DBRS Morningstar revised the trend on Canadian Western Bank's long-term ratings to negative from stable and maintained the stable trend on the company's short-term ratings.
The rating agency confirmed all the company's long-term and short-term ratings, including the long-term issuer rating at A (low) and short-term issuer rating at R-1 (low).
DBRS Morningstar cited the novel coronavirus pandemic, which is causing a drop in economic activity across Canada, and deterioration in Alberta's economy caused by a drop in oil prices in revising the trend on the long-term ratings to negative. While the bank's direct oil and gas exposure is 1% of its total loan portfolio, "the pandemic will likely pressure all asset classes," the rating agency said. DBRS Morningstar also raised concerns about how the company's real estate project finance portfolio, which makes up 12% of its total loan portfolio, will perform in this environment.
The negative trend also reflects the uncertainty on how long businesses will remain closed in Canada, a measure instituted to stop the spread of the coronavirus.