CIBC Beats Estimates as Canadian Unit Resumes Growth

(Bloomberg) -- Canadian Imperial Bank of Commerce’s focus on its domestic market is paying off, with strength in the nation’s housing market fueling an emerging rebound in the company’s retail-banking operations.

• Profit in the Canadian personal and commercial business rose 5.5% in the fiscal fourth quarter. That compares with a 23% drop in the unit’s net income in the previous three months. The performance contributed to the bank’s overall results beating analysts’ estimates.

Key Insights

• CIBC was among the more conservative banks in guarding against potential loan losses early in the crisis, a strategy that’s paid off for companies able to dial back set-asides in subsequent quarters. For CIBC, provisions for credit losses totaled C$291 million ($225 million) in the three months through October, compared with C$525 million in the third quarter and C$1.41 billion in the second quarter.
• The bank has a goal of expanding its U.S. business to reduce reliance on its home country. Profit in the U.S. commercial-banking and wealth-management unit fell 27% to C$131 million last quarter.
• Like its rivals, CIBC has benefited from an increase in trading activity amid the volatile markets caused by the pandemic. Profit in its capital-markets business climbed 16% to C$267 million last quarter, helped by interest-rates and commodities trading. That compares with a 67% increase in the third quarter.
• Separately, CIBC said that Katharine Stevenson will become the board’s chair starting in April, replacing John Manley, who is retiring after six years as chair and 16 years as a CIBC director.

Market Reaction

• CIBC shares have gained 1.9% this year through Wednesday, compared with a 1.7% drop for the eight-company S&P/TSX commercial banks index.

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• Net income fell 15% to C$1.02 billion, or C$2.20 a share. Excluding some items, profit was C$2.79 a share, beating analysts’ C$2.52 average estimate.
• Click here for more on CIBC’s fourth-quarter results.

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