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Canadian Imperial Bank of Commerce (CM-T) booked a 42-percent jump in third-quarter profit, as the bank bounced back from a significant charge that depressed its earnings a year ago.
Canada’s fifth-largest bank made $841 million, or $2 a share in the third quarter, compared to $591 million, or $1.33 a share a year ago, beating analysts’ expectations.
Revenue rose less than 1 percent to $3.15 billion.
CIBC boosted its quarterly dividend 4 cents to 94 cents, an increase of 4.4 percent. The bank also said it plans to buy back as many as 8.1 million shares, or roughly 2 percent of its outstanding common shares.
The increase in profit was magnified when compared to the charge CIBC took against its earnings in 2011. In the third quarter last year, CIBC booked an impairment charge of $203 million at its FirstCaribbean banking operations, which was the result of changing that business over to new international accounting standards.
With that issue no longer hanging over the bank’s earnings, CIBC posted higher profit at its retail and business banking operations, as well as its investment banking division.
Adjusted to exclude unusual items, CIBC made $2.06 a share. That beat analysts’ estimates of about $1.96 a share for the quarter. The writedown of the bank’s structured credit run off business was among the one-time items that shaved six cents off the bank’s earnings.
CIBC chief executive officer Gerry McCaughey called the results “solid,” adding that several of the bank’s core divisions performed well.
“The dividend increase announced today, and our intention to repurchase common shares, reflects our confidence” McCaughey said in a statement.
CIBC’s provisions for credit losses, or the amount of money banks set aside to cover bad loans, rose to $317 million, from $310 million a year ago. The increase was due to higher losses in U.S. real estate finance, as well as Canadian wholesale banking. CIBC said it had lower loan losses in its credit card portfolio in the quarter, a sign that Canadians are keeping up with their debt payments.
Profit rose 8 percent at the bank’s retail and business banking division, which includes its network of Canadian branches, to $594 million. Those earnings were helped by a boost in loan volumes and fees, which was partly offset by slimmer margins, CIBC said.
Wealth management profits rose 9 percent to $76 million, while wholesale banking, which includes the bank’s capital markets and investment banking operations, made $156 million, an 11-percent increase.
CIBC’s corporate segment, which includes technology and a variety of other operations including its treasury and finance divisions, reported a profit of $15 million, compared to a loss a year ago of $171 million, due to the $203 million goodwill impairment at FirstCaribbean.