CIBC profit beats estimates as Canada retail, U.S. gains offset loan loss provisions

FILE PHOTO: The Canadian Imperial Bank of Commerce (CIBC) logo is seen outside of a branch in Ottawa, Ontario, Canada, February 14, 2019. REUTERS/Chris Wattie

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

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

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

CIBC also said that Chief Financial Officer Kevin Glass, who has been at the bank for 10 years, will retire and be replaced by Executive Vice President Hratch Panossian.

Net income attributable to common shareholders, excluding one-off items, rose to C$1.38 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.

A 3% increase in Canadian retail banking earnings and a 6% rise in U.S. commercial banking and wealth management profit contributed to the earnings gain. That helped offset losses of 1% in its Canadian commercial banking and wealth management businesses, and a 13% slump in its capital markets division.

This is the first quarter in four that the lender has beaten profit estimates, as higher interest rates in Canada have crimped borrowers' ability to take out loans. But the domestic tide appears to be turning, with bigger rival Royal Bank of Canada RY.TO on Wednesday also posting growth at home.

Royal Bank, the country’s largest lender by market capitalization, reported a 6% fall in its capital markets income on Wednesday, in part because of declines in equity trading and loan syndication revenue.

Reporting by Nichola Saminather in Toronto and C Nivedita in Bengaluru; Editing by Shounak Dasgupta and Bernadette Baum