Canadian Imperial Bank of Commerce
reported first quarter profit that beat analysts’ estimates on stronger performance in Canadian banking, even as the lender posted higher provisions for loans that could default.
CIBC earned $1.73-billion, or $1.77 per share, in the three months that ended Jan. 31. That compared with $433-million, or $0.39 per share, in the same quarter last year when the bank’s earnings were weighed down by a large legal provision.
Adjusted to exclude certain items, including a charge stemming from a special assessment by the U.S. Federal Deposit Insurance Corp., the bank said it earned $1.81 per share, a 7-per-cent decrease from the same quarter a year prior. That topped the $1.68 per share analysts expected, according to data from the London Stock Exchange Group.
“These first-quarter results demonstrate our success in executing on our client-focused strategy which is delivering results for our stakeholders,” CIBC chief executive officer Victor Dodig said in a statement. “We have clear momentum in attracting and deepening client relationships, underpinned by continued expense discipline, a robust capital position, and strong credit quality, giving us a strong foundation as we continue to proactively manage our bank to further our progress and momentum in 2024.”
The bank kept its quarterly dividend unchanged at $0.90 per share.
CIBC is the fifth major Canadian bank to report earnings for the fiscal first quarter. Toronto-Dominion Bank is also releasing results on Thursday. The rest of the Big Six banks reported earlier this week, with Bank of Nova Scotia, Royal Bank of Canada and National Bank of Canada beating analyst expectations, while Bank of Montreal missed estimates.
In the quarter, CIBC set aside $585-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included $93-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, CIBC set aside $295-million in provisions.
Total revenue rose 5 per cent in the quarter, to $6.22-billion as expenses decreased 22 per cent to $3.47-billion. On an adjusted basis, excluding last year’s large legal provision, expenses increased 3 per cent on higher technology and staffing costs.
Profit from Canadian personal and small business banking was $650-million, up 10 per cent from a year earlier, as wider net interest margins offset higher provisions. Loan balances were up 2 per cent.
The Canadian commercial and wealth management division generated $498-million of profit, up 6 per cent on lower provisions and higher revenue.
The bank’s U.S. division posted a loss of $9-million, as lower deposit balances, static loan growth and higher expenses, weighed on earnings. The U.S. business booked higher provisions, largely stemming from impaired loans in the commercial real estate portfolio. It also took the charge related to the special assessment imposed by the FDIC.
And capital markets profit was flat year-over-year at 612-million as expenses outpaced revenue with lower activity in corporate banking offsetting a boost from global markets, investment banking and direct financial services