CIBC earns $876-million in Q2 2013
Canadian Imperial Bank of Commerce
Symbol C : CM
Shares Issued 399,811,389
Close 2013-05-29 C$ 80.43
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CIBC earns $876-million in Q2 2013
2013-05-30 05:35 ET - News Release
Mr. Gerald McCaughey reports
CIBC ANNOUNCES SECOND QUARTER 2013 RESULTS
Canadian Imperial Bank of Commerce has released its financial results for the second quarter ended April 30, 2013.
Second quarter highlights
Reported net income was $876 million, compared with $811 million for the second quarter a year ago, and $798 million for the prior quarter.Adjusted net income was $876(1) million, compared with $840(1) million for the second quarter a year ago, and $895(1) million for the prior quarter.Reported diluted earnings per share was $2.12, compared with $1.90 for the prior year quarter, and $1.91 for the prior quarter.Adjusted diluted earnings per share was $2.12(1), compared with $2.00(1) for the prior year quarter, and $2.15(1) for the prior quarter.
Results for the second quarter of 2013 were affected by the following items of note: $27 million ($20 million after-tax or $0.05 per share) income from the structured credit run-off business; $21 million ($15 million after-tax or $0.04 per share) loan losses in our exited European leveraged finance portfolio; and $6 million ($5 million after-tax or $0.01 per share) amortization of intangible assets.
CIBC's Basel III Common Equity Tier 1 ratio at April 30, 2013 was 9.7%, and our Tier 1 capital ratio and Total capital ratio were 12.2% and 15.5%, respectively, on an all-in basis compared to Basel III Common Equity Tier 1 ratio of 9.6%, Tier 1 capital ratio of 12.0% and Total capital ratio of 15.3% in the prior quarter.
Return on common shareholders' equity for the second quarter was 22.3%.
CIBC announced a quarterly dividend increase of 2 cents per common share to 96 cents per share.
"CIBC delivered solid results this quarter across our core businesses in Retail and Business Banking, Wealth Management and Wholesale Banking," says Gerald T. McCaughey, President and Chief Executive Officer. "These results reflect our strong focus on our clients as well as our underlying business fundamentals."
Core business performance
Retail and Business Banking reported net income of $604 million for the second quarter, up $48 million or 9% from the same quarter last year.
Revenue of $2.0 billion was up $32 million or 2% from the second quarter of 2012, primarily due to volume growth across most products, wider spreads, and higher fees. Provision for credit losses of $233 million was down $38 million, or 14%, from the same quarter last year due to lower write-offs and bankruptcies in the cards portfolio.
During the second quarter of 2013, Retail and Business Banking continued to make progress against our objectives of accelerating profitable revenue growth and enhancing client experience:
We continued to invest in our distribution platform, opening 10 branches in the first half of fiscal 2013 to better serve our clients. We now offer expanded evening and Saturday hours at over 650 of our branches, as well as Sunday hours at over 100 branches; In April, we launched the CIBC Everyday Banking Bundle and the CIBC Premium Banking Bundle to make it easier for our clients to bank with us and reward them for doing so; We launched Break Away to our Imperial Service teams across the country. Break Away, a leadership training program to support frontline best practices, has successfully demonstrated that through a consistent approach to sales and service delivery we can significantly improve sales and client experience results; and Post quarter-end, we announced the availability of CIBC Mobile Payments to Android smartphones, starting with the Samsung Galaxy S3 from Rogers. This builds on our leadership in the mobile payments space. Last October, CIBC became the first bank in Canada to provide consumers with the ability to complete credit card transactions via their smartphone.
Wealth Management reported net income of $92 million for the second quarter, up 16% from the same quarter last year.
Revenue of $443 million was up $25 million or 6% compared to the second quarter of 2012, primarily due to higher client assets under management driven by higher long-term net sales of mutual funds.
During the second quarter of 2013, Wealth Management continued its progress in support of our strategic priority to build our wealth management platform:
We announced our intention to acquire Atlantic Trust Private Wealth Management from its parent company Invesco Ltd. as part of our strategic plan to grow our North American wealth management business; and We continue to maintain momentum in our retail fund business with 17 consecutive quarters of positive long-term net sales.
Wholesale Banking reported net income of $198 million for the second quarter, up $107 million from the prior quarter, which included a settlement charge shown as an item of note. Excluding items of note, adjusted net income was $193(1) million, down $7 million from the prior quarter.
Revenue of $580 million was up $17 million or 3% from the prior quarter, primarily due to higher revenue in the structured credit run-off business and U.S. real estate finance, partially offset by lower capital markets revenue.
In support of its objective to be the premier client-focused wholesale bank centred in Canada, Wholesale Banking acted as:
Financial advisor to Inmet Mining on its sale to First Quantum Minerals for $4.6 billion; Joint bookrunner and administrative agent in the refinancing of Hydro-Quebec's US$2.0 billion revolving credit facility; Joint bookrunner of TELUS Corporation's $1.7 billion dual-tranche bond offering; Financial advisor, joint underwriter, joint bookrunner and administrative agent for Leon's Furniture Limited's $500 million acquisition financing to acquire The Brick; and Joint lead and joint bookrunner on the Province of Manitoba's US$500 million global debt offering.
In summary, CIBC delivered solid performance during the second quarter.
"The investments we are making in our retail and business banking, wealth management and wholesale banking businesses are furthering our strength and positioning us well for the future," says Mr. McCaughey.
CIBC in our communities
CIBC is committed to supporting organizations that help make our communities stronger and healthier. During the quarter CIBC announced:
A $1 million sponsorship of the National Arts Centre (NAC) Gala in support of the National Youth and Education Trust; A $500,000 donation to London Health Sciences Foundation; A $250,000 donation to the Ottawa Hospital to support the hospital's Breast Health Centre; and A $250,000 donation to the IWK's Women's & Newborn Health Program in Halifax to help redevelop the operating suites and recovery area at the IWK Health Centre.
As the official Canadian bank in association with VISA of the 2014 FIFA World Cup BrazilA , CIBC hosted the 2014 FIFA World Cup Winner's Trophy at an event for more than 4,000 clients, employees and the public to celebrate Canada's diverse communities and passion for sports.
For a second consecutive year, CIBC was ranked as the strongest bank in Canada, strongest in North America and third strongest in the world by Bloomberg Markets. During the quarter, CIBC was also named as one of the:
Best Workplaces in Canada 2013 by the Great Place to Work Institute; Best Employers for New Canadians 2013 and Canada's Best Diversity Employers 2013 by Mediacorp; and Top Brands 2013 in Canada by the Reputation Institute.
"These awards reflect our strategy to be a lower risk bank that generates consistent and sustainable earnings over the long term, while achieving strategic growth; and demonstrate our commitment to creating an environment where all employees can excel," adds Mr. McCaughey.
Consolidated statement of income
For the three For the six
months ended months ended
2013 2013 2012 2013 2012
Unaudited, $ millions, except as noted Apr. 30 Jan. 31 Apr. 30 Apr. 30 Apr. 30
Interest income
Loans $ 2,389 $ 2,474 $ 2,454 $ 4,863 $ 4,994
Securities 409 403 363 812 751
Securities borrowed or purchased under
resale agreements 86 88 77 174 153
Deposits with banks 10 11 9 21 20
2,894 2,976 2,903 5,870 5,918
Interest expense
Deposits 866 904 910 1,770 1,825
Securities sold short 82 83 77 165 164
Securities lent or sold under
repurchase agreements 27 30 41 57 93
Subordinated indebtedness 50 52 52 102 104
Capital Trust securities 36 34 36 70 72
Other 10 18 34 28 65
1,071 1,121 1,150 2,192 2,323
Net interest income 1,823 1,855 1,753 3,678 3,595
Non-interest income
Underwriting and advisory fees 97 106 114 203 221
Deposit and payment fees 195 191 188 386 378
Credit fees 109 118 98 227 195
Card fees 142 156 149 298 313
Investment management and custodial fees 117 112 105 229 207
Mutual fund fees 249 240 219 489 431
Insurance fees, net of claims 86 85 80 171 162
Commissions on securities transactions 107 101 107 208 208
Trading income (loss) (1) 14 41 13 86
AFS securities gains, net 83 72 81 155 133
FVO losses, net - (3) (11) (3) (19)
Foreign exchange other than trading 17 4 35 21 65
Income from equity-accounted associates
and joint ventures 29 25 24 54 86
Other 86 105 101 191 180
1,316 1,326 1,331 2,642 2,646
Total revenue 3,139 3,181 3,084 6,320 6,241
Provision for credit losses (Note 4) 265 265 308 530 646
Non-interest expenses
Employee compensation and benefits 1,037 1,082 994 2,119 2,007
Occupancy costs 180 168 172 348 345
Computer, software and office equipment 251 247 256 498 497
Communications 80 77 76 157 155
Advertising and business development 51 47 52 98 101
Professional fees 39 36 43 75 82
Business and capital taxes 14 17 10 31 23
Other 169 313 161 482 345
1,821 1,987 1,764 3,808 3,555
Income before income taxes 1,053 929 1,012 1,982 2,040
Income taxes 177 131 201 308 394
Net income $ 876 $ 798 $ 811 $ 1,674 $ 1,646
Net income attributable to
non-controlling interests $ 2 $ 2 $ 1 $ 4 $ 4
Preferred shareholders $ 25 $ 25 $ 44 $ 50 $ 100
Common shareholders 849 771 766 1,620 1,542
Net income attributable to
equity shareholders $ 874 $ 796 $ 810 $ 1,670 $ 1,642
Earnings per share
Basic 2.12 $ 1.91 $ 1.90 $ 4.03 $ 3.84
Diluted 2.12 1.91 1.90 4.03 3.83
Dividends per common share 0.94 0.94 0.90 1.88 1.80
We seek Safe Harbor.