CIBC Tops Estimates as Domestic Banking Helped by Lower Reserves

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Canadian Imperial Bank of Commerce posted fiscal first-quarter profit that topped analysts’ estimates as its domestic retail-banking unit continued to rebound.

  • Canada’s fifth-largest lender by assets said profit in its Canadian personal and business banking unit rose 13% to C$652 million ($522 million) in the three months through January. The gain was driven by lower provisions for loan losses.

Key Insights

  • CIBC’s earnings got a lift from a decline in set-asides for potentially souring loans. The bank reported C$147 million in provisions for credit losses last quarter, compared with C$291 million in the fourth quarter.
  • Because of its heavy domestic focus, CIBC’s residential-mortgage business has been a particular focus for investors. The bank’s mortgage portfolio increased 2.5% from the fourth quarter, reaching C$226.6 billion. That compares with a 2.2% quarter-over-quarter gain in the previous three months.
  • CIBC’s capital-markets division has benefited from strong trading activity and demand for underwriting services. Profit in the unit rose 30% to C$493 million in the first quarter as a result of higher revenue from fixed-income, equities and currencies trading.

Market Reaction

  • CIBC shares have gained 8.4% this year, compared with a 9.4% advance for the S&P/TSX Commercial Banks Index.

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  • Net income rose 34% to C$1.63 billion, or C$3.55 a share. Excluding some items, profit was C$3.58 a share. Analysts estimated C$2.81, on average.
  • Click here for more on CIBC’s first-quarter results.

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