forecasts provided by the Canadian government and its agencies, as well as certain private sector forecasts. These forecasts are subject to inherent risks and uncertainties that may be general or specific. Where relevant, material economic assumptions underlying forward-looking statements are disclosed within the Outlook sections of our interim and/or annual MD&A.
Non-IFRS Measures
We use a number of financial measures to assess our performance against strategic initiatives and operational benchmarks. Non-IFRS measures provide readers with an enhanced understanding of how we view our ongoing performance. These measures may also provide the ability to analyze trends related to profitability and the effectiveness of our operations and strategies, and determine compliance against regulatory standards. To arrive at certain non-IFRS measures, we make adjustments to the results prepared in accordance with IFRS. Adjustments relate to items which we believe are not indicative of underlying operating performance. Some of these financial measures do not have standardized meanings prescribed by IFRS, and therefore, may not be comparable to similar measures presented by other financial institutions. The non-IFRS measures used in this news release are calculated as follows:
- Adjusted non-interest expenses – total non-interest expenses, excluding the pre-tax amortization of acquisition-related intangible assets (see calculation on page 6 of the 2020 First Quarter Report to Shareholders).
- Adjusted common shareholders' net income – total common shareholders' net income, excluding the amortization of acquisition-related intangible assets and acquisition-related fair value changes, net of tax (see calculation on page 6 of the 2020 First Quarter Report to Shareholders).
- Pre-tax, pre-provision income – total revenue less adjusted non-interest expenses (see calculation on page 6 of the 2020 First Quarter Report to Shareholders).
- Adjusted cash earnings per common share – diluted earnings per common share calculated with adjusted common shareholders' net income.
- Return on common shareholders' equity – annualized common shareholders' net income divided by average common shareholders' equity.
- Adjusted return on common shareholders' equity – annualized adjusted common shareholders' net income divided by average common shareholders' equity.
- Return on assets – annualized common shareholders' net income divided by average total assets.
- Efficiency ratio – adjusted non-interest expenses divided by total revenue.
- Net interest margin – annualized net interest income divided by average total assets.
- Provision for credit losses on total loans as a percentage of average loans – annualized provision for credit losses on loans, committed but undrawn credit exposures and letters of credit divided by average total loans. Provisions for credit losses related to debt securities measured at fair value through other comprehensive income (FVOCI) and other financial assets are excluded.
- Provision for credit losses on impaired loans as a percentage of average loans – annualized provision for credit losses on impaired loans divided by average total loans.
- Provision for credit losses on performing loans as a percentage of average loans – annualized provision for credit losses on performing loans (Stage 1 and 2) divided by average total loans.
- Operating leverage – growth rate of total revenue less growth rate of adjusted non-interest expenses.
- Common share dividend payout ratio – common share dividends declared during the past twelve months divided by common shareholders' net income earned over the same period.
- Basel III common equity Tier 1, Tier 1, Total capital, and leverage ratios – calculated in accordance with guidelines issued by the Office of the Superintendent
of Financial Institutions Canada (OSFI); - Risk-weighted assets – on and off-balance sheet assets assigned a risk weighting calculated in accordance with the Standardized approach guidelines issued by OSFI.
- Average balances – average daily balances.
For the three months ended | Change from | ||||||||||
(unaudited) | |||||||||||
($ thousands, except per share amounts) | 2020(2) | 2019 | 2019 | 2019 | |||||||
Results from Operations | |||||||||||
Net interest income | $ | 201,010 | $ | 201,439 | $ | 193,342 | 4 | % | |||
Non-interest income | 18,962 | 19,414 | 19,097 | (1) | |||||||
Total revenue | 219,972 | 220,853 | 212,439 | 4 | |||||||
Pre-tax, pre-provision income | 119,788 | 114,390 | 118,073 | 1 | |||||||
Common shareholders' net income | 71,943 | 67,512 | 66,499 | 8 | |||||||
Earnings per common share | |||||||||||
Basic | 0.82 | 0.77 | 0.75 | 9 | |||||||
Diluted | 0.82 | 0.77 | 0.75 | 9 | |||||||
Adjusted cash | 0.83 | 0.78 | 0.80 | 4 | |||||||
Return on common shareholders' equity | 11.2 | % | 10.6 | % | 11.1 | % | 10 | bp(4) | |||
Adjusted return on common shareholders' equity | 11.3 | 10.7 | 11.9 | (60) | |||||||
Return on assets | 0.91 | 0.86 | 0.90 | 1 | |||||||
Net interest margin | 2.54 | 2.55 | 2.61 | (7) | |||||||
Efficiency ratio | 45.5 | 48.2 | 44.4 | 110 | |||||||
Operating leverage | (2.6) | (3.4) | 0.4 | (300) | |||||||
Provision for credit losses on total loans as a | |||||||||||
percentage of average loans(3) | 0.18 | 0.19 | 0.24 | (6) | |||||||
Provision for credit losses on impaired | |||||||||||
loans as a percentage of average loans(3) | 0.15 | 0.18 | 0.22 | (7) | |||||||
Number of full-time equivalent staff | 2,289 | 2,278 | 2,200 | 4 | % | ||||||
Per Common Share | |||||||||||
Cash dividends | $ | 0.28 | $ | 0.28 | $ | 0.26 | 8 | % | |||
Book value | 29.81 | 29.29 | 27.39 | 9 | |||||||
Closing market value | 32.72 | 33.35 | 29.42 | 11 | |||||||
Common shares outstanding (thousands) | 87,273 | 87,250 | 87,210 | - | |||||||
Balance Sheet and Off-Balance Sheet Summary | |||||||||||
Assets | $ | 31,571,598 | $ | 31,424,235 | $ | 29,348,618 | 8 | ||||
Loans | 28,653,132 | 28,365,893 | 26,780,617 | 7 | |||||||
Deposits | 25,640,876 | 25,351,361 | 23,910,243 | 7 | |||||||
Debt | 2,243,891 | 2,412,293 | 2,037,066 | 10 | |||||||
Shareholders' equity | 2,991,732 | 2,945,810 | 2,778,408 | 8 | |||||||
Assets under administration | 10,013,678 | 9,298,745 | 8,357,142 | 20 | |||||||
Assets under management | 2,152,255 | 2,099,569 | 2,136,700 | 1 | |||||||
Capital Adequacy | |||||||||||
Common equity Tier 1 ratio | 9.1 | % | 9.1 | % | 9.1 | % | - | bp(4) | |||
Tier 1 ratio | 10.6 | 10.7 | 10.7 | (10) | |||||||
Total ratio | 11.9 | 12.8 | 12.0 | (10) |
(1) | Includes certain non-IFRS measures – refer to definitions provided on page 4 of this news release, with further detail provided on page 6 of the 2020 First Quarter Report to Shareholders. |
(2) | Results for periods beginning on |
(3) | Includes provisions for credit losses on loans, committed but undrawn credit exposures and letters of credit. |
(4) | bp – basis point |
SOURCE
© Canada Newswire, source