Canadian western bank, long active in commercial lending in the region from British Columbia to Manitoba, is looking to expand its retail business.
The Edmonton-based bank has hired several regional managers recently to oversee its retail customers, part of the plan to significantly increase the $2.5 billion it holds in personal loans and mortgages.
“We have stepped up our focus on retail banking in the past couple of years, recognizing and appreciating the value it brings to our business,” says Kirby Hill, director of investor and public relations with CWB. “Our objective for the next year is to maintain double-digit growth across personal and business lending.”
The bank has seen its combined personal and business loan portfolio grow by a minimum of 10% for 20 of the past 21 years, with 2009 being the sole exception. Growth thus far this year, Hill says, is 14%.
CWB’s plans include building its branch network, which currently sits at 40. The bank recently opened a new, full-service banking branch in Richmond, B.C., offering business and retail services in English and Chinese, as well as a new branch in Saskatoon and two more in Edmonton. CWB plans to open another branch in Winnipeg next year but, Hill says, CWB’s expansion plans won’t stray east of the Manitoba/Ontario border.
“It’s safe to say we are underrepresented in Winnipeg, considering the opportunities there,” he says. “Our expectation is to add two to three branches [across Western Canada] every year.”
Hill says CWB offers “very competitive” deposit products and a wide range of mutual funds, although it doesn’t have its own mutual funds. “We offer everything you can get at your local [Big Six bank] branches,” he says. “We have generated significant deposit growth through our relationships with our business customers. A lot of our retail customers are our commercial customers as well.
“A lot of our success has been built on word of mouth and referrals,” Hill adds. “Getting more people talking about Canadian Western Bank is one of our key objectives. We have the capacity to touch more people on the retail side and build those relationships we’ve been successful in building on the business side.”
The bulk of CWB’s loan portfolio is in commercial real estate, and general commercial, construction and equipment financing. “Business lending is about 80% of our balance sheet,” says Hill. “It’s our competitive advantage against our bank competitors.”
CWB’s branches are set up a little differently than other banks, he adds, with four commercial lenders for every retail lender.
CWB has a market capitalization of about $2 billion — good for the seventh largest bank in Canada by that metric — and $14 billion in assets, including $9 billion in business loans as well as some cash and real estate.
CWB made a significant investment in wealth management three years ago, acquiring a majority stake in Edmonton-based Adroit Investment Management Ltd., which had almost $1 billion in assets under management at the time.
A September research report from Royal Bank of Canada predicts CWB’s stock will “outperform” and has “average” risk. CWB stock was trading near $25 a share in early October, but RBC has a 12-month price target of between $35 and $36.
Risks to the price target include the health of the overall economy and the provincial economies of Alberta and B.C., where CWB has the majority of its operations, and sustained commodities price declines or volatility, particularly in natural gas and oil.
Noting CWB’s personal touch, Hill says there isn’t a single number a caller can dial where they will hear a voice-mail message. “It sounds a little old-school,” he says, “but we get the most compliments on that.” IE