When interest rates edge higher, the spread between income from loans and payments on deposits typically widens, which can help increase bank profitability through
higher net interest margins (NIMs).
Also, on a fundamental level, if a growing economy supports a steeper yield curve with a significant difference between long and short yields, banks stand to benefit from stronger earnings due to
higher net interest margin and increased lending revenues.
Not exact matches
Last year was a difficult one, with
net interest margins declining and
higher loan impairment charges, says Fitch.
These positive earnings drivers were more than offset by the combined impact of several factors, including increased energy - related provisions for credit losses, a 17 basis point decline in
net interest margin, moderate growth of non-
interest expenses, the addition of acquisition - related contingent consideration fair value changes reflecting performance within CWB Maxium Financial (CWB Maxium),
higher preferred share dividends, and the 20 % increase to CWB's income tax rate in Alberta.
PTPP earnings were 4 %
higher, reflecting the combined benefits of very strong 4 % loan growth, a 32 % increase in non-
interest income and relatively stable
net interest margin, partially offset by
higher non-
interest expenses.
Compared to last quarter,
net income available to common shareholders increased 3 %, reflecting the combined positive impacts of 9 %
higher other income and very strong loan growth, partially offset by an eight basis point reduction in
net interest margin.
Compared to last quarter,
net income available to common shareholders increased 8 % ($ 3.7 million) as positive contributions from $ 9.3 million
higher net insurance revenues, 2 % quarterly loan growth and a stable
net interest margin were partially offset by a $ 4.7 million decline in
net gains on securities and a $ 2.5 million reduction in the «other» component of other income.