CWBFG Annual Report 2022

Contractual Obligations

We enter into contracts in the normal course of business that give rise to commitments of future minimum payments that may affect our liquidity position. In addition to the obligations related to deposits and subordinated debentures discussed in the Deposits and Liquidity Management sections of our MD&A, as well as Notes 12, 13, 14 and 17 of the audited consolidated financial statements, the following table summarizes purchase obligations outstanding at October 31, 2022 for operating and capital expenditures.

Table 32 - Contractual Obligations ($ thousands)

Within 1

1 to 3 Years

More than


4 Years


October 31, 2022









October 31, 2021









Credit Ratings

Our ability to efficiently access capital markets funding on a cost-effective basis is partially dependent upon the maintenance of satisfactory credit ratings. Such credit ratings increase the breadth of clients and investors able to participate in various deposit and debt offerings, while also lowering our overall cost of capital. Credit ratings are largely determined by the quality of earnings, the adequacy of capital, the effectiveness of risk management programs and the opinions of rating agencies related to creditworthiness of the financial sector as a whole. There can be no assurance that our credit ratings and the corresponding outlook will not be changed, potentially resulting in adverse consequences for funding capacity or access to capital markets. Changes in credit ratings may also affect the ability and/or the cost of establishing normal course derivative or hedging transactions. Credit ratings do not consider market price or address the suitability of any financial instrument for a particular investor and are not recommendations to purchase, sell or hold securities. Ratings are subject to revision or withdrawal at any time by the rating organization.

The following table summarizes our current credit ratings issued by DRBS Morningstar, as well as the corresponding rating agency outlook.

Table 33 - DBRS Morningstar Credit Ratings

Subordinated debentures (NVCC)

Preferred shares (NVCC)

Limited recourse capital notes (NVCC)

Short-term instruments

Long-term senior debt and long-term deposits


R1 (low)

A (low)

BBB (low)


BB (high)








Capital risk is the risk that we have insufficient capital resources, in either quantity or quality, to support economic risk taken, regulatory requirements, strategic initiatives and current or planned operations.

Risk Overview

Capital management involves an ongoing process to determine, allocate and maintain appropriate amounts of capital. The objective of capital management is to ensure:

• Capital is, and will continue to be, adequate to maintain confidence in the safety and stability of CWB while also complying with required regulatory standards; • We have the capability to access appropriate sources of capital in a timely and cost-effective manner; and, • Return on capital is sufficient to support projected business growth and satisfy the expectations of investors. Risk Governance The Board approves the annual regulatory capital plan, and the Board Risk Committee approves the periodic ICAAP and Capital Risk Management policy. The Group Capital Risk Committee is responsible for capital risk management. The CRO oversees the demand side of capital management, including risk capital and economic capital. The CFO is responsible for the supply side of capital management. Risk Management Our Capital Risk Management policy establishes a framework to manage our capital requirements, including the definition of roles and responsibilites as well as reporting and monitoring requirements. We have established target capital levels, which are informed by our ICAAP and stress tests, that are deemed prudent to effectively manage risks, and are well above regulatory minimums. Regulatory ratios are calculated under the Standardized approach for credit risk and reported to senior management and the Board of Directors on a recurring basis, at least quarterly. On an annual basis, we complete a regulatory capital plan, which includes a three-year capital projection. To monitor capital risk, we utilize models to analyze the likely capital impact of projected operations, various balance sheet and income statement scenarios, approaches used to calculate regulatory capital, and/or significant transactions. A quarterly update on both capital demand and capital supply risk is provided to the Board Risk Committee.

The Risk Management and Finance teams comprise the core ICAAP team and are closely involved in capital management, and follow the process and principles outlined in the Stress Testing section of our MD&A. For additional information, refer to the Capital Management section of our MD&A.

54 | CWB Financial Group 2022 Annual Report

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