CIBC Quarterly Profit Beats Expectations as Loan-Loss Provision Falls

By Robb M. Stewart

Canadian Imperial Bank of Commerce's earnings for the fiscal third quarter beat expectations, thanks to a lift in revenue from its Canadian personal and business banking, and U.S. commercial and wealth management operations, as well as a drop in the provision set aside against potential defaults by its borrowers.

CIBC, one of the country's largest lenders, recorded net income of 1.8 billion Canadian dollars (US$1.33 billion), or C$1.82 a share, for the three months ended July 31, against C$1.43 billion, or $1.47, a year earlier. On an adjusted basis that strips out amortization of intangible assets and other items, the bank reported per-share earnings of C$1.93.

Analysts surveyed by FactSet were expecting income of C$1.65 billion and adjusted earnings of C$1.74 a share.

Net interest income for the period rose to C$3.35 billion from C$3.24 a year ago, while noninterest revenue increased to C$3.07 billion from C$2.62 billion. That left total revenue up 13% at C$6.6 billion, topping the C$6.28 billion mean estimate of analysts.

The bank's provision for credit losses was lowered for the latest period to C$483 million from C$514 million the quarter before and C$736 million a year earlier. CIBC's provision for credit losses on performing loans was down on a year earlier when its economic outlook became less favorable during a time of sharply higher interest rates and uncertainty. Its provision for credit losses on impaired loans was down largely due to lower provisions in U.S. commercial banking and wealth management, though that was partially offset by higher provisions in Canadian personal and business banking, and capital markets and direct financial services.

CIBC's common equity Tier 1 capital ratio stood at 13.3% for the three-month period, wider than 13.1% at the end of the first quarter. The country's banking regulator requires the big banks to hold a CET1 ratio of no less than 11.5% of risk-weighted assets.

The bank held its quarterly dividend steady at C$0.90 a share for the three months through the end of October and unveiled plans to buy back up to 20 million of its shares, which would represent as much as 2.1% of its outstanding shares, under a normal course issuer bid.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

August 29, 2024 06:44 ET (10:44 GMT)

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