CIBC posts better-than-expected second-quarter profit even as loan loss provisions rise

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Canadian Imperial Bank of Commerce CM-T reported higher second-quarter profit that beat analysts’ estimates as a boost in its domestic personal and business banking unit offset higher loan loss provisions and slowdowns in other sectors.

CIBC earned $1.69-billion, or $1.76 per share, in the three months that ended April 30. That compared with $1.52-billion, or $1.62 per share, in the same quarter last year.

Adjusted to exclude certain items, the bank said it earned $1.70 per share. That edged out the $1.62 per share analysts expected, according to Refinitiv.

“We continued to execute on our client-focused strategy, delivering solid financial results in the second quarter by leveraging the investments we’ve made in high-touch, high-growth markets and furthering our strengths in talent and technology,” said CIBC chief executive officer Victor G. Dodig. “In a more fluid economic environment we remain well capitalized and our well-diversified business provides resilience

The bank raised its quarterly dividend to $0.87 per share from $0.85 per share.

CIBC is the third major Canadian bank to report earnings for the fiscal second quarter. Bank of Nova Scotia BNS-T and Bank of Montreal BMO-T reported results Wednesday that missed analyst expectations. Royal Bank of Canada RY-T and Toronto-Dominion Bank TD-T also release results Thursday, and National Bank of Canada NA-T next week.

In the quarter, CIBC set aside $438-million in provisions for credit losses – the funds banks set aside to cover loans that may default. That was higher than analysts anticipated, and included $59-million against loans that are still being repaid, based on models that use economic forecasting to predict future losses. In the same quarter last year, CIBC reserved $303-million in provisions.

Total revenue rose 6 per cent in the quarter, to $5.7-billion as expenses edged slightly higher to $3.14-billion from $3.11-billion in the same period a year earlier.

Profit from Canadian personal and small business banking was $637-million, up 28 per cent from a year earlier, on higher revenue and a lower loan loss provisions, which were partially offset by rising expenses.

The Canadian commercial and wealth management division generated $452-million of profit, down 6 per cent year-over-year as provisions for credit losses and expenses rose, offsetting higher revenue.

Profit from the bank’s U.S. arm was down 72 per cent at $55-million, and capital markets profit fell 8 per cent to $497-million as provisions set aside compared with a reversal in the same quarter last year.

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