Canadian Western Bank says all energy loans under watch

Thu Jun 2, 2016 4:17pm EDT
 
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By Matt Scuffham

TORONTO (Reuters) - Canadian Western Bank CWB.TO said on Thursday it was monitoring all lending to oil and gas producers after reporting a 37 percent decline in second-quarter profit as struggling clients defaulted on loan repayments.

Canada's biggest banks, including Royal Bank of Canada (RY.TO: Quote), Toronto-Dominion Bank (TD.TO: Quote) and Bank of Nova Scotia (BNS.TO: Quote), all announced increased losses on loans to energy companies in the second quarter as oil prices touched 13-year lows in February leading to rising defaults.

Canada Western Bank, based in Canada's oil-rich Alberta province, set aside C$33 million to cover bad loans to oil and gas companies. It has C$327 million in loans outstanding to the sector, equivalent to 2 percent of its total lending.

"I would say we are watching every loan," Chief Executive Chris Fowler told analysts.

"This whole industry is challenged right now. Not every loan financially is on the watch list but we're looking at every loan. There's been a lot of volatility and it's not the right time not to look at everything very closely," he said.

The bank reported net income for the quarter of C$32.2 million ($24.6 million) or C$0.41 per share, in line with analysts forecasts.

Fowler said the impact of very low oil and gas prices early in the calendar year, and subsequent reviews of oil companies' credit lines, had put increased stress on the bank's oil and gas loan portfolio.

Chief Financial Officer Carolyn Graham said she expected economic conditions to remain challenging in Alberta, which has seen a sharp rise in unemployment, and said the economic impact of the Fort McMurray wildfires was not yet clear.   Continued...