TD, CIBC make it six-for-six in bank earnings bonanza
Canadian Imperial Bank of Commerce joined in the parade of big profit beats from Canada's largest banks on Thursday, as a sharp comedown in provisions for loan losses and double-digit gains in key units powered earnings growth in its fiscal first quarter.
Net income for the three-month period ending Jan. 31 climbed 34 per cent year-over-year to $1.63 billion. On an adjusted basis, CIBC earned $3.58 per share; analysts, on average, were expecting $2.81.
CIBC's profit from its core Canadian personal and business banking unit jumped 13 per cent year-over-year to $652 million. The division benefited from a significant drop in provisioning, as just $54 million was set aside for loans that could go bad, compared to $121 million in the prior quarter and $211 million a year earlier.
The bank's total loan-loss provisions fell to $147 million in the latest quarter, compared to $291 million in the previous quarter.
Similiar to its peers, CIBC's capital markets division delivered a standout performance in the latest quarter, with profit in that division surging 30 per cent year-over-year to $493 million.
“Our one key pushback on CIBC’s first-quarter results is that they are too good. This is not just our assessment, but also appears to be management’s view given flat year-over-year expense growth that is not expected to continue later in the year,” wrote Scotia Capital Analyst Meny Grauman in a report to clients Thursday.
“That said, the broad trends of this result are encouraging, especially the ongoing momentum in the personal and business banking segment including record mortgage originations of $17 billion (up from $14 billion in Q4) and mortgage growth of eight per cent year-over-year.”