CIBC Fourth-Quarter Profit Falls 22 Percent on Structrured Credit Losses
Canadian Imperial Bank of Commerce, the country’s fifth-largest bank, said fourth-quarter profit fell 22 percent after the bank posted a loss on its structured credit business.
Net income for the period ended Oct. 31 was C$500 million ($493 million), or C$1.17 a share, compared with C$644 million, or C$1.56, a year earlier. Revenue rose 13 percent to C$3.25 billion.
CIBC’s earnings were reduced by C$239 million from losses tied to a structured credit business that it’s exiting, along with capital repatriation costs. The bank also had a C$45 million reversal on credit loss provisions.
CIBC said it earned C$1.68 a share excluding items, higher the C$1.63-a-share average estimate of 14 analysts surveyed by Bloomberg News.
CIBC rose C$2, or 2.5 percent, to C$81.05 yesterday on the Toronto Stock Exchange, its biggest increase in three months. The stock has risen 19 percent this year, compared with the 8.9 percent rise of the 10-company S&P/TSX Banks Index.
The bank set aside C$150 million for bad loans, down from C$424 million a year earlier.
Earnings from CIBC’s consumer lending business rose 23 percent to C$576 million, while its investment-banking business posted a loss of C$56 million, compared with C$160 million profit a year earlier.
Canadian Imperial was the hardest hit among the country’s banks during the financial crisis, recording C$10.9 billion in debt-related writedowns since the collapse of the U.S. subprime market in 2007. The bank has been unwinding the debt-related activities that led to the charges.
Canadian Imperial is the country’s second bank to report fourth-quarter results. Montreal-based National Bank of Canada, the country’s sixth-biggest bank, said yesterday that profit beat estimates.
Toronto-Dominion Bank, Canada’s second-biggest bank, also reports today. Royal Bank of Canada, the country’s largest lender, and Bank of Nova Scotia, the No. 3 bank, report tomorrow. Bank of Montreal, the fourth-biggest Canadian bank, reports results Dec. 7.
(CIBC will hold an earnings conference call at 8 a.m. Toronto- time at +1-416-695-6622 or +1-800-766-6630 or at www.cibc.com)