PROVISION FOR CREDIT LOSSES The provision for credit losses as a percentage of average loans of nine basis points consisted of a 17 basis point charge related to impaired loans and an 8 basis point recovery related to performing loans. This compared to 32 basis points last year, including an 18 basis point provision for credit losses on impaired loans and a 14 basis point provision for credit losses on performing loans. In dollar terms, the provision for credit losses of $27 million compared to $92 million last year. The provision for credit losses on impaired loans of $51 million remained relatively consistent with the prior year, while the provision for credit losses on performing loans was a recovery of $24 million compared to a charge of $41 million last year. For additional information on the estimation of the performing loan allowance, refer to the Allowance for Credit Losses section of our MD&A. Quarterly write-offs fluctuate as loans become impaired and are subsequently resolved. Our approach to managing credit risk has proven to be very effective and write-offs as a percentage of average loans of 19 basis points remained below our five year average of 20 basis points. Write-offs increased compared to last year due to ongoing resolution of impaired loans, which resulted in the realization of losses previously recognized in the provision for credit losses.
Table 14 - Provision for Credit Losses (as a percentage of average loans)
IAS 39 (1)
IFRS 9
2021
2020
2019
2018
2017
Provision for credit losses on total loans
0.09 %
0.32 %
0.21 %
0.20 %
0.23 %
Provision for credit losses on impaired loans
0.17 0.19
0.18 0.17
0.21 0.23
0.19 0.18
0.19 0.21
Write-offs
(1) Fiscal 2021, 2020 and 2019 results have been prepared in accordance with IFRS 9. Previous years have been prepared in accordance with IAS 39 Financial Instruments: Recognition and Measurement and have not been restated.
COVID-19 RESPONSE MEASURES
Our teams continued to actively support our clients through government lending initiatives that were launched in response to the COVID-19 pandemic. During the year ended October 31, 2021, we:
• administered the advance of approximately $50 million (2020 – $90 million) of Canada Emergency Business Account (CEBA) loans, which are funded by the federal government and not carried on our balance sheet; and, • funded approximately $50 million (2020 – $130 million) of loans with partial federal government guarantees through Export Development Canada’s Business Credit Availability Program (BCAP), and approximately $30 million (2020 – nil) of loans with full federal government guarante es through Business Development Canada’s Highly Affected Sectors Credit Availability Program (HASCAP), which are carried on our balance sheet.
The application window for the CEBA program closed on June 30, 2021, and the deadline was extended to December 31, 2021 for the BCAP and HASCAP programs.
In fiscal 2020, we launched our #CWBhasyourback program to provide payment deferrals to clients experiencing temporary financial difficulty following the emergence of the COVID-19 pandemic. The percentage of outstanding loans deferring payments under this program was 2% at October 31, 2020, and there were no loans in active deferral status at October 31, 2021.
DEPOSITS AND FUNDING
Highlights of 2021
• Continued execution of our diversified funding strategy, reflected by very strong growth in our relationship-based branch-raised deposits of 16%, including 26% growth of demand and notice deposits. • Branch-raised deposits comprised 64% of total deposits at October 31, 2021, compared to 61% last year. • Broker deposits declined by 10% and decreased their proportion as a percentage of total funding to 21% of total deposits at year end, down from 26% last year.
• Growth of debt capital market funding, with five senior deposit note issuances totaling $2 billion at historically low credit spreads. • Growth of securitization funding to support originations of both equipment loans and leases, and residential mortgages.
34 | CWB Financial Group 2021 Annual Report
Powered by FlippingBook