CIBC posts better-than-expected Q3 earnings; raises dividend

Matt Scuffham, Reuters

CIBC Canadian Imperial Bank of Commerce , The Canadian Press

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TORONTO - Canadian Imperial Bank of Commerce (CM.TO) reported third-quarter earnings ahead of market expectations, driven by strong performances across most of its businesses.

Canada's fifth-biggest lender said on Thursday earnings per share, excluding one-off items, increased to $2.77 from $2.67 a year ago, in the quarter to June 30. It's also raising its quarterly dividend three pennies to $1.30 per share.

Analysts had on average anticipated earnings of $2.66 per share, according to Thomson Reuters I/B/E/S data.

“While the initial impression on CIBC’s results is quite positive, with a strong beat, we believe that much of the enthusiasm will be tempered by the strong lift in revenues in the Corporate segment,” wrote Barclays Capital Analyst John Aiken in a report to clients. “Although the dividend increase is an incremental positive and suggests confidence in the contribution from PrivateBancorp going forward and the bank’s ability to rebuild its capital ratios, it was largely expected.”

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The bank's Canadian unit stood out in the latest quarter, with profit rising eight per cent to $719 million amid loan growth and higher fees.

CIBC, which acquired Chicago-based PrivateBancorp in a US$5-billion deal in June, has been looking to diversify outside of Canada where it is the most exposed of the country's biggest banks to the domestic economy.

Adjusted profit in the lender's U.S. division surged 76 per cent to $44 million.

“It’s encouraging to see them going boldly beyond our borders,” said Goodreid Investment Counsel Portfolio Manager Brian Madden in an interview with BNN. “Strategically, if you want to be in that market, they decided we need to bite the bullet and pay the price. We’re going to see whether that pays off for them.”

Meanwhile, CIBC’s capital markets unit stumbled in the latest period, with adjusted profit dipping 13 per cent.

"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," Chief Executive Victor Dodig said in a statement.