NET INTEREST INCOME Net interest income is the difference between interest earned on assets, and interest paid on deposits and other liabilities, including debt. Net interest margin is net interest income as a percentage of average total assets. Table 3 – Net Interest Income ($ thousands) 2023 2022
Average Balance
Interest Rate
Average Balance
Interest Rate
Mix
Interest
Mix
Interest
Assets Cash, securities and deposits with financial institutions
$
4,143,626
10 % $
72,465
1.75 %
$
4,106,837
11 % $
36,915
0.90 %
Securities purchased under resale agreements
245,260
1
11,386
4.64
143,701
-
1,964
1.37
Loans
Personal Business
7,142,258 29,418,323 36,560,581 40,949,467 1,022,491
17 70 87 98
298,011
4.17 6.74 6.24 5.78 0.00
6,687,336 27,153,241 33,840,577 38,091,115
17 70 87 98
211,531
3.16 4.83 4.50 4.10 0.00
1,983,610 2,281,621 2,365,472
1,311,495 1,523,026 1,561,905
Total interest bearing assets
Other assets Total Assets
2
-
948,188
2
-
$ 41,971,958
100 % $ 2,365,472
5.64 %
$
39,039,303
100 % $ 1,561,905
4.00 %
Liabilities Deposits
Personal
$ 18,699,829
45 % $
759,464 499,791
4.06 %
$
16,023,732 15,334,691 31,358,423
41 % $
325,291 220,166 545,457
2.03 %
Business and government
14,496,310 33,196,139
35 80
3.45 3.79 4.46 0.36 3.07 0.00
39 80
1.44 1.74 1.35 0.44 2.21 0.00
1,259,255
Securities sold under repurchase agreements
38,403 942,849
-
1,782 3,369
50,470 711,081
-
679
Other liabilities
2 9 9
2 9 9
3,159
Debt
3,897,081 3,897,486
119,789
3,282,776 3,636,553 39,039,303 39,039,303
72,634
Shareholders’ equity
-
-
Total Liabilities and Equity
$ 41,971,958 $ 41,971,958
100 % $ 1,384,195
3.30 % 2.34 %
$ $
100 % $
621,929 939,976
1.59 % 2.41 %
Total Assets/Net Interest Income
$
981,277
$
Net interest income of $981 million was up 4% ($41 million) from last year. Growth was primarily driven by an 8% increase in average interest bearing assets, partially offset by a seven basis point decrease in net interest margin. The decline in net interest margin reflected the impact of lower loan related fees, including payout penalties and a proportional shift in our funding mix towards fixed term branch-raised and insured broker deposits. The yield on average cash, securities and deposits with financial institutions of 1.75% increased 85 basis points primarily due to increases in market interest rates following the Bank of Canada policy interest rate changes. The average balance of cash, securities and deposits, less securities sold under repurchase agreements, as a percentage of total assets remained relatively consistent with the prior year. Average loan yields increased 174 basis points to 6.24% primarily due to a 325 basis point increase in the average prime rate, driven by the Bank of Canada policy interest rate increases during the current and prior year. The increase in prime rates immediately impacted our floating rate loan yields, which represent about one third of our loan portfolio, while our fixed rate loan portfolio will continue to trend upwards as loans originated prior to the policy interest rate increases mature and are renewed or replaced with new lending at a higher interest rate. The increases in average loan yields were partially offset by lower loan related fees, which primarily related to payout penalties in the higher interest rate environment. Average deposit costs were up 205 basis points to 3.79% and the overall cost of average interest-bearing liabilities and equity increased 171 basis points to 3.30%, primarily due to market interest rate increases. The increase in market interest rates immediately impacted our floating rate deposits, which represent about one third of our deposit portfolio, and also resulted in deposit pricing changes to match competitive market rates on certain administered interest rate products. The proportional increase in deposits compared to loan yields is primarily due to the impact of our fixed term deposit portfolio repricing faster to reflect higher market interest rates than our fixed term loans, which have a longer average duration and the negative impact on our loan yields associated with lower loan related fees as discussed above.
CWB Financial Group 2023 Annual Report | 21
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