TORONTO — CIBC has been investing in growth opportunities like its corporate rebrand and buying the Costco credit card portfolio, and both the costs and payoffs are starting to show up on its balance sheet.
The bank reported Thursday that revenue was up 10 per cent in the fourth quarter from a year ago to $5.06 billion thanks to volume growth in lending, growth in transaction fees, and adding clients in its capital markets division.
Costs, however, have also been rising, up seven per cent from the previous quarter and eight per cent from a year ago, mostly related to higher employee compensation but also from strategic initiatives.
CIBC chief executive Victor Dodig emphasized on a conference call that the bank was investing for future growth across the organization, from its new headquarters in Toronto down to bank branches and new technologies.
“The overarching theme at our bank, and our strategic focus as a leadership team is to continue to invest to grow market share at the expense of our competition.”
The bank reported a fourth-quarter profit of $1.4 billion, or $3.07 per diluted share for the quarter ended Oct. 31, up from a profit of $1 billion or $2.20 per diluted share in the same quarter last year.
On an adjusted basis, CIBC says it earned $3.37 per diluted share, up from an adjusted profit of $2.79 per diluted share in the same quarter last year.
Analysts on average had expected the bank to report an adjusted profit of $3.53 per share, according to financial markets data firm Refinitiv.
The earnings miss came in part from higher-than-expected expenses, as well as a $78 million increase in provisions for credit losses when analysts had expected a reversal.
Scotiabank analyst Meny Grauman said in a note that the details were better than the headline figures, as the credit provision increase was related to a change in bank parameters rather than the risk environment, while the expenses were elevated in part from the bank rebrand.
“The message on expenses from this bank continues to emphasize further reinvestment in the business, but despite an inflation headwind in F2022 management continues to expect positive operating leverage for the year as a whole thanks to continued strong revenue growth.”
Barclays analyst John Aiken said in a note that loan growth at the bank was solid in both Canada and the U.S., and that operating leverage could remain positive even as the bank invests.
“The message on expenses from this bank continues to emphasize further reinvestment in the business, but despite an inflation headwind in F2022 management continues to expect positive operating leverage for the year as a whole thanks to continued strong revenue growth.”
The bank said Thursday that it will now pay a quarterly dividend of $1.61 per share, up from $1.46. CIBC also says it plans to buy back up to 10 million of its shares.
The increased payment to shareholders and share buyback follow moves by several other large Canadian banks this week after the federal banking regulator lifted restrictions last month on dividend increases, share buybacks and increases in executive compensation that were put in place at the start of the pandemic.
CIBC said its Canadian personal and business banking business earned $597 million, up from $590 million a year ago, while Canadian commercial banking and wealth management earned $442 million, up from $340 million in the same quarter last year.
In the U.S., CIBC says commercial banking and wealth management earned $256 million, up from $135 million a year ago.
CIBC’s capital markets business earned $378 million, up from $310 million in the same quarter last year.
For its full year, CIBC says it earned $6.4 billion or $13.93 per diluted share, up from a profit of $3.8 billion or $8.22 per diluted share a year earlier. Revenue totalled $20 billion, up from $18.7 billion.
This report by The Canadian Press was first published Dec. 2, 2021.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
