Post by
perplexed01 on Aug 30, 2024 12:12pm
cibc flash research: target C$28
FQ3 First Look: Nothing To Show A Turnaround
Our take: Neutral. LB reported a modest EPS beat, mostly on the release of performing credit allowances. PTPP of $68MM was effectively in line with the consensus estimate of $69MM.
Overview of results: Adjusted EPS came in at $0.88 versus consensus of $0.86 and our estimate of $0.84. Adjusted ROE was 6.2%, unchanged from last quarter. Book value per share was $56.97, increasing only 0.3% sequentially due to impairment and severance charges.
Sources of variance: Positive sources of variance relative to our estimate include higher capital markets related revenue (CMRR) (+$0.14/sh) and lower PCLs (+$0.05/sh). This was partially offset by higher operating expenses (-$0.10/sh) and lower lending NII (-$0.04/sh).
Total PCLs helped by performing release: Total PCLs were $16.3MM (18bps), better than our estimate of $19.0MM (21bps) and lower than FQ2 at $17.9MM (20bps). Performing provisions were negative $11.8MM (release) and impaired provisions were essentially flat sequentially at $28.1MM.
NII lower on lower AEA: Lending NII came in at $181MM, up <1% sequentially and ~1% below our forecast. NIM was flat Q/Q and AEA declined ~1% in total.
Loans decline across all categories: Total gross loans and acceptances declined 3.3% Q/Q. Commercial loans declined 3.9%, personal loans declined 5.3% and residential mortgages declined 2.4%.
Operating leverage remains negative: Total expenses of $188MM increased 5% Y/Y. Adjusted operating leverage came in at negative 7%. The bank reported another restructuring charge in the quarter, as expected. Charges totalled $9MM versus $7MM expected and down from $156MM last quarter.
Deposits decline: Total deposits declined 5.2% Q/Q, worse than -1.9% in FQ2. Demand deposits declined 3.8% versus a 5.7% decline in FQ2. Term deposits declined 5.7% Q/Q, versus flat in FQ2.
CET1 ratio: Reported CET1 was 10.9%, up from 10.4% last quarter.