CWB Financial Group is a diversified financial services company and Schedule 1 bank in Canada. It is a leading regional bank providing specialized financial services in the commercial and retail banking sector as well as asset management services for small and medium-sized businesses. CWB also provides equipment finance and escrow services across Canada.

CWB operates through an extensive network of branches with a focus on banking, credit, asset and fiduciary services. It has a large presence in the western parts of Canada with a strong focus on general commercial, equipment, construction and real estate project finance.

CWB offers a full range of financial solutions and personal services to target segments within Canada’s commercial banking industry.

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Plant data

Sales growth & market presence

Canadian Western Bank takes a customer-centric approach and a strong focus on meeting the financial needs of business owners. It has a large footprint that stretches from coast to coast across Canada. The loan portfolio includes general commercial loans (33%), personal loans and mortgages (19%), equipment finance and leasing (17%), commercial mortgages (20%) and real estate project loans (10%).

CWB’s exposure to oil and gas production loans accounts for only 1% of total loans. A diversified platform offers significant growth opportunities and increased resilience to regional fluctuations.

The company looks back on a long tradition of more than 45 years in equipment leasing and is an industry leader in the field of small and medium-sized equipment leasing. The group also provides specialized financing solutions in healthcare, hospitality, transportation, real estate, etc. CWB’s exposure to these industries is well diversified and backed by high quality and resilient borrowers.

Canadian Western Bank continues its balanced growth strategy that is diversified across regions, industries and sources of funding. It is focused on reaching a 30-30-30 diversification milestone for BC, AB, and ON. It is carrying out various transformation initiatives to improve the business infrastructure. CWB is focused on increasing its noninterest income by increasing its income from banking and leasing fees, asset management and fiduciary services.

CWB saw momentum in growth in branch deposits and borrowing in the most recent quarter across the country. The bank is expanding its market share in Ontario and plans to open its second full-service banking center in FY’22. CWB has a reputation as a secured lender and disciplined underwriter with a proven history of low write-offs over business cycles.

CWB has launched a digital banking platform for small and medium-sized businesses. The ongoing efforts towards the digital customer experience should also support future growth. CWB estimates to achieve high single digit loan growth in FY21.

Dividends

Canadian Western Bank is a Canadian dividend aristocrat with 28 consecutive dividend increases. It has grown its dividend growth by over 10% annually over the past decade. The bank has a very reasonable payout ratio of 36% and an average annual return of more than 3%. Most recently, it increased its dividend by 3.5% in 2020.

Canadian Western Bank has a strong balance sheet and a solid track record of dividend growth and consistent profitability. Its EPS has grown 5% + CAGR over the past three years. CWB is well positioned to add value to its shareholders through a variety of capital deployment options in line with its balanced growth strategy.

In addition, the bank has consolidated its movables financing and leasing business under one management. CWB’s credit quality remains strong overall with very little write-downs due to a secured loan portfolio, disciplined underwriting practices and effective credit management. He continues to benefit from a diversified funding mix and steady growth in branch deposits.

CWB had assets of $ 36 billion as of the end of the second quarter of 2021. The bank has strong capital levels and a positive side with a successful AIRB transition that aims to further improve capital ratios. The CET1 capital ratio decreased compared to the previous year due to the accumulation of assets.

For full year 2021, CWB expects AEPS growth in the mid-tens and an efficiency rate of 48% to 49%, driven by stronger net interest income.

Historic Canadian Western Bank (CWB) Return
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competition

The financial services market is highly competitive and the performance of Canadian Western Bank is influenced by the level of competition in all different market segments.

Laurentian Bank, National Bank, and VersaBank are the major competitors of Canadian Western Banks.

The National Bank is the leading bank based in Quebec and is one of the six largest commercial banks in Canada. VersaBank is a leading chartered bank in Canada, while Laurentian Bank is a leading Canadian bank offering a wide range of advice-based solutions and services to its customers.

In addition, Canadian Western Bank is also suffering from competition from non-financial institutions that offer banking products and services through electronic and Internet-based financial solutions.

Bottom line

CWB has an impeccable reputation for providing proactive and personalized service. The bank’s investments in skills and product offerings should open up growth opportunities in the future as the near-term economic outlook improves.

CWB should also expect its equipment leasing business to spike once the economy recovers. The acquisition also paved the way for CWB to become a leader in Canada’s private wealth industry. CWB is well positioned to benefit from digital transformation, growing full-service relationships and lower-cost deposits from branches across Canada.

In addition, the company is focused on increasing its market share in the target industries in its growing geographic presence.

Historical PE. Canadian Western Bank (CWB)
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