CIBC tops forecasts on recovery in loan-loss provisions, rebound in loan revenue - The Globe and Mail

A CIBC sign in Toronto's financial district.

NATHAN DENETTE/The Canadian Press

Canadian Imperial Bank of Commerce reported higher third-quarter profit as the bank recovered more loan loss provisions than expected and revenue from some types of loans rebounded.

The bank’s personal and business loan balances were up 10 per cent year-over-year, outpacing growth in deposits, as a strong housing market fuels demand for mortgages. Commercial deposits increased 9 per cent, as business activity picks up amid easing lockdown restrictions.

For the three months that ended July 31, CIBC reported profit of $1.73-billion, or $3.76 per share, compared with $1.17-billion, or $2.55 per share, in the same quarter last year.

Adjusted for certain items, CIBC said it earned $3.93 per share. On average, analysts expected adjusted earnings per share of $3.41, according to Revinitiv.

The bank is the fifth major lender to report earnings that exceeded analysts’ expectations this week. In each case, banks have reclaimed provisions for credit losses – the funds set aside to cover loans that may go bad – as actual losses have been lower than they had feared early in the COVID-19 pandemic.

CIBC released $99-million in provisions in the quarter, mostly because of improving economic forecasts. That helped profits beat expectations, because analysts predicted CIBC would add about $152-million in provisions.

Profit from Canadian personal and business banking increased 40 per cent to $642-million, compared with a year ago, largely because of lower loan loss provisions but also rising revenue. Canadian Commercial banking earnings were $470-million, up 47 per cent.

U.S. commercial and wealth management profit rebounded from a weak quarter a year ago to $266-million. And capital markets revenue was up 11 per cent to $491-million year-over-year, but down slightly from the previous two quarters as fixed-income trading declined.

The bank kept its quarterly dividend unchanged at $1.46 per share in keeping with temporary restrictions Canada’s banking regulator has imposed on payouts to shareholders.

CIBC also announced a goal to reach net zero greenhouse gas emissions associated with its operations and financing activities by 2050 – a target also set by several other major banks. And CIBC increased its sustainable finance commitment, promising to deploy $300-billion by 2030, citing “a strong positive response from clients” to financing for sustainable initiatives.

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CIBC tops forecasts on recovery in loan-loss provisions, rebound in loan revenue - The Globe and Mail
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