Canadian Western Bank Q2 Profit Rises 40%, Beats by C$0.08; Shares Down 2%

Shares of Canadian Western Bank (CWB) fell more than 2% in early trading Friday even after the bank reported better-than-expected profits in its second quarter. CWB is a Canadian bank based in Edmonton, Alberta. The bank serves clients in Western Canada and other provinces.

Earnings available to common shareholders came in at C$72 million (C$0.82 per diluted) in Q2 2021, up from C$51.4 million (C$0.59 per diluted share) in Q2 2020.

Lower provisions for credit losses drove the improvement in profits. Indeed, they totaled C$14.8 million, a decrease of 57.6% from C$34.9 million a year earlier.

Meanwhile, revenue was C$247.1 million, higher than the consensus of C$244.2 million, and up 15.3% from the prior-year quarter.

On an adjusted basis, CWB earned C$0.84 per share in the second quarter, up from adjusted earnings of C$0.60 per share a year ago.

Analysts on average expected earnings of C$0.76 per share, according to financial data firm Refinitiv. (See Canadian Western Bank stock analysis on TipRanks)

CWB President and CEO Chris Fowler said, “Our financial results surpassed our expectations again this quarter, supported by very strong branch-raised deposit and loan growth across the country. Our focus to create an unrivaled experience for our clients and invest in our capabilities and product offering is creating exciting growth opportunities for CWB, especially as the near-term economic outlook improves. Based on the expected trajectory of our financial performance for the rest of the year, we now expect to deliver high single-digit loan growth and mid-teens adjusted earnings per share growth on a full-year basis in fiscal 2021.”

Last week, Scotiabank analyst Meny Grauman upgraded CWB to Buy from Hold. She also lifted its price target to C$41.00 (from C$36.00), for 13.4% upside potential.

Grauman had anticipated that CWB would “easily beat” management’s expectations as the outlook for credit and margins keeps getting better.

Overall, CWB scores a Moderate Buy rating among Wall Street analysts based on 7 Buys and 4 Holds. The average analyst price target of C$37.50 implies 3.7% upside potential to current levels.

TipRanks’ Smart Score

CWB scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the overall market.

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