CIBC Sees Revenue and Spending Rise As It Focuses On Growth And Increases Dividend – .

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CIBC Sees Revenue and Spending Rise As It Focuses On Growth And Increases Dividend – .


TORONTO – CIBC has invested in growth opportunities like its rebranding and the purchase of the Costco credit card portfolio, and the costs and gains are starting to show on their balance sheet.
The bank said Thursday that fourth-quarter revenue rose 10% from a year ago to $ 5.06 billion thanks to growth in lending volume, growth in transaction fees and adding clients to its capital markets division.

However, costs have also increased, up seven percent from the previous quarter and eight percent from a year ago, mainly due to higher employee compensation, but also initiatives. strategic.

CIBC CEO Victor Dodig stressed on a conference call that the bank is investing in the future growth of the organization, from its new head office in Toronto to bank branches and new technologies.

“The general theme of our bank and our strategic objective as a management team is to continue to invest to increase our market share at the expense of our competitors. “

The bank reported fourth-quarter earnings of $ 1.4 billion, or $ 3.07 per diluted share for the quarter ended Oct. 31, compared to earnings of $ 1 billion, or $ 2.20 per diluted share in the quarter. same quarter of last year.

On an adjusted basis, CIBC says it earned $ 3.37 per diluted share, up from adjusted earnings of $ 2.79 per diluted share in the same quarter last year.

Analysts on average expected the bank to report adjusted earnings of $ 3.53 per share, according to financial market data firm Refinitiv.

The shortfall is due in part to higher-than-expected spending, as well as a $ 78 million increase in provisions for credit losses as analysts expected a reversal.

Scotiabank analyst Meny Grauman said in a note that the details were better than the main numbers because the increase in the credit provision was linked to a change in banking parameters rather than the environment. risk, while expenses were increased in part due to the rebranding of the bank.

“This bank’s spending message continues to focus on further reinvestment in the business, but despite a headwind of inflation in fiscal 2022, management continues to expect a positive operating leverage for the full year thanks to continued strong revenue growth. “

Barclays analyst John Aiken said in a note that the bank’s lending growth was strong in Canada and the United States, and operating leverage could remain positive even as the bank invests.

“This bank’s spending message continues to focus on further reinvestment in the business, but despite a headwind of inflation in fiscal 2022, management continues to expect a positive operating leverage for the full year thanks to continued strong revenue growth. “

The bank announced Thursday that it will now pay a quarterly dividend of $ 1.61 per share, down from $ 1.46. CIBC also announced its intention to repurchase up to 10 million of its shares.

The increase in shareholder payments and share buybacks follow action taken by several other major Canadian banks this week after the federal banking regulator lifted restrictions on dividend increases, share buybacks last month and executive compensation increases that were put in place at the start of the pandemic.

CIBC said its personal and business banking in Canada gained $ 597 million, up from $ 590 million a year ago, while commercial banking and wealth management in Canada gained $ 442 million. dollars, up from $ 340 million in the same quarter last year.

In the United States, CIBC says commercial banking and wealth management gained $ 256 million, up from $ 135 million a year ago.

CIBC’s capital markets business increased $ 378 million, up from $ 310 million in the same quarter last year.

For its full year, CIBC says it earned $ 6.4 billion or $ 13.93 per diluted share, compared to earnings of $ 3.8 billion or $ 8.22 per diluted share a year earlier. Revenue totaled $ 20 billion, compared to $ 18.7 billion.

This report by The Canadian Press was first published on December 2, 2021.

Companies in this story: (TSX: CM)

Ian Bickis, The Canadian Press

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