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UPDATE 1-Canadian Western Bank profit hit by soured oil loans

Published 2016-06-02, 07:29 a/m
© Reuters. UPDATE 1-Canadian Western Bank profit hit by soured oil loans
CWB
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(Adds comments from chief executive)
TORONTO, June 2 (Reuters) - Canadian Western Bank CWB.TO
reported a 37 percent decline in second-quarter profit,
reflecting a ramp-up in funds set aside to cover loans to oil &
gas companies that have turned sour amid a prolonged slump in
oil prices.
The bank, based in Canada's oil-rich Alberta province,
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.
Canadian Western Bank said last month it would set aside
C$33 million during this quarter to cover bad loans to oil & gas
companies.
Oil prices touched 13-year lows in February, putting
increased pressure on Canadian banks' energy clients and leading
to rising loan defaults.
"The impact of very low oil and gas prices on producer cash
flows early in the calendar year, as well as subsequent
borrowing base redeterminations, led to an increase in credit
stress within this portfolio compared to prior quarters," said
Chief Executive Chris Fowler.
"We are maintaining a realistic outlook as we work with our
clients through the difficult operating environment in Alberta,"
he added.
($1 = 1.3101 Canadian dollars)

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