CWBFG Annual Report 2023

Fluctuations in the value of securities are generally attributed to changes in interest rates, movements in market credit spreads and shifts in the interest rate curve. Net unrealized losses, before tax, recorded on the consolidated balance sheet at October 31, 2023 totaled $72 million, compared to net unrealized losses of $160 million last year. Elevated unrealized losses on cash and securities in prior year were primarily driven by the significant and rapid increase in market interest rates. The unrealized losses reduced in the current year with more stability in interest rates and through the maturity and replacement of debt securities with yields that reflect current market interest rates. We regularly review the level of unrealized losses on securities. Impairment charges on debt securities are reflected in net gains (losses) on securities only in the case of an issuer credit event. We have no direct investment in any sovereign debt or other securities issued outside of Canada or the United States. Refer to Table 25 – Valuation of Financial Instruments of our MD&A for additional information on significant financial assets and liabilities reported at fair value.

LOANS Table 8 – Outstanding Loans by Portfolio ($ millions)

2023

2022

Change from 2022

General commercial loans Personal loans and mortgages

$

13,681

$

12,430

$

1,251

10 %

7,118 7,106 5,722 3,098

6,952 7,446 5,546 3,200

166

2

Commercial mortgages

(340)

(5)

Equipment financing and leasing Real estate project loans Oil and gas production loans

176

3

(102)

(3)

485

332

153

46

Total Outstanding Loans (1)

$

37,210

$

35,906

$

1,304

4 %

(1) Total loans outstanding by lending sector exclude the allowance for credit losses.

Total loans, excluding the allowance for credit losses, increased 4% ($1.3 billion) compared to last year and reflected our continued focus on optimizing risk-adjusted returns in the current economic environment. Very strong growth of 10% in our general commercial portfolio reflected our continued focus to increase full-service client relationships across our national footprint. General commercial loans increased by 17% in Ontario, supported by our Mississauga and Markham banking centres. General commercial lending also reflected activity across a broad range of industries, such as finance and insurance, hospitality, retail trade, construction, transportation and storage, professional services, healthcare, and manufacturing. Personal loans and mortgages increased 2% ($166 million) primarily due to growth in uninsured mortgages, which benefited from strong new origination volumes with prudent loan-to-value ratios and strong average beacon scores. Our commercial mortgage portfolio declined 5% ($340 million) with new origination volume more than offset by scheduled repayments, as fewer new lending opportunities met our risk-adjusted return expectations. The equipment financing and leasing portfolio increased 3% ($176 million), primarily in Quebec, Alberta, and British Columbia (BC) and was dampened by continued market competition and elevated payouts in the year. Real estate project loans declined 3% ($102 million) as a lower than usual volume of new project starts from top-tier borrowers were more than offset by payouts associated with the timing of project completions, primarily in Alberta. Oil and gas production loans were up 46% ($153 million), primarily reflecting our participation in syndicated facilities that remain within our prudent risk appetite. As at October 31, 2023, our exposures to oil and gas service and production businesses each represented approximately 2% of total loans. The shift in the mix of our portfolio (see Figure 2) reflected strong execution against our strategy to focus on full-service client opportunities and risk-adjusted return expectations across a broad range of industries. Very strong growth in our strategically targeted general commercial loans increased the proportion of loans to 37% at October 31, 2023, compared to 35% in the prior year. The proportion of loans in commercial mortgages and real estate project loans also decreased to 19% and 8%, respectively, compared to the prior year proportions of 21% and 9%, respectively. The proportional decline in these portfolios primarily reflects lower volume of new lending which met our risk-adjusted return expectations, compared to repayments and project completions during the year. Our remaining portfolios remained relatively consistent with the prior year. Figure 2 – Outstanding Loans by Portfolio (October 31, 2022 in brackets)

26 | CWB Financial Group 2023 Annual Report

Powered by