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ATB Financial 2016-17 Business Highlights

It's all about
you.


About time, isn't it?

Banking should always be all about you, because your money and what you do with it is very personal. You need to know that we're using all the skills and power we have as a financial institution to do what's right for you.

Dave Mowat

President and CEO

Banking didn’t change for decades.

Inflated interest rates. Unavoidable fees. Arbitrary rules. Bankers' hours. And processes that made everything more difficult than it needed to be. After decades of banking being more about banks than about the customers they’re supposed to serve, things have finally started to change.

Today:

You can pay in a store using nothing more than your phone and a thumbprint.

You can send money across the world in seconds.

You can go years without stepping into a branch or carrying cash.

You can expect so much more.

ATB is changing, too.

From this point on, we’re 100% focused on making banking work for you — not the other way around. Because for us, banking really is all about you.

Message from
President
Dave Mowat



It’s not news to anyone that 2016 was one of the worst years, financially, in the history of our province. The economic impact of low oil prices was felt across all sectors and continued to make things tough for a lot of Albertans, including many of our customers. When things get tough, it can be tempting to batten down the hatches and just ride things out. But that’s never been how ATB works. Even when things were at their worst, we never panicked, never changed our credit criteria, and never turned our backs on the customers who were relying on us. Instead, we made a point of listening to what our customers told us they needed and got to work making it happen.

The only reason it’s possible to do any of those things is because we have over 5,000 people who believe in what they’re doing. People who understand that in good times and bad, banking is woven into every part of our lives. Our team members never lost sight of the importance of listening to our customers and helping them get what they needed to get through life’s challenges.

The importance of sticking by one another was never more evident than in response to the wildfire that devastated Fort McMurray in May 2016. On the day of the evacuation, our immediate goal was making sure our 32 team members and their families were safe. Once they were, those team members got to work triaging our customers affected by the fire. Even in the midst of the chaos, we were able to listen to what customers needed most and work around typical banking processes to help.

Our belief in the importance of listening prompted some major changes within ATB. We’ve shifted almost everything in our organization to align with our commitment to listening. From our corporate structure to our introduction of innovative technology, our focus is on making life better for our customers. This includes helping entrepreneurs launch or expand their businesses, so they can help diversify Alberta’s economy and bolster the confidence of all Albertans. Right now, we have more than 100,000 business customers who are showing us exactly why there are so many reasons to be excited by what the future holds.

It’s a future ATB is gearing up for as we transform our business through better service and advanced technology. We’re in an age right now where new technology will allow us to make the banking experience infinitely better and more convenient. Used correctly, technology lets us remove the pain points and make banking simpler, more intuitive and more agile.

Technology will never replace the face-to-face service that customers want, unless that face is Pepper’s, but it will allow us to devote more time to listening to what customers want and need us to hear.

Dave Mowat Sign

Dave Mowat

President and CEO

Message from
Board Chair
Brian Hesje

Managing through the economic downturn Alberta faced this past year is a significant accomplishment. The fact that ATB has done it with no decrease in either team member engagement or customer satisfaction speaks volumes about who we are as an organization and where our priorities lie. People—both the ones we serve and the team members who make that work possible—will always be our focus.

Being able to manage through those challenges was achievable, in large part, because of the ATB team. Their willingness to listen to what our customers want, and undertake a major restructuring to make those wants a reality, demonstrates our dedication to making banking work for our customers. That restructuring also reflected our commitment to promoting from within and to creating gender balance in our leadership team, as we saw several senior roles filled by long-time ATB leaders, including two senior executive roles filled by women.

The challenge of transforming banking is easy to say, and incredibly hard to do. You have to be innovative and you have to have a culture that encourages change and embraces taking risks. And you need people within your organization who believe that the organization is interested in helping them transform to be better. Fortunately, ATB has those people and a commitment to developing that culture. We know it won’t happen overnight. It was a challenge last year, it is again this year, and it will be next year. But we’re getting there.

In the midst of all this change, we were fortunate to have continuity in our board and our ongoing commitment to sound governance. In November 2016, the Governance Professionals of Canada recognized us for having Best Overall Corporate Governance in a non-publicly listed company. It was a tremendous honour and something we think demonstrates our belief in the importance of doing things right, at every level. On behalf of ATB’s Board of Directors, thank you to our team members for their passion for transforming banking, to our customers for their faith in what we do, and to the Government of Alberta for their support.

Brian Hesje Sign

Brian Hesje

Chair of the Board

Financial Highlights 2016-17

For the year ended March 31 2017 2016
Operating results ($ in thousands)
Net interest income $1,084,315 $1,092,809
Other income 390,896 434,100
Operating revenue 1,475,211 1,526,909
Provision for loan losses 234,989 387,559
Non-interest expenses 1,044,404 998,922
Net income before payment in lieu of tax 195,818 140,428
Payment in lieu of tax 45,038 32,298
Net income $150,780 $108,130
Income before provisions for loan losses 1
Operating revenue $1,475,211 $1,526,909
Less: income from asset-backed commercial paper (ABCP) - (74,538)
Less: non-interest expenses (1,044,404) (998,922)
Income before provisions for loan losses $430,807 $453,449
Financial position ($ in thousands)
Net loans $40,811,222 $40,350,157
Total assets $48,547,286 $46,757,278
Total risk-weighted assets $32,985,934 $33,927,048
Total deposits $33,927,760 $30,862,289
Equity $3,147,286 $3,109,820
Key performance measures (%)
Return on average assets 0.32 0.24
Return on average risk-weighted assets 0.45 0.33
Operating revenue growth (3.4) 5.8
Other income to operating revenue 26.5 28.4
Operating expense growth 4.6 5.8
Efficiency ratio 2 70.8 65.4
Net interest spread 2.35 2.53
Loan losses to average loans 0.58 0.99
Net loan growth 1.1 7.1
Total asset growth 3.8 8.5
Total deposit growth 9.9 0.89
Growth in assets under administration 14.2 7.0
Tier 1 capital ratio 3 9.6 8.9
Total capital ratio 3 15.3 13.7
Other information
Investor Services’ assets under administration ($ in thousands) $16,725,308 $14,650,720
Branches 173 173
Agencies 143 136
ABMs 4 292 285
Total Customers 725,961 701,670
Team members 5 5,021 5,065
  1. Income before provisions for loan losses is calculated as the difference between total operating revenue less income from asset-backed commercial paper and non-interest expenses. A non-GAAP (generally accepted accounting principles) measure. Income earned on ABCP is immaterial in the current year.
  2. Calculated by dividing non-interest expenses for the year by total operating revenue for the year. It measures how much it costs us to generate $1 of revenue. So for every $1 of revenue we earned in 2016–17, it cost us 70.8 cents to earn it.
  3. Calculated in accordance with the Alberta Superintendent of Financial Institutions (ASFI) capital requirements guidelines.
  4. Automatic banking machines.
  5. Number of team members includes casual and commissioned.

Financials at a glance

Deposits
($ in billions)
  • 2017$33.9
  • 2016$30.9
  • 2015$30.6
  • 2014$27.3
  • 2013$23.7
Net loans
($ in billions)
  • 2017$40.8
  • 2016$40.4
  • 2015$37.7
  • 2014$33.9
  • 2013$29.7
Income before provisions for loan losses
($ in thousands)
  • 2017$430,807
  • 2016$453,449
  • 2015$414,784
  • 2014$323,372
  • 2013$267,331
Net income
($ in thousands)
  • 2017$150,780
  • 2016$108,130
  • 2015$328,681
  • 2014$276,409
  • 2013$241,300
Operating Revenue
($ in billions)
  • 2017$1.48
  • 2016$1.53
  • 2015$1.45
  • 2014$1.35
  • 2013$1.23
Net interest spread
  • 20172.35%
  • 20162.53%
  • 20152.67%
  • 20142.85%
  • 20132.85%
Assets under administration
($ in millions)
  • 2017$16,725
  • 2016$14,651
  • 2015$13,691
  • 2014$11,029
  • 2013$8,609
Revenue earned by AOE

35% Retail Financial Services

24% Business and Agriculture

27% Corporate Financial Services

12% Investor Services

2% Strategic service units 6

Efficiency ratio
  • 201770.8%
  • 201665.4%
  • 201565.6%
  • 201470.3%
  • 201370.7%

  1. These are business units of a corporate nature, such as investment, risk management, asset/liability management, and treasury operations.

Business highlights 2016-17

By working together ATB:

  • Achieved our best-ever corporate-wide customer advocacy score. 7
  • Reached 89% team member engagement,8 our best ever.
  • Welcomed 24,291 new Alberta customers.
  • Was ranked second of Canada's Top 50 Workplaces by the Great Place to Work Institute.
  • Won a Canadian Society of Corporate Secretaries award for best board practices in strategic planning, oversight, and value creation.
  • Donated $3.3 million to charities, spent $7.8 million on community focused sponsorships, and fundraised $1.5 million through corporate social responsibilty initiatives.

Because we're customer obsessed we:

  • Launched ATB X, a business accelerator to support new entrepreneurs and maximize their success.
  • Launched two ATB Entrepreneur Centres to support entrepreneurs as they start and grow their businesses and provide both business and personal banking services unique to entrepreneurs.
  • Expanded Alberta Private Client into two new communities.
  • Established a unique arrangement with Cashco Financial to establish alternatives to payday loans and provide better banking services to Albertans who have not been well served by traditional financial institutions.
  • Established Four Directions, an ATB agency serving primarily homeless people in one of the poorest communities of Edmonton and using innovative biometric technology to replace the need for more traditional types of identification.

To transform banking we:

  • Were among the first financial institutions in Canada to offer Apple Pay for credit and debit cards.
  • Unveiled a new ATB online banking platform with a more modern look and feel.
  • Released the new ATB Mobile app and provided for more services, including remote deposit capture for cheques.
  • Launched Global Transfers, enabling Albertans to more easily move money from their accounts to virtually anywhere in the world.
  • Were the first financial institution in North America to apply a Facebook Messenger bot to move money and perform transactions.
  • Launched ATB Prosper, a state-of-the-art platform introducing customers to online investing and saving.
  • Introduced Albertans to Pepper, a robot ATB purchased to explore using robotics and artificial intelligence to support our team members and customers.
  1. The customer advocacy index (CAI) is ATB’s standard metric, based on surveys conducted by NRG Research on ATB’s behalf, for measuring a customer’s willingness to continue to bank with ATB and to recommend ATB to others, allowing us to benchmark ourselves against other financial institutions in Alberta.
  2. Team member engagement scores are measured by Aon Hewitt.

Take a look ahead.

We’re optimistic about what the future holds for ATB, for our customers, and for our province. Everything we do will be about doing a better job of listening to you and giving you what you need and want from your financial institution. Together, we’re transforming banking and making banking work for you.




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