TORONTO _ CIBC is boosting its shareholder dividend while reporting a lower second-quarter net income of $306 million, saying the results were impacted by it Caribbean banking subsidiary.
The bank is increasing its quarterly dividend by two cents to $1 per common share.
CIBC said it earned 73 cents per share diluted in the quarter, compared with $2.09 per share on $862 million in net income in the same quarter last year.
The bank announced earlier this month that it was taking a $420-million, non-cash goodwill impairment charge in the quarter related to CIBC First Caribbean, which it says has been impacted by a prolonged recession in the region. CIBC also recorded $123 million of after-tax of loan losses related to the Caribbean bank.
CIBC also recorded $22 million in expenses related to its travel rewards program and from its Aeroplan transactions with Aimia (TSX:AIM) and TD Bank (TSX:TD). Travel rewards company Aimia Inc., which owns and operates the Aeroplan rewards program in Canada, now has TD Bank as its main partner as the issuer of Aeroplan credit cards.
Excluding such items, CIBC's adjusted net income was $887 million, or $2.17 cents per share, up three per cent year-over-year, beating analysts' expectations of $2.07 per share.
CIBC (TSX:CM, Stock Forum) is the sixth big bank to beat analysts' expectations on adjusted earnings per share in the quarter.
Along with CIBC, BMO (TSX:BMO,Stock Forum) and National Bank (TSX:NA, Stock Forum) also announced in the quarter that they're raising their dividends.
CIBC's wealth management business reported net income of $117 million for the second quarter, up $26 million or 29 per cent from the second quarter a year ago.
But its retail and business banking segment reported net income of $546 million for the second quarter, down $26 million or five per cent year-over-year.
CIBC said its provision for credit losses in quarter were $330 million compared with $265 million in the same quarter last year.
The bank's return on equity was seven per cent compared with 23 per cent in the same quarter last year.
Barclays analyst John Aiken said it was a solid quarter for CIBC, noting he had not been calling for an increase to the dividend.
``The beat against consensus and the dividend increase are positives, however, with CM (CIBC) performing reasonably strongly since reporting season began, the reported earnings may not be enough to sustain all of the relative outperformance,'' Aiken wrote in a research note.
``That said, we do not have any fundamental issues with the quarter and we would not necessarily anticipate a rush to the exit either.''