CIBC reports second-quarter net income up nearly 25 per cent from year ago

Armina Ligaya, The Canadian Press</span>
Published Wednesday, May 23, 2018 7:41AM EDT

TORONTO -- The Canadian Imperial Bank of Commerce reported better-than-expected results for its second quarter with a nearly 25 per cent increase in net income compared with a year ago.

The lender, the first of the large Canadian banks to report its latest results, said Wednesday it earned a profit attributable to common shareholders of $1.29 billion or $2.89 per diluted share for the quarter ended April 30, up from $1.04 billion or $2.59 per diluted share a year ago.

On an adjusted basis, Canada's fifth-largest bank said it earned $1.32 billion or $2.95 per diluted share for the quarter ended April 30, up from $1.06 billion or $2.64 a year earlier.

Analysts had expected a profit of $2.81 per share, according to Thomson Reuters Eikon.

"In the second quarter, each of our business units performed well," CIBC chief executive Victor Dodig said in a statement.

"We delivered robust earnings growth with continued progress on our strategy to build a relationship-oriented bank for a modern world with high quality, diversified earnings growth and disciplined expense and capital management."

The lender's Canadian personal and small business banking division reported a 16 per cent increase in net income to $584 million, while its domestic commercial banking and wealth management arm reported $310 million for the quarter, marking a nine per cent increase from the same period a year ago.

CIBC's U.S commercial banking and wealth management arm saw a significant jump in net income in the second quarter, climbing 431 per cent year-over-year to $138 million. This was boosted by its acquisition of Chicago-based PrivateBancorp in June last year, later rebranded as CIBC Bank USA.

The lender's capital markets arm, however, saw a seven per cent decrease in net income to $249 million compared with one year ago "primarily due to higher non-interest expenses and a higher effective tax rate, partially offset by higher revenue."

The bank's provisions for credit losses, or money set aside for bad loans, was $212 million, up $33 million or 18 per cent from the second quarter of 2017. CIBC said this was primarily due to an increase on provisions on impaired loans due to the inclusion of the results of CIBC Bank USA. As well, this marked the second quarter which reflects a new accounting standard that puts a greater emphasis on a bank's expected losses over the life of the loan, and in turn, introduce more volatility to the measure.

The bank's common equity tier 1 ratio, a key measure of the bank's financial health, was 11.2 per cent, up from 10.8 per cent in the previous quarter but down from 12.2 a year ago.

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