CIBC Profit Beats Estimates on Strength in Capital Markets

(Bloomberg) -- Canadian Imperial Bank of Commerce came ahead of analyst expectations with gains across all segments, particularly with strength in the capital markets business.

The Toronto-based lender reported adjusted earnings of C$2.20 per share for the fiscal first quarter ending Jan. 31, compared to the C$1.97 average estimate of analysts in a Bloomberg survey. The earnings beat the highest Wall Street estimate of C$2.08 per share.

Capital markets profit clocked in at C$619 million ($431.7 million), up 19% from a year earlier, boosted by higher equity derivatives trading and debt underwriting activity. CIBC joined peers, including Royal Bank of Canada and Toronto-Dominion Bank, in reporting strong trading revenue.

Shares made their biggest intraday jump since December earlier in the trading day before paring gains and closing 0.4% lower in Toronto at C$86.43.

CIBC’s core personal and business banking segment profit gained 7% to C$765 million compared to a year ago on higher volume growth and fees. Commercial banking and wealth management in both Canada and the US rose to C$591 million and C$256 million, respectively.

CIBC set aside less money for loans potentially going sour, booking C$573 million in provisions for credit losses. That’s down C$12 million from a year earlier. Analysts were expecting the bank to set aside nearly C$548 million.

Outlook

Provisions for losses on performing loans were higher largely due to a worsening economic outlook, including uncertainty around tariffs President Donald Trump has promised to impose on imports from Canada, the lender said.

Chief Executive Officer Victor Dodig said the bank had a strong fiscal first quarter as management navigates a period of economic and political volatility stemming from trade tensions.

“Against this backdrop, CIBC delivered robust performance in the first-quarter, consistent with our strategy and the message we’ve been delivering to our investors,” Dodig said on a call with analysts. “Our bank has an organic growth strategy that’s working and positions us well through the full economic cycle.”

The bank plans to focus on affluent households and build on its private wealth franchise as one of the key goals in achieving its return-on-equity targets. In an investor presentation, management said the mass affluent household segment represents 80% of total investable assets and that segment is growing over four times faster than the rest of the client base.