Canadian Imperial Bank of Commerce’s second quarter profit more than tripled from its pandemic low a year ago, boosted by falling loan loss provisions and strong financial market results.
For the three months ended April 30, CIBC earned $ 1.65 billion, or $ 3.55 per share, compared to $ 392 million, or 83 cents per share, in the same quarter a year latest.
On an adjusted basis, CIBC said it earned $ 3.59 per share, which was much higher than the consensus estimate among analysts of $ 3.01 per share, according to Refinitiv.
CIBC is the second major bank to report second-quarter earnings after the Bank of Montreal reported higher earnings on Wednesday, driven by similar factors.
For CIBC, the most significant change in a year was in provisions for credit losses – money banks set aside to cover loans that may default. In the quarter, CIBC only allocated $ 32 million in new provisions, up from $ 1.4 billion a year ago and $ 147 million in the first quarter.
The bank set aside $ 246 million for losses on loans already in arrears, but made up most of that by recouping $ 214 million that had previously been set aside in case the loans that were still going sour. After banks built up billions of dollars in reserves against losses at the start of the crisis, actual losses were minimal as massive government stimulus packages helped ease the cash flow crisis for many businesses and households.
Profits from CIBC’s main retail banking unit rebounded to pre-pandemic levels to $ 603 million, up 270% from a year earlier. The bank benefited from a sharp increase in mortgage balances, which rose 9 percent in hot real estate markets. But credit card balances are down 13 percent year-over-year, despite a 21 percent increase in card purchase volumes.
In the Canadian Commercial Banking and Wealth Management unit, profit of $ 399 million increased 94% year-over-year as provisions for credit losses fell and revenues increased 11 %. Demand for loans continues to be slower, with commercial loan balances increasing only 2 percent from a year ago. And US commercial banking and wealth management earnings rose to $ 206 million, from $ 18 million a year earlier, thanks to a sharp reversal in bad debt provisions. Loan balances grew faster in the United States, up 4 percent.
Profits in financial markets climbed to $ 495 million from $ 137 million in the same quarter last year, with higher income from trading as well as business and investment banking services.
The bank kept its dividend at $ 1.46 per share as the Canadian banking regulator temporarily banned dividend increases and share buybacks. And its capital levels edged up, with CIBC’s Class 1 (CET1) common stock ratio of 12.4%, up from 12.3% in the first quarter.
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