February 26, 2015 / 11:14 AM / 3 years ago

CIBC profit beats estimates, eyes U.S. deals

A pedestrian walks past a CIBC branch in Montreal, February 25, 2010. REUTERS/Christinne Muschi

TORONTO (Reuters) - Canadian Imperial Bank of Commerce (CM.TO), the country’s No 5 lender, reported better-than-expected first-quarter earnings on Thursday, helped by strong growth in its wholesale banking business, and unexpectedly raised its dividend.

Excluding items, CIBC earned C$2.36 ($2) per share in the quarter ended Jan. 31, topping the average analyst estimate of C$2.27, according to Thomson Reuters I/B/E/S.

CIBC shares rose 2.9 percent to C$94.89 in Toronto, the biggest gain among the country’s major banks. Toronto-Dominion Bank (TD.TO) also reported results on Thursday, posting an in-line profit.

Investor sentiment had soured on Canadian largest banks heading into the results season on concerns about the impact of a sharp price drop in oil prices. But four of five lenders reporting have met or beat expectations.

CIBC CEO Victor Dodig told analysts the bank was still looking at buying U.S. asset management and private banking providers. He had previously said the bank could do deals in the C$1 billion to C$2 billion range.

“While we have been actively assessing opportunities, we have not identified anything that meets our acquisition criteria. We will be patient and remain disciplined on valuation,” he said on a conference call.

Dodig also said the bank was under no restrictions when it comes to acquisitions, other than its own criteria for deals.

CIBC raised its quarterly dividend by 3 Canadian cents per share to C$1.06. Dodig said it was important that CIBC work its way towards the high end of its dividend payout ratio, as well as investing internally.

The surprise dividend increase could be interpreted as a signal from the board that “its outlook is nowhere near as negative as what is being priced into (CIBC‘s) shares,” Barclays Capital analyst John Aiken said in a note to clients.

Net income at CIBC fell to C$923 million, or C$2.28 per share, from C$1.18 billion, or C$2.88 per share, a year earlier, when results were boosted by a one-time gain from the sale of part of the company’s Aeroplan Visa credit card portfolio.

Excluding one-time items, earnings in CIBC’s wholesale banking business jumped 26 percent to C$271 million. Profit in its wealth management unit rose 12 percent to C$128 million.

Net income in the bank’s retail and business banking division, its biggest, fell 13 percent to C$650 million, hurt mainly by a drop in revenue from credit cards following the Aeroplan sale.

($1 = 1.2487 Canadian dollars)

With additional reporting by Ashutosh Pandey in Bengaluru; Editing by Savio D'Souza and Ted Kerr

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