(Reuters) - Canadian Western Bank CWB.TO reported a smaller-than-expected profit as the company set aside more money to cover potential losses from loans to oil and gas companies in the wake of a slump in oil prices.
The bank, which mainly lends to clients in the western provinces of Canada, including oil-rich Alberta, said its total allowance for credit losses increased almost 10 percent to C$103.8 million (about $77 million) in the quarter ended Oct. 31.
“Challenges included the negative impact of low oil prices and regulatory factors on our small portfolio of loans to oil and gas producers,” Chief Executive Chris Fowler said.
“We took a proactive approach to resolve positions within this portfolio, which resulted in higher-than-expected provisions for credit losses.”
A nearly 55 percent drop in oil prices since mid-2014 has forced banks to cut credit lines for oil and gas companies.
On an adjusted basis, the company earned 59 Canadian cents per share, missing the average analyst estimate by 1 cent, according to Thomson Reuters I/B/E/S.
The net income attributable to shareholders fell to C$47.8 million, or 54 Canadian cents per share, from C$53 million, or 66 Canadian cents per share, a year earlier.
Reporting by Vishaka George in Bengaluru; Editing by Savio D'Souza and Saumyadeb Chakrabarty