CWB update on expected timing of AIRB approval

CWB Financial Group (TSX: CWB) (CWB) today provided an update on our transition to the Advanced Internal Ratings Based (AIRB) approach for regulatory capital and risk management. Our formal application review with the Office of the Superintendent of Financial Institutions Canada (OSFI) continues. It will now include a parallel run of our AIRB models and tools to evaluate their operation through this period of economic volatility. The timeline for approval will be extended, compared to our original expectation of the end of the current fiscal year. We expect to complete our parallel run in 2021 followed by finalization of OSFI’s review. The extended timeline does not change our near-term financial outlook as OSFI’s current industry restrictions limit the deployment of capital through increased dividends or share buybacks.

“Our AIRB journey will continue to follow an iterative process as our AIRB models and tools move into a parallel run phase,” said Chris Fowler, President and CEO. “This will provide the opportunity, through a period of economic stress, to affirm our processes and monitor the performance of our AIRB models against OSFI’s use-test requirements.”

“We are actively using the majority of our AIRB tools to manage credit risk, including comprehensive stress testing, internal capital adequacy assessment, and expected credit loss. Until we receive final approval, our regulatory capital ratios will continue to be measured on the Standardized basis. Approval of our transition to the AIRB approach will result in improved risk-sensitive capital ratios that better reflect the strength of our balance sheet. Combined with the launch of our digital capabilities, AIRB approval will enable us to deliver increased competition in Canadian financial markets, support higher growth and achieve further diversification, with an enhanced view of risk.”

“We continue to expect AIRB to create long-term meaningful and lasting value for shareholders and this delay in timing of approval does not change our view”.

For Further Information Contact:

Chris Williams, MBA
AVP, Investor Relations
Phone: (780) 508-8229
Email: [email protected]

Forward-looking Statements:

From time to time, we make written and verbal forward-looking statements. Statements of this type are included in our Annual Report and reports to shareholders and may be included in filings with Canadian securities regulators or in other communications such as press releases and corporate presentations. Forward-looking statements include, but are not limited to, statements about our objectives and strategies, targeted and expected financial results and the outlook for CWB’s businesses or for the Canadian economy. The forward-looking statements in this press release include statements about the anticipated approval and timing of CWB’s transition to the AIRB approach and the anticipated benefits of the transition. Forward-looking statements are typically identified by the words “believe”, “expect”, “anticipate”, “intend”, “estimate”, “may increase”, “may impact”, “goal”, “focus”, “potential”, “proposed” and other similar expressions, or future or conditional verbs such as “will”, “should”, “would” and “could”.

By their very nature, forward-looking statements involve numerous assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations and conclusions will not prove to be accurate, that our assumptions may not be correct and that our strategic goals will not be achieved.

A variety of factors, many of which are beyond our control, may cause actual results to differ materially from the expectations expressed in the forward-looking statements. These factors include, but are not limited to, general business and economic conditions in Canada, including housing market conditions, the volatility and level of liquidity in financial markets, fluctuations in interest rates and currency values, the volatility and level of various commodity prices, changes in monetary policy, changes in economic and political conditions, material changes to trade agreements, legislative and regulatory developments and decisions, legal developments, the level of competition, the occurrence of natural catastrophes, outbreaks of disease or illness that affect local, national or international economies, changes in accounting standards and policies, information technology and cyber risk, the accuracy and completeness of information we receive about customers and counterparties, the ability to attract and retain key personnel, the ability to complete and integrate acquisitions, reliance on third parties to provide components of business infrastructure, changes in tax laws, technological developments, unexpected changes in consumer spending and saving habits, timely development and introduction of new products, and our ability to anticipate and manage the risks associated with these factors. It is important to note that the preceding list is not exhaustive of possible factors.

Additional information about these factors can be found in the Risk Management section of our interim and/or annual Management’s Discussion and Analysis (MD&A). These and other factors should be considered carefully, and readers are cautioned not to place undue reliance on these forward-looking statements as a number of important factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. Unless required by securities law, we do not undertake to update any forward-looking statement, whether written or verbal, that may be made from time to time by us or on our behalf. The forward-looking statements contained in this document are presented for the purpose of assisting readers in understanding our financial position and results of operations as at and for the periods ended on the dates presented, as well as our strategic priorities and objectives, and may not be appropriate for other purposes.

Assumptions about the performance of the Canadian economy over the forecast horizon and how it will affect our businesses are material factors considered when setting organizational objectives and targets. In determining expectations for economic growth, we consider our own forecasts, economic data and forecasts provided by the Canadian government and its agencies, as well as certain private sector forecasts. These forecasts are subject to inherent risks and uncertainties that may be general or specific.

Where relevant, material economic assumptions underlying forward-looking statements are disclosed within the Outlook section of our annual MD&A. The emergence of COVID-19 has cast uncertainty on each of these assumptions and there can be no assurance that they continue to be valid. Given the rapid pace of change, it is premature to make further assumptions about these matters. The full extent of the impact that COVID-19, including government and/or regulatory responses to the outbreak, will have on the Canadian economy and our business is highly uncertain and difficult to predict at this time. See the Financial Results and Outlook and Risk Management sections of our interim MD&A for more information.