As reported by Reuters, the bank posted an 11 per cent year-over-year decline in its earnings (8 per cent per share) on the quarter ending July 31, down to $45.6 million ($0.60 per share). The bank’s proportion of funds allotted to cover bad loans to oil and gas producers has also climbed significantly in the same period.
“Our outlook for the remainder of 2016 reflects expectations for ongoing credit stress and macroeconomic uncertainty within Alberta, primarily related to the impact of persistent low oil prices,” the bank’s statement read.
Despite a partial rally in Q3, this year has seen petroleum prices descend to a 13-year low. Earlier this year, analysts pointed out that the mass exit of energy sector workers (after the worst effects of weak oil prices became apparent) has had a massive impact on Alberta’s real estate market. As of July, approximately 56,000 workers have departed from province since the onset of the crash, with most of them returning home after layoffs and facility closures.
Alberta rental market hardest hit by weak oil - analysis
In its September 1 announcement, the Canadian Western Bank reported a notable drop in its earnings on the third quarter, stemming primarily from the weakness of its oil and gas loan portfolio in Alberta (one of its primary target markets).