Canadian Western Bank profit falls, warns of oil impact

TORONTO (Reuters) - Canadian Western Bank (Toronto:CWB.TO - News) on Thursday posted a drop in third-quarter earnings, and warned the lower price of crude will keep its oil and gas loan portfolio under strain in the energy-producing province of Alberta.

The bank, which mainly lends to clients in the western provinces of Canada, including Alberta, reported net income of C$45.6 million ($35 million) in the quarter ending July 31, down 11 percent compared with a year earlier. Earnings per share fell by 8 percent to C$0.60.

"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 said in a statement.

The bank said its portfolio of loans to oil and gas producers remained under strain, with funds set aside to cover bad loans higher than normal levels. Crude prices struck a 13-year low early this year although there was a partial recovery in the time period covered by the bank's third quarter.

As Canada's top oil-producing province, Alberta has been hit hard by the crude price slump and the impact was exacerbated by wildfires earlier this year, which led to the evacuation of 90,000 residents and prompted some energy firms to suspend oil operations.

Canada's biggest six banks, which are more diversified than Canadian Western, had each reported earnings results that beat forecasts during the latest quarter.

($1 = 1.3115 Canadian dollars)

(Reporting by Matt Scuffham; editing by Susan Thomas and W Simon)