CIBC exceeds expectations with 15% earnings growth

Provision for credit losses drops nearly 50%

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The Canadian Imperial Bank of Commerce posted a 15% increase in profits in the first quarter of its fiscal year as revenue rose in its core banking and wealth management businesses.

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The bank’s net profit was $1.87 billion with adjusted diluted earnings of $4.08 per share for the three months ending Jan. 31. Analysts had expected $3.67 per share, according to IBES data from Refinitiv.

CIBC’s board also approved a two-for-one stock split, which will be submitted for approval at a shareholders’ meeting on April 7.

CIBC’s Personal and Commercial Banking segment saw net income increase 5% to $687 million from the same period last year, due to higher volume and income from higher fees. The bank’s commercial banking and wealth management businesses saw net income rise 31% from a year earlier to $462 million, as revenue benefited from market appreciation and rising investment activities.

“Our structure, coupled with a constructive economic environment, has led to double-digit lending growth and solid banking growth, solid deposit growth in commercial banks on both sides of the border,” the chairman said and CIBC CEO Victor Dodig on Friday morning. conference call.

Dodig also said the bank is monitoring ongoing geopolitical tensions, supply chain disruptions and inflationary pressures.

“These factors can impact economic growth and customer activity in the near term,” Dodig added. “Given this economic backdrop, the most important thing I would like to highlight is that we have demonstrated over the past two challenging years that we have a strategy playbook that will not only support our clients, but also manage our risks and enable us to invest for future growth.

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Dodig added that he thinks the split in shares of banks, which were trading more than 4% Friday morning at $161.11 in Toronto, would bring new investors into the fold.

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“Our stock price has appreciated significantly,” Dodig said. “Now is a good time to announce a spin-off that would make our shares more accessible to many retail investors.”

John Aiken, principal analyst and head of research at Barclays, identified an improvement in the company’s efficiency ratio in particular (the bank’s expenses divided by its revenues) as an indicator of the bank’s performance, noting that the results were strong in all areas.

“(CIBC) posted strong growth in trade balances and improved margins in Canada. We believe that (CIBC)’s results should receive a warm welcome from the market and support its relative valuation multiple today,” Aiken added in a note to clients.

Amid market volatility and expected trading revenue moderation, Aiken said what they believe to be record trading revenue and capital markets could “take a bit of a shine for the market,” although that these segments represent only a part of the better – than expected results.

The company’s provision for credit losses fell 49% to $75 million from the same quarter last year.

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