CWBFG Annual Report 2023

FISCAL 2024 OUTLOOK

Economic Conditions Despite persistent levels of inflation and an elevated interest rate environment, growth of the Canadian economy remained moderately positive in fiscal 2023. As the impact of elevated interest rates continues to work through the economy, economic growth in fiscal 2024 is expected to be weak in the first part of the year before expanding in the latter half of the year. We anticipate a relatively stable policy interest rate in fiscal 2024, with the potential for policy interest rate reductions in the latter part of the year on the assumption that core inflation continues to decline to reach the Bank of Canada’s target level. Outlook of expected financial performance We have a demonstrated history of delivering strong, stable financial results against volatile economic backdrops. We target and win new full-service clients through economic cycles by delivering an unrivaled client experience with a consistent and prudent risk management approach. Looking ahead to fiscal 2024, we expect to deliver:

Annual Metric

Fiscal 2024 expectations

Operating leverage

Positive

Adjusted earnings per common share

Low to mid single-digit percentage growth

Against this expected economic backdrop, our teams remain focused on winning full-service clients within our risk-adjusted pricing criteria. We expect to deliver mid single-digit annual percentage loan growth, if prudent and within our disciplined risk appetite, with a strategic focus on portfolios that support further full- service client opportunities. We expect strong loan growth in Ontario will drive further geographic diversification of our loans as we continue to expand our physical presence with the opening of our Toronto financial district and Kitchener banking centres in fiscal 2024. We expect to launch our new digital and cash management platform next year and will commence with a phased migration of existing commercial clients onto the new platform. We expect gradual momentum in branch-raised deposit growth as the year progresses, with mid single-digit percentage growth of branch-raised deposits on an annual basis. Based on the assumption of a more stable interest rate environment, our net interest margin is expected to gradually increase over the next year and reflect the benefits of the growth in fixed term asset yields continuing to outpace growth in funding costs, and loan growth that is targeted to optimize risk-adjusted returns. We will continue to carefully manage discretionary costs while prioritizing investments in key roles and capabilities to support our differentiated strategy to be the best bank for business owners in Canada. The reorganization initiatives undertaken in late fiscal 2023 provide us with additional operational efficiency to continue to advance our strategy, while ensuring we maintain an appropriate level of expenses relative to our expected revenues. We executed most of the planned organizational redesign activities in the fourth quarter of fiscal 2023 and expect limited further activity within fiscal 2024. We will carefully monitor and manage our expenditures and expect to deliver positive operating leverage next year. We expect that the sustained impact of higher interest rates will result in increased borrower defaults and impaired loans as the year progresses. Consistent with our experience in prior periods of economic volatility, our prudent lending approach supports our expectation that our provision for credit losses will be within our historical normal range of 18 to 23 basis points next year. Based on the assumptions described above and presuming no significant adverse shifts in the macroeconomic environment, we expect annual percentage growth of adjusted earnings per common share in the low to mid single-digit range.

20 | CWB Financial Group 2023 Annual Report

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