Noah Zivitz

Managing Editor, BNN Bloomberg

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Canadian Imperial Bank of Commerce beat fiscal first-quarter profit expectations by a wide margin as all of its major divisions posted year-over-year gains. It also announced plans to split its shares.

The bank said on Friday its first-quarter net income rose 15 per cent year-over-year to $1.87 billion from $1.63 billion a year earlier. On an adjusted basis, CIBC earned $4.08 per share in the three-month period that ended Jan. 31. Analysts, on average, were expecting $3.67 in adjusted earnings per share.

Its revenue rose to almost $5.5 billion from $4.96 billion in last year's fiscal first quarter, and credit quality was stable as it set aside $75 million for loans that could go bad, compared to $78 million in provisions in the prior quarter.

Unlike Royal Bank of Canada, which opened earnings season for the Big Six on Thursday, CIBC's capital markets division posted profit growth in the latest quarter. Net income in that division rose 10 per cent year-over-year to $543 million. CIBC attributed that to revenue growth and a release of $38 million from its provisions for credit losses. And the growth wasn't just because of investment banking operations. CIBC said its revenue from global markets (which includes trading activity) climbed to $672 million from $614 million a year earlier. On a sequential basis, global markets revenue surged 60 per cent.

“While what we believe to be record trading revenues and capital markets results may take some of the shine off for the market, we note that the higher trading numbers represent approximately only a portion of the better-than-expected results,” wrote Barclays Capital Analyst John Aiken in a report to clients.

“We believe that [CIBC’s] results should receive a warm reception from the market and support its relative valuation multiple today.”

CIBC’s profit growth from core domestic banking was more modest that RBC's, however. The bank said net income in its Canadian Personal and Business Banking unit rose five per cent year-over-year to $687 million in its first quarter as revenue climbed eight per cent.

The bank said its residential mortgage book balance stood at $257.1 billion in the last quarter. That was a $5.6-billion increase from the prior quarter and a 13-per-cent jump from a year earlier.

CIBC said in a release that its board of directors has approved a plan to split its shares on a two-for-one basis. That plan is subjected to shareholder approval at a meeting in April. CIBC's shares rallied 31.5 per cent over the last year to close at $154.90 on the Toronto Stock Exchange Thursday.