August 22, 2019 / 10:28 AM / 3 months ago

UPDATE 3-CIBC's quarterly Canada retail, U.S. growth offset loan loss provisions

(Adds share price move, CFO comments)

By Nichola Saminather and C Nivedita

Aug 22 (Reuters) - Canadian Imperial Bank of Commerce on Thursday beat analysts’ estimates for third-quarter profit, as gains in U.S. commercial banking and domestic retail offset a jump in loan loss provisions and weakness in its capital markets unit.

Provisions for credit losses jumped 21% to C$291 million in the quarter, amid higher provisions for performing loans.

Canada’s fifth-largest lender said it would raise its quarterly dividend by 4 cents to C$1.44.

CIBC shares jumped 3.2% to a near three-week high of C$102.75, compared with a 0.7% gain in the Canadian bank stock benchmark.

The bank, which saw a 6% rise in U.S. commercial banking and wealth management profit, will continue to expand in the United States, outgoing Chief Financial Officer Kevin Glass said in an interview.

“This is a natural way for us to diversify,” Glass said. “We’ve done two (deals). If something makes sense, we’ll consider it.”

Glass will be succeeded by Executive Vice President Hratch Panossian on Nov. 1 upon his retirement, CIBC said on Thursday.

The lender acquired Chicago-based PrivateBank in 2017, and Milwaukee-based boutique investment bank Cleary Gull in July. The U.S. commercial banking and wealth management unit accounted for about 12% of total income in the quarter.

Net income attributable to common shareholders, excluding one-off items, rose to C$1.38 billion ($1.04 billion), or C$3.10 per share, in the third quarter ended July 31, from C$1.37 billion, or C$3.08 per share, a year earlier.

Analysts, on average, had expected earnings of C$3.06 per share, according to IBES data from Refinitiv.

This is the first quarter in four that the lender, which is more focused on Canada than many of its rivals, has beaten profit estimates, as higher interest rates in Canada have crimped borrowers’ ability to take out loans. But banks’ domestic performance is improving, with bigger rival Royal Bank of Canada on Wednesday also posting strong growth at home.

“CM delivered a slight beat that could be viewed positively in the marketplace, mainly benefiting from much better” net interest margins, analysts at Canaccord Genuity wrote in a note.

“The company’s U.S. segment continues to drive above-average growth.”

U.S. commercial banking and wealth management profit rose 6% from a year earlier and Canadian retail banking earnings increased 3% as net interest margins climbed 12 basis points. That helped lessen the impact of a 13% slump in its capital markets division and a 1% loss in its Canadian commercial banking and wealth management businesses. ($1 = 1.3283 Canadian dollars) (Reporting by Nichola Saminather in Toronto and C Nivedita in Bengaluru; Editing by Shounak Dasgupta, Bernadette Baum and Jonathan Oatis)

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