CIBC sees Q3 net profit fall, adjusted earnings rise; dividend going up

The Canadian Press</span>
Published Thursday, August 24, 2017 6:50AM EDT
Last Updated Thursday, August 24, 2017 7:22AM EDT

TORONTO -- CIBC is reporting nearly $1.1 billion of net income for its fiscal third quarter, and an increase to its quarterly dividend.

The profit amounted to $2.60 per common share, which was down from $3.61 per share in the 2016 third quarter when CIBC recorded an unusual gain from the sale of its minority interest in American Century Investments.

After adjustments, CIBC earned $2.77 per share or $1.167 billion in the three months ended July 31, up from $1.07 billion in last year's third quarter, while revenue was on a par with last year at $4.1 billion.

The Toronto-based bank (TSX:CM) said this year's third quarter included costs associated with its acquisition of a Chicago-based wealth management firm, which cost CIBC about US$5 billion.

"Our strong results this quarter reflect solid contributions from our strategic business units, as well as our acquisition of The PrivateBank, which closed in June," CIBC chief executive Victor Dodig said.

He described the addition of PrivateBank as a "pivotal milestone" for the CIBC's expansion in the United States.

CIBC's dividend is going up to $1.30 per share with its next payment, up three cents or about 2.4 per cent from the previous rate.

On Wednesday, Royal Bank (TSX:RY) also announced a dividend increase and higher adjusted earnings for its third quarter.

CIBC's core retail and business banking unit in Canada increased net income by eight per cent to $719 million.

But net income at its Canadian wealth management arm was down 73 per cent or $370 million from last year, when CIBC recognized a $383-million gain from the ACI transaction.

Excluding that gain, wealth management's adjusted net income was $136 million, up 10 per cent. At U.S. commercial banking and wealth management, adjusted earnings was up $19 million at $44 million, mainly due to the acquisition of PrivateBank.

The only major CIBC division to show declines in both net income and adjusted earnings was Capital Markets, which saw lower revenue.

CIBC follows Royal Bank as the first two major Canadian banks to report this year's third-quarter earnings. The others are scheduled to release theirs next week.

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